May 21, 2007
WHICH JUST SHOWS HOW MUCH REVENUE WE CAN RAISE:
Not Enough Pain from $3 Gas: Gas prices still aren't high enough to spur the needed transformation of the U.S. auto fleet to much higher average fuel economy (David Kiley , 5/21/07, Business Week)
Gasoline prices have surged more than 20 cents in recent weeks to a record nationwide average of $3.10 per gallon, surpassing the previous record of $3.07 per gallon set in September, 2005, according to the Energy Information Administration. As gas prices rise, owner loyalty in the large pickup and midsize and large utility vehicle segments drops, according to data gathered between February and April of this year by Power Information Network (PIN), an affiliate of J.D. Power & Associates.Owner loyalty is measured by the percentage of owners in any given segment who trade for another vehicle in the same segment. [J.D. Power is a division of McGraw Hill (MHP), as is BusinessWeek.]
"We're seeing a broad, long-term—but gradual—movement to smaller vehicles," says Tom Libby, senior director of industry analysis at PIN. "For example, during periods of high gas prices over the past two years, we've seen movement from larger to smaller SUVs. However, the total SUV pie remains largely intact." Total SUV sales are still strong in large part because of the influx of car-based "crossover" SUVs that get better gas mileage and drive more like cars.
Additionally, sales of small vehicles, including cars and light trucks, as a percentage of total new vehicle retail sales, have risen from 26.3% in the first quarter of 2004 to 31.8% in the first quarter of 2007. That trend is due to consumer demand, which has prompted some automakers to enliven their small car offerings.
That's a start. But most consumers won't trade in their Ford Expeditions, Toyota Sequoias, and Chevy Tahoes until gasoline moves permanently north of $4 per gallon.
If any of the Democrats were serious about greenhouse gases they'd propose carbon consumption taxes to drive prices at least that high. They aren't.
Posted by Orrin Judd at May 21, 2007 9:47 AM
Maybe they won't move even then. Some people actually need a large truck for work or a large station wagon to haul around the family.
Posted by: Mikey![[TypeKey Profile Page]](http://brothersjuddblog.com/nav-commenters.gif)
at May 21, 2007 11:52 AM
We just had our first $50 + fill up. It's interesting to note that in 1972 we spent about $100 in gas driving a large Ford Country Squire station wagon packed with kids and camping gear from Connecticut to California and back.
Posted by: erp at May 21, 2007 2:58 PMIndeed, it's not all about trading in one's cars. It's also about, e.g., living closer to work rather than farther out.
Actual miles driven per driver decreased year-over-year, thanks to these gas prices. A near twenty-year first, demonstrating that people do, in fact, have some kind of short-term elasticity of demand. (And in the long-term even more.)
Posted by: John Thacker at May 21, 2007 4:29 PMIt's not even that, John. It's more about combining trips to grocery store/Home Depot/BestBuy/restaurant and telecommuting than living closer to work. It also means going on summer weekend drives a little closer to home, as folks on Colorado's Western Slope can attest with all the Denverites coming to visit.
Posted by: Brad S at May 21, 2007 7:24 PMI let the SUV go almost empty last week and beat $90.00. Solution: use the rice-burner for everything except hauling one of the boats.
I continue to marvel at the inelasticity of demand for BIG TRUCKS. Not just boaters, all kinds of folks, have them. Often that is their only vehicle, which means high-cost driving for every trip they make.
The point is that for some people, the car is more than transportation, it is spirit, song and power. It is is foolishness to those who hear different music, to those who are content with the poverty of mass life and mass transportation. transportation.
Posted by: Lou Gots at May 22, 2007 12:14 PM