Gas Prices Down, But So Far Auto Demand Not Picking Up

(MoneyWatch)  Gas prices have fallen sharply. The two-week drop of about 35 cents per gallon, from Sept. 26 to Oct. 10, reportedly was the steepest drop ever measured by the Lundberg Survey, which tracks gas prices.

Logically, that should improve demand for automobiles, especially trucks, since higher gas prices helped kick off the worst of the present auto-sales downturn in the first place. However, the credit crunch and concern about the bigger U.S. economy remain, and while gas prices are down, they're still higher than a year ago.

Gas prices are down about 72 cents per gallon from a month ago, to a nationwide average of about $3.13, according to the AAA Daily Fuel Gauge Report. However, gas is still about 37 cents per gallon higher on average than a year ago, the AAA said.

Drivers are voting with their feet, so to speak, by driving less. According to the Federal Highway Administration, Americans drove 3.6 percent fewer miles in July than the year-ago month. That's 9.6 billion fewer miles, and the ninth consecutive month of year-over- year declines.

Year to date, miles driven were down 2.9 percent or 52 billion miles, the agency said. At an average of 20 mpg, that represents 2.6 billion gallons of gas, so no wonder prices are down.

The Federal Highway Administration collects vehicle-miles-traveled data for all motor vehicles through more than 4,000 automatic traffic recorders operated around the clock by state highway agencies.