Gas at $4 a Gallon Will Change Car Buying Habits
Sergio Stiberman, CEO of LeaseTrader.com told CNNMoney.com his prediction on $4 gallon a gas changing buying habits is based on activity at his website, which allows consumers to swap leases they are in. He said 16 percent of his customers turned in leased trucks because of high gas prices last month, compared to 78 percent in the summer of 2008 when gas was last at a record $4 a gallon.
"During the uptick, concerns and complaints heat up when we pass certain price benchmarks, but widespread behavior doesn't actually change until we reach $4.00 per gallon," he said.
AAA's estimate for the average price of a gallon of regular gas stands at $3.375, up 9% in the last month but that's just in certain parts of the country. In California, according to the Department of Energy, gas prices have already hit $3.63. That puts California within 10 percent of hitting $4 a gallon, presumably well before summer if Middle East tensions continue to raise crude oil prices.
Two experts are already saying we could see $5 a gallon gas in the next year. Jerome Corsi, who says he is a New York Times bestselling author and the Senior Managing Director in the Financial Services Group at Gilford Securities as well as a senior staff writer for WND.com, says at his website RedAlert.WND.Com, that OPEC members Iran, Venezuela and Libya have weighed in favor of the $100/barrel target,
Former Shell Oil executive John Hofmeister told FoxNews.com, the problem would start with "stockouts" at select gas stations during the summer and during bad weather and then spread. He said those states farthest from refineries would get hit the worst and that in order to maintain some consistency, local and state governments might resort to the kind of rationing they employed in the early '70s -- when drivers with even-numbered license plates would buy gas on even days, and vice-versa.
The rising gas of price is even effecting the Geneva Motor Show. Last year the green cars were put in the back of the exhibition hall and now they are being given prominence. Major manufacturers like Rolls-Royce, BMW, and Volvo are using the event to roll out electric vehicles and plug-in hybrids.
There's one other factor to consider that will change buying habits. Leases typically are two to three years in length. People who leased cars in the summer of 2008 and after, when gas prices are at their peak, are starting to turn those cars back into dealers. It will be interesting to see what the trend is among them.
Initially, it looks like the trend is going to be towards more fuel efficient. According to research by J.D. Power and Associates, the compact crossover utility vehicle lease rate was 15 percent of all CUVs sold in 2008, then dropped to 12 percent in 2009. In January, lease rates for CUVs were back up to 22 percent. The compact market was especially weak in 2008 at only 2 percent but in January it jumped to 9 percent.
The effects of $4 a gallon gas may already being felt even with gas still in the $3.37 range this week.
Gas Could Hit $5 a Gallon By Summer