What Price Will Fuel A Change?

With gasoline prices surging across the nation in the wake of Hurricane Katrina's path of destruction in the Gulf of Mexico, the cost of running a car appears to be heading for what some auto experts say is a tipping point for American drivers. The price of gas is now well above $3 a gallon in some parts of the country, and the storm-related price surge comes on top of already record-high pump costs. But despite the persistent rise in gas prices this summer, U.S. motorists continued to buy up gas-guzzling light trucks and SUVs as the big U.S. auto companies offered deep discount programs to whittle down swollen inventories. All that now appears to be changing. According to an unscientific poll of automotive industry experts, a sustained gasoline price above $3 is likely to push American car consumers away from buying large gas-guzzling SUVs and light trucks and toward smaller, more fuel-efficient SUVs and cars. "Three is the magic number," said Mike Chung, automotive market analyst at auto research Web site Edmunds.com. "It's not about gas prices moving briefly above $3; the cost of gas will have to move above $3 and stay there for a few months for people to realize this is hitting their pocketbook hard - that's where we'll see a shift in attitudes." Chung says that, while SUV owners may have been willing to pay $50 to fill a 20-gallon gas tank when a gallon cost $2.50, at $3 a gallon a fill-up costs a SUV owner $60, and as the cost edges closer to $100 it will start to make smaller cars look more attractive. "With every major shift in gas prices over the last year we have not seen a major shift in consumer buying practices, but there's definitely a breaking point where people will consider smaller vehicles, and $60 for a tank of gas is where we think people will sit up and take notice," Chung said. Devon Cohen, vice president of automotive services at LiveDeal.com, a Web site for classified advertising, says employee discounts have led to a glut of big, fuel-inefficient cars like SUVs. Nationwide, car dealerships are reporting a significant increase in customers trading in their SUV's for smaller, more fuel-efficient SUVs and cars, he notes. "I've spoken to a number of auto dealers and they are saying people are coming into their dealerships with large SUVs, like the Escalade or Yukon, and want to trade them in, but some of the dealerships are not bidding on those cars because they already have too many," he said. "They know they will hold those cars on their lots for a long time, and as gas prices go up the value of those cars will go down - it's a risk to their inventories."

From the 1973 oil shock until 1981, when retail gasoline prices surged

to a nationwide average of about $3 in today's dollars after the Iranian revolution of 1979 and the country's war with Iraq, the average fuel efficiency of new U.S. vehicles doubled from about 14 miles per gallon to 28 miles per gallon. New regulations passed following the energy shocks of the early 1970s recommended that automakers make more efficient vehicles, but those regulations were not binding and the shift was due primarily to consumers demanding cars that could run further on a gallon of gas, according to Lave. "This short-term blip from Katrina will not last, but it's unlikely we'll see a serious decline in gas prices from where they were a week ago at $2.50, certainly over the next three to five years," Lave said. "The main thing that will bring that price down is whether there's some alternative to petroleum; there are some alternatives out there, but unless Americans drive less and reduce demand for gas, we'll continue to see higher prices." "There's little question that the situation in the Gulf, if it keeps gas prices high, will have an impact on consumers' car choices, but will this period of higher gas prices be sustained long enough to see people make major shifts in their purchasing decisions?" Langer said. "Is the dramatic drop in SUV sales temporary, or the start of a major trend?" Another question is how the big car companies will react adds Langer. "The big auto companies have found themselves in a bind - they already several years behind in creating hybrids, but they also have so many resources tied up in these vehicles it is hard to for them to make the shift and give consumers what they want in the face of high gas prices. They are stuck in a mindset that is hard for them to respond," she said.

Reply to
NoOption5L
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Yes.

Reply to
ZombyWoof

YES! When gas first rose after the 9/11 attacks I ditched my 2000 F-150 with its 5.4 V-8 for a 2000 Honda Accord Coupe. I ended up getting about the same range in miles on a tank of gas, but, the Accord was almost 1/2 the price to tank up when compared to the F-150. Now I have gone even further back and taken over my wife's 97 Civic because my job requires a lot of travel. Words just can't describe how much I am enjoying 30 to 37 miles per gallon right now, especially when I had over 300 miles of travel this past week alone!

Naturally, I still want a 2005 or 2006 Mustang GT, but if the price of gas gets too far out of control, I may have to pass! I figure the Mustang can be no worse on gas than my 1996 T-Bird was, as long as it is driven conservatively.

As for the F-150 that I had, when I pulled my Wells Cargo trailer, I was lucky to get 14 miles per gallon with it, and it was really more like 11 MPG most of the time. Without the trailer, I managed to squeeze an astounding 16 to 19 MPG out of it on the highway.

Reply to
Stiff Hard Cox

snipped-for-privacy@aol.com wrote in news:1125624707.912445.49250 @g47g2000cwa.googlegroups.com:

Gasoline prices over $3/gal will cause a major shift in _every_ market. Everything will be going up due to increased fuel costs. Ready for milk @ $5/gal?

Reply to
Joe

Joe wrote in news:kTWRe.9874$RO5.3415 @bignews5.bellsouth.net:

No.. and it wont happen anytime soon. How much has the retail index shifted during the 1.50 to 3.00 rise? Think about it.

Not just that, but some are betting that the oil price will have dropped to under $40 sometime in 1st qtr, 06. You know it's speculation has driven the price up.

Lead-month crude oil futures fell $1.26 to $68.18 a barrel today {because rumors of oil platform damage in Gulf are unfounded -wonder who started them!} and the fact that oil is flowing through the LA pipelines, albeit reduced, and the refineries will be up in a couple weeks.

Gas here in Central Ohio just dropped to $2.99, confounding the local gripers who complain they are quick to rise and slow to drop..... while milk stays steady at about 2.89

Reply to
Backyard Mechanic

Backyard Mechanic wrote in news:Xns96C5981E53F5Apettyfogery@207.115.63.158:

Talk to me next month when the effects ripple downward.

Damn, those rose-colored glasses must be nice!

Reply to
Joe

It would take a long period of sustained high prices to get people to change. Sure, some will sell their SUVs and 4X4s, but the majority won't. Once the other prices kick in, like the $5 a gallon milk, more and more people will change "some" things.

The higher prices might more quickly lead to remote employees working from home rather than go in to work.

The car makers had already decided to start thinking smaller SUVs even before this mess, due to sales.

Essentially, it would take a federal mandate to force people to change.

And, the oil pundits are predicting the price per barrel will rise for a bit and then quickly drop back to under $50 per barrel, because, as they say, societies around the world could not sustain with long term high prices. Chaos would result, and likely lead to global conflicts and revolutions. Spike

1965 Ford Mustang fastback 2+2 A Code 289 C4 Trac-Lok Vintage Burgundy w/Black Standard Interior; Vintage 40 16" rims w/BF Goodrich Comp T/A gForce Radial 225/50ZR16 KDWS skins; surround sound audio-video.

Gad what fools these morons be.... Children are obscene but should not be heard Give me a peperoni pizza... or give me a calzone!

Reply to
Spike

Indeed. Soda and bottled water are more expensive than gas and cheaper to produce, but you don't see people rising up in the streets with pitchforks over that...

*shrug*
Reply to
Ritz

Of course, those are things which most people don't feel that they must have to survive. Fuel, on the other hand, impacts them directly in the pocketbook, and as transportation costs rise, hits them again for increased costs of food and other necessities, and well as comforts.

And I know I am not alone when I say that others here recall the gas crunch in the 70s when fuels were rationed, and stations ran dry... when tankers were hijacked... when cops had to respond to fights at service stations... and even when emergency agencies ran out of fuel and had to park 'em. Things could be much worse than they are now.

There were times when we had only one patrol mobile at a time to serve a community of 80,000+. The rest would be stationed around and just sit and wait for a call. The plus side was a mandated walk a beat in the neighborhood. Cops actually got to know the people they served.

And you had the doom and gloomers who predicted the end of civilization as we knew it, and the positive attuders who said it'll pass. It did pass. Gas never went back down to what it had been, but everyone adjusted to it and went on about their business.

Some people changed the way they lived. Must have. Somebody had to buy those Mustang IIs. Not much else did though. And in time, everyone forgot about what they went through.

Spike

1965 Ford Mustang fastback 2+2 A Code 289 C4 Trac-Lok Vintage Burgundy w/Black Standard Interior; Vintage 40 16" rims w/BF Goodrich Comp T/A gForce Radial 225/50ZR16 KDWS skins; surround sound audio-video.

Gad what fools these morons be.... Children are obscene but should not be heard Give me a peperoni pizza... or give me a calzone!

Reply to
Spike

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