Car Companies Pay The Price For Higher Gas Prices

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