PRINCETON, NJ -- Americans, on average, expect gas prices to surge to $4.36 a gallon where they live this year. More than one in four predict gas prices in their area will reach or exceed $5 a gallon this year.
The March 3-6 Gallup poll also finds Americans reporting that they currently pay an average of $3.45 a gallon at the pump. This comes close to the U.S. Department of Energy's reported average price for regular gas of $3.52 a gallon for the week that ended March 7.
Half of Americans anticipate that pump prices will increase by 75 cents or more where they live this year, more than said the same the past three times Gallup asked this question.
Gallup surveyed Americans about gas prices in the first week of March this year, earlier than in past years. This may be partly why their predictions of how high gas prices will rise surpass those from previous years; gas prices typically increase most as the summer driving season approaches. But the 91-cent average expected increase is still 36% higher than that from Gallup's 2008 survey, conducted in mid-March.
Future peak gas price expectations are in a pretty tight range regionally. The lowest peak expectation for the year is in the South at $4.27 while the highest is in the West at $4.49 a gallon. The East is at $4.37 and the Midwest at $4.36.
Expectations May Be More Important Than Today's Pump Price
Gas prices have increased by 14 cents a gallon over the past week and 75 cents over the past year. Given this rate of increase and the turmoil in the Middle East, it is not surprising that most Americans expect prices to continue to surge.
But the level to which gas prices have risen to date may actually underestimate the potential impact of what is happening in the U.S. economy. For example, some Wall Street observers say gas prices won't really damage economic growth until they reach an average of $4 a gallon or more. This ignores the impact of consumer expectations. Consumer behavior is highly influenced by expectations -- that is why the Federal Reserve Board is so concerned about the possibility of inflation concerns taking root in the U.S.
Consumers are telling Gallup that surging gas prices have them expecting $4 and even $5 pump prices where they live sometime this year. In turn, it seems reasonable that consumers and businesses will change their behavior accordingly -- with consumers reducing their use of gas, spending less in general, and downscaling where they buy, while businesses anticipate revenue declines, also spend less, and limit their hiring. These changes in behavior may be more pronounced than many of the nation's retailers anticipate and worse than expected for the U.S. economy. Whether consumers' expectations and their associated behaviors will also prevent a strong public backlash until gas prices exceed $4.36 a gallon is yet to be seen.
Results for this Gallup poll are based on telephone interviews conducted March 3-6, 2011, with a random sample of 1,021 adults, aged 18 and older, living in the continental U.S., selected using random-digit-dial sampling.
For results based on the total sample of national adults, one can say with 95% confidence that the maximum margin of sampling error is ±4 percentage points.
Interviews are conducted with respondents on landline telephones (for respondents with a landline telephone) and cellular phones (for respondents who are cell phone-only). Each sample includes a minimum quota of 150 cell phone-only respondents and 850 landline respondents, with additional minimum quotas among landline respondents for gender within region. Landline respondents are chosen at random within each household on the basis of which member had the most recent birthday.
Samples are weighted by gender, age, race, education, region, and phone lines. Demographic weighting targets are based on the March 2010 Current Population Survey figures for the aged 18 and older non-institutionalized population living in continental U.S. telephone households. All reported margins of sampling error include the computed design effects for weighting and sample design.
In addition to sampling error, question wording and practical difficulties in conducting surveys can introduce error or bias into the findings of public opinion polls.
For more details on Gallup's polling methodology, visit www.gallup.com.