Gas prices ‘without a doubt’ changing consumer behavior, AAA analyst says

AAA Northeast Public Affairs Senior Manager Robert Sinclair Jr. joins Yahoo Finance Live to discuss the impact elevated gas prices are having on Americans and how inflation is changing driving habits.

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- Oil prices are off their recent highs. But gas prices are still hovering around record levels. The question now is whether consumers will start to change their behavior because of these high prices at the pump. Robert Sinclair Jr. Is the Northeast public affairs senior manager for AAA and joins us now. Rob, I was joking break when we see you, gas prices are usually on the rise or almost vacation season. This case, gas prices are on the rise. Is there anything you're seeing in the numbers or people that you talKED to that we might be nearing some form of just short-term peak in pump prices?

ROBERT SINCLAIR: A short-term peak. I think we may have peaked so far for the current hikes in that we're at $4.32 per gallon and we've been there for a couple of days. But there are things on the horizon that will lead to gasoline prices going higher, namely the switch over to summer blends of gasoline, which starts tomorrow on the West Coast and has to be completed by mid-April on the East Coast. Those blends are more difficult to refine, more complicated to distribute.

So that leads to the price going up. And as the weather gets better, people want to get out and get rid of the COVID doldrums and take a trip somewhere. And 85% to 95% of summer holiday trips and summer vacation trips are taken by motor vehicles. So demand goes up. And with it, price. So we might see a leveling off right now. But there are factors in the near future that will make prices go higher.

- And always great to see you here. I want to ask you about some of those high prices and the price of crude oil and how the transmission line into the gas prices. I've noticed-- and this was a long time ago when I had to fill up as a teenager and it really hurt me at the pump. I noticed that as soon as crude oil would spike, then you get those gas prices going up pretty quickly. And then when crude oil would fall off, the gas price is just kind of stay high for a while. I'm just wondering if there is any science to that whatsoever.

ROBERT SINCLAIR: Sure. It's the science of making money. Prices go up like a rocket and go down like a feather because the retailers are making money when the prices go down. When prices go up, they're covering their cost of doing business for their next deliveries. But as prices go down, if they can keep their prices higher, artificially higher, despite the fact that they're getting cheaper deliveries, that's when they're making money. So folks will change their thinking and realize that when prices are going down, they go down slowly. They rise like a rocket and fall like a feather. That's because there's profit taking happening by the local retailer. And we're all paying as a result.

- Robert, are we hearing that point, just given where prices are, that motorists are just likely to be driving less, or perhaps they hop onto public transport? How do you think about it?

ROBERT SINCLAIR: Oh, without a doubt. We've done a couple of surveys. Back in March of 2018, we asked drivers what the pain point was for the price of gasoline. 40% said $3 a gallon. We just revisited that survey last week. And now, what was it, 60% of drivers are saying that $4 a gallon is the pain point. And they've already made that change, that adjustment, because we've blown through that price. And 75% of drivers said $5 a gallon is the pain point.

And what would they do in response? Well, younger drivers, those 34 and younger, about 23% of them said that they would carpool to deal with these higher prices. But the older drivers, the older 35 and above, said that they would cut back on spending, going out and to dinner and making major purchases for appliances and that sort of thing. And they also said they would combine their errands with their commute.

So it really depends on your age group as how you will deal with these higher gasoline prices. I think those older drivers might have a little bit more money in their pocket. And so that's why they're dealing with it in their way and carpooling. When you think about it, when I think about it, adding extra people into your vehicle adds weight and will actually reduce your fuel economy. So if you're the passenger in carpooling, you're doing great. If you're the driver, you might not be doing so well.

- Hey, Rob, before I let you go, really quick, we've been sharing stories all morning long about our first cars. What was your first car?

ROBERT SINCLAIR: 1966 Chevrolet Chevelle. But it didn't have a big fire-breathing V8. It had a 200 cubic inch 6 cylinder and a two-speed PowerGlide transmission. And all the problems that I had with it, my friends started calling it the power slide. But it was just a totally, totally reliable vehicle. It ran better in the cold weather.

I think I had a poor man's form of turbocharging with the cold air making for a denser mixture in the carburetor. And that little two-barrel carburetor that I had, it actually got pretty decent fuel economy. Super reliable. I loved it. And it came to an untimely end when a guy in a Mazda RX7 forced me off the road and I damaged it. Yeah. I damaged the undercarriage. But just a wonderful car. I had a tremendous time with it.

- Duly noted. And I think between your car, my car, and Jared's first car, none of them really had any semiconductors, which is really good if those cars were made in this environment. We'll leave it there. Robert Sinclair Jr., Northeast public affairs senior manager for AAA always good to see you. Good to see you. Thanks for.