High Gas Prices Having a Different Effect on US Drivers This Time
High Gas Prices Can't Be Seen as Temporary AnymoreSometimes the same circumstances can produce different reactions. The first time that gas prices spiked in the past decade, after hurricane Katrina and the big commodities boom up to the 2008-2009 financial crisis, US drivers became paralyzed. Until that point, they had been gorging on gas guzzlers, and they didn't want to stop. Even those that wanted to switch to more fuel efficient vehicles didn't have that many choices (the US wasn't exactly known for its quality fuel-efficient small cars at the time), so most people delayed purchases, complained loudly about gas prices, and hoped that prices would fall.
They eventually did, but only because of the Great Financial Crisis. Once the initial shock passed, oil prices started to climb again, and it now seems like this has been going on for long enough to convince US drivers that this was no temporary anomaly, but the shape of things to come.
Rising gasoline prices have gone from bane to boon for the recovering U.S. auto industry. In 2008, U.S. gas prices hit a record of $4.11 a gallon and contributed to Detroit’s downfall, as truck and sport-utility vehicle sales collapsed. With gasoline again approaching $4, buyers are returning to showrooms to replace old guzzlers with new, fuel-efficient models.
“It’s really astounding that you’ve gone from $4-a-gallon gasoline devastating sales to $4-a-gallon gasoline supporting sales today,” Mike Jackson, chief executive officer of AutoNation Inc. (AN), the largest U.S. car dealer, said in an interview. “This is a real change in consumer behavior that puts us in a much better place than where we were in 2008.” [...]
“The impact of $4-a-gallon gas on the sales rate is neutral to a slight positive,” said Brian Johnson, Chicago- based auto analyst with Barclays Capital. “It certainly doesn’t seem to be paralyzing the consumer this time.”
Even truck buyers now care a lot about fuel economy. For example, Ford now sells more F-150 pickups with V-6 engines than with fuel-thirsty V-8s. Until the 2011 model year, Ford didn't even have a V-6 engine available in the F-150 (since 2008).
© University of Michigan
As you can see on the graph above (which is taken from this post), there's been a pretty significant spike in the average fuel economy of new cars sold in the US recently. It even breached 24 MPG for the first time ever.