Excuse me, Mr. and Mrs. Consumer, but may I have a word with you?
I couldnt help noticing you over at the auto lot. You gave a quick once-over to the high-mileage sedans but lingered quite awhile by the SUVs. That concerns me.
I know whats going through your minds. Average gas prices have fallen below $1.80 per gallon. The automakers are splashing out incentives to move the sport-utes off lots where they have been hanging around like unwanted in-laws since last summer. Youre figuring, maybe that gas price spike last summer was a fluke, the oil market is settling down, and its time to spread out on the road again with a 4 x 4.
Youre not the only ones figuring that way. The Chicago Tribune reported Friday that GM has ordered overtime for workers at the plant making the biggest honkin SUVs in GMs fleet: Yukons, Tahoes, and Escalades.
Dealers here and there are reporting that SUV sales have ticked up a bit.
Its certainly not springtime for big, thirsty vehicles. And it may never be again. The chastened Big Three CEOs who came hat in hand to Congress last week surely know by now that wagering their companies futures on oil prices staying low indefinitely is a suckers bet.
Which is why you ought to be careful about going back to your old road flame with the 10 cup holders and the abysmal fuel economy. The long-term oil price trend is still pointing upward. As the head of the International Energy Agency said in China the other day, the era of cheap oil is over.
The recession is reducing demand, but long-term growth in oil demand is still in the cards. In the meantime, the production outlook is not promising. Look for accelerating output declines from older oilfields. Private oil companies, IEA says, face dwindling opportunities to increase their reserves and production. State-owned companies holding the biggest reserves may not be willing or able to invest in big production boosts.
So, Mr. and Mrs. Consumer, are you really sure about plunking down money for that big rig? Those sedans on the other side of the lot, especially the ones getting 30-plus MPG, sure look shiny and cool to me. Please, go take another look. For your sake and the country's.
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