While automakers in the United States continue to bank on crossovers, SUVs and trucks, consumers should expect to pay more at the pump than they’re used to.
The Detroit Free Press reported on Sunday that crude oil prices have soared to their highest points since 2014. Right now, the price hovers around $68.57. The higher price has caused gasoline prices to move away from the $2 mark, and closer to $3 per gallon across most of the United States. The west coast is already paying over $3 per gallon.
The national average for a gallon of unleaded gasoline is currently $2.85 per gallon, about 42 cents higher than this time last year. Analysts expect the prices to continue climbing throughout the summer, too.
The spike comes amid a global demand for oil during robust economic growth around the globe. The price is also far off from the Great Recession-era when Americans were regularly paying $4 per gallon. For some comparison, crude oil prices were at $130-plus a barrel.
Even as prices climb, experts said we shouldn’t see anything close to the oil prices of yore. Since then, the U.S. has become a major oil producer, and as demand rises, U.S. companies will begin churning out larger supplies.
Comments
The market has changed to where this is not the issue it once was.
It used to be that we only had full size trucks and SUV models with 14 MPG. Todays market is much more made up of smaller CUV models with 4-6 cylinders and most getting 20-35 MPG today in various sizes.
The greatest vehicle at risk is the full size truck as even with their improved MPG they tend to see the most decline but they always bounce back.
Now most MFG are back in the mid size truck market now too so they will play a factor.
Gas price hikes have always had an impact but today that impact is more spread out over much more efficient smaller vehicles than it once was. Most of the people driving the CUV models down sized from larger models, Came from cars with similar MPG or mini vans. They all are not going to be any worse off than they were.
In the past we had a Full size model to choose from with 14-16 MPG and that was it. Now we have much more choices to fit about any situation on size and affordability for anyone be it an Encore to a full size Suburban.
GM has had the luck of twice coming out with new trucks in the last 20 years where the gas prices spike at the intro. It creates a slow start but they always rebound. That is going to be the greatest issue for GM.
But GM can do more by adding hybrid and EREV technology (from the FWD Chevy Volt and the RWD Cadillac CT6) to all the CUV and SUV models. Ford has presented at the NYIAS the plug-in hybrid Navigator. Where are the PHEV Transverse and Enclave? And where are the PHEV Equinox and Terrain, both based on the same Volt platform?
IF GM acts now, they will ride out the next oil price increase with better sales.
In due time but most people will not pay more for it and most of it is not profitable yet.
Ford presented a show car of a low volume non profit center vehicle. It is a stepping stone to the future but not the present day solution yet. GM has their own coming but it has to be timed out to grow the segment and not go bankrupt.
Just because they can build it does not mean they will make money with it or have much in volume. .
Like the Large Hybrid SUV and full size trucks they went no where as the technology was expensive and no one really cared. Today the stop start is cheap and on many vehicles.
They will get there but one Ford Show SUV of limited nature will not save them in the short term.
They have the technology –
used it on the Yukon Hybrid and Tahoe Hybrid 8 or 10 years ago?
Maybe others – electronic variable transmission, etc.
Well, the Consumer is buying the CUV/Crossover vehicles, not the true SUV based RWD w/4×4. (some of it is there is not many true SUV’s offered)
So gas prices will not matter as much. Really won’t have a dramatic effect on the sales.
Let’s be real here, the CUV/Crossover is more like a raised car with a Station Wagon/SUV -ish designed body that offers AWD. Not really an off-road vehicle.
Exactly as many people have down sized from Yukon’s and Tahoe’s as they are no longer the only choice. Many Yukon owners have gone to the Acadia where 20-27 MPG on a loaded Denali is common.
The Cross overs are unit body and use many things to assemble them. The C1XX has much of it glued together with new adhesives. It saves a lot of weight.
They are in some cases based on cars like the Encore but others are on special built platforms like the C1XX but they are modern designs.
But you have the idea there is not the big truck based issue like in the past.
The only thing is trucks and large SUV’s are cash cows for GM , Ford and Chrysler . This is where the profits are being made , look at the Escalade for example , GM makes a healthy $20,000 on every one sold . And at Ford , they produce a F-150 every 48 seconds .
Just last week Saudi Arabia said they want to see $80 dollars a barrel of crude oil by years end at the latest OPEC meeting with Iran and Russia in attendance . This could put a dent in the domestic automakers profits if this were to happen . Sure trucks and SUV’s get much better gas mileage than in the past but it could end up being a psychological thing when consumers see it costing more to fill up their tanks .
For the time being there shouldn’t be any thing to worry about , but time will tell . As many an economist will tell you ,
” Don’t put all your eggs in one basket ” .
If the 10 speed trans can help highway mileage move toward the 24-25 mpg area, then fuel cost may not be too much of a factor.
I have 2003 Tahoe which is still a great vehicle, but with highway mileage at around 18 mpg, when gas prices go higher, trips get much more expensive:
500 mile trip at 18 mpg= 28 gallons x $2.75 = $77.00
at 24 mpg=20.8 gallons x $2.75= $57.00
at 28 mpg=17.85 gallons x $2.75= $49.10
Higher fuel prices may also take some of these older Pickups off the road, ones that get 10-12 mpg.
When gas prices fell 3-4 years ago, all of these pickups were fixed up and used as daily drivers.