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February 23, 2007
Gas prices, fuel efficiency and vehicle size
American drivers have been criticized for buying large sport utility vehicles and trucks in light of concerns about the environment and energy use. But N.C. State University economist Mike Walden says there a logical explanation for these buying habits.
"I think there is," says Dr. Walden, a North Carolina Cooperative Extension specialist. "And really if you look at the data the big interest in light trucks and SUVs started in the 1990s. And what was happening in the 1990s? Well, gas prices were very low –- about a dollar a gallon. And there is an economic principle at work that says when something is low in price, people are going to buy more of it.
"So gas was cheap then, that made driving vehicles cheap, it made driving big vehicles with a lot of power cheap. And so people bought those kind of vehicles," he explains. "Now prices of course are higher, and we see the trend moving away slightly from SUVs and trucks. And people are more interested in fuel efficiency and smaller cars and vehicles.
"So I think what this shows is the importance of price –- just raw price –- in determining our buying decisions."
Posted by deeshore at February 23, 2007 08:47 AM