On March 6, 2007, I wrote the following post for Techshake:
“Within the context of buying a new car or truck, people often ask me whether I think gasoline will be $4 a gallon or $5 a gallon soon. In case you have the same question, here is the general answer I give them:
Oil is being depleted steadily while demand worldwide continues to rise. There are no indications currently that any new oil reserves in any significant amounts will be suddenly available in the future. There are no indications currently that demand for oil will do anything except increase dramatically in the next 20 years.There may be hiccups in the price of oil that manifest themselves as price plateaus such as the one we had recently, but the long-term forecast is for oil prices to continue their steady trajectory upward over at least the next two decades. Oil prices will drop when there is less demand for oil. That condition is extremely unlikely in the foreseeable future. You should prepare yourself for higher oil prices, and therefore higher retail prices of gasoline until substitutes are found for one or both. To not prepare yourself for this pricing environment is to delude yourself.
So, the summing up is this: If you’re in an income range where it doesn’t really matter how much gasoline costs, then buy whatever you wish without regard to future price increases. If you are in an income range where paying $4 a gallon of gas would take up too much of your after-tax income, then I would suggest you do the math based on gasoline being $5 a gallon (it’s not that unlikely within the service life of the vehicle) and buy what you can afford to buy gas for at that price per gallon.”
That was a little over five years ago.
Some people figured this out on their own, and made sure the next new car they bought after 2007 achieved good fuel efficiency. I wish I could take credit for what those people did, but not many people were reading our site in 2007, so, you know, I just can’t do that.
Many other people, however, based their fuel economy requirements, and therefore, their estimation of fuel costs, for the new vehicle they purchased post-2007 on whatever the pump price was the day they decided to buy that vehicle.
Many of those same people are now howling about the current price of gasoline and exclaiming loudly that somebody needs to do something. I have to ask this rhetorical question of those people: Do you not read the paper, watch the news on television, get on the internet, listen to the radio or have conversations with other people?
And I’m not asking that question to be petty or mean-spirited; what information were you getting that made you figure the price of gasoline was not going to go up? Because everything I’ve ever read or heard on the radio or seen on television or the internet made me believe that a long-term rise in the retail price of gasoline in the United States was definitely going to happen.
And here’s the take-away that I want our valued readers to get from what they’re looking at right now: Nothing’s changed from 2007; the price of gasoline is going to continue to rise.