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Cheap cars in India = expensive gas in the States
click above to view more images of the Tata Nano
A report at CNN kinda states the obvious, that if the $2,500 Tata Nano proves as popular in India as most people think it will be, there will be a huge increase in demand for gasoline there. And if worldwide demand for oil goes up, the price of gasoline here will go up. Basic economics, right? Well, CNN looks a little deeper, and gets into why we're likely to see higher pump prices soon.
The target market for the Nano in India is people who do not currently own cars. That means droves of fuel-efficient scooter drivers will trade two wheels for four. And even though the Nano gets 54 mpg, that's still not as good as most of the scooters sold there.
And the second reason is that Tata sees the Nano as a "gateway" car. Get 'em addicted to the cheap stuff, then move 'em up to bigger, more profitable, less fuel-efficient cars later.
Combine these two reasons with the fact that the Nano will likely be sold in China as well, and you potentially have hundreds of millions of newly licensed drivers in line at the pump. The CNN story quotes one oil analyst who says we're likely to see gas prices near $4 or $5 well before 2015.
[Source: CNN]
Reader Comments (Page 1 of 3)
James 6:32PM (2/04/2008)
$4 or $5/gallon gas is not very expensive; at 4% annual inflation, we should see $4.34/gallon in 2015 assuming current gas prices are around $3.30/gallon.
Most likely gas will be twice that much.
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Seoultrain 6:41PM (2/04/2008)
lol, never mind that half the vehicles sold in the US are huge trucks and SUV's, let's blame a 50-mpg 3rd-world car for rising gas prices. Way to avoid blaming ourselves..
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JW 6:46PM (2/04/2008)
I am all for a cheap car, but just because it is cheap, it doesn't have to be butt ugly; it looks like it doesn't even have full size tires on it...looks like the ones that come on a John Deere Gator. I am happy that the less fortunate can have a means of transportation though.
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JMC 3 6:53PM (2/04/2008)
...and when We pull out of Iraq too soon and Iran takes over it'll go higher still.Also ,China needs oil more than ever to power their economy and put their people in cars.
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akatsuki 6:49PM (2/04/2008)
Yeah, we wouldn't want other people being able to own cars and have the privileges we do if it might mess up our war-subsidized gas prices...
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zamafir 6:50PM (2/04/2008)
And that we wont have as many families of five on tiny bikes. Go for it India, it's the tragedy of the commons. Hell, everyone can upgrade to new hybrid escolades for all I care, if we (US of A) can do it as the model nation we are, then who's to stop anyone else?
Mass transit is sooo Japan/Germany.
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Mattias 6:51PM (2/04/2008)
The worst thing about it is that lower mileages don't mean higher standards of living. In Norway for example, buying an SUV cost you some $20.000 luxury tax, so you think twice whether to take the Kangoo "varebil" ort the cool Chevy 4x4. Norway still ranks higher in "standard of living". Got the point?
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Victor 6:52PM (2/04/2008)
It'll be fun to see. I don't drive a gas guzzler. Buy and drive what you can afford. If gas prices go high, don't b*tch and complain about it.
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Gregg 6:55PM (2/04/2008)
Hello! It is a $2500 car. Costs are cut in every conceivable way to get down to that level, including wheels and tires. It's a monumental achievement, when you consider how much more money the least expensive strippo vehicle is here.
And boo hoo if our prices go up. We are pigs who feel totally entitled. When less than 5% of the world (us) consumes 25% or more of the resources, some sort of re-balancing will eventually follow. Thank goodness this rebalancing is going to be an economic one. I'll take being charged more any day to being killed by fanatics supported by the desperate who have no hope.
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Nightcrawler 7:01PM (2/04/2008)
$4 of $5 by 2015? I'd be shocked if we don't have $4 by 2010, regardless of $2500 cars in India. Gas has gone up, what, close to $1 in the last year? Another buck on top of that doesn't seem too hard with oil close to $100 a barrel.
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Zane 7:07PM (2/04/2008)
I'd be happy to see it touch $5/gal or even more .. if that's the only way to get those zombie SUV drivers off the freakin road.
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KT 7:12PM (2/04/2008)
Alaska here we come!
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VPN 7:21PM (2/04/2008)
....and let's not blame companies like ExxonMobil that post record profits in history even when "supplies are low" and are blamed for high gasoline prices that we pay at the pump. I've been to India in the summer of 2007 and with the conversion to dollars from rupees, they pay $4.75/gallon. shame on our govt. and their buddies (oil companies).
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DIRETTORE 7:41PM (2/04/2008)
* Unfortunatly this is only the begining. This is history in the making.
The Model T(ata) all over again.
Nobody cried then, why we cry now? This will turn the industy upside down.
Exactly 100 years ago, the T came out with 20 HP. It took us 100 years to make 13 HP??? That 1 HP / Decade! Still using an internal combustion engine. We've been sitting on our asses for a century, now we're scrambling to make up for lost time. Better late than never. This car will branch out to other markets with a variant eventually coming to NA. It wont replace Primary transport, but will be a 2nd, 3rd car.
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Dan 7:42PM (2/04/2008)
That's impossible! We all know oil prices are only high because of fat greedy Americans in their gas guzzling trucks and if only we'd drive tiny hybrids and live in tiny apartments eating cheese like they do in Europe the world would be at peace again.
Since 1999, global oil consumption has increased by 10 million barrels per day and 90% of that took place outside of the US.
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Richard 8:09PM (2/04/2008)
Or to rephrase just a tiny bit:
Since 1999, global oil consumption has increased by 10 million barrels per day. 10% of that took place inside the US, even though only we have only 4.6% of the world's population.
Especially considering that developing countries should be responsible for "more" than their population share, just because they're coming from so far behind the curve, that's a pretty startling statistic.
JW 7:55PM (2/04/2008)
Gas prices have nothing to do with what people drive. People drive SUVs and Trucks to haul things or go on vacations; for example, SUVs are used for mud riding, towing stuff (you can't tow anything with a prius, much less a family sedan), SUVs have tons more room than a "cuv" too. Trucks are used for the same reasons as well, and while some people buy them just because, there are real hard working people that use their vehicles as a part of their job. It all leads back to global warming which is not our fault, it just happens, it's called Nature "let nature take it's course".
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2004m3driver 8:10PM (2/04/2008)
5$ a gallon by 2015 is optimistic. I've seen premium gas at 3.88 around west LA already.
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Mehul 8:23PM (2/04/2008)
My exact thoughts
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Mehul 8:24PM (2/04/2008)
Damn this reply button! It was a reply to seoltrain
"lol, never mind that half the vehicles sold in the US are huge trucks and SUV's, let's blame a 50-mpg 3rd-world car for rising gas prices. Way to avoid blaming ourselves.."
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