Despite the High Price of Gas, Americans Still Not Sold on Fuel-Efficient Cars Despite the High Price of Gas, Americans Still Not Sold on Fuel-Efficient Cars
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Despite the High Price of Gas, Americans Still Not Sold on Fuel-Efficient Cars

by Andrew Price

April 3, 2011

So with gas prices pushing $4 per gallon in many parts of the country, America must be snapping up fuel-efficient cars, right? Not so, according to USA Today:

With regular gasoline now averaging $3.60 a gallon nationally—up from a 2010 average of $2.84—car buyers are thinking more about fuel economy than they were last year. But replacing a large vehicle with a much smaller one is further than many buyers are going.

Hybrid sales actually shrank from 2.9% of new vehicle sales in 2009 to 2.4% last year. Sales of light trucks—pickups, SUVs, crossovers, minivans—rose to 51% from 48% in the same period.

Sales of fuel-efficient cars are so slow, in fact, that car companies are worried about meeting the requirement of a fleetwide average of 35.5 miles per gallon by 2016.

So what's the problem? Well, there are at least two. One factor is that, because gas prices fluctuate so much, people don't see these high gas prices as the new normal, they see them as a temporary discomfort. And a related problem is that we have short memories. By 2009, the "pain at the pump" of 2008 is long forgotten, even though more pain is right around the corner in 2010 and 2011. The result, as a researcher at IHS Automotive said, is that "the American consumer will buy small, more fuel-efficient cars for literally three to four months. And then three or four months later, we go right back to buying big cars."

My suggestion, which I've mentioned before, is a dynamic tax that adjusts to keep the price of gas above a certain floor, maybe as high as $4 per gallon, so consumers can start thinking about their car- and house-buying decisions with the benefit of some certainty about the price of gas.

Photo (cc) from Flickr user George E. Norkus

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Despite the High Price of Gas, Americans Still Not Sold on Fuel-Efficient Cars