Tuesday, May 16, 2006

Gas Crisis? What Gas Crisis? Newsweek Magazine on America's Counterintuitive Fuel Consumption Patterns

Newsweek's got an intriguing article on the American consumer's incredible demand for gasoline, complete with some counterintuitive statistics. It turns out that while sales for some hybrids are falling, some big SUV models are flying off the lots:

Grousing about gas prices has become our new national pastime. As it turns out, we're griping while we guzzle. Since Katrina gave us our first $3 pump prices last fall, gasoline consumption in this country has actually risen, confounding the energy experts who recall how much we throttled back on our gas usage following the '70s oil shocks. Where are we burning all this gas? In big, powerful cruisers. One in four new models today comes equipped with a gas-thirsty V-8 engine—which is unchanged from last summer, before gas prices spiked, according to new data from J.D. Power. And some of the best-selling rides on the road today are GM's trio of beefy new SUVs—the Chevy Tahoe, the GMC Yukon and that blingy 'Slade, which saw its sales surge 127 percent last month. Meanwhile, last year's "it" car, the hybrid, is becoming a harder sell. Sure, dealers are still selling out of the Prius, but sales of the Honda Accord hybrid plunged 69 percent last month and Ford had to resort to a zero percent financing deal to jump-start its Escape hybrid. For all their megawatt buzz, hybrids still account for just 1 percent of U.S. auto sales and are outsold by SUVs 23-1. "Not a lot of people are jumping up to pay $3,000 extra for a hybrid," says Memphis Toyota dealer Kent Ritchey. "For $3,000, you can buy a lot of gas." Detroit once thought $3 gas would be our ultimate pain threshold, forcing us to finally give up the keys to our big rigs. But it turns out our oil addiction is harder to kick than anyone expected. Although pump prices have nearly doubled in the last three years, we're driving more than ever. Today's cars average 12,190 miles on the road annually, up 24 percent from 1980, according to federal statistics. And the models we buy now have more horsepower and heft than those of a generation ago, which explains why gas mileage is headed in reverse. Today's new cars and SUVs average just 21mpg, down from 22.1mpg in 1987. When it comes to paying up at the pump, Americans have proved they can rationalize just about anything. "When prices are lower in June," says energy analyst Tom Kloza, "people will brag, 'I got my gas for only $2.75'." Now Detroit is recalibrating its threshold. The new CW: "Prices have to get to $4 and maybe even higher—and stay there for at least a year—before we'll see a substantial shift in what we drive," says J.D. Power's Tom Libby.
Oh boy, $4.00 a gallon! We've been hearing about how strong this economy is, with strong productivity keeping the expansion alive, and so forth. Perhaps people drive and drive until they literally can't drive any more, financially. Or perhaps, the cost/benefit advantage of driving those hybrids isn't that compelling yet? Who knows? While you got to love the American consumer, I'm looking forward to a drop-off in this profligate petroleum purchasing -- then maybe my family's gas bill will go down!

1 comment:

Steve Landis said...

Isn't it possible that the continued or even increased sale of these SUV's can be attributable to favorable tax rebates? The cost / benefit of hybrids certainly has kept their increased use down but that appears to be changing.

I noted earlier that I was not seeing comments. Clearly I should have looked more closely.