Saturday, December 27, 2008

Falling gas prices drive large vehicle sales

With falling gas prices, sales of SUV's are rising and sales of hybrids and compact cars are expected to be down reports. Falling gas prices coupled with large incentives on large SUV's and trucks are driving sales in this category, while interest in the most fuel efficient vehicles has wained with the falling prices.

Consumer behavior is once again proven to be driven by short term consideration. Low prices for gasoline promote:
  • large vehicle sales and fuel consumption
  • increased vehicle emissions
  • infrastructure and housing development further away from core urban areas such as Downtown Ann Arbor
  • inefficient building design
Additionally, they discourage interest in mass transit that presently seems strong enough to get significant projects off the ground.

Will all of these things fall flat with gas prices now approaching $1.50 per gallon? Would a fuel tax curb this wasteful fuel consumption and development?

What kind of money are we going to need to maintain the deteriorating infrastructure - roads, bridges, sewers, schools that we have already created? What are the real, long term costs of developing further out from existing urban centers? I bet they are a lot higher than we think and I bet a lot of accounting is ignoring this part of the life cylce costs of development.

Another bubble? the infrastructure bubble maybe.

Photo courtesy of Bitzcelt at

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