Are High Gas Prices Actually Benefiting the Auto Industry?

September 19, 2014
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High Gas PricesAre high gas prices actually good for the automotive industry? According to some, that’s the case – just in sort of a roundabout way. In a recent Wall Street Journal article, one powerful CEO made a compelling argument this is so.

According to Mike Jackson, the Chairman and CEO of AutoNation, the high gas prices present a new opportunity. He said that for the first time, the auto industry can now offer viable alternatives to the gas-guzzling vehicles on the road today. As a result, Jackson believes that a sudden, significant dip in gas prices would actually undercut the growth of automotive technology. 

High Gas Prices Lead to Difficult Decisions

But finding a balance isn’t easy. On one hand, you have all the issues and volatility in the Middle East, which automatically leads one to believe the United States should be less dependent upon oil than we are in our current situation. To make this a reality, our country must accelerate production of hybrid and all-electric vehicles, while at the same time continually improving the MPG of cars that run on fuel.

On the other hand, you always have the possibility of gas prices going down significantly. This would quickly slow the entire technological advancement process that is currently taking place. It might even make large SUVs more relevant again. Remember, too, that we’re coming up on an election year, a time in which it’s a top priority for Washington to ensure that gas prices are lower than normal.

Over the last couple decades, a major shift has happened. It used to be that car dealers would highlight everything large and roomy – selling these vehicles at premium prices and placing a lesser emphasis on the “econo-boxes” that were lower priced. Today, the smaller vehicles are taking center stage because of the high gas prices, and the car buying public is still getting used to this metamorphosis.

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