As investors grappled with 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 drastically cut oil use, and that a spike in demand from emerging economies is about to 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 decline of more than 40 percent since July.
How will lower prices at the pumps affect consumer attitude toward hybrids and other fuel-efficient option? Will Americans become lukewarm about the growing selection of more efficient vehicles scheduled to hit the market in coming months and years? A marketing study released by Kelley Blue Book a few weeks ago indicates that they won’t. Fifty-eight percent of drivers who plan to factor fuel efficiency heavily in choosing their next car say they wouldn’t revert back to gas guzzlers 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 greener cars—regardless of fluctuations in oil prices, gas prices, and consumers’ ability to buy a new car.