Tuesday, July 29, 2008

Gee, High Prices Drive Down Consumption -- Markets Work

U.S. motorists, paying record prices for gasoline, drove less for a seventh consecutive month in May, pointing toward the first annual drop in road travel since 1980.

``$4 per gallon may have been the trigger point we've been looking for,'' said Kenneth McGill, managing director for travel and tourism at consulting firm Global Insight Inc. in Lexington, Massachusetts. ``It's interesting to see Americans finally reacting to the price of gasoline by rationing consumption.''

Vehicle-miles traveled on all U.S. roads fell 3.7 percent in May from a year earlier, the Federal Highway Administration said in a report today. The seven-month slide is the longest streak since 1979, agency spokesman Doug Hecox said.
Bloomberg News

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