Re: What Price Will Fuel A Change?
- From: ZombyWoof <Zomby-Woofdogs@xxxxxxx>
- Date: Fri, 02 Sep 2005 00:10:18 -0400
On 1 Sep 2005 18:31:47 -0700, NoOption5L@xxxxxxx wrote:
>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
>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
>"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
>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.
>What do you think... will prices over 3 bucks a gallon cause a major
>shift in the auto market?
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