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Cheap cars in developing nations mean higher gas prices everywhere

post #1 of 2
Thread Starter 

Ah yes, the expansion of the car culture.  How might it affect those of us who already rely on gas to get to work?  Here's an article from CNN to give you an idea...



The debut of the $2,500 car may be billed as a mobility breakthrough for billions of people in the developing world, but for U.S. motorists it could mean one thing: higher gas prices.


Rising demand from the developing world has long been cited as a main driver behind the runup in oil prices. That demand will only get more intense with staggering growth in car sales - and by extension, gasoline use - in places like India and China.


"We'll get into a situation where we'll have to compete with them for gasoline, $4, $5 a gallon, who knows how high we could go." said Peter Beutel, an oil analyst at the consultancy Cameron Hanover.


He says that time could come much sooner than 2015, when light vehicle sales in India are expected to total over 3 million - doubling 2006 sales - according to J.D. Power & Associates. In China they're expected to nearly triple - to over 17 million - roughly on par with projected sales in the United States.


That huge growth doesn't even begin to scratch the surface of potential car buyers in those countries though. The 2 billion-plus combined populations of India and China could one day dwarf the 300 million potential car buyers in the U.S.



China is expected to nearly quadruple its fuel consumption for motor vehicles by 2030, according to the Energy information Agency. In India it's expected to rise nearly three-fold.


By comparison, growth in the U.S. is only expected to be about 40 percent, although fuel use in the U.S. will still be more than twice that of China thanks largely to the bigger vehicles we drive.


Sales of all types of cars and trucks are growing in India and China - as they are in other developing economies like Mexico, Brazil and throughout the Middle East.




But small, super-cheap cars are important because they are marketed to people who don't have cars. Earlier this year India's Tata motors introduced the Nano, a two-cylinder, four-person sedan that gets 50 miles per gallon and is priced at $2,500. China's Chery car company has the slightly more expensive QQ, and Nissan and Renault are reportedly considering similar tiny models.


While the vehicles are efficient - certainly more efficient than gas-guzzling SUV so popular in the U.S. - experts say their effect on gas consumption will nonetheless be significant for two reasons.


First, the people that buy them will mostly be trading in motor scooters, which get much better gas mileage especially due to their ability to whiz through Asia's traffic-clogged streets, said Lee Schipper, a fellow at EMBARQ, the World Resources Institute's Center for Sustainable Transport.


Second, these cars are seen as gateway vehicles. The ultimate goal of the car companies is to move the consumer up the supply chain into bigger - and less efficient - rides.


[Read the rest at CNN]

Edited by stins - Tue, 05 Feb 2008 20:55:33 GMT
post #2 of 2
Thread Starter 

So yesterday I posted the news that there are concerns that the Tata Nano (and other cheap cars) will drive up gas prices because of increased demand of the fuel (based on wide spread adoption of the aforementioned cheap cars).  Well, it looks like Ratan Tata, chairman of Tata, doesn't take those concerns too seriously.


Edited by stins - Wed, 06 Feb 2008 22:15:03 GMT
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