Gas prices are increasing, what price will affect what kinds of vehicles consumers buy? Research shows that gas is getting more expensive especially in the California. How high does the price have to go before consumer change their vehicle-buying choices?
As of May 21, gas prices jumped 12 cents over the past 14 days, and six-cents since last Monday, landing the national average at $2.93 – the highest price point going into the Memorial Day weekend since 2014.
“AAA forecasts nearly 37 million travelers will hit the road for the holiday weekend. Compared to an average of the last three Memorial Day weekends, pump prices are nearly 50 cents more expensive and climbing,” said Jeanette Casselano, AAA spokesperson. “Trends are indicating that this summer is likely to bring the national average to at least $3/gallon.”
The nation’s top ten most expensive markets are: California ($3.71), Hawaii ($3.68), Washington ($3.41), Alaska ($3.36), Nevada ($3.32), Oregon ($3.31), Idaho ($3.16), Utah ($3.14), Connecticut ($3.11) and Pennsylvania ($3.08).
Kelley Blue Book Current Events Panel research found that 20% of respondents expect fuel prices to rise this year, but 60% report it is unlikely to affect their purchase decisions. The buying decisions for most respondents will be affected only when gasoline reaches $4.00 a gallon noted the study.
In the previous gas crisis, the when the price of gas reached $4.00 many larger eight-cylinder vehicles were taken off the road through “Cash for Clunker” programs.
“What we see now is more of the sport utility vehicle [and] crossover vehicles are built on car platforms, and they get much better vehicle economy, in fact there isn’t much penalty between a midsize sedan and a compact sport utility,” Michelle Krebs, senior analyst with Autotrader, told Automotive News. “Despite the rise in gas prices, people still want the versatility and practicality of those utility vehicles.”
The study found that gas prices would have increase 35 percent from current levels to affect the industry in a meaningful way. Prices could send buyers to economical crossovers, rather than go back to buying sedan.
“They haven’t been high for long enough that we would see any change and I think the desirability of crossover vehicles and various utility vehicles outweighs concerns about higher gas costs,” Krebs said.