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Montanans ease up on gasoline use during $4-a-gallon pricesPosted on Dec. 7

Montanans ease up on gasoline use during $4-a-gallon pricesPosted on Dec. 7

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HELENA - After several years of fairly inelastic demand, it appears this summer's $4 gas was enough to get Montanans to ease up on the accelerator n a trend that, if it continues, could delay some road projects across the state.

Gasoline use dropped slightly in Montana for the 12 months ending in June. Among other things, that falloff meant a loss of revenue for the Department of Transportation, which depends on fuel taxes for about a third of its $600 million budget.

The state collects 27 cents for every gallon of gas sold, and 27.75 cents per gallon of diesel.

For the year ended in June, Montanans bought 495.2 million gallons of gas, down .44 percent from the 12 months ending with June 2007. That means a loss of around $600,000 in gas tax collections.

But the decline got much more precipitous over this past summer, when gas topped out at around $4.25 across the state. Gasoline use this July was down 7.6 percent from the same month in 2007, while August use was down 6.1 percent and September slipped 7.0 percent. Even in October, when gas prices were falling quickly across the nation, Montanans bought 4.6 percent fewer gallons this year than in 2007.

If the trend continues, and gasoline use drops, say, 5 percent over last year, the highway department would see a revenue drop of $6.7 million.

"When gas hit three bucks a gallon, we started to see a decrease," said MDOT director Jim Lynch.

It's easier to measure the economic effect of fuel prices by looking at gasoline rather than diesel, Lynch said. Diesel consumption is driven by construction, he said, while gas is a better measure of typical consumer behavior.

Lynch said a drop in fuel tax revenue will force the highway department to consider trimming its construction budget. No hard cuts have been made yet, he said, and the first things to go would likely be projects that are funded completely with state money and no federal match.

Keeping federal highway money, which accounts for about $320 million of the department's annual budget, is a top priority, since it's a matching deal tilted so strongly in the state's favor. Percentages can vary, but generally the state gets 87 federal dollars for every $13 it puts toward a project.

Likewise, Lynch said he's loathe to cut from funds to keep roads clean and safe. That means state-only projects would be the first to go.

Lynch said it's difficult to forecast where gas tax revenues will go in the future. Have Montanans permanently changed their driving habits as a result of the price spike this summer? Or are SUVs back in style now that gas costs less than half what it did four months ago? Just this week in Helena the price dropped another dime, to $1.59.

"We're on uncharted ground now. This is totally unusual," Lynch said, and looking at historical usage patterns may not be a good indicator of how much gas Montanans will buy in the future. "This country's never seen almost $5 gas, and between that and the financial crisis we're facing, how is that going to play into people's habits?"

Denice Harris, spokeswoman for AAA MountainWest, said that after years of steady increases, Americans traveled less over each of the most recent four holidays the organization tracks: Memorial Day, Independence Day, Labor Day and Thanksgiving.

While high prices at the pump contributed earlier in the year, Harris believes the faltering economy is playing a role in Americans continuing to stay closer to home, even as gas falls to prices not seen in nearly a decade.

"I think it's a mixed bag of the economy not doing so well, and people have realized that the times of driving anywhere you want in the biggest vehicle you can buy are long gone," she said.

She's unsure whether demand for fuel will return to previous levels, but cautioned that excessive use isn't sustainable, no matter how cheap gas gets.

"I hope people have learned something, because this problem did not go away," she said. "It's not like we found a whole bunch of oil somewhere and the crisis has gone away."

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