From my window I can see the price sign of a gas station, so I'm usually up on where gas prices seem to be headed. There was a recent dip that proved very temporary, and prices now are about 30 cents higher than they were during that dip. Said neighboring station currently shows $3.259.
I wonder how high the price of gas has to rise before people who own monster SUVs like Suburbans and Tahoes regret buying such a thirsty vehicle. And you know, if you follow this blog, that I have less than zero sympathy for those folks, because I regard them as destroying the planet. (Greenhouse gas emissions are directly proportional to gas consumption.)
Statistics show that, when gas prices rise, people are interested in smaller, more economical cars. When gas prices fall again, people go back to disregarding fuel economy when they're car-shopping, and in fact sales of large SUVs rise again. (This has been a problem for Detroit at several periods over, say, the last 50 years: They introduce small cars and then the price of gas falls and they can't sell those smaller cars.)
So we see that car buyers can be very short-sighted. The price of gas may fall but it will certainly rise again, kind of like the stock market. And, like the stock market, I'd wager that, long-term, the trend is upward.
Copyright © 2010 by Richard Stein
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