At what point do consumers look to smaller vehicles?

Discussion in 'Fuel Economy' started by tigerhonaker, May 23, 2006.

  1. tigerhonaker

    tigerhonaker Platinum Contributor

    Tipping Point
    At what point do consumers look to smaller vehicles?

    AutoWeek | Published 05/18/06, 5:06 pm et

    Somewhere between today’s $2.75 or so per gallon and the potential $3.75-per-gallon gasoline up around the next bend, consumer buying habits take a dramatic turn. A CNW survey of changes in buying and driving habits at different fuel price points shows 48 percent of new-vehicle buyers say they will purchase a more fuel-efficient vehicle “immediately” if gas hits $3.75 per gallon. An AutoVibes study from Harris Interactive and Kelley Blue Book confirms the findings in this chart—that as fuel prices surge, buying habits veer sharply toward consideration of more fuel-efficient vehicles.

    Out of a Barrel
    With crude oil selling at more than $70 for a 42-gallon barrel, it’s good for the petroleum industry that it can extract even more in commercial products at the output end of the refinery—nearly 45 gallons according to the American Petroleum Institute’s 2004 figures.

    Funny business? No, just “processing gain,” by which the lighter, less-dense fractions occupy more volume than does crude. Mass is conserved, just like they taught you in chemistry and physics class, but gallons measure volume, not mass—as when making popcorn or ice, the volume expands without changing the mass.
    At $3.75 per gallon, consideration swings to owning fuel-efficient cars like the Toyota Prius hybrid.

    There are trace amounts of additives used in processing; the volumes reported in our graphic are before detergents and octane enhancers such as lead, MTBE or ethanol. Note the industry has some flexibility—in winter months, for instance, refinery output tilts toward home heating oil, in summer toward gasoline for vacationers, but the percentage change is minor.

    Finally, don’t rush to your calculators: Firstly, anything that doesn’t add up exactly is due to rounding of the numerous components; secondly, at $75/barrel, the proportions here work out to $1.66/gallon and diesel at $1.68. That’s the cost for the raw material before taxes (federal is 18.4 cents per gallon on gasoline, close to 24 cents on diesel, plus your state and local taxes), transportation costs, storage, those additives, etc. And before profit margins, of course.
    Oil's Future
    For more on the state of gas and oil in the world today, check out:
  2. Chuck

    Chuck just the messenger

    This is Going to Be An Individual Thing...

    If oil prices make a drastic jump, lots of people would find a way to drive smaller vehicles, bikes, cycles, etc. If they rise slowly, so will the switch.

    The slower the rise, the more time people will have a chance to budget in the gas guzzlers. It might also allow people to trade up from a 12mpg vehicle to say a 18mpg one - still a gas guzzler. Some people are more price-sensitive and will change vehicles.

    For luxury gas guzzlers like the H2, price won't work. They will have to feel frowned on, ridiculed, or uncool enough to change.
  3. Hot Georgia

    Hot Georgia Well-Known Member

    I have the receipt from my first HCH tank, it was $1.24/gallon. 2-1/2 years later it's 2.75.
    I bought it for my 100 mile/day commute and my '94 Dodge Spirit 16MPG was draining.
    I was also willing to change habits. The change was rather drastic.
    Now I can't drive any other way than to be fuel conscious in every choice I make along the way.

    Gas has more than doubled so I can foresee $6.00/g in a few short years, especially since we're not doing anything regarding supply.
    Gas has dropped $.12 in the past few weeks so as history repeats, will soon begin another increase.
    I can't see too many Yukon drivers willing to pay $300 for a single tank, especially with other family expenses.
    If push comes to shove in the Middle East who knows what prices will do?

    Please don't miss interpret my post- I'm far from hoping for price increases.
    If I could roll prices back 3 years ago I'd do it in a second.
    Vehicle buying trends will be forced to change. Slowing down traffic is another matter. After all a car just gets what it gets, right? :rolleyes:
  4. philmcneal

    philmcneal Has it been 10 years? Wow

    if our engines were as efficent as electric motors, I wouldn't worry about price hikes at all!

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