Don’t tell the car industry about oil dropping from $78 a barrel to $52. They aren’t buying it long-term.
A survey of 100 power-train experts, including CEOs, by University of Michigan Transportation Research Institute (UMTRI) found a consensus that gas is going way, way up. To $4 by 2010 and $5 by 2020.
The stock market currently appears to be betting that oil prices will drop, or, at least stay stable. Large oil company stocks have continued to drop for several weeks marking down shares of Exxon (XOM), Chevron (CVX), Conoco (COP), and BP (BP).
Fuel prices at over $4 a gallon would clearly mean that Detroit firms like GM (GM) and Ford (F) will need to step up their migration from large SUV and pick-up heavy product lines to more fuel efficient cars like those offered by Toyota (TM) and Honda (HMC)
At $5 a gallon, that would put oil at $100 a barrel or so? Looks about right.
Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.