Monday, January 18, 2010

Oil Efficiency Falls in Importance, Perhaps

Oil market participants are curious to know whether oil efficiency is becoming more important to consumers buying new vehicles. Consumers say no. In fact, they say its importance is diminishing.

Consumer Reports' 2010 Car Brand Perception Survey has just been released.  The US survey was conducted in December 2009.  Safety, quality, value and performance remain the primary factors of interest to consumers according to the 2010 survey.  Efficiency, called the 'environmentally friendly/green' factor in the survey, fell 8 percentage points from 40% in 2009 to 32% in 2010.  As Consumer Reports says:
"In a troubled economy, with gas prices relatively low, green in the wallet trumps environmental concerns."
In short, the Consumer Reports' Survey indicates that the greater than two year efficiency drive which occurred in the early 1980s is not being repeated at present. Instead, 2008-2009 oil demand destruction may be more like the 1973-1974 efficiency drive which quickly evaporated.

The oil market is now receiving conflicting data from US oil consumers.  The percentage of newly purchased vehicles being cars is increasing versus SUVs and light trucks, but according to the Consumer Reports' survey consumers are saying that efficiency is less important.  Perhaps it is the wording of the Consumer Reports survey which is creating the conflict with actual US vehicle purchase data?  Perhaps we should watch what consumers do rather than what they say?

(See Oil 101 for more on prior oil demand destruction periods.)
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