Friday, April 15, 2005

Gas Prices Keep Rising

As the gas prices continue to rise and are currently at $2.67 per gallon for Unleaded, people are turning to hybrid engine cars. These cars currently get 55 miles per gallon. The hybrid cars are now in high demand and Japan is working to mass produce them. Some people who currently own these hybrid cars are trying to sell the cars for more than they paid for them to make a profit. One man posted his car on the internet for $37,000 ($10,000 more than he paid). So far he has had many offers and people seem to be willing to pay any price to save money on gas prices in the long run. What do you think about the rising gas prices? Do you think that these hybrid engine cars will slowly take over or gas guzzling cars that we have today? Would you be willing to pay a lot of money for a hybrid engine car?

5 comments:

Natalie said...

As gas prices increase the demand for hybrid cars increases, causing an immediate increase in the price of these hybrid cars. Because the demand for the hybrid car increases, the quantity sold increases. When quantity increases the price of the hybrid car would increase until the high price encourages suppliers to supply more. As they continue to produce more the price of the hybrid car eventually drops back down to a new equilibrium price. Ceteris Paribus, the demand for hybrid cars will be greater than the demand for gas cars.
I wouldn’t spend a lot of money on a hybrid car right now due to the fact that I’m going to an expensive college. For me the cost of the hybrid car does outweigh the benefits, but each person would have to do their own cost/benefit analysis.

Ben B. said...

While there is no doubt in my mind that increasing gas prices will result in Americans increasing their demand for more fuel efficient cars, I believe that there is a more important issue at hand. What is often overlooked is the fact that the majority of electricity used to power hybrid cars is in fact created by power plants buring fuel. Because of this, I believe that increasing gas prices could also increase the price of electricity, which would make the transition from gas to hybrid not as beneficial.

Sarah Drake said...

I'm not so sure that a large amount of people will change to the hybrid cars soon, maybe eventually if gas prices continue to be so high. Right now though, many people are trying to just wait it out until they are lower again. Currently, I would definately not pay a lot of money for a hybrid car, especially not more than it was worth in the first place as in the ebay case. Hopefully, gas prices will go down soon anyway.

Rachel Ruth said...

Hybrid cars generally are expensive, but in Dr. D's class we looked at a Honda and it was in the low 20k's I believe. Honetly, I believe that the American tolerance level for gasoline is much higher, and until we reach 4-6 dollars for a gallon, none of us will make severe lifestyle changes. And don't expect gas to come down either.... a cheif economist recently spoke here at MC and she noted that when you start to see M & A activity in this industry, it's only because companies forsee the price of oil to stay high. Take the Texaco merger recently for example.

Amie said...

I think government should force to produce more hybird car to prevent some people from selling at high price. The demand for this kind of car is increase significantly, if the supply doesn't rise up also, the price would be incredible high. I think it's the only solution since oil is a scare resource, I don't expect the price of it to fall.