Skip to Content
Streetsblog USA home
Streetsblog USA home
Log In
Cars

Auto Sales Rise Along With Gas Prices (Though Nowhere Near $5/Gallon)

You may have heard last week that a former Shell executive predicted that gas prices would reach five dollars a gallon by the end of next year. John Hofmeister is now the head of Citizens for Affordable Energy, which advocates for increased coal, gas, and oil production in the U.S. He’s also the author of a book called “Why We Hate the Oil Companies: Straight Talk from an Energy Insider.”

The SUV: "We're Back." Photo: ##http://autoworld.wordpress.com/2009/04/06/new-2010-gmc-terrain-revealed-details-and-photos/gmc-terrain-suv-2010-img_9/##Auto World##

Hofmeister told Platts in an interview last week, “If we stay on our current course, within a decade we’re into energy shortages in this country big time.” He’s predicting “blackouts, brownouts, gas lines, rationing” and says it’s the result of politically-driven decisions to “fritter at the edges” of renewable energy.

Conservatives are going after Obama for rising oil prices (more on this soon), blaming him for canceling Bush-approved oil leases and slowing production after the Gulf oil spill. Hofmeister warns that with the economy recovering, demand is going back up worldwide, especially in Asia.

Although the news media has gone wild over Hofmeister’s predictions, no economist is willing to get behind them. Even John Kingston, the news director of Platts – where Hofmeister first made his prediction – has refuted his numbers.

Kingston told CNN he doesn’t understand why gas prices would rise so high so fast – “it certainly wouldn’t be as a result of the lack of energy because the U.S. has tons of coal and the U.S. now has massive reserves of natural gas,” he said.

He said flat-out that five-dollar gas prices by next year aren’t realistic. “That would require crude oil prices to be up around $170 to $180,” he said. “The most bullish forecast I’ve seen tends to come from the people at Barclay’s, and even they don’t see a price beyond $150 by 2015.”

At the same time as all this hullabaloo over skyrocketing gas prices (and the irrefutable reality of $3/gallon gas today), the auto industry is reporting that sales are bouncing back from recession lows.

New car and truck sales came in at 11.6 million for the year – way down from the 2005 peak of 17.4 million, but on the upswing from 2009, when sales bottomed out at 10.6 million. And remember, all those layoffs and “efficiency measures” the companies made when they were getting bailed out by the feds have made them leaner. They can post a profit with lower car sales now than before.

And the American car-buyer has fallen back in love with oversized gas-guzzlers. After a brief flirtation with more efficient vehicles the last time gas prices spiked, they’ve returned to their roots. Last month – with gas over three bucks a gallon – SUV and truck sales made up 54.3 percent of all vehicle sales.

Stay in touch

Sign up for our free newsletter

More from Streetsblog USA

Tuesday’s Headlines Turn Up the Heat

Triple-digit heat, fueled by climate change, is warping rail lines, interrupting construction work on transit lines and causing burns on sidewalks.

July 16, 2024

These Are the Most Dangerous Congressional Districts for Pedestrians

The deadliest congressional districts in America are dominated by BIPOC communities — and federal officials need to step up to save the most vulnerable road users.

July 16, 2024

Delivery Worker Minimum Wage Shows Promise … For Some, Data Shows

New data from New York City's Department of Consumer and Worker Protection shows minimum wage is bringing order to a previously wild industry.

July 15, 2024

Monday’s Headlines Go Through Basic Training

An NYU study looks into why the U.S. is lagging behind on high-speed rail, and one transportation expert ponders the impact on growth.

July 15, 2024

Sustainable Transportation Advocates Need to Talk About Sustainable Urban Design

A new book hopes to act as a "magic decoder ring" to our built environment — and a powerful tool to understand how sustainable transportation networks can fit within them.

July 15, 2024
See all posts