Upside to recession: Gas consumption still falling

SACRAMENTO -- An economic meltdown might not be the preferred way to scale back California's dependence on foreign oil, but it seems to be doing the trick.

Gas consumption in California continues to fall, even with prices far lower than the record highs set last summer, new figures from the California State Board of Equalization show. Some economists credit the poor economy for the trend.

Unemployed people don't drive to work. Car sales are down. And suburban growth is sputtering. All of which promotes lower fuel use.

"The impact of drops in income on gasoline consumption are actually quite large," said Chris Knittel, an economics professor at the University of California at Davis.

Severin Borenstein, director of the Energy Institute at the University of California at Berkeley, said the economy might have little to do with the decline in consumption; rather, he said, there is a lag between price drops and increased usage.

Californians started using less gas beginning in 2007 as prices crept upward. By last summer, prices topped $4 a gallon, and the trend had picked up, with Californians using about 200 million fewer gallons of gasoline during the second quarter of 2008 than they did during the same period in 2007.

Now gas prices are back around $2.25 a gallon, but use continues to plummet, dropping 40 million gallons from summer to winter of last year and remaining 200 million gallons, or 5 percent, lower than winter of 2007.

The benefits of lower gas consumption have been widely documented, potential for less pollution, less sprawl and less U.S. involvement in the Middle East chief among them.

On the flip side, a lot of domestic jobs are directly or indirectly tied to the oil industry, Knittel said. As such, the trend, and what it portends, aren't doing much to help the economy.

For instance, Scott Blevins would, in a way, love to be using as much fuel as before. He's the president and chief executive officer of Mountain Valley Express, a Manteca-based trucking company.

Mountain Valley's diesel use dropped by 75,000 gallons, or 20 percent, compared with the prior year, during the first three months of 2009.

That's not through economizing. Business, Blevins said, has plunged.

"We went from 400 to 350 employees during the last 90 days," Blevins said, adding that in his company's three- decade history, "it's never been like this."

But mass transit use is up over last year as more people shun cars. Ridership is up more than 8 percent on the Stanislaus County bus system and 5.7 percent on Modesto's buses. The county system will carry an estimated 284,000 people this fiscal year, with Modesto Area Express buses anticipating carrying 304,000 in 2008-09.

Borenstein, the Energy Institute director, thinks gas consumption might already be increasing, noting that the state's newest figures don't cover 2009.