The Oil and the Glory

At $4 a gallon, Americans again shout, ‘I’m fed up’

At $4 a gallon, Americans again shout, ‘I’m fed up’

A long-awaited threshold appears to have finally been reached in U.S. gasoline prices — the point at which Americans say "enough." And it is strikingly similar to the last time they did so. With average gasoline prices at just under $4 a gallon, American car-buyers — just as they did in 2008 — have begun to veer away from gas-guzzling SUVs, and sharply toward efficient vehicles, including much-derided electrified cars.

This inflection point diverges from the conventional wisdom, which is that, four years after enduring $4 gasoline for the first time, Americans are inured to this striking point. Which price would turn their heads — $5 a gallon? $6? — was anyone’s guess.

Instead, there still appears to be something important about the number 4, according to vehicle sales reported this week. What does it mean? To the degree that prices stay there, overall U.S. gasoline demand will continue to drop, and the country’s economics improve. Will we see the emergence of heretofore unseen American tastes, such as a sudden embrace of motor scooters — in England, motor scooter sales are surging with gasoline prices verging on *gasp* $9.50 a gallon (pictured above, city transport in Ho Chi Minh City).

For now, it is simply more fuel-efficient four-wheeled vehicles. Consider: Last month, cars achieving 30 miles or more a gallon comprised about 44 percent of GM’s sales of 231,00 vehicles, which was a record number for the company, reports the Wall Street Journal. Sales of Toyota’s hybrid Prius leapt by 54 percent compared with March last year, to a record 28,711 vehicles. Sales of the GM Volt, the punching bag of the Republican Party, soared to a record 2,289, about 50 percent higher than December, the previous high-sales month. All in all, electrified vehicles were the leading growth sector of U.S. car sales in the first quarter of the year, according to Bloomberg, jumping by 49 percent to 117,182 vehicles.

As a result, GM — which had halted production of the Volt for five weeks because of poor sales — is lifting the stoppage a week early, and will resume making the car April 16.

This replicates what we saw in 2008, when oil prices rose to an all-time record of $147 a barrel, gasoline prices to about $4.11 a gallon, and the sale of SUVs and mini-vans in the U.S. plunged. Mind you, it did not mean that Americans abandoned their SUVs, trucks and mini-vans — a cruise down any U.S. street or highway then or now reveals that these large vehicles are America’s transport-of-choice. But there was a shift.

With the latest average price at $3.93 a gallon, sales figures show a similar trend. But this time, carmakers reveal an exercise of foresight: The gigantic Ford Explorer — probably the symbol of gas-guzzlingness — now gets 25 miles to the gallon. With the edge off gasoline anxiety, Explorer sales rose by 6 percent from a year ago, to 13,212 vehicles, the Journal reports.

In 2008, the figures appeared to show that gasoline not only had to reach $4 a gallon, but they had to stay there; once prices dropped, Americans forgot their love affair with smaller cars. This time, vehicle-makers themselves are offering higher mileage.