Will the consumer expect more fuel economy from here on out even with gas prices lower?
In the past, Americans have paired fuel economy with a tiny car, a smelly, noisy diesel, something less desirable to drive. Americans like big cars.
Take the new Camry Hybrid for example. It's a big car that gets economy car gas mileage. We have proof that a big car, with a decent price point, can get good gas mileage.
Even in the face of declining gas prices in September, sales of Toyota vehicles were led by smaller models such as the Prius, Corolla, Yaris and Scion cars. http://www.bloomberg.com/apps/news?pid=20601087&sid=aMC5g_9REWR4&refer=home
The dual-hybrid transmission is on the horizon for the big GM trucks and for BMW and Daimler-Chrysler applications. It will be interesting to see how these vehicles play out with consumers.
According to a recent Gallop poll:
...42% of respondents agreed with the statement that the Bush administration "deliberately manipulated the price of gasoline so that it would decrease before this fall's elections." Fifty-three percent of those surveyed did not believe the conspiracy theory; 5% said they had no opinion. http://www.usatoday.com/money/industries/energy/2006-09-25-gas-poll_x.htm?csp=15
The president’s approval rating us usually closely tied to the price of gasoline http://www.usatoday.com/news/washington/2006-09-20-bush-gas-prices_x.htm, but not in this case. It hard to believe that any one man could manipulate a huge global economy, but could a market force that is tied to the values of one man change the course of oil events? In politics, perception is truth. Almost half of America thinks so.
Political perception and new buying trends appear to be changing the market even in the face of lower gasoline prices.
It's probably a combination of things --some that Bush/Cheney have control over, and some that they don't.
Is is logical that the Bush Administration would want oil prices to drop before elections? Yes. Do I think they did some behind-the-scenes arm twisting with their oil buddies to try to get prices down? Yes. Did they luck out with a quiet hurricane season? Yes. Did high gas prices force Americans to conserve? Yes.
Do I think consumers will expect more in fuel efficiency from here on out? Depends. If nothing major happens to pump prices up next year, then I think America will go back to its wasteful ways. If on the otherhand we see another major spike, I think it could affect the psyche of the consumer for several years to come...which is actually a good thing.
I am a cynical optimist on that take. I think it's hard to ignore your neighbor getting 50 mpg with a normal sized car. I am on Long Island right now visiting family for a memorial and I tell them all, I got 52.3 mpg in stop-n-go NYC traffic with my hybrid. It probably gets annoying.... but hey
And speaking from the middle class, wages are eroding so people are looking for ways to economize. A smaller car is the best way to do that.
It will be out of necessity in a contracting/competitive middle class economy that people will seek to use less gas and drive smaller cars, thus depressing the price of gas. The question is what will that price will be in the future and how does that correlate to the desire to reduce consumption.