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Home » Auto Ownership

$4 Per Gallon Gas: From Apocalypse to Necessary Evil Tax in 4 Short Years?

Last updated by on 11 Comments

Remember pre-Great Recession, circa 2008, when gas prices shot up from under $2 per gallon to over $4?

People were scared and PISSED! Used Prius’s were selling for over the MSRP of new ones (because you couldn’t find a new one anywhere other than Craigslist). SUV and truck sales plummeted. And anyone who wanted to sell their once-coveted giant SUV in favor of a more fuel efficient ride couldn’t give the damn thing away – like it was some kind of infectious disease. Oh, and we were all on the short path to Peak Oil and the Apocalypse.

New car buyers, at that time, were demanding higher mpg’s. And automakers were caught mostly flat-footed¬† in being able to deliver them, with the exception of Toyota. 23 city and 32 mpg highway, at the time, were considered exceptional.

Yet, buyers intentions were clear. In May of 2008, year-over-year vehicle sales looked like this:

Top selling vehicles that had increased in sales year-over-year

  • Nissan Altima +9.6% (24 mpg city, 32 mpg highway)
  • Ford Focus +29.1% (24 mpg city, 35 mpg highway)
  • Chevy Cobalt +17.3% (24 mpg city, 33 mpg highway)
  • Toyota Prius +22.6% (48 mpg city, 45 mpg highway)
  • Chevy Malibu +22.5% (22 mpg city, 32 mpg highway)
  • Pontiac G6 +22.2% (22 mpg city, 30 mpg highway)

Top selling vehicles that had decreased in sales year-over-year

  • Ford F Series (trucks) -15.5% (13 mpg city, 17 mpg highway)
  • Chevy Silverado (truck) -20.8% (14 mpg city, 19 mpg highway)
  • Dodge Ram (truck) -24.2% (13 mpg city, 17 mpg highway)
  • GMC Sierra (large SUV) -11.2% (14 mpg city, 19 mpg highway)
  • Ford Econoline (van) -21% (14 mpg city, 19 mpg highway)

Then the recession hit. And gas prices dropped 60% to below $2 overnight (quite literally).

Over the next two years (2009-2010) gas prices went right back up to around $2.75-$3 and leveled out. 2011 and 2012 have brought prices up to the mid to high $3′s. And 2012 has seen the return of $4 per gallon. Here’s how the historical price of gas looks over the last 7 years:

historical gas prices

The country’s response a few years ago to the high demand for fuel efficient vehicles brought a wave of more fuel efficient smaller vehicles that are just now hitting the market. The most fuel efficient cars are all hybrids and electrics. There were only a few back in 2008. On top of that, for non-hybrids, the new gold standard is 29 city, and 40 mpg highway – a full 8 mpg higher than just a few years ago.

Sadly, there’s been limited demand for these vehicles, as seen in a list of the best selling vehicles of 2012:

 RANK  VEHICLE                       2012     2011   % CHNG
 1     Ford F-Series P/U          143,827  126,627    +13.6
 2     Toyota Camry               105,405   76,821    +37.2
 3     Nissan Altima               96,360   69,551    +38.5
 4     Chevy Silverado-C/K P/U     95,638   92,455     +3.4
 5     Honda Civic                 77,169   64,968    +18.8
 6     Honda CR-V                  74,587   57,433    +29.9
 7     Toyota Corolla              68,428   76,675    -10.8
 8     Dodge Ram P/U               67,464   52,739    +27.9
 9     Ford Focus                  66,043   37,071    +78.2
 10    Ford Fusion                 63,949   65,023     -1.7

Only the Honda Civic and the completely re-designed Ford Focus come close to 40 mpg hwy.

At the same time, there is hefty sales gains in the biggest gas guzzlers as well. The Ford F series (+13.6%, 17 mpg city), Chevy Silverado (+3.4%, 14 mpg), and Dodge Ram (+27.9%, 14 mpg), are all having banner years. What a difference 4 years makes, eh?

Instead of having the same reaction we had (pre-recession) when prices skyrocketed and we all were looking for signs of the coming Apocalypse, it appears that we have been eased in to a new $4 per gallon norm. $5 per gallon is looming as the economy continues to recover. Gas prices have simply become a “necessary evil” tax for driving around town at 15 mpg’s in 4,500 lbs. of steel.

Consumers have clearly dropped the ball and went ahead and bought the gas guzzlers.

Meanwhile, the near extinct automakers have laughed all the way to the bank as they have been enjoying record profits on the backs of lower worker wages (another story entirely) and more highly profitable truck units being bought.

But YOU are better than that! If you want to ever achieve financial independence, that is.

More to come…

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11 Comments »
  • Jonathan says:

    So, consumers are buying pickup trucks? Do you know that they’re commuters and not contractors and other small business who need the hauling capacity? Maybe the purchase of pickups and other light trucks is a sign of economic recovery (growth of small business) rather than a sign of a broader consumer stupidity.

    • Wizard Prang says:

      That makes sense for folks who need a big vehicle for work purposes, but what about the folks who buy a $40,000 crew-cab 4×4 truck for pose value? They’re easy to recognize – not a stain or a spot, and the load bed looks like it has never been used.

      What about SUVs? And what about the mommies who _need_ 4000lbs of brand-new minivan to cart around <40lbs of kid? Yesterday there were a lot of HUGE vehicles in my church parking lot. Most of them were wants, not needs. And few of them are paid-for.

      The simple fact is that most people love to complain about gas prices, but we don't really want to change anything. We haven't got to that point yet.

      And we still associate BIG with SAFE, with a certain amount of justification.

    • G.E. Miller says:

      The economy was chugging along in the first half of 2008, hence the $4 gas prices. Yet, the purchase behaviors then were towards fuel-efficient vehicles and not trucks, as highlighted. So that would lead one to think it goes beyond business trends.

      Also, all three pickups are in the top 10 of sales. And all 3 are absolute humongous beasts, there are definitely smaller pickups or hauling vehicles (minivans, hatchbacks) out there that get better fuel efficiency.

      I also wouldn’t label the consumers as “stupid” either (although I wouldn’t recommend buying one of those vehicles to anyone). They’ve simply adjusted to the new norm of high gas prices.

  • Melissa H. says:

    Yup, and this is why I’ve kept my ’08 Prius (bought before the Prius craze), and why my boyfriend and I are saving to buy a used hybrid/fuel efficient vehicle for when his poor, ’99 truck finally quits on us (this many years going strong! But it’s a gas guzzler and definitely on its last legs.)

    I wouldn’t necessarily call those consumers who went out and bought themselves gas guzzlers after the recession (if we can call it that? I thought we were still in one…) ‘stupid’, but I would question their short- to long-term memory. I mean, really? I just got a job, but I’m definitely NEVER going back to spending $30 a week on gas, as I did when I had an ’06 Camry! And I’m told by others that $30 a week is cheap, so… yeah.

    Are people really in need of such giant vehicles? Is everyone getting raises I don’t know about? Are people just totally okay with $4 a gallon gas? Have people given up on taking vacations, so they just don’t drive as much? We might need a psychologist to answer these questions ;)

    • G.E. Miller says:

      ’99 truck? That’s like brand new!

      • Melissa H. says:

        I think I’m getting it wrong… the bf may have bought it in ’99, when he was in high school… it was already used. He’s not here to double check with, but I definitely know he bought it in high school (so, years ago) and it was already used… then again, I know how you are about keeping older vehicles, G.E., so that probably doesn’t make a difference ;)

        ’99 or older, in any case the poor thing needs more money put into it now than it’s worth, so we’ll either try to trade it or try to sell it and get money for it to put towards a new (to us), more fuel efficient car.

        You’ll be happy to know he’s strongly considering getting a bike to commute to work… however, we live in Phoenix and his commute is about 20 miles, so I’m thinking this won’t last long when it’s 110 outside!

  • Warren says:

    It’s curious that with the concern about fuel economy that there is not more interest in one specific part of the electric/hybrid cars that could be applied to other vehicles. It’s the regenerative braking. Storing the energy from stopping instead of wasting that energy. Whether it’s generating electricity to store in small batteries or powering up a flywheel, it would make a big difference. Looking at the Toyota Prius in the table, it has better city mpg than highway mpg. That’s because of the regenerative braking.

    The particular choice of technology, as long as it is reliable and safe, wouldn’t make any difference to most people. If it’s compressed air or giant rubber bands, who cares if it works.

  • menorman says:

    After reading this article, I am disappoint. It is made to look like Americans are continuing to gravitate toward thirsty pickups instead of compacts despite the high gas prices, which I think is a very poor interpretation of the data at best. Considering that this year has shown a somewhat sustained uptick in hiring, it seems like the increased truck sales is more related to small businesses improving their fleets. Also, both Dodge and Ford sell a good deal of their trucks as diesels (greater percentage than GM for both), which again supports the idea that businesses are buying, not commuters. Especially since Chevy has a significantly smaller year-over-year growth than the other two. So notwithstanding the drop in Corolla sales, it looks like both American consumers and businesses are both choosing fuel economy when they’re in the new vehicle showroom.

  • David says:

    Humans are notorious short-term thinkers. There has been improvement in a lot of people’s personal economics and they have been waiting since 2008 to buy these cars that reflect their personality. Humans are emotional being before they are logical thinkers.

  • Matt says:

    There is a significant skew to the data. Outside the US you will observe a prominence of diesel as a fuel. If you look at figures for luxury SUV’s in Europe you’ll see they easily get 30+mpg and it is only partially due to improvements in technology, the biggest driver is the fuel type being used. European demands on fuel economy leave diesel as one of the only viable alternatives. Diesel too has changed it’s image with emissions on par with advanced petroleum based engines.

    I dream about owning an LR3 Landrover, but couldn’t justify an 18mpg V8. In the UK I can buy a V6 diesel with the same performance figures (or very close) but that pulls in 35mpg.
    The same goes for pickups over here, very practical vehicles because one vehicle can do many tasks, but unless it runs a high compression high fuel pressure diesel system, forget it.
    When I lived in England I drove a VW Lupo as my run around. This car had a 1.3 litre turbo diesel engine with only 75bhp, but a whopping 150+Ibs of torque for a vehicle weighing little more than a bx of breakfast cereal. It was fast and I could get over 100mpg on a highway run at 70mph.
    Make vehicles like this available in the US and the majority of driving we do can be performed by cars that offer exceptional fuel frugality – albeit to the detriment of vehicle size. Sure, it won’t work for hauling kiddies or a run to pick up lumbar, but it does work for the daily commute of one parent and I suspect it would work for the majority of reasons we have a vehicle, moving one or two people from A to B on a daily basis.

    Incidentally, my other vehicle has been converted to run on Propane and the benefit other than zero particulate emissions are that the price of the fuel is historically much more stable than petrol. Plus, the US has all it’s own propane reserves. A gallon of Propane from the local bbq establishment sets me back $2.75. Petrol is $4.29.

  • Ron Ablang says:

    My next new car (if I ever buy one) purchase will be a hybrid or full electric vehicle. I’m wondering if a hybrid mini-van will ever come out.

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