High Gas Prices

$5.50 per gallon?

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Almost as fun as speculating on when the Dow will hit a new all-time high is trying to find the American driver's latest pain point on the price of fuel. Here in the Los Angeles area, we have been paying over $3.50 per gallon for the cheap stuff for several months now-and here comes summer and traditionally higher prices.

And I couldn't be happier. As mentioned in earlier posts, I was transferred across the pond to work with the European automobile manufacturers a few years ago. It was during that time that I realized just how out-of-step the average American vehicle driver was with true global realities. It seems ingrained in our psyche that the most (read: largest and strongest) vehicle for the money is always the best. I assume this is a by-product of the migration across the U.S. back in the 1800s-that there will always be more land to enjoy just over the next ridge. Wide open spaces. "Go West, Young Man."

Toyota Fine-X Concept Fuel Cell Vehicle

The highly taxed price of fuel in Europe has lead to a demand-driven auto market that naturally rewards economy and efficiency. Drivers in Europe have no choice but to be much more realistic with their needs and buy vehicles that satisfy them. Little is wasted ... especially at $7.50 or more per gallon.

The U.S. Senate Commerce Committee recently voted for new CAFE standards that require all vehicles to average 35 MPG by the year 2020. While this is an admirable goal on the surface, it is not "market demand-driven" and will encounter plenty of resistance from the manufacturers as well as many economists. Get ready for much whining from the industry, while loopholes are quietly agreed on that undermine the respectable goal of creating a more efficient US vehicle fleet.

The only thing that will truly help this country reduce its dependence on oil is a further escalation in fuel prices. Not a happy thought ... but a painful reality. The U.S. energy market has been sheltered for far too long by politicians unwilling to raise fuel taxes to temper demand, and it now looks like the rest of the world is going to do for us what we are still unable to do for ourselves.

Know someone in the market for a new vehicle? IntelliChoice's Cost of Ownership ratings, which include projected Fuel Costs over 5 years of driving, suddenly make more sense than ever.

Posted on 2007-05-14 | Permalink | |

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