The only thing we have to fear... is low oil prices?

An article in today’s WSJ Autos section describes an interview with Mike Jackson, CEO of AutoNation, which is apparently the largest auto retailer in the country. Mr Jackson has an interesting take on how high gas prices are actually good for the auto industry, and, by interference, for consumers.

Jackson’s thinking goes something like this: The high cost of energy is here to stay. There never was real economic support for driving around a Hummer and not paying a small fortune to fuel it; “fundamentally incoherent national energy strategy” presented a mirage of viability, and now that oil prices are up, demand has suddenly dropped. (See GM, canceling EV-1 in favor of purchasing Hummer, under heading “Business Decisions, Shortsighted.”) He argues that auto makers now have sufficient incentive to develop alternative technologies since consumers will pay more for technology that reduces or eliminates their pain at the pump. Should oil prices drop again for a prolonged period, Hummers and Superdutys would again be in style and the electric and hybrid alternatives would again seem like eclectic fringe products.

I can see his point. Just looking at my own pocketbook, $4 or $5 for a gallon is expensive, but so is a premium at the dealership to buy the new technology. If I knew gas prices were going to stay high or climb to Europe-style heights, it would be a lot easier to justify paying more for a hybrid or electric car. But the penny-pincher in me would wince if gas dropped back down to $2/gallon. Not that we’ll ever see that again; I do think high fuel prices are here to stay, courtesy of the tremendous demand in the developing nations. So here’s to high gas prices! … How paradoxical.