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      03-10-2011, 11:49 PM   #1
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Nada Warns $4.50 Gallon Is Consumer Tipping Point, Nascar In Trouble Too?

While it may be no secret that gas prices are on the rise, and consumers are known to dramatically alter their driving and vehicle purchasing habits when gas reaches a certain price, chief economist for the National Automobile Dealer Association (NADA) recently offered his opinion on the matter.

It goes without saying that NADA’s interests are much aligned with those of car dealers in that both must be able to predict near and long-term buying habits of customers in order to best prepare, especially in regards to product mix. As Automotive News points out, in 2008 consumers displayed a knee-jerk reaction when gas hit $3.50 a gallon, stranding large trucks and SUVs on dealer lots for months, often failing to move even with deep discounting.

“Generally it takes a level that consumers have not seen before,” warned Paul Taylor, chief economist for NADA. “Gasoline prices in excess of $4.50 per gallon are likely to have a more dramatic increase upon consumer choices.”

While the U.S. may still be about a buck off the $4.50 mark in terms of its national average, after swapping places a few times in recent days, Hawaii inched ahead of California today for the highest average cost per gallon of gas at $3.929, compared to California’s bargain-rate $3.92. Time will tell if Hawaiian and Californian drivers will play guinea pig when they invariably hit $4.50 a gallon first, or if they display some type of immunity.

One thing is for sure, NADA and individual dealers around the country will be watching the development of gas prices closely in hopes of avoiding a repeat of 2008 when hundreds of millions of dollars were tied up in vehicles no consumers could afford to drive.

Don’t forget NASCAR
Despite ESPN’s not-quite-serious article today discussing the increasing gas prices and their affect on NASCAR fans, which as ESPN points out, tend to drive the latest half-ton pickups made by the company’s representing their favorite drivers, the sports publication poses a serious question that extends beyond just NASCAR fans.

Ed Hinton of ESPN points out that a part of the tradition of NASCAR comes in the form of long road trips to the races, accompanied by tailgating. Those road trips are starting to become quite costly, especially when you figure many of the vehicles being driven to these events are averaging about 20 miles per gallon – with a tailwind. Just how long can NASCAR fans continue to drive their thirsty Rams, F-150s and Silverados? Surely not much longer, if at all, than the general American public.

Hinton goes on to point out that at some point, NASCAR may even have to reduce the distance of some races in order to alleviate an upset public’s outcry over the “wasting” of precious fuel – as seen in the 1970s when racing events of all types were canceled or shortened. In the meantime, NASCAR fans and every American alike will be forced to adapt to the changing price of fuel, whatever that price may climb to.
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      03-11-2011, 11:39 AM   #2
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Americans will scramble for the most fuel efficient car out there and dump their gas guzzlers at huge losses, just like back in '08-'09. Then we'll eventually either see prices go back down, or adjust to the new "norm" of prices, and go back to our old habits to some extent.

Gas prices and the reactions they incite from the public are really faddish IMO.
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