U.S. sales of hybrid SUVs and other fuel efficient vehicles will prove interesting to watch this year, especially if fuel prices remain relatively low. Expert predictions about where oil and gas prices are headed vary widely. Some expect both to remain steady due to global economic conditions while others point to the return of $3/gallon gas (in the states) fueled mainly by an increase in foreign demand.

In July of 2008, oil futures hit their record high of more than $145 per barrel and several areas of the country neared $5/gal. prices at the pump. Since then we’ve seen the price dip below $34/barrel (12/08) and most recently it has traded in the $70 to $80 range. During these huge fluctuations, sales of hybrid cars have closely mirrored what we pay to fill our gas tanks.

Low gas prices encourage less fuel efficient vehicles.

In a 2009 CNNMoney.com interview, AutoNation CEO, Mike Jackson voiced his opinion that gasoline is too cheap and that the United States government should consider a gas tax to make sure the price does not fall below roughly $3.50 to $4 per gallon. While many others agreed (including executives at several auto makers) it is unlikely that higher taxes would be a popular approach to reducing our dependence on oil.

Are new CAFE standards the answer?

In a recent Wall Street Journal article Bob Lutz (General Motors Vice Chairman) stated that GM will continue to build hybrids due to more stringent federal fuel economy standards even though the company most likely will always lose money on hybrids. Lutz also predicted that hybrids will never comprise more than 10% of the U.S. car market.

Bob may be right, especially if the cost of gas remains low. Last year the best selling hybrid in the U.S. was the Toyota Prius with about 140,000 vehicles sold. Not bad, but that put the Prius in 16th place. The Ford F-Series pick-up was #1 selling vehicle (413,000 sales) and two other trucks cracked the top ten.

In Japan, the Prius was the #1 selling vehicle last year.

The difference? Government sponsored tax breaks and incentives combined with much more expensive gasoline (over $5 per gallon in US dollars). A similar trend unfolded all across Europe with fuel sipping cars like the Volkswagen Golf (570,000) and Ford Fiesta (472,000) outselling all others. A litre of petrol in many European countries is currently the equivalent of $7 per gallon gas (U.S). If gas ever reaches those levels here, you can bet that hybrid cars, phevs and electric vehicles will be hard to find.

World Gas Prices By Country (converted to U.S. dollars per gallon)

Data from wikipedia and gas buddy

If you live outside of the U.S, how much do you pay for gas/petrol?