By on November 27, 2014

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On the news of OPEC’s decision to keep oil production at current levels, there is almost certainly going to be a rout in the price of oil.

As of this writing, Gasoline futures are below the $2 mark, while West Texas Intermediate (the North American crude oil benchmark) is sitting at about $71.50, down from a high of $105 this summer. Gas prices are sure to sink even lower alongside the expected dip in crude.

The big question in my mind is how this will influence consumer behavior in the auto sector. Since the Great Financial Crisis, auto makers have positioned themselves for marked increases in fuel economy, spurred by equal parts consumer demand and government mandates (CAFE and Euro emissions regulations). This has manifested itself in everything from incremental (more efficient powertrains) to extreme (the aluminum F-150).

With gasoline at record highs, the demand for smaller, fuel-efficient cars is acute. But when the price dips, consumers tend to forget about the hard times and gravitate back towards pickups, SUVs and all manner of gas guzzlers.

Or do they?

Over the following months, we’ll be able to track what happens to auto sales and the price of gasoline. Our sales guru Tim Cain will be able to plot the results in one of his trademark charts.

Personally, I suspect that we’ll see more short-term thinking when it comes to vehicle purchases. Sales of SUVs, trucks and larger crossovers will keep rising. Small crossovers will eat into sales of passenger cars, likely stealing market share from compact cars once nameplates like the Chevrolet Trax and Honda HR-V hit the market. The hard times will quickly be forgotten…until the next rise in gas prices and economic contraction. In the mean time, it’s going to be a rough market for hybrids and EVs.

But I’m curious to hear what you have to say. With no formal training in economics or business, all I can do is go with my gut. I’m curious to hear your analysis, whether its rooted in the same methodology as mine, or something more concrete and quantitative.

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133 Comments on “Question Of The Day: This Time It’s Different?...”


  • avatar
    Lie2me

    Legitimate question. Can’t speak for others, but I’ve learned my lesson about fluctuating gas prices and gotten stuck with some real hogs. I will not own a vehicle that gets less then 20mpg, even if gas is a dollar a gallon. We won’t be fooled again

  • avatar
    Halftruth

    What’s funny is that switching a vehicle due to current fuel prices is a knee jerk reaction and a fool’s game. People forget how much money it costs to switch to something else. Better off keeping what you have and changing your driving habits (if possible). You almost always take a hit on a trade and prices are always in flux. Will be interesting to see what the trends will be.

  • avatar
    jim brewer

    It will definitely influence behavior–in a bad way. This is a golden opportunity to rationalize our financing of roads by making the gas tax fully support roadway infrastructure. About a 40–50 cent tax increase.

    Don’t favor a tax increase? Cut an offsetting tax elsewhere. A doubling of the child tax credit fits almost perfectly.

    • 0 avatar
      Lie2me

      Gas taxes are already going up, which is fine as long as it goes to infrastructure. One of the few places left that you can still see your tax dollars at work

    • 0 avatar
      Superdessucke

      That makes too much sense and is vaguely un-American.

    • 0 avatar
      Dr. Kenneth Noisewater

      Heck, roll the cost of minimum liability insurance into the cost of gasoline. No more uninsured motorists, and you only pay for the actual miles you drive. Comprehensive w/collision and other forms of insurance would still have their own market, but the gas-tax-based insurance would be a sort of assigned-risk pool.

      • 0 avatar
        MPAVictoria

        That is….

        That is frickin brilliant!

        Did you think of that on your own? Because seriously great idea.

        • 0 avatar
          Pch101

          The idea of including liability in fuel prices is not a new one.

          The Aussies have the right idea for this: their car registration includes third-party bodily injury coverage. Combined with nationalized healthcare that contains the costs of medical treatment, and the cost of auto insurance policies goes down and the policies are cheaper and easier to underwrite. (Insurers have less reason to be concerned with high medical costs, nor do they have to pay for the injuries of others.)

      • 0 avatar
        jacob_coulter

        Yea, because we need the government running a new industry.

        The federal government can’t even build a website giving away health insurance. You really think they could handle a project like that?

    • 0 avatar
      Lorenzo

      Lee Iacocca wanted a 50 cent increase in the federal gas tax in 1982, when he was trying to sell K-cars and gas was about $1.20/galllon. Congress hates direct tax increases and wouldn’t do it. They won’t do it now either.

    • 0 avatar
      ihatetrees

      I’d be more supportive of a such higher federal taxes / user-fees if laws enshrining the Soprano-style business model of road construction (aka prevailing wage nuttiness) were made more market friendly and less statist.

      • 0 avatar
        Lorenzo

        Believe it or not, wages are just a small part of road construction costs. The increasing cost of materials (sand, aggregate, cement and asphalt) is driving up costs. Even the difficulty of handling heavy traffic while rebuilding existing roads causes long delays and higher costs, since shutting down a stretch of highway or interstate for efficient rebuilding would force traffic onto local streets, a political impossibility.

    • 0 avatar
      TW5

      Check out the correlation between household spending on gasoline and median income growth. It will make you think twice about the merits of raising gasoline tax.

      If we do anything, we should eliminate the federal gasoline tax, and let states adjust accordingly. Post roads are an enumerated responsibility of the US Congress, and interstates fall under the jurisdiction of national security. They shouldn’t be funding roads with a decrepit Depression-era excise tax that was aimed at people who were still wealthy enough to drive in a pre-suburbia America.

  • avatar
    kurtamaxxguy

    For USA’s last decade, it seems vehicle purchased size/MPG inversely tracks gas prices. Higher prices = smaller, more fuel efficient cars, low prices = more large SUV’s and trucks.
    However, USA’s energy bonanza may be short-lived as a number of new USA pipelines and LNG terminals being completed could mean more exports of fuel and natural gas.

  • avatar
    davefromcalgary

    With the Verano having a lifetime average of 27 usmpg over 11500 miles, I intend to change nothing except to use the maybe 20 bucks a month savings to buy a bottle of wine or something.

    (assumption of a decline from 1.15/L to 0.95/L, and my filling frequency)

  • avatar
    GiddyHitch

    I agree with Halftruth about people being penny wise, pound foolish chasing around MPGs while neglecting to consider the frictional costs of getting into a new vehicle (tax, title, trade in value, etc.) that wipe out 5-10 years of savings at the pump. I read about it all the time in the comments section here at TTAC.

    With regards to purchasing behavior and current gas prices, people in my neck of the woods have come to accept the $4/gal is the new norm and will go around commenting about how cheap gas has become at $3/gal like it is now. Just a few years ago, anything approaching $5/gal was a sure sign of Armaggedon and that we would all be walking to work like a bunch of Euros quite shortly. It’s funny how short our collective memory is. That being said, I don’t live in pickup country (hello Texas!) and the only full size SUVs are in livery service around here, so buyers seem to have already migrated to more fuel efficient options and I would expect that to continue going forward. About everyone I know lusts after a Model S rather than a new M3 or 911.

  • avatar
    danio3834

    People haven’t forgotten about high fuel prices, nor do most people believe prices will remain low for a long period of time. The increases in pickups and CUV sales are mainly driven by increased consumer confidence and a transition from “needs” based purchases during turbulent economic times to “wants” based purchases since the economic outlook has improved. Basically, people are seeing more economic security on the horizon, aren’t really caring what gas prices are or will be, and are buying the vehicles they want.

    • 0 avatar
      Scott_314

      danio this is probably the best answer. People do care about fuel economy, but it’s within the context of the vehicle or type of vehicle they want to buy for other reasons. The second part is key.

      • 0 avatar
        danio3834

        Right, they’re willing to accept some pain at the pump in exchange for having the vehicle they want. The key to acceptance is the prospect of economic security.

  • avatar
    Hummer

    People act as if gas going down a dollar makes the cost of fueling something thirsty any different.

    Hint: it doesn’t, from the 2009 $1.80 prices to the highs at $3.90, it doesn’t make a marked difference on the money in the household. Unless your one of the few that live paycheck to paycheck as if it magically gets better, feeding a truck at 12 MPG shouldnt even give a double take.

    There are losers however…
    When gas goes up all businesses suffer, when gas goes down all bussinesses get a nice bump, all of the people so gullible to believe a raise in gas tax will go to roads seems to forget the number of people (read every non-hermit in the United States) that are hurt from that stupid move.

    • 0 avatar
      Lie2me

      Your cynicism is understandable, but the money to fix and plow the roads has to come from somewhere and maintaining the roads benefits everyone, especially politicians. Many have lost reelection because they didn’t get the plows out on time

      • 0 avatar
        Hummer

        I’ll take unplowed roads 9/10 snow can give me traction, a plowed road just gives it a better chance to re freeze and create a situation that has brine mixed with a frozen solid surface.
        So one of those I have traction, the other I have no traction and I’m helping to corrode the underbody of an 11 year old truck with very little surface rust on its frame.
        The 1/10 is when you can’t tell where the road ends and the ditch begins.

    • 0 avatar
      Mathias

      >> Unless your one of the few that live paycheck to paycheck

      Where’ve you been?
      You just described around half the U.S. households.
      We all have a billion-dollar marketing industry aimed at our hearts; not a lot of people are built to withstand that. So a dollar goes in, and 99 cents go out… that’s down from 8 years ago, when $1.05 would go out.

      There was a spate of articles a year ago or so to the effect that fewer than half of U.S. households could put their hands on a thousand dollars of their own money on short notice.

      If you look at median wealth and median income, it does not jibe with the sheet metal you see on the road.

  • avatar
    Pch101

    Our historical benchmark of sorts for this is the OPEC crisis. The 70s oil shock notably changed the nature of vehicle demand in the US, with a notable trend toward downsizing.

    As that crisis fizzled out in the early 80s, we saw the beginning of the horsepower wars and the basis was being set for the SUV boom that would follow, but it did not mean that the large traditional family sedan was due for a comeback or that the imports would go away.

    I suspect that we’re in for something similar. Consumer demands for fuel economy will indeed drop as it becomes cheaper to fill the tank. But that does not mean that they’ll go back to driving the specific classes of vehicles that they were driving 10-15 years ago.

    I wouldn’t hold my breath that the large mainstream truck-frame SUVs are due for a resurgence. But I would expect the crossovers to become more bloated and the horsepower wars to continue.

    • 0 avatar
      benders

      Don’t forget about the new CAFE standards. They may force manufacturers to aggressively raise prices for large vehicles to cover the costs of compliance (penalties or incentives to buy smaller vehicles).

      • 0 avatar
        ihatetrees

        To a point that’s true. Some manufacturers (Honda, Toyota) are better suited to flex their vehicle lineup toward gas guzzling. But don’t discount the political economy question – there will be a strong push to modify CAFE if it starts biting into the huge (potential) profits of selling V8 trucks.

      • 0 avatar
        Pch101

        Theoretically, CAFE should increase the price of gas guzzlers because it effectively serves as a production quota of sorts that constrains supply.

        In practice, I doubt that this will happen. The market is already predisposed to favoring smaller engines. Ultimately, it is the consumer who dictates the product mix, and the average vehicle buyer does not want to dedicate substantial portions of their household income to purchasing motor fuel. There is some demand for gas guzzlers, but a lot more demand for vehicles that aren’t.

        • 0 avatar

          To me I think CAFE has pushed up prices for gas guzzlers but only certain ones. Gm dropped lower trims off their fullsize SUV’s this seems to be aimed at CAFE. Doing exaclty what you say. They can get away with it because of little competition. Can’t really do that with pickups thou their prices our rising as well. There is talk over at allpar that the next wrangler may be more expensive to avoid the CAFE pain it is currently causing FCA.

          • 0 avatar
            Pch101

            The data would suggest that a considerable percentage of those who used to buy the large domestic SUVs cannot afford or are otherwise unwilling to pay for the fuel.

            The average price paid for large domestic pickups has increased because the smaller spenders bailed out of the segment. That leaves the bigger spenders to buy the rest of them; the trim levels match the customers who remain.

  • avatar
    APaGttH

    Honestly, I’d share the macroeconomic discussions and a blog I wrote for Fool on this subject but the comment engine would eat it.

    At about $70 a barrel WTI it starts to become unprofitable to drill new wells in the Bakken and specific Gulf wells to costly to operate. Oil producers are already stacking rigs in the Gulf.

    OPEC has several issues – OPEC ministers want to squeeze US and Canadian production. At current prices Iran is really squeezed and it hurts Russia. Saudi Arabia apparently is leading a scorched earth policy on supply, and has the financial resources to fight a two year battle.

    I’d write more but a 50/50 shot TTAC will nuke it.

    • 0 avatar

      You can send it to me derek at ttac dot com and I’ll run it as a guest post.

    • 0 avatar
      Pch101

      The Saudis can’t do much to influence world oil prices. A primary reason that we have oil futures exchanges today is to keep OPEC at bay; traders and the market now set the price.

      I suspect that US fracking operators will figure out ways to reduce their costs, as they will fail if they don’t and they are highly motivated not to fail. But US fracking doesn’t do much to reduce global oil prices, as it is merely replacing other supplies from elsewhere that have been reduced. The world doesn’t have substantially more oil, it’s just the sellers that have changed.

      In any case, any Saudi desires to depress oil prices probably have more to do with Iran than American fracking. Iran will suffer dearly with lower oil revenues, which could influence its willingness to cut a nuclear deal.

      I believe that we will see in retrospect that $100+/bbl pricing was an aberration within this cycle. $50-70ish oil is the new equilibrium and we will see lower prices as the US further tapers QE. (Oil prices are impacted by the strength of the dollar, and QE is bad for the currency.)

      • 0 avatar
        Lorenzo

        They’re trying to influence oil production, not prices. High cost producers can’t stay in business for long with lower prices, but the Saudis can, for a time. When the supply is reduced, the prices will go back up. The Saudis are betting that will happen before their cash reserves are gone.

        • 0 avatar
          Pch101

          As noted, I suspect that the fracking operators will find ways to push down their cost basis. The Saudis can’t prevent innovation, and there will be strong incentives to cut costs.

    • 0 avatar
      Big Al from Oz

      @APaGttH,
      Very good comment, and I do hope Derek does give you the privilege to write a guest article.

      The impact of these low oil prices could also set off an event as far reaching or worse than the last GFC.

      People must realise the biggest factor affecting the US economy is the cost of all commodities. Historically when the US economy tanked commodity prices went into decline. This decline also provided the US with cheap resources for growth again. The GFC didn’t allow this to occur as others consumers kept the price of commodities high. Now they are down again the US is in an upswing.

      On of the first losers of the low oil prices will be the Canadian tar sands. The US will also encounter cost vs production issues. The medium and smaller players will be hit first.

      OPEC with it need to maintain high levels of oil production is actually adding around 5 million barrels a day onto the market. The Saudi’s in particular can pump oil for a long time at current prices.

      If this oversupply situation continues it can have devastating effects across the globe, far worse than the last GFC.

      These cheap prices are unsustainable, globally.

      • 0 avatar
        mikeg216

        The United States exports more oil than it has in 50 years, we’ve run out of places to store oil gas and wet gas, the only long term effects globally is Iran and Russia collapses, China’s oil demand is even falling.

        • 0 avatar
          Pch101

          The US is a net oil importer.

          • 0 avatar
            Lorenzo

            That’s been true even when US oil production was at its peak in 1970. But increases in domestic oil output have reduced our imports by 2 million barrels a day, and it so happens that there’s a glut of 2M bbl/day in world markets. When we import less, the world market develops a surplus, destabilizing it.

    • 0 avatar
      Neb

      I’d be interested to read this, too.

      I’m actually somewhat optimistic about consumer behavior this time around. Granted, there will always be stupid consumers who don’t remember the past or don’t think about the future, but I think the message of “high fuel prices here to stay” has sunk in, at least with younger, more insecure drivers. The other reason I’m optimistic is that the economy still stinks* – in a boom time I can see a quick fashion change, but now in the middle of a lost decade, people will be more conservative.

      *America has a long way to go to recover its lost jobs, and in Canada the prosperous places are those most connected with oil production, so they might see a slacking off of frantic growth. Of course, Canadian fuel prices are a lot higher, anyway…

    • 0 avatar
      shaker

      I’ll definitely look for that article – I’d be especially “schadenfreude-al” to know that Putin suffers from this, and that Iran may be influenced to bargain regarding their nuclear “ambitions”.

    • 0 avatar
      TW5

      I’m looking forward to reading it. I didn’t know you wrote for Fool.

  • avatar
    indi500fan

    Heading to the PRI show next week. Maybe I’ll order a 572 crate engine….

  • avatar
    Hummer

    AMC would be doing well in the V8 compact Arena right now…

  • avatar
    Secret Hi5

    I’d bet that Russia is working to create geopolitical instability in oil-producing regions with the hope of raising oil prices. The Saudis are treading on thin ice, or slippery sand dunes, in this case. :D

    • 0 avatar
      highdesertcat

      With Russia being the world’s greatest oil producer, they are sure to feel the pinch of lower oil prices. And with the trade restrictions in place re the Ukraine, geopolitical instability would be to Russia’s advantage, giving Putin more leverage at home.

      The Israelis recently intercepted a shipment of Russian made arms to the Gaza, that was supposedly sent by the Iranians, whose oil is also embargoed.

      I am certain that there is much more to the current price of oil than readily meets the eye.

      My bet would be that once these issues with Rusia, Iran, Syria and ISIS are resolved, the price of oil will sky rocket again.

      • 0 avatar
        Lorenzo

        In terms of just crude oil, Russia is barely ahead of Saudi Arabia, but the Saudis can add 1.5 million barrels quickly. In terms of combined petroleum liquids, including liquids produced from natural gas plants, The Saudis are on top with 11.8 million bbl/day, with the US in second with 11.3 million, and Russia third with 10.9 million.

  • avatar

    As a bleeding heart liberal environmentalist I’ve always considered it my moral responsibility conserve resources and to not be wasteful, not that I’ve always lived up to those principals.

    • 0 avatar
      petezeiss

      Don’t you ever feel chumped by the fact that the newly-wealthy populations elsewhere are riotously consuming and polluting like there’s no tomorrow and any resources we don’t use will just be bought and squandered by them?

      I kinda do.

    • 0 avatar
      shaker

      Efficiency is its own reward, and even the explosive growth of China and India will be tempered by the realization that when 2.5 billion more people try to live an “American” lifestyle, all will suffer if it’s done with fossil fuels.

      The residents of Beijing can testify to this.

  • avatar
    Scott_314

    I don’t get this article. Gas was expensive? When? That was like century ago, you’re so old! What’s Kim Kardashiam up to? Justin Beiber, I don’t like him anymore. It’s Black Friday! I’m thinking about getting Michael Kors, Kate Spade is SO 2013. Let me take a selfie!

  • avatar
    Tonto

    Not only will the oil prices not drop, they are sure to rise steeply in near future and will only keep rising.

    Any more sagging price is going to cut oil multinationals’ profits but more importantly is going to make in particular American shale oil extraction prohibitively expensive… and then the shale deposits are mostly depleted anyway, the peak is already behind us.

  • avatar
    April

    I’m guessing a large percentage of new vehicle buyers will get a case of fuel price amnesia and buy even more bloated SUV’s and full sized trucks.

    It’s because the majority of people are short sighted idiots.

    (Sorry, I’m sick right now so my levels of sugar coating the way idiot people doing idiot things is in short supply)

    • 0 avatar
      28-Cars-Later

      I agree, the public has a short memory and is highly susceptible to marketing and “this month only” deals on guzzlers. I wonder how much of a percentage in fuel would be gained by simply building conventional trucks which are not the size of the Super Duties of a dozen years ago.

    • 0 avatar
      shaker

      Which is why the government-mandated CAFE requirements are a good thing; they’re a built-in defense against oil dependency, and have the long-term effect of increasing supply and keeping prices lower.

  • avatar
    JaySeis

    My thumbnail sketch; Here in rural two lane road Amerika, I’ve noticed people pass less but tailgate slightly more in this modern age of higher gas prices. When prices were near $4/gal, everyone drove 55. Now with “cheaper fuel” that’s more like 60 but they won’t pass if I’m hanging at 56-57. However, morning commuters are still the worst in that they tailgate more, pass more.

    • 0 avatar
      rudiger

      While there has always been a sizable group that valued fuel economy (the success of the VW Beetle and domestic compact cars during the sixties when gas was artificially cheap is testament to that), it’s been theorized that the tipping point of the price of gas that gets everyone else to permanently pay attention to fuel economy was $4/gallon. That sounds pretty accurate. The dark days of Hurricane Katrina really put the zap on a lot of people’s minds and it was barely less than ten years ago. It’s worth noting it was also during that time when Prius sales really took off which ultimately led to that unorthodox car becoming a mainstream vehicle.

      In short, even with the current low gas prices (relatively speaking), I just can’t imagine any American consumer returning to the pre-Katrina days of completely abandoning fuel economy as a major factor when purchasing a new vehicle.

  • avatar
    AGR

    Not long ago we were paying $1.50 a liter for premium gas in Canada it did not stop the sale of pick ups/SUV/CUV folks have become desensitized to the price of gas.

    Cheaper gas (the savings) will be applied elsewhere in the personal budget than spur the sale of bigger vehicles with poorer fuel economy.

    The gas crisis of a few decades ago, is now the gas abundance at low prices of 2015.

    As @APaGttH mentioned at $70 a barrel Bakken and the Canadian Oil Sands come under intense pressure to remain a viable business model. The Oil sands were there for thousand of years as the price of oil escalated above $70 the business model became more viable.

    Its clear that the middle eastern members of OPEC are jockeying for position and have just created a pivot point for oil.

  • avatar
    petezeiss

    Isn’t this kind of self-modulating?

    The concern that consumers will be “tricked” into buying gas-guzzlers again makes me think, so what? Gas-guzzlers don’t come so easily or cheaply these days in the new car market.

    You’ve got to spend, what, a minimum of 30-35K to start getting terrible gas mileage with a big V-6; more for a V-8, right? So if you can swing the loan to begin with you probably have the relatively petty cash to feed the beast.

    The confluence of forces that put all those 4-bangers out there for us lower-tier little people appear to be protecting us from our own shortsighted profligacy.

    We just can’t in aggregate do that much self harm no matter how high gas goes. I therefore consider this article a Silly Thinge.

  • avatar
    petezeiss

    Isn’t this kind of self-modulating?

    The concern that consumers will be “tricked” into wanting gas-guzzlers again makes me think, so what? Gas-guzzlers don’t come so easily or cheaply these days in the new car market.

    You’ve got to spend, what, a minimum of 30-35K to start getting terrible gas mileage with a big V-6; more for a V-8, right? So if you can swing the loan to begin with you probably have the relatively petty cash to feed the beast.

    The confluence of forces that put all those 4-bangers out there for us lower-tier little people appears to be protecting us from our own shortsighted profligacy.

    We just can’t in aggregate do that much self harm no matter how high gas goes. I therefore cons*der this concern a Silly Thinge.

    • 0 avatar
      Hummer

      I was actually just thinking this before I read it, no one that is particularly affected by small influxes in fuel prices can afford anything that get poor fuel economy, more over finding something that gets poor fuel economy is a task in itself, 1/2 pickups no longer get poor fuel economy even in the bigger engine trims, save fords outgoing 6.2. All the larger BOF vehicles are dead save 4-5 basic platforms, and the only one remotely affordable to the cheapos still manages decent MPG.

      Honestly the only vehicle I can think of that is relatively low priced with poor fuel economy would be a stripper 3/4 pickup, and who buys a stripper 3/4 reg cab, 2wd, truck to just drive around.

      Low cost, poor fuel economy vehicles no longer exists in new form unless your going to an extreme.

      • 0 avatar
        petezeiss

        Amazing, isn’t it? It used to be so easy to buy a cheap gas hog. I think we’ve been socially engineered.

        • 0 avatar
          Hummer

          All the whining about big SUVs is crap, CUVs outsell SUVs and the whole point of a crossover is better fuel economy.
          If every fullsize SUV achieved 34-42 MPG none of the whining would stop, it would just find a new face.

          • 0 avatar
            petezeiss

            As Ben Stein says, all such whining is from people who just like to take things away from other people.

            All I want to take away from other people are illegal guns and fertility.

          • 0 avatar
            Pch101

            Horsepower has become ubiquitous. Today, you can buy a Camry that would blow the doors off of a V8 ’65 Mustang and keep up with a Ferrari 308, and you’re irritated that they don’t burn more fuel?

          • 0 avatar
            Lie2me

            “All I want to take away from other people are illegal guns and fertility.”

            Take his gun and shoot it off, two problems solved

          • 0 avatar
            petezeiss

            “Rocky had come, equipped with a gun, to shoot off the legs of his rival.”

            Fun, but labor intensive. And in case it’s not usually on your shopping list, ammo ain’t cheap.

          • 0 avatar
            petezeiss

            “Horsepower has become ubiquitous.”

            That don’t speak to me none. Tall glass and a cushy ride would.

          • 0 avatar
            Lie2me

            “And in case it’s not usually on your shopping list, ammo ain’t cheap.”

            Somebody hasn’t looked at Farm & Fleet’s Black Friday ad

          • 0 avatar
            petezeiss

            They’ll have 3 boxes of each caliber just to make the ads legal.

            It’s just bait to get you in to buy camo deer mittens and bottles of doe estrous.

          • 0 avatar
            Lie2me

            Ok, then I won’t even tell you that they’ve got kitty-litter 1/2 off

          • 0 avatar
            petezeiss

            Their litter gives your basement that permanent mulch smell. HUGE with cats.

          • 0 avatar
            Lie2me

            ew

          • 0 avatar
            Hummer

            I’m not irritated that it doesn’t burn more fuel, that’s a good thing no doubt. I’m irritated that the environmentalists are going to whine about gas guzzlers at every turn while ignoring the simply fact that they no longer exist in any real numbers. It’s become more of a way to attack a certain demographic that enjoys something different from cars.

        • 0 avatar
          Lorenzo

          I won’t carry a “man-purse”!!!

  • avatar
    mikey

    First off, Happy Thanksgiving USA.

    For us Canadians lower oil prices can be a two edged sword. Yeah, its going to hurt the oil sands. However lower oil prices, drive down the Loony, and give manufacturing a much needed break.

    For most of us, we have seen this before, many times. I think we might see a slight change in buyer decisions. Nothing long term.

  • avatar
    johnny ringo

    Falling oil prices are a double-edged sword, while consumers will certainly like them, if prices fall enough the fracking industry in North Dakota and the tar sands in Canada will certainly take a hit-they need relatively high oil prices to turn a profit due to high production costs. The Saudis on the other hand are low cost producers and can still turn a profit with low prices. Personally with dropping prices I’d like to see a rise in the gas tax to fund road and bridge repairs, but I doubt that happens due to spineless politicians terrified of backlash from their constituants.

    • 0 avatar
      Hummer

      There’s nothing spineless about it, you have an opinion not shared by a majority of people, therefore any politician willing to cave to an extreme would be more spineless than a politician upholding the area they represent.

    • 0 avatar
      Lorenzo

      While the Saudis are low cost producers, they need high prices to finance measures to keep their population from going all Al Qaeda on the monarchy. They have prodigious cash reserves, some say enough to survive low oil prices for two years, but would they really blow a bankroll that took over a half century to build, and leave themselves open to future price drops?

  • avatar
    Joss

    I’d be looking for a fuel surcharges reduction from my shipping company. Lets hope it gets passed on to grocery prices…

    • 0 avatar
      LALoser

      We received notices about two months ago of energy surcharge increases, then last week one supplier sent a notice declining the increase, nothing from the others though…this is on material that is energy heavy to produce.

  • avatar
    jimbob457

    The main thing to keep in mind is the impact of ‘fracking’ on crude oil supply. At $100 per barrel, production from the almost totally mined out and nearly forgotten Williston and Permian Basins was exploding.

    The crude price had to go down. It must stay down for at least a few years lest ever expanding supply from just these two places capture substantial market share from the traditional suppliers.

    How low will it go? This is not clear just yet. It has to be low enough to stop the rapid expansion of crude oil production from ‘fracking’. From what I read, this means $60 to $80 per barrel. My educated guess is that it will turn out to be toward the bottom of that range.

    There are other issues. Production from currently unused capacity in Iran, Iraq and Libya will have to find a place in the market eventually. This makes curtailing the growth of production from ‘fracking’ all the more important. Only a lower crude oil price can do that.

    Absent some international political dustup, the outlook is for lower oil prices for years to come. This would be good for the US motor vehicle industry.

    • 0 avatar
      highdesertcat

      I see it much the same way. But I also believe that some international political dustup is always in the making. Plus, we in America are now stuck with Obama’s War. That’s going to cost a ton of money and we already have mission creep now.

      Turned out, all the BS O promised us about getting out of the wars in Iraq and Afghanistan turned out to be nothing but jaw jacking because now we’re in a much bigger war with ISIL that will last a whole lot longer than what we had.

      This ISIL thing in Syria and Iraq is huge compared to the miniscule wars in Iraq and Afghanistan. Muslims have taken s!des in this. O got some really, really bad advice from those in academia who had no appreciation for the dedication these Muslims have for a Holy War to create an Islamic State.

      • 0 avatar
        shaker

        Cheney’s taking out of Saddam started this whole house of cards mess that you call “Obama’s War”.

        • 0 avatar
          psarhjinian

          Technically, the US and UK ousting Mohammad Mossadegh in 1953 (ostensibly because of communism, but really because of oil) is what started this mess.

          Saddam’s reign was a side-effect of that original meddling.

          • 0 avatar
            highdesertcat

            psar, I must commend you on your knowledge of Middle East history! I take my hat off to you.

            Yes, I agree with your assessment! The US and UK meddling was the root cause from which all unintended consequences in the Middle East flowed, along with the recognition of Israel as a nation-state by the US, after the Arabs walked out on the negotiations, way back then.

            However, I stand by my statement of “Obama’s War.” We, the US and its cohorts, should not have left Iraq prematurely, or leave Afghanistan at the end of this year.

            If the decision was made to do that, then we should leave things alone and let the pieces fall where they may, when the consequences of this ill-advised decision are tearing it apart at the seams.

            To now go back in and get involved with an air campaign, more “advisors”, and eventually “boots on the ground” just highlights what an ill-advised decision this was.

            That’s what happens when academia with zero practical real-world experience gets involved in micro-managing a war.

            And Obama gets ALL the credit for this new war! He got us out of the last one so WTF are we doing back in?

          • 0 avatar
            Pch101

            Hussein wasn’t the problem. Ousting him without having a replacement who could hold the country together was the problem. Bush 41 understood that; his ne’er-do-well son did not.

        • 0 avatar
          rudiger

          Yeah, ‘Obama’s War’ makes about as much sense as calling Vietnam ‘Nixon’s War’…

          • 0 avatar
            petezeiss

            This!

            There a plenty of reasons to despise Barry without jackwagony misattribution.

          • 0 avatar
            Lie2me

            “jackwagony” = CUV

            I like it

          • 0 avatar
            petezeiss

            All this time it’s been staring us in the face but it took a kid who talks to an imaginary tiger to see it.

            Yes, jackwagon = CUV.

          • 0 avatar
            highdesertcat

            rudiger, in case you don’t know, Viet Nam really was Eisenhower’s War because of his commitment to stem the flow of Communism after the French defeat in Indo-China.

          • 0 avatar
            Pch101

            “Obama’s war” is the sort of quality analysis that can be expected from a “political independent” who thinks he’s smart because he parrots Fox News.

          • 0 avatar
            highdesertcat

            Bloomberg, chump.

            WSJ, CNBC, not Fox. Can’t stand talking heads at Fox interrupting the guests they ask a question of.

            Don’t know anyone who watches Fox. Most people in Blue State New Mexico still watch CNN.

            Nightly news with Brian Williams and Nightly Business Report with Tyler Matthesson and Susie Gharib are my staples.

          • 0 avatar
            Pch101

            For a guy who claims to consume so much news media, you sure don’t know much. Like the early combustion engines, a lot of excess heat but not much power to the wheels.

  • avatar
    DeadWeight

    1/2 off Escalades & similar vehicles with 10,000 to 20,000 miles on odometer in next 15 to 20 months.

    • 0 avatar
      frozenman

      I,m with you on this one. When oil reaches bottom I’ll come in to the market with a sector dividend fund and chuckle all the way to the bank while driving my 4 pot. Patience is a virtue after all!

  • avatar
    calgarytek

    If sales of ‘gas guzzlers’ pick up, I wonder what this will mean for sales of used/economy cars.

    • 0 avatar
      petezeiss

      If you want a cheap car with the security of a warranty it’s got to be an economy car. Well, Patriot excepted. I think fuel economy is a secondary attraction at best.

      Nowadays a gas-guzzler is a status symbol that’s unavailable to the budget buyer.

    • 0 avatar
      jimbob457

      Check out GasBuddy.com for gasoline prices in your area. In Dallas right now $2.50 USD per US gallon for regular mogas is higher than at most stations.

      Markets work both ways. Gas prices go up, and folks want economy, and the value of econoboxes goes up. Gas prices go down, and it is just the opposite.

      • 0 avatar
        Lorenzo

        I live in the Peoples’ Republic of California. One lone station in my area has $2.80 for regular, but the average is over $3, and the highest is still $3.55! Texas doesn’t have those “unique” Summer-Winter formulations.

  • avatar
    TW5

    Falling gasoline prices will probably have an impact on truck and SUV sales, though the statistical noise from the new F-150 may distort the actual trend. Low oil prices probably have staying power because oil should never have reached $100 in the first place. Sinopec should never have traveled the globe on an oil-buying binge. Dumb wannabe traders should never have been pouring money into the USO ETF, and the American people should never have allowed the court-ordered moratorium (effectively) on hydraulic fracking by the 11th Circuit in the early 1990s.

    Anyway, this is a dangerous time for some consumers because low fuel prices will probably increase demand for SUVs and trucks, yet CAFE regulations reduce the manufacturers willingness to sell them. The solution to excess demand and short supply is rising MSRP, and if you check the prices on the latest fleets of fullsize SUVs, you can see the trend had already started when oil was still at $100/bbl. Drunk on the elixir of cheep gasoline, some consumers will undoubtedly be baited into $60,000 Tahoes and $50,000 Expeditions. Unexpected geopolitical instability will be their swan song.

  • avatar
    jacob_coulter

    Oh look, the price of oil is collapsing because of a price war as a direct result of American increase in oil production.

    Pretty basic Econ 101 stuff, and here the “other side” said the price of oil had nothing to do with production, it was all evil bank capitalists speculating, or something.

    Guess the free market, “drill, baby, drill” side was right all along.

  • avatar
    Johnnyangel

    Sure, this is right-leaning TTAC, but even so I’m surprised that there hasn’t been one single comment referencing global warming and its many ramifications, including the oceans becoming ever more acidic.

    It really isn’t about fuel prices or fuel economy per se, it’s about carbon dioxide emissions per mile — which ought to be a metric required to be published in every car ad. I can’t understand why any consumer would be so unpatriotic and uncaring about fellow human beings that they wouldn’t consider this a major concern when purchasing a new car. (And no, I don’t own a Tesla or a Prius.)

    Just maybe Americans will prove themselves to be less selfish and isolated from the real world than you think.

    Now cue the wingnuts who will reply that global warming doesn’t exist or that it has nothing to do with human activities. You’re not fooling the rest of the world and you likely don’t even believe your own s**t.

  • avatar
    jacob_coulter

    Oh look, the price of oil is collapsing because of a price war as a direct result of American increase in oil production.

    Pretty basic Econ 101 stuff, and here the “other side” said the price of oil had nothing to do with production, it was all evil bank capitalists speculating, or something.

    Guess the free market, (drill, baby, drill) side was right all along.

  • avatar
    el scotto

    Most folks understand that if they get a Canyonero or Thundebolt-Grease-Slappper; their gas mileage isn’t going to be that great. A raise in gas prices will take money out of their pocket. (DUH). As for the Middle East mess, I blame Lord Balfour. It’s Friday, I need a whisky & soda please.

  • avatar
    Jeff S

    @highdesertcat–I watch Nightly Business Report as well and read The Week. I don’t see cheap oil lasting indefinitely nor do I see $5 to $6 a gallon gasoline. Cheap oil is more of the Saudi’s driving competition out and less demand on a global market with Europe and Asia still in a recession.

    It is very short sighted to assume that long term oil will continue to go down and then go out and buy a vehicle that is less efficient because of lower oil prices. Your better to buy what you need and like for the long term and keep it unless you can afford a newer vehicle every few years. Unless you are in sales it doesn’t make sense to buy a vehicle just for status. Why impress someone unless you have to. No wonder people don’t have any savings if they are constantly buying a vehicle based on the price of gas–false economy, false savings.

    • 0 avatar
      highdesertcat

      Hey Jeff S, I’m afraid my car and truck buying days are coming to a close, and frankly, I have never cared about the price of gasoline because I need it to get around. Always have and always will.

      I had to buy a few cars for “status” like my wife’s 1992 Towncar she needed to show clients real estate properties. Today we’re down to the 2015 Sequoia Platinum 4×4 the business bought for my wife, and my 2011 Tundra. I do intend to buy a 2016 Tundra 5.7 4-dr 4X4 but it doesn’t have to be in the top trim.

      We gave my wife’s 2012 Grand Cherokee to our 23-yo grand daughter to use, after we sold her 2011 Elantra. And the 2008 Highlander we gave to our 17-yo grand daughter to use, because for her to be seen her mom’s Odyssey was just not cool at High School.

      So I wouldn’t say that I, or people like me, always buy for status. Most of the time we buy what we can afford. I do believe that even with lower gas prices, Joe Sixpack and Sally Homemaker will continue to buy what they would have bought even if gas prices remained high.

      Even during the times when gas prices were high, people still made the F150 and Camry the best sellers in America. That wasn’t status. That was buying logic, for them.

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