Renewable Gossip

Survey: $3 Gas is a Tipping Point

The latest study by Kelley Blue Book once again confirms the fickleness of US car buyers when it comes to gasoline prices. In the second half of May, KBB surveyed 753 prospective car buyers and found that 87 percent expect gas prices to rise sharply. In April, just 66 percent believed gas prices would rise. What changed in the last month? Gas prices rose sharply.

The national average price for gasoline is $2.64—a jump of 20 percent in the last month. In California, the statewide average for regular is $2.96—four cents below what KBB sees as the tipping point. KBB also found that about two-thirds of respondents said that gas prices had an influence on what car to buy.

Kelley Blue Book thinks that $3-per-gallon gas will lead car shoppers to to a renewed interest in fuel economy. Photo via joeshlabotnik.

“While we may not see the $5-per-gallon gas experienced in some areas last year, current economic conditions compounded by the pain at the pump may make $3-per-gallon gas a new threshold for car buyers—the point at which they change their mind about what vehicle to buy and how they spend their money,” said Jack Nerad, Kelley Blue Book’s executive market analyst.

According to KBB, the No. 1 compromise was moving to a smaller engine—a four-cylinder, say, instead of a V6 or V8. That was followed closely by vehicle size—moving down to a mid-sized sedan from a larger model, for instance.

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