Rising gas prices could strangle the economy and light vehicle sales, but it'll take more than $4 per gallon, an auto industry economist says.
How high would the price have to go?
Paul Taylor, chief economist for the National Automobile Dealers Association, puts the figure at about $4.50 per gallon.
In Taylor's mind, that's the new emotional flashpoint. In 2008, people panicked and changed their spending habits when gas prices hit $3.50.
"At each dime of gasoline price increase some consumers adjust their buying decisions, particularly for vehicle choice or at least engine choice," he says. "Generally it takes a level that consumers have not seen before. Gasoline prices in excess of $4.50 per gallon are likely to have a more dramatic increase upon consumer choices."
Today's national average price for a gallon of gasoline stood at $3.46, according to consumer Web site http://www.gasbuddy.com/. That's up from $3.12 a gallon a month ago and $2.71 a year ago.
Yet the seasonally adjusted light vehicle sales rate rose to 13.44 million in February, up 28 percent from February of 2010.
Gasoline prices are climbing quickly. Combine high fuel prices and troubled real estate markets and that could slow growth if prolonged through this year, he says.
"At $4.50 per gallon, an 18-gallon fill-up is $81 and at over $5.50 per gallon it reaches $100," says Taylor. "That would rivet the attention of consumers."
