Spend-and-drive days over?

Wells Fargo economists believe current and future gas prices will force consumers to change the way they spend and drive.

"If we persist at current gas prices, we are going to see some impact on consumer spending and driving," said Kelly K. Matthews, executive vice president and economist.

In May the average gas price in Utah was $3.20, compared to $1.79 in May 2000. The same amount of money this year buys 858 gallons less than it did in 2000.

Wells Fargo economists say on average, Utahns spend about 5.3 percent of their gross income for gas in 2007, up from 3.3 percent in 2000.

"The conclusion is that gasoline prices are having a significant adverse impact on affordability and will alter family budgets and reduce gasoline demand," Matthews said.

Matthews said so far economists have not seen a clear-cut change in spending and driving habits, but they will.

"We cannot just continue as we have been and absorb $3.20," Matthews said. "There will be an impact significant enough that we will have to adjust."

Matthews added that food prices, driven by ethanol, are rising as are other costs of living, and people cannot "ignore and pretend it's not going to have an effect on spending habits."

One effect, Matthews said, would be people buying more fuel-efficient cars.

He also said he doesn't believe gas prices will go down "anytime soon."

Lack of refineries keeps gas prices soaring, not the price for crude oil. Inventory and production in refineries is lower, Matthews said.

Sterling K. Jenson, CFA of Wells Capital Management, a money-management company, said the economy throughout the United States is strengthening, and Utah's economy is strong.

However, even with a strong economy, gas prices will stay high. Matthews believes that gas prices "will be north of $3 through this year and on to next year."

There has been a concern about gas prices' effect on the stock market with auto sales weak at the beginning of the year, but that concern is fading, Jenson said.

"People continued the same spending patterns as they have in the past," he said.

Spending, driving and income will all be impacted by rising gas prices and habits will change, Matthews assured. Consumers must either budget more money for gas or drive less.

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E-mail: csmith@desnews.com