As investors grappled with the the potential ramifications of a looming global economic downturn today, oil prices fell to levels not seen since late 2007. The dive was precipitated by a growing sense that in the coming months, businesses and individuals around the world will be drastically cutting their oil use, and that a spike in demand from emerging economies is about plateau.
In July, oil hit record highs near $147 a barrel, leading many energy analysts to predict that it might never again dip below 100 dollars. But in less than four months, markets around the world have declined significantly, leading to a collapse in the projected demand for crude in the coming months. Today’s low was near $86 per barrel, a more than 40 percent decline from July.
But with a drop in prices at the pump coming, will Americans be lukewarm to the barrage of fuel efficient vehicles scheduled to hit the market in the coming months and years? A marketing study released by Kelley Blue Book a few weeks ago seems to indicate that they won’t. Fifty-eight percent of drivers who plan to factor fuel efficiency heavily in their next car say they wouldn’t revert back even if the price of gas fell to $1.00 per gallon.
It’s unlikely however that gas will fall very far below $3.00 per gallon, even if crude prices continue to hover near 90 dollars. And new federal regulations increasing the average fuel efficiency each carmaker must meet will continue to drive the production of green cars—even if fewer consumers can afford them.