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Fuel pricing not ideal for some new models

Philip Nussel is managing editor of autonews.com.

Here’s some great news for this weekend’s travelers:

Gasoline prices will stay relatively cheap for the entire Labor Day weekend, according to U.S. Energy Department figures released yesterday. For pump-price watchers, that means $2.68 a gallon on average, up 9 cents from last year but still lower than $3.68 in 2008, $2.80 in 2007 and $2.73 in 2006, according to Reuters.

And the U.S. government says it expects gas prices to continue to drop through September and into the fall. Lower crude prices, higher inventories and relatively weak fuel demand, it seems, are conspiring to keep fuel prices low.

Which isn’t at all good news for some automakers.If you’re trying to sell the Chevy Volt, the Nissan Leaf or the plethora of other high-priced hybrids, electrics and other fuel-efficient vehicles reaching the market in the coming months, you want to see gas prices rise. A lot.

During the fuel price run-up in the spring of 2008, Ford executives noticed that the tipping point for changes in consumer buying habits -- i.e. forgoing trucks in favor of more economical cars -- was about $3.50 a gallon.

One can only conclude, then, that automakers will have a hard time getting consumers to pay a premium for fuel efficiency when prices are well below $3 a gallon. Sure, for some, being environmentally correct is worth the cost. And for others, the government tax incentive will be attractive.

But for most new-vehicle buyers, the economics of spending thousands more for a hybrid or electric vehicle vs. a traditional gasoline-powered set of wheels just aren’t going to add up, at least for now.

Fortunately for the Detroit 3, they still have plenty of big ol’ trucks and SUVs to sell. For them, low gas prices are, in the grand scheme of things, good news.

You can reach Philip Nussel at pnussel@crain.com.