The Oil Dividend, Part II

I find this piece of news to be a little disconcerting. While auto sales are off over 30% in the last three months, the share of pickup and SUV sales in the US market has actually increased.

When you think about it, it makes sense. The price of gasoline has decreased dramatically from summer highs. The average price for unleaded gasoline in my area (Southeastern Delaware County, PA) is under $1.90/gal.; off from highs of $4.00+ in July. Additionally, car dealerships are practically giving SUVs and pickups away to deplete inventory and prepare production (well, for Ford at least) for more fuel efficient vehicles. This ramp up in production of fuel efficient cars was a response to consumer demand for compact vehicles in the wake of - you guessed it - higher gasoline prices.

While lower gas prices are a welcome respite to a seeming endless stream of bad economic news, they are surely temporary - a benefit of a decreasing demand. The question remains where the Obama Administration will come down on the position of increasing supply through offshore drilling and ANWR exploration once this demand curve recovers.