Gas Prices Falling Could Mean Less Demand For Green Cars

Prices at the pump expected to continue falling through end of 2013

Gas prices have tumbled over the past two months. That's a good thing for consumers, but not so good for sales of green cars, because car shoppers tend to go revert to their old gas-guzzler ways once gas becomes cheap again.

The average price at the pump has fallen in 52 of the past 59 days, according to AAA data. In September, the average fuel economy of new cars sold plummeted 0.3 miles per gallon to 24.6 mpg, the most inefficient number in nine months, say University of Michigan researchers. That means buyers were already opting for cars with worse fuel economy, even when gas prices were still above $3 a gallon. In some states, the price could fall to below $3 in the coming days or weeks.

"The decline likely reflects the recent reduction in the price of gasoline," said Michael Sivak, a senior researcher at the school's Transportation Research Institute who compiles the monthly report. October's fuel-economy average is not yet available.

Buyers in October already started turning away from hybrid and electric vehicles. Sales of the Chevy Volt dropped 32 percent year over year, falling to 2,022 units during the month, according to Autodata Corp. Sales of the four Toyota Prius models fell 6.9 percent to 15,623. Not every green car was affected by the slump, however. Sales of the Nissan LEAF reached 2,002 units, a 27 percent increase over October 2012.

Green car sales actually rose 4.3 percent during October, but that's a paltry gain considering overall car sales were up 10.6 percent last month. In September, green-car sales declined 1.8 percent overall year over year, the slowest sales month of 2013.

Analysts say the gasoline prices could continue falling through the end of the year, which could further dampen green car sales. Today, motorists across the U.S. are paying an average of $3.27 per gallon., and AAA's Avery Ash says they could reach $3.10, which would be the cheapest gas since February 2011.

Reasons for the decline include plentiful supply, declining demand and a seasonal switch to a winter blend that costs 10 to 15 cents per gallon less to produce. Another big reason has been a lack of a problem. Last year, Hurricane Sandy struck the East Coast in early November. In previous years, weather-related problems and refinery problems have sent prices skyrocketing. Not this year.

"There are fewer frowns on drivers' faces as they leave gas stations," Ash said.

Some states are already seeing prices below the $3 per gallon mark, including Missouri, which has the nation's cheapest gas at $2.91 per gallon. Texas and Arkansas are averaging $3.04 per gallon.

Pete Bigelow is an associate editor at AOL Autos. He can be reached at and followed on Twitter @PeterCBigelow.

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