• Feb 4, 2008
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]



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  • 40 Comments
      • 6 Years Ago
      The current high oil prices have not so much to do with supplies running out or increased demand but with speculators (investors) jacking up the prices, I have read several articles that if current oil supply/demand would solely be taken into calculation (minus the investors) the price per barrel would barely touch $45-50 at todays levels, which would pretty much explain the ExxonMobil recent profits... Oil is of limited supply but contrary to what people might think (or read), we are still pretty good for another 100-200 years.

      Canada along with US (yes, United States) have enough untapped KNOWN (and there is probably a lot more undiscovered fields) oil fields that at current demand would last our country for well over 100 years... So again, current oil prices is mostly about speculation/investors. I am all for alternate energy sources but it's not time to panic yet as some of the governments would led you to believe. They like to use fear and use it as an excuse to jack up prices.
      • 6 Years Ago
      Your points are well taken and valid about the economy. The part of Dans' response that gets me is the sense that despoiling the earth is and entiltement provided that you work hard to get the means.

      If an when the earth overheats and the seas rise, Dan can proudly have "I earned it" engraved on his headstone.
      • 6 Years Ago
      TO AUTO BLOG. the reply button does not work
      • 6 Years Ago
      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.."
      • 6 Years Ago
      Please - THIS is why we went into Iraq in the first place. Terrorism and WMD's my arse....

      It's all about maintaining a source for "cheap" oil. But at what cost?
      • 6 Years Ago

      Alaska here we come!
      • 6 Years Ago
      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.
      • 6 Years Ago
      This thing must fail.

      I know it will though, 2,500 means reliability has been cut considerably, not to mention if you can't afford a 5,000 car I doubt you will be able to fuel a 2,500 car.
      • 6 Years Ago
      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.
      • 6 Years Ago
      More than demands on petroleum as fuel, China and India's need for chemical feedstock for all the manufacturing they are doing is driving the cost of petroleum up right now.

      As for the Nano's future impact on fuel prices, the people considering Nanos will be high end two wheeler owners and I'm not sure that a 500cc motorbike gets that much better mileage than the Nano. When you factor in passenger miles vs a two wheeler, it's hard to say if Nanos will mean a net increase in demand for fuel.

      I'm not worried. Global Resource Corp, http://www.globalresourcecorp.com/
      can recycle plastic and tires into natural gas and petro chemicals, as well as turn coal into liquid fuels. The US has huge coal deposits and even without GRC's new microwave technology, it's relatively easy and cheap to turn coal into methanol. REB Research, http://www.rebresearch.com
      has converters that turn a methanol/water mix into hydrogen pure enough to run a fuel cell. There are at least 3 new Li-Ion battery technologies in production right now that are very promising in terms of EVs, and Caterpillar's Firefly division is bringing their new lead acid technology to market this summer, with even greater performance to come as they develop the technology. Eestor just signed a deal to supply Lockheed Martin with ultracapicitors to run military equipment.

      I think it's an exciting time for car folks. ICEs aren't dead yet, with compressed charge and direct injection, and lots of new competing technologies are coming onstream.
      • 6 Years Ago
      The reason why gas prices will most likely go up is not because of the Tata Nano. Exxon mobile will be shooting for an extra 10 billion in profits to the tune of $50.6 billion at our expense. No other reason. Maybe their CEO will be getting a $400+ million bonus next year cause $330 million this year just isn't enough.
      • 6 Years Ago
      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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