Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
I think Jerome is correct instating that it's not the amount of the price of petrol overall that causes a shift in vehicle type but the amount over a short period of time.  Two examples:

(1)  The 1973 Yom Kippur War and ensuing petrol price increases and shortages caused a major change of vehicle usage in the US.  The congress enacted legislation in 1975 that mandated increased mpg and this did rise until 1987 to 26.2 mpg. (http://uspolitics.about.com/od/energy/i/cafe_standards.htm ) All of this occurred due to the "shortages" and doubling of the price per gallon.  If I recall correctly the price was about .32 cents per gallon and rose to something like .79 cents give or take.  The prices in GB, where I was at the time were already hitting a quid for a UK gallon - about $2.40.  Upon our return to the US in 1976, we were able, by 1978 or so to buy a Honda Civic than got 42-48 mpg, and the trend was definitely downsized foreign made vehicles.  I've never bought anything but Honda sedans or hatchbacks since and the Honda became for a time the most popular car on the road.

The unfortunate loophole in the 1975 legislation was that it exempted small trucks, thus over time even though petrol prices have risen, so have wages, and people became accustomed to paying more (still only $1-$130) until a year or two ago.   The small truck loophole led to invention of "cars" built on truck frames, thus the SUV with no cap on mpg.

(2) One of my relatives manages a small business providing a line of products including installation. The business runs on a shoestring budget in order to make a profit because the products are probably considered non-essential luxury items, but lots of people that don't make huge salaries want them.  Most of the companies employees are basically unskilled workers when hired on but they receive training and are paid relatively low wages.  When the price of petrol started to rise dramatically a year or so ago quite a few employees said they would have to quit because they could no longer afford to commute from outlying areas (lower housing costs).  The company held fast and the price of petrol gradually became lower.  Now, even my relative is worried that the company, which uses a fleet of inexpensive relatively low petrol mileage vans, will not be able to afford the price of petrol soon.  He has to replace the fleet soon, but there are no real choices on the market that meet the company's size requirements.  Should the price of petrol suddenly hit $4-$5 this summer, the company (typical of many I suspect) and its employees will face a major crisis.

I can swear there ain't no heaven but I pray there ain't no hell. _ Blood Sweat & Tears

by Gringo (stargazing camel at aoldotcom) on Wed Jun 20th, 2007 at 10:57:42 PM EST
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