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Politics : View from the Center and Left
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To: Lane3 who wrote (64003)5/7/2008 10:54:24 AM
From: slacker711  Read Replies (1) of 542617
 
Trouble is, this has happened before. We saw the same thing during the last gas crisis. That was in the days before SUV's. But then the crisis was over and people reverted to their old gas guzzling ways.

I think that changes in price expectations happen slowly enough that consumers arent going to react quickly to a drop in prices. That is certainly how it has played out on the upside as sales of SUV's continued to do well even after prices had risen. However, you are obviously correct in that any prolonged drop in prices will eventually bring people back to gas guzzling cars.

My hope though is that this period of high prices will make a difference on the production side. The increased R&D dollars going into green technologies should accelerate the development/deployment of alternative energy sources. More concretely with respect to automobiles, I expect the premium on hybrids to drop drastically as manufacturers continue to ramp volumes. If you get the hybrid premium down to something like $1500, you can justify the expense at half the current gas prices. Toyota's goal is to have an all hybrid fleet by 2020. Consumers might go back to buying SUV's, but they are very likely to be substantially more fuel-efficient SUV's.

Slacker
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