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Cheap Gas Means Drivers Want SUVs, but Detroit Must Sell Hybrids

The 2015 Porsche Cayenne
The 2015 Porsche CayenneCourtesy Porsche Cars North America, Inc.

Where are the Hummers when we need them? With gas prices expected to drop as low as $2 per gallon in some parts of the U.S., the market seems primed for a Costco-ready tank. The last Hummer rolled off GM’s assembly line in May 2010, with gas at an inflation-adjusted $3.04 per gallon. Gasoline sells for just $2.77 today, a 15 percent drop from a year ago.

Moving a giant chunk of metal from point A to point B hasn’t been this cheap in years, as global oil prices sink to $65 per barrel. Drivers have noticed: From August to September, the aggregate fuel economy of purchased cars dropped from 25.8 to 25.3 miles per gallon, according to the University of Michigan’s Transportation Research Institute. That metric didn’t budge in October, even though dealerships started selling next year’s models, which are generally more efficient—a sign that drivers have been choosing SUVs over small sedans. “Consumers react very quickly to changes in gas prices, especially if those changes are relatively rapid,” said Michael Sivak, director of sustainable worldwide transportation at the University of Michigan.