The great tipping point toward higher fuel economy in American vehicles did not come directly from higher fuel prices but resulted from fuel shortage: long lines at the gas pumps, uncertainty of getting fuel at all, hoarding fuel in gas cans. It was having to get back in line so soon after filling the tank that was the killer. Heading home for Christmas in 1973, I was on the 43rd bus for Cleveland out of Chicago that day. The bus station was a zoo, because there was no certainty of being able to get fuel. That day will come again. If the Straits of Hormuz get closed, it will be chaos.

Economists have been slow to grasp the impact of changes resulting from the ever growing increase in income and wealth inequality in the U.S. The middle class is maxed-out and has run out of disposable income. The auto industry, by continuing to focus profitability efforts on high-end cars and trucks, and ignoring basic transportation needs (or even knowing how to make a profit on a base vehicle) is becoming more and more dependent on the top 5% income bracket. That's a limited market.

The company that figures out how to build a profitable small go-fer commuter vehicle which comfortably and safely seats two (plus 2), provides 500 mile range on a 9 gallon tank, and costs under $12,000 will have a killer ap when the next fuel crunch comes.

Let's see -- 50,000 vehicles per year at $7,000 profit each versus 500,000 at $1,500. Which would you chose, and which pumps up the economy and provides more jobs? The auto industry has forgotten that cars are a disposable, depreciable commodity. By making cars more expensive, the turn-over time has increased from 3 years to 9 years, resulting in less total cash-flow moving through the system.

Fred,

Having lived through the gas situations of the 70s myself, I agree. Nothing drives home the idea of a scarce resource quicker than rationing. People would pay $4 per gallon, but as soon as you tell them that they can only have 10 gallons this week, they get upset.

What I find interesting is the rapid acceleration of sales of B-segment cars here in the USA. The success of the Honda Fit, Nissan Versa and Toyota Yaris is the reason why Ford will have a new B-segment model by 2009 here in the USA and why even VW is seriously looking at selling the next-generation Polo here.

And B-segment cars don't need to be cramped, if you've ever sat in the Fit or Versa (both can seat four adults comfortably).

There are plenty of small, inexpensive, high MPG vehicles available today in the USA. The economy compact and sub-compact segments have seen some significant gains in market share due to higher fuel prices. But, most consumers continue to walk right by these cramped, less safe economy cars to buy something larger, safer and more comfortable with far more utility due to more space. The fastest growing segment in the US automobile market right now is the compact crossover SUV segment. This should make most of the far lefties on this board at least somewhat happy.

I love these internet chat boards where people talk about closing the Straights of Hormuz. It’s kind of funny and ridiculous all at the same time. Other than the US or Great Britain, what country has the Navy and/or Air Force to close the Straights of Hormuz? If Iran tried, the US could eliminate Iran’s entire Air Force and Navy within 24 to 48 hours. Even if someone surprised NATO and disrupted shipping by sinking a few ships or laying a few mines, the US Navy would have it reopened in days, a week tops in some kind of bizarre worst case scenario. Do most of you have any idea how superior the US Navy and Air Force are to every other Navy and Air Force on the planet?

P.S.: Iran certainly won’t even try to close the Straights of Hormuz before late January 2009. GW is just itching for an excuse to turn Iran into one great big burning oil slick, and he has the ammo to do it.

RS,

I agree that personal freedom does not include buying a large gas guzzling vehicle that uses up all of OUR limited resources and pollutes OUR air. That person's freedom stops when they harm others.

This is unacceptable to many eco-Nazis, so they want to force their choice of vehicle on everyone else.

I bet you're kind of sad that people aren't launching at all this sad chum you're tossing.

good morning.
the cars that harm the environment should be chang by another one less pollution.and i wonder if there any new ideas,like machines working on magnatic fild actually its my idea.or on H2o by separating the o2 from H2.
thanks....