Question of the Day: Will Cheap Gas Resurrect Gas-Guzzlers?
As the U.S. economy craters, the price of gas is about to fall below $3 a gallon. Most experts believe that lower fuel costs will not lead American consumers into gas-guzzling SUVs anytime soon. If at all. Given the sudden arrival and frentic pace of the last gas price spike, even an extended period of low, stable fuel prices wouldn’t convince American consumer to “trust” lower pump prices. In other words, an entire generation of drivers may have suffered “pump trauma.” And until somebody buys the damn things, and lots of ’em, SUV and pickup truck residual values will remain low enough to make an ant’s ankles look like Godzilla’s eyeballs (or something like that). But hey, that’s the 411 from “experts,” not TTAC’s Best and Brightest. So I turn to you for a more thoughtful analysis. Will Americans “forgive” their gas guzzlers and “forget” their pain at the pump, plumping for ye olde guzzlers when the economic crisis passes? If so, how long would it take? What effect would cheap gas have on eco-oriented whips like the Chevy Volt and Toyota Prius?
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The only reason gas prices dropped is that the economy tanked. So if the economy gets back on its feet, people will have some money to spend, but gas prices will also rise. So either way, the SUV is not a great choice.
Building on what Carlos wrote - I live in a political battleground state (why don't the candidates just get it over with and move to Ohio...save travel expenses!) that is being hit among the hardest in the country in terms of loss of jobs, foreclosure of homes, repo-ed vehicles, and loss of purchasing power. I've lived here several times in my life, but I have never seen so many people worried and scared about their futures than they are now. That being said, the impression I get is that the automakers could dump the prices of trucks and SUVs by half, they would still sit and collect dust on the lots. I know people that travel around the country on a regular basis...and they could be wrong, but they mentioned that they have never seen such severe swings in gas prices on a daily basis than what we have here in the Ohio/Kentucky/Indiana region. I've encountered .30/gal swings during various parts of the day. That is always a topic of conversation here and adds another log on the panic fire! I've also noticed that I have FAR more neighbors here in downtown than I've had before. People here are trying to reduce their commute given that we don't have a light rail/subway system (but we still have the early-1900's tunnels under the city just waiting to be used!) There is one other thing I've noticed - of all of the new cars with the paper dealer plates, most of them are tacked onto a Civic, Mazda3, Yaris, and Fit. We just don't have a huge hybrid inventory to choose from... Last thing - From an all-time high in Northern Kentucky that was around $4.40/gal, most stations are about $1.20/gal cheaper now and some of the stations between Cincinnati and Dayton have $2.85/gal gas. I drive so many miles a week that this huge plunge in gas prices is a massive help to the budget, but there is no way I'm considering purchasing a guzzler. Support Ohio - buy a Honda!!!
I'm laughing. I only wish I'd waited about six months to buy my Suburban, although the real reason for the purchase was the need for the vehicle. I just filled my tank with $2.18 gummint sponsored ethanol (recovering taxes paid, see) and enjoyed the nice warm 'I told you so' feeling that comes with correctly predicting the collapse in gas prices. Sure had a lot of funny looks when I bought my Suburban...
There is a lot of hate for these "Guzzlers", but there are actually people who need them. Other than their higher consumption of fuel, SUVs and Trucks have very high utility. The question is, whether the person commuting with it requires all that utility. My neighbor has two vehicles, a BMW M6 coupe and a Chevy Tahoe. His car gets 13 mpg mixed driving on premium, while his Tahoe gets 15 mpg. The SUV hauls his family of 7, tows his trailer, and carries a lot of stuff. His sportscar gets worse mileage and has next to no family utility, but it's his SUV that gets the scorn from this group. I have a family of 7 myself (me, wife, 3 kids, and two grandparents). We have a Honda Accord Sedan and Ford Expedition. We cannot live our lives without the Expedition because no sedan I know of can carry 7 people, cargo, and a couple of dogs. Not all people are single, living in the city, and can live their lives with a small compact car. I love my Honda Accord, but if we had to lose a car, it would be the one to go.