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Could Hybrid and Electric Vehicle Sales Slow if Gasoline Falls Below $3.00/gal?

Are Gasoline Prices Affecting Electric Vehicle Sales?
Are Gasoline Prices Affecting Electric Vehicle Sales?

Every year, the short cycle of gasoline prices goes up and down, “winter blend” gasoline prices typically up to 15¢ cheaper per gallon than “summer blend” prices. Do sales of hybrid and electric vehicles reflect this trend?

Currently, the national average is $3.25/gal, a far cry from the 99¢/gal I recall from a decade ago, but analysts predict that this could drop to $3.10/gal by the end of the year. There are already a number of states that have gasoline for less than $3.00/gal, particularly in the South and Gulf States Region. Aside from the switch from summer to winter blend pricing, another part of the reason for the falling price of gasoline is the price of crude oil, about $95 per barrel.

What worries me about the falling price of gasoline is the effect it has on Americans’ short memory. When the price of gasoline falls, so does the fuel economy of vehicles that are being bought. Sure, it was nice to be ablet o fill up my old Jeep for just $20, but when that jumps to $70, or higher, the Corolla starts looking much more attractive. The same goes for hybrid and electric vehicles, and when the average gas price in the US was over $4/gal back in 2008, better than $5/gal in some areas, people were a whole lot more interested. On the other hand, when gasoline prices start to drop, it seems that we drop our guard too quickly, and suddenly the Hummer H3 looks like a great deal. Still, there are some studies that seem to suggest otherwise.

Is there a correlation between a 30¢ drop in gasoline and a corresponding decrease in the fuel economy of new vehicle sales? I’m certain that the hybrid and electric vehicle market will feel the pinch, as short-memories engage and the extra money for an advanced powertrain suddenly stops making sense. Of course, hybrid and electric vehicles have always made sense but, for some reason, people need their wallets to tell them that.

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