Have gas prices crossed that magic line?

September 3, 2005

Will $3-a-gallon gasoline finally bring a change in our thirsty buying and driving habits? According to a report in today's Detroit Free Press and News (the weekend joint venture), Michigan's gasoline prices have soared to $3.13, the highest in the nation. I would imagine that means there are some Big Three executives are having a very nervous holiday weekend.

As folks like Bob Lutz, General Motors' "car czar," like to point out, the fuel economy for the typical Detroit car isn't all that bad. In fact, it often exceeds the imports in many product segments. But let's face facts, the Big Three have made most of their money, in recent decades, selling big, gas-guzzling trucks and high-power -- read thirsty -- passenger cars. Take away the Ram pickup and the Hemi engine, and Chrysler's nascent rival doesn't quite look so good anymore.

The doomsayers predicted light truck sales would tank at $1.75, then $2.00, then $2.50, but American motorists grit their teeth and kept buying. Now the number has topped the chilling $3 mark. Worse, much worse, there's a likely shortfall of supply due to the devastation wrought by Hurricane Katrina. No one is yet sure how many oil platforms have been damaged or destroyed, nor how long it will take to get stricken refineries back into operation.

Thanks be tothe Europeans, who have diverted massive supplies of fuel to the U.S., adding to what the feds have released from the strategic oil reserve. But the supply line has been stretched taught. Something as random as the pipeline fire that curtailed supplies to Arizona a year ago could be devastating. And I don't even want to discuss the potential for disruption in Mideast supplies. What happens if Venezuelan President Hugo Chavez decides to send his thanks for Pat Robertson seeking his assassination?

Detroit is not the only one at risk, of course. Japanese makers, notably Toyota and Nissan, have ramped up light truck production significantly in recent years. So this could be a very chilly autumn for the auto industry.

Now the question: will $3 gas change your buying habits? Click the "Comments" button below and let us know.

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