Potential hybrid buyers should pay close attention to oil prices
Are hybrid prices going up?
Been watching a lot of CNBC these days to stay atop the oil story. Obviously, oil is the key topic, but I was particularly fascinated by an interesting piece on Fast Money last night that touched on oil. Seems like $125 oil is a key benchmark for many on Wall Street – a number that would translate to a national average gasoline price of at least $4.00 – $5.00. That’s when it’s time to really start paying attention.
So, what does this mean for potential buyers of hybrid cars?
Inevitably, gasoline prices are moving up. That could push gas prices to the higher end of $3.00 for most US states, but over $4.00 for many populous states, especially into the summer driving season and probably through 2011. And at $4.00 per gallon, many hybrids begin to become good buys. Already great hybrid buys, such as the Toyota Prius – already considered to be the best passenger vehicle on the market according to Intellichoice and others – become even better buys.
But will that push demand far beyond supply?
Probably not. Although an increase in hybrid sales won’t be surprising, especially as the summer nears, hybrid supply shouldn’t be greatly impacted. Still, higher demand could lessen incentives now available on some hybrid cars.
In terms of the likelihood of dealer add-ons, however, gas prices probably won’t increase enough to spur a serious increase in hybrid demand until oil prices increase at least another $10 per barrel with the appearance of trending higher.
In the interim the low end range of gasoline price forecasts through the next few years make some hybrids clearly cost-effective buys, particularly in large urban centers, where not only will gasoline be more expensive, but congestion more severe – the ideal conditions for most hybrids. Thus, if you’re in the market to buy a hybrid some time in 2011, the deals probably won’t get any sweeter than they are today, but the potential for higher prices and less incentives looms very real.