BOSTON (CBS) – Drivers are doing double takes as they pass by gas stations advertising regular unleaded for less than $2.00 per gallon.
“It’s like 1980 all over again,” one motorist told WBZ.
Inexpensive gas has the ability to put more money in people’s pockets. It can also encourage them to drive more. And as car dealers are quick to point out, low gas prices have a powerful effect on how people shop for new cars.
David Rosenberg, the CEO of Prime Motor Group, puts it plainly: “People have very short-term memories.”
Rosenberg recalls a time just a few years ago when a gallon of regular unleaded cost more than $4.00. Back then, he says, “We couldn’t give away SUVs. And everyone was trading in their Chevy Suburban for a Toyota Camry or Toyota Corolla or a Toyota Prius, and they were worth nothing.”
“And then gas prices get low and everyone wants to drive the big SUVs again.”
Today, Rosenberg says, those Priuses have lost a lot of their value while and those big SUVs are worth a fortune as trade-ins.
“Everyone thinks that the conditions today are never going to change,” adds Rosenberg. “And when gas prices are high, they think those conditions are never going to change. So, you will see vehicle demand go up and down.”
His advice? If you’re buying a new gas-guzzler today, make sure to leave room in your budget for much higher gas prices in a couple of years – or sooner — just in case.