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In this article
The difference between driving a vehicle that gets 15 mpg and one that averages 22 mpg comes down to about $2.26 a day.
Consumers are now less affected by gasoline price increases than they were in the late 1970s.
All it takes is one slight earnings miss for Wal-Mart stock to shoot downward.

Gasoline Consumption: Consumer Lip Service

When it comes to issues like global warming and conserving oil and energy, most consumers are quick to agree that something should be done to preserve our precious resources. But is that really happening? A comparison of words and actions shows that it's not.

For example, the difference between driving a vehicle that gets 15 mpg and one that averages 22 mpg comes down to about $2.26 a day. Do you really think anyone will sweat over paying an extra $2.26 per day to drive their car?

Studies indicate that the average consumer is not concerned at all.

In fact, a study of gasoline consumption and driving behavior by economists at the University of California Davis concluded that consumers are now less affected by gasoline price increases than they were in the late 1970s.

Not only that, but a study of automobile sales trends shows that small cars and crossover wagons account for only 25% of total retail sales in the United States compared to this same small-car segment making up 40% of total retail sales in Europe.

In other words, Americans still like their Land Rovers and GMC Yukon Denalis no matter what the environmentally correct position is.

Gasoline Consumption: Is He Off Base?

Now, any regular Market Report reader knows that Adam has been talking a good bit about the threat of $4 gasoline prices. Is he off base? Based on a year-over-year basis, I think he's actually on track.

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For example, the average nationwide gasoline price is at $2.61 a gallon -- which is a full $0.11 higher than this time one year ago (and that's according to the federal Energy Information Administration).

So although rising gas prices at $2.16 has yet to translate into any meaningful decrease in Americans' gasoline consumption, a sustained price tick above $3 a gallon will be the catalyst that triggers the actions that match the words.

And here's the important trading point: The one company that always is the first to feel the pinch of increased gas prices is discount retailer Wal-Mart (WMT:NYSE).

Although an $0.11 year-over-year increase has yet to make any significant impact -- you better believe that prices north of $3 and approaching $4 will really kick-start the behavioral changes that many are predicting will happen.

So connect the dots. If you're not driving to Wal-Mart anymore, you're certainly not spending money at Wal-Mart anymore.

And all it takes is one slight earnings miss for Wal-Mart stock to shoot downward.

Is there any coincidence that we're holding Wal-Mart puts in WOW?

***

Bryan Bottarelli is the head trading tactician for the WaveStrength Group, and is a contributing editor for Taipan Financial News. Coming off the floor of the Chicago Board Options Exchange (CBOE), Bryan uses WaveStrength chart forecasting to develop wining options plays for his service called WaveStrength Options Weekly. Bryan is also the lead editor of BottarelliResearch, an elite membership service that he independently publishes himself.

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Related Resources
Fuel Economy: Gas Prices Rise and Consumers Shrug. - The Wall Street Journal
Quotes: Ford breaks above $8.00 per share. - MarketWatch.com
WMT: Wal-Mart at one year. - MarketWatch.com