Floyd Norris points out that in the annual cost of ownership equation, fuel prices are nearing the cost of the vehicles themselves!
Historically, rapidly rising gasoline prices have hurt the auto industry, and that seems to be happening now. The carmakers have no trouble selling fuel-efficient vehicles, particularly hybrids that can run on electricity as well as gasoline. Until recently the demand for those vehicles was limited, though, and it is not easy to increase production quickly. But the gas-guzzling vehicles, particularly sport utility vehicles and pickup trucks, have plunged in demand, leaving the carmakers with large inventories at a time when prices for similar used vehicles have fallen sharply.
Note, however, that as a percentage of discretionary income, energy has not yet climbed to the levels seen in the late 70s and early 80s.
chart courtesy of NYT
Gas Was Once a Bigger Expense
NYT,: July 5, 2008