If gas prices keep dropping, will we keep buying small cars?
It figures. After months of waiting, I finally get my hands on the super-frugal 2007 Honda Fit, and what happens? The price of gasoline drops like a sack of crap. Today I paid less than $3 per gallon -- I can't remember the last time gas prices were this low in Los Angeles. Not that I'm complaining, mind you (much as it may sound that way).
Matter of fact, BJ Killeen and I got to talking about what would happen if the price of gas dropped all the way to $2/gallon. Not long ago, I reported that more than half of Honda Fit buyers in the US were trading in a mid-size or larger vehicle. If gas prices were to drop by a third, will America's new-found small-car fever stick -- or will we go back to buying big cars and SUVs? Personally, I think we'll go back to our big-car habits. What do you think? Click the "comments" link and tell us. -- Aaron Gold
Photo © Aaron Gold -- for more on the Honda Fit, read Colin Hefferon's review of the 2007 Honda Fit Sport
Comments
I don’t think it’s really so much about the price of gas anymore, people are becoming more concerned about the effects of the gas guzzlers on the environment for one. Another important consideration is that people are being forced to realize that gas prices MAY continue to fluctuate and maybe they can’t afford to have that happen. Small is nice, at least when cars come into play. Plus, so many auto-makers are introducing suv/van/crossover vehicles that fill the spot of the aging SUV. Just my $.02 and a hopeful one at that.
In Frisco, TX where I live people are still buying the Hmmers, Lexuss, Mecedess, BMWs.
I think small car and hybrid sales will continue to stay steady. The gas prices have planted a seed of fear in most middle class consumers. The possibility of that blossoming into high gas prices (once again) is enough to keep the consumers on their toes.
We must not forget it was not long ago that prices per gallon were $1.50 and $2.00 was considered a rediculous price. Oh, how conditioned we are, no.. what suckers we are, to now think $2.00 is cheap.
What is really needed is a better choice of more fuel efficient (read: 30 mpg real time)cars, suvs, trucks.The technology (non-hybrid) is there; but the will of the car manufacturers are lacking.
I hope that americans will use more than one reason to maintain the efforts of energy conservation. We also need to remember our enemies of our freedom control the oil. The more we spend, the more money they have to finance terrorism. Driving a more efficent car can speak loudly that we value our freedom. Lets not forget the environmental impacts too. I think there is a big discussion on global warming that should make us take notice.
There’s also that little matter about smaller cars being more fun to drive. And the new crop of small cars have the high-up seating that some folks crave, so they can have that AND some fun AND the ability to easily park in a crowded parking lot.
Enemies of freedom? Like Canada, Mexico and Venezuela? They are our #1, #2 and #4 sources of oil imports respectively, and together account for well over 3x the oil we import from Saudi Arabia (#3) and nearly 8.5x the oil we import from Iraq (#6).
First of all, your math is wrong. Going from $3 to $2 is a 33% drop, not 50%.
Yes, as long as there’s gas at any price, people will still buy the gas guzzlers. Worry when it becomes a problem.
It doesn’t matter who we import from, it’s a global market, that is totally irrelevant. THe more we drive the demand for oil worldwide, the more prices will increase and the more all oil producers will be able to profit such as Saudi and Iran who I think are the top 2 exporters. And BTW Venezuela is no friend to this country either.
i really dont think that the gas prices will drop down to what they used to be, but they will certainly increase in the years to come, i really dont care what the scientists or whoever say, im getting ready for the worst.
DOH! Jack, thanks for the heads up – numbers corrected.
The environment is a huge political issue in areas such as the People’s Republic of the West Coast. Yet, cars are the only mobile “status symbol” we really have so I think it’ll still come down to money; who wants to flaunt it. As for me, I’ll keep my paid-for 2002 Altima and 30 mpg freeway…
After buying my kids a 2006 Honda Civic EX-Navi in February, I can’t remember being so impressed with a new car. The Civic is averaging 34 MPG in combined City/Highway driving. It has sensational looks and seats 4 adults in true comfort. I am seriously considering trading my Lexus RX-300 for a 2007 Civic. Why? It’s a combination of Honda’s truly remarkable new car, the desire to use less fuel – not because of cost, but to help reduce pollution and help our country become less dependent on foreign oil. My hope is that each and every car-buying American will wake up and follow Europe’s lead toward today’s excellent small cars as our only viable option.
I would hope people would continue to buy the smaller cars, even if the price of gas comes down. If we do that we will never have to worry again. Gas will be plentiful & more than likely will come down even more. We will end up with a glut. Watch how that gas comes down to $1.00 gal. America should be as smart as the oil companies.
The price of a gallion of gasoline is related to the amount of oil reserves to production. When the price of a barrel of oil if low, there is no economic incenitive to search for new oil fields. But now with the price of a barrel oil in the $60-70 dollar range the equation has changed and oil companies will start plowing their recent profits into the search for oil. Geologists estimate that the present known reserves are about 1 trillion barrels of oil and that there is still about 1 trillion barrels of oil to be find. Perhaps think small gas efficient cars in the short term, but the large people hauler family car will be around for a long, long time.
I still believe Americans have poor memories…if gas gets down to $1 a gallon, you’ll see big SUVs take up residency again in garages all over the country.
The low prices are not going to last!
I remember 0.45/gallon when Dad filled up the wagon.
price is going up forever. Gas will be around for another 20 plus years. Just who can afford it then. My guess is California or Massachusett will be the front runner in advancing transportation technology. Best area for technological expanse would be in an underdeveloped state were land is still untouched and a unique metropolis is constructed around the transportation grid. Where communiting would be out the door and walk within 5 minutes to a S.M.A.R.T. subway or S.M.A.R.T. carpool bus(Suburban/Metro Artifical Remote Transportation). Where S.M.A.R.T. tickets can be printed from an online service or at a station. Surface bus would use road proximeter guidance to bus stops. Solar grid to charge up bus as it waits to depart every 10 minutes. Homes would also have daytime solar power for general use and designated power from electric company for essential use like medical and food refrigeration. These “Starlight” cities would be connected with bullet trains. Why do people like to commute 30 to 1 hour plus to get to work. Why do we build eight lane highways. Dependant on foreign oil is one thing, paying them because we are thirsty($3.78+/gallon) is another. My guess is:
24% of the population is willing to pay $5.00/gallon two years from now. 4% don’t care because mass transit is already there cup of tea.
37% will wait for new technology to rollout 24 years from now and still drive that 2006, 34 mpg car into the ground.
22% will be using some alternative non-fossil fuel vehicle in 3-6 years.
2% of the population that still is of age to drive will move into inner cities and live in community style living.
7-8% will choose not to commute by car/bus but by bike or scooter.
And last the bottom 2-3% will still fly on 1 of 3 airlines in the U.S. due to zoning restrictions.
American Auto Industry has hurt itself by not seeing what the short future will be doing to them. The best time for the big 3 to go back to the drawing board and survey the buyers to see what they want and build in the near future 1-5 years in a vehicle. Populous, would say “I am going to wait to see what the gas price will do in the next year and then I will decide my purchase and my vacation”. Why buy something I can’t sell later? Maybe the big 3 should build disposable cars. Personalize the top for the owner. The chasis and motor can be recycled. Or trade you old in for a new every 10,000 miles. Or maybe big 3 can come up with the urban vehicle of choice: horse and wagon replacing the HUMMER.
I work in the petroleum industry. Products derived from a barrel of crude will never come down significantly. They’ll fluctuate to make us feel good but that’s it. Home heating oil, plastics, synthetics of all kinds, and gasoline will always rise as long as the profits are staggering. And no supplier (Exxon/Mobil, Shell, etc) will ever give those profits up. Why not emulate Brazil? They are oil independent since they concentrate their efforts on ethonal powered cars which are made in the USA. Their crude is refined for some gasoline, lubricants and other by-products. America can’t do that? The USA is being swallowed up in its’ own greed. Moderation is a thing of the past. Drop the price of a gallon of gas and the SUV will once again reign supreme.
I’m sure there will be some people that will switch back to larger vehicles. Most of that will depend on the size of the families I would guess. The majority of people that switch to smaller cars will have 0-2 children, or empty nesters. The rest of us will continue to buy and drive either vans or SUV’s. Probably half of my friends have 3 or more children. We have five, so smaller is not an option for us. We just “bite the bullet” and fill ur up. But again, that’s my choice. Even when I drive by myself, I enjoy driving the suburban.
Even if GAS PRICES drop,I am planning to downsize. I think the future is to uncertain to be locked into a GAS HOG,
REGARDLESS OF PRICE. I will be going hybrid, I would like to go diesel, but
being in NY(ech!,double ech!) not available.
hybri
I plan on downsizing regardless of how low the price goes. At this point I owe more on my car than it’s worth so I’m hoping it
stays low for 2 or 3 years so I can downsize when I don’t take a big loss. There is always going to be the macho men driving big trucks just to be intimidating. There should be gas prices
based on the mpg rating of your car.
Americans like to ride Big & smooth with lots of room. Sure it’s back to the SUV’s. Myself, I like to spend on things other than gas. Give me a good Civic and a small Pickup and I’m happy
Aaron, exactly how does a sack of crap drop, and why would anyone do that? I’ve never put crap in a sack, much less dropped it.
That said, the law of supply and demand is infallible as a plumber’s crack, Adam Smith’s “Invisible Hand” and all that. No room or time for a full economics lesson here, but the oil futures market is definitely affected by changes in supply, whether it’s hurricanes in the Gulf–short term–or oil finds there–longer term.
As as the price of oil falls, so will gasoline as one company lowers its prices to gain a competitive advantage and another follows suit to stay competitive. I’m sure that the fall of gas prices by 50 cents in my area wasn’t altruism on the part of Exxon/Mobil.
On the other hand, it could just be a conspiracy to help the Republicans in the upcoming elections!
Aaron, where will you be when the lights go out? When will the world wake up that burning invaluable petroleum products is not the answer? We had better start looking for alternative answers. Anyone read about the big oil find in the deep water Gulf of Mexico recently? Yeah, this “pool” is supposed to contain 15 billion barrels of oil! Of course the US currently consumes 8 billion barrels a year but hey, thats close to a whole 17 months worth! I mean shucks, we can turn it all into gasoline (not) and burn it into the atmosphere and not worry about it or our children’s future or the legacy we are leaving. I never hugged a tree in my life but when are we gonna wake up?
Wait until the November primaries are over.
Well, Gerry, your figures differ from what I have. If one follows what you say, since this is said to increase world production reserves by about 3 percent, we should be completely out of oil in about 30 years. Not one drop more. Of course, we were supposed to run out of oil by 1910 or so, so I guess you may be right.
You Caliornians have it hard. $3?!
the profits made by oil producers is not necessarily used to finance terrorism. the profits are also lent to the US govt to finance the ridiculous defecit that the current administration has created. regardless of the price, only a moron would drive around a city or a suburb (where the VAST majority of people in the US live) in something as environmentally destructive as a hummer, ford expedition etc. Unless one lives in the wilds of wyoming or montana, get real, get over the macho bull of swanning around town or to the beloved mall in a truck.
I wish consumers will learned. Is it coincidental that gas prices are dropping dramatically just before the elections? The consumers have been on a gas hog binge for well over a decade now, and none of it makes any sense. Follow the herd mentality. It is amazing all the people who love the great out doors, clean air, water, protected plant life, yet continue to buy poluting gas guzzelers not only for cars, but boats, ATV’s etc.
We have never owned an SUV, only minivans (Chrysler/Dodge mostly). We have traded the minivan in for a 4 cylinder, 5speed Mazda5 that seats our family of 5 just fine. We’ll deal with less space. Why haul around an extra acre of vehicle 80% of the time when you only use that space 20% of the time? We just pack less and deal, it’s that simple. I’ll take my 8 mpg increase, thank you.
We will always revert back to buying the SUV guzzlers when the cost of gas is low. Most people just don’t care and WANT what they want, regardless of the consequences. These ‘greenhouse’ gases everyone speaks of came from the early industrial revolution and very early vehicles that ran pig rich with no emissions control. We are so much cleaner now (vehicles, industry), it’s hard to believe that we will effect the earth negatively even burning all the fuel we do. Maybe we’ll all stop buying gas for one day and really impact the gas companies with a surplus, that’s something I’d like to see, but it’ll never happen. $2.00 per gallon is the norm now, we better get used to it.
I am glad I kept my 1972 Volkswagen Super Beetle because that is my primary means of transportation – was paid for when Nixon was president and still gets 30mpg with just under 1/2 million miles on the odometer and still going…buying that car cost me only $2100 new and than is the best money I spent.