With prices falling, let's not abandon fuel conservation

Crude-oil prices fell to a 14-week low Monday and for Washington motorists still reeling from record gasoline prices, there is reason to hope that the downward trend will continue.

According to an AAA survey, the average price of regular had slipped from an average high of $4.35 per gallon in the state last month to $4.02 on Wednesday. That's still high, but we'd certainly prefer it heading downward toward $4 than on upward toward $5.

The Seattle Times reported that in conjunction with the drop in crude-oil prices, the U.S. economy will continue to slump into 2009, crimping fuel demand. A Bloomberg News survey showed our national economy will grow at an average 0.7 percent annual pace from July through December, with half the gain in the first half of the year.

There were also market reports that the conflict between Russia and Georgia is not really affecting the pricing situation. Georgia is a key link in a U.S.-backed energy corridor that connects the Caspian Sea region with world markets, bypassing Russia, The Times noted.

"It's become clear that demand is cratering, which is making it hard to rally," said Rick Mueller, director of oil markets at Energy Security Analysis in Wakefield, Mass.

But what appears to be the real driver in the lower prices is the age-old reality of supply and demand. When gas prices were on a steady incline, motorists adjusted and either cut down on travel or searched out alternate forms of transportation. That led to a drop in demand.

A report in this newspaper Monday found the local situation pretty much reflects what's happening nationally, and even on the international scene.

When the price of fuel increases, consumers' purchasing power decreases, Lewis Mandell, a finance professor at the Foster School of Business at the University of Washington, told our reporter.

"It's the same as the boss cutting their paycheck," he said. "If (they) have less money to spend, what economics tells us, people make their cuts all over. ... Not only will people be motivated to use less gasoline, they'll also be motivated to buy less of everything."

Gas prices are an indicator, and as they slide a bit, it's still a good time for a reality check since the prime factor in the decline has been a reduction in demand.

Even if gas should get back in the $3-plus per gallon range, which would certainly be a welcome development, let's keep in mind that if demand starts to go back up, it's a good bet prices will, too.

The gas crunch has actually been an opportunity to adopt some good habits of conservation and budgeting. It would be a shame to abandon them to the vagaries of oil marketing.

* Members of the Yakima Herald-Republic editorial board are Michael Shepard, Sarah Jenkins, Bill Lee and Karen Troianello.