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

Friday Video: Are We All Living in a ‘Carspiracy’?

How does "car-brain" shape the way we think about the world — even in relatively bike-friendly countries like the U.K.?

July 26, 2024

Friday’s Headlines Share and Share Alike

Bikeshares, and e-bikes and scooters generally, are becoming more popular. That's led to more injuries, highlighting the need for better infrastructure.

July 26, 2024

What the Heck is Going on With the California E-Bike Incentive Program?

The program's launch has been delayed for two years, and currently "there is no specific timeline" for it. Plus the administrator, Pedal Ahead, is getting dragged, but details are vague.

July 26, 2024

Talking Headways Podcast: Have Cities Run Out of Land?

Chris Redfearn of USC and Anthony Orlando of Cal Poly Pomona on why "pro-business" Texas housing markets are catching up to "pro-regulation" California and what it might mean for future city growth.

July 25, 2024

The Paris Plan for Olympic Traffic? Build More Bike Lanes

A push to make Paris fully bikable for the Olympics is already paying dividends long before the opening ceremonies.

July 25, 2024
See all posts