Lutz says gas prices will need to go up if Americans are to embrace small cars

Bob Lutz often makes a lot of sense. The GM vice chairman is saying the right things about the Chevy Volt and where GM is going in the future, but there's a line in this story from Automotive News (subs req'd) that doesn't make sense to me. Apparently, while speaking at the Automotive News World Congress yesterday, Lutz said that, "We refuse to let the price of fuel rise gradually in the United States and therefore we fail to induce change in consumer behavior." Huh? The last time I checked, the price of gas has risen gradually, especially since the mid-1990s. That's what the DOE says, anyway, as you can see in the graph after the jump. What's it like at your pump?

Now, in a discussion of long-term prices, Lutz has a point. The real cost of gas today is just under what it cost in the late 1970s. And I certainly cannot disagree with him when he says that European-level gas prices (~$8 a gallon) will cause Americans to rethink the types of cars they drive (I should point out that Lutz didn't call for a gas tax or anything like that). But is Lutz right when he says that's the only way this contemplation will happen? I doubt it. We don't need $8 gallons of gas to force a change, especially if that change comes over the next ten years. You'd see one hell of a shift to small cars if gas were $5 a gallon two weeks from now. It's the slow increases that keep us in our big cars and SUVs. We see the prices go up over time and just swallow and insert the credit card. A quick jump will reframe the debate.

[Source: Automotive News]

Gas prices in the U.S. From the DOE.

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