Car Companies Pay The Price For Higher Gas Prices

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Americans have several options to fight high gas prices. They can stay at home, use public transportation, join car pools, shop online, or buy new fuel-efficient vehicles. Auto manufacturers have also raised prices recently because of higher metal costs.  A demand for cars and light vehicles should be slow during a recession because consumers are reluctant to take on additional debt.

It turns out that Americans would buy new fuel-efficient cars in great numbers–if gas moves well above $5. That rise seems less likely each day. So does more strife in the Middle East or another deepwater leak, but neither can be ruled out completely.

A new Gallup poll shows that “Americans are most likely to say they would seek vehicles that get better gas mileage if gas prices keep rising but don’t go above the $5-per-gallon range.”

Car sales in the US should slow this summer. Part of the reason is that people are still concerned about their economic well-being and it would take a great deal to offset those fears. Maybe the need to save gas money would change the the fortunes of the auto industry, but gas prices may actually back down from $4.

The oil price rally has turned into a retreat. That may be because it moved up so quickly. Perhaps the price increase curtailed demand.  OPEC says it will not raise production, so supply does not seem to be a reason. Gas prices in the US may fall further if Americans reduce their driving as a result.

Gas at $5 may be the only thing that brightens domestic car sales this year, but it is a long shot

Methodology: Results for this Gallup poll are based on telephone interviews conducted May 12-15, 2011, with a random sample of 1,024 adults, aged 18 and older, living in all 50 U.S. states and the District of Columbia.

Douglas A. McIntyre

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