What will it take for me to switch to a hybrid or electric car ask Richard Read in the article “If Gas Goes Up $1, What Does it Mean for Auto Sales?” Research suggest no amount of price hike will increase the rate at which consumers switch to hybrids and electric cars. “If encouraging them to do so is a goal of the auto industry, the government, or some other authority, Experian's data suggests that it's going to take something other than gas taxes to get the ball rolling”
Right now with the average gas price in Utah at $3.523 per gallon, I have no intention of making the switch to a more fuel efficient vehicle. Gasoline is an inelastic good, meaning if the price per gallon reaches $4.50, I would still have to drive my car to work, school, supermarket, etc... The price of gasoline would have to be north of $5.00 a gallon for me to drastically adjust my driving habits or consider purchasing a hybrid vehicle; unfortunately experts believe it is only a matter of time before federal tax on gasoline increases which hasn't happened in 20 years.
With that being said, rising gas prices do effect my spending habits. As “Gas Prices: How Real Is the Damage?” explains that each $.01 increase in a gallon of gas redirects $1 billion of consumer spending away from other goods over the course of the year. For example here in St. George we live a short 90 minute drive from Las Vegas. Many of us drive down there to go shopping at the many retail outlets and malls because the selection and prices are better than here in southern Utah. The higher gasoline prices have made us spend less on purchases in order to balance our budget.