Retail gasoline prices in the U.S. peaked back in July at $4.17 a gallon. (Source: EIA). At the end of 2008, gasoline had fallen to $1.67. We typically use about 140 billion gallons of gasoline each year, so that $2.50 drop amounts to an annualized difference of $350 billion in the pockets of consumers – and into the U.S. economy instead of the economies of Saudi Arabia and Venezuela. Add in the drop in diesel, home heating oil, and jet fuel and you are looking at half a trillion dollars. And while I am strongly in favor of raising gasoline taxes to reduce our fossil fuel consumption (and demand has been sharply down as a result of high prices), the economy can certainly use this sort of stimulus right now.
But in the long run it is very important how people use that money. And we seem to be reverting to bad habits. How quickly we forget $4 gasoline:
NEWPORT NEWS – It looks like the Highlander is in and the Prius is out — for now at least.
Trucks and sport utility vehicles will outsell cars for the first time since February, according to a December report by Edmunds.com, which tracks industry statistics.
“Despite all the public discussion of fuel efficiency, SUVs and trucks are the industry’s biggest sellers right now as a remarkable number of buyers seem to be compelled by three factors: great deals, low gas prices and winter weather,” said Michelle Krebs of AutoObserver.com, a division of Edmunds.com, in a prepared statement.
And the punch line:
The surge in SUV and truck sales suggests that the issue of fuel efficiency has faded in the minds of many consumers.
Toyota has already slowed production of the industry’s flagship hybrid vehicle, the Prius, due to lack of interest and a growing inventory of the once best-selling model, Edmunds.com reported.
All this might mean a setback for fuel-efficient models that were heralded as a remedy for the country’s addiction to oil.
If people are going to flock back to gas guzzlers instead of using their extra pocket money to pay down their debt, then I would rather gas prices go ahead and recover. Based on the trends in vehicle sales, I am sure I will see that wish fulfilled before too long.