Fuel economy conundrum: $4.50+ gas detrimental to US auto industry

If gas prices rise enough to support the sales of hybrid cars and plug-in vehicles, the US auto industry goes out of business. The Fuel economy conundrum.

High gas prices good for hybrids, bad for the US auto industry

The mainstream embrace of hybrids and plug-in vehicles impossible for now?

Earlier today, CNBC's Phil Lebeau interviewed Toyota's US VP Bob Carter. After covering supply issues – an interview during which Carter suggested Toyota will be able to maintain “adequate” supplies of the Toyota Prius – Lebeau then asked Carter what price of gas would be “detrimental” to the US auto industry, offering $4.50 as the critical number. Carter responded “maybe”.

Later in the day, GM's CEO Dan Akerson was also interviewed by Lebeau and asked the same gasoline price question. Akerson acknowledged that $4.50 gas would be “very detrimental” to the US auto industry.

Yet, aren't these “detrimental” numbers the only way the US moves towards a real embrace of fuel efficient technologies?

Sadly, history has proven that unless gas prices move closer to $4.50, most consumers won't buy hybrid cars, for instance, and the extra upfront costs of plug-in vehicles will probably take even higher gas prices. Of course, if higher gas prices squash automaker profitability, how can automakers afford to increase production on vehicles with slim profit margins, if even any?

Crazy. Now I gotta run. Need to bury my head in the sandpit for a little while.


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