If successful, the Tata Nano will likely push up gas prices
I'm not quite sure why I put "likely" in the headline to this post. I can't think of any scenario where the ultra-cheap Tata Nano sells millions of units in India and China and other "developing" countries but doesn't have an effect on gas prices in the rest of the world. I mean, if a million more people need to buy gas (or more gas, if they're used to scooters) to get around, that's a lot less gas that's available to the people who use it today, no?
This possibility is the subject of a CNN story that quotes oil analyst Peter Beutel as saying that, "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." Beutel's estimate is that $4 or $5 gallons of gasoline could come to the U.S. much sooner than 2015. Considering that the 50+mpg Nano is kind of a gateway car and that larger, thirstier vehicles will be offered to the people who outgrow the Nano, then what?
Gallery: Tata Nano: The People's Car
Related:
[Source: CNN via Autoblog]
Reader Comments (Page 1 of 7)
Wise Golden 3:04PM (2/05/2008)
I think that you are likely right on the idea of this type of car pushing up the cost of Gasoline. At the end of the day, though, I know that it will take $4,5,or even $8per gallon gasoline to get a portion of America to start cutting back. We've talked a lot about mandating conservation in the form of higher CAFE standards and incentivising alternatives like ethanol, hybrids and EV's. (I'm fine will all of that.)
As for me, I think it's a lot simpler than all of this. I think that if our government would simply place a regulated "floor" on the price of oil, the whole thing would just take care of itself. It's not likely to happen because our politians are cowards and afraid to tell the majority of Americans that they are wrong. Folks -- this is NOT a Democracy, it's a Republic. We elect people to be smarter than us -- and they don't always make the best long term decisions for our country.
We have $100/br oil and if the industry knew that that price would never fall below $100 (in fact if it could not fall below $100,) industry would swing into motion and solve the problem for us. But oil is not going to stay at $100. As soon as America cuts it's use by as little as 5%, oil will drop to $40/br. It will bankrupt all of the companies that have made investments in ethanol, bio-deisle, solar, ect. In fact, it will hurt the oil companies (I know - cry a river.)
This little car might just allow us to move our dependancy from the US to China and India if this car proves successful at keeping oil prices high. The bad part is that this little car will likely produces 5 times the environmental pollution of an American SUV per mile driven.
All of this mess could be solved over a period of 8 years with a simple act from Congress stating that oil will never be allowed to go below $100/br. The market would solve the problem for us. I know that this sounds like regulation and many are oposed to regulation. I'm as conservative as they come and I feel that there are a few areas that government should regulate. Energy is one example. Environmental compliance is another. Requiring seat-belts is another. Not being allowed to steel, rob or murder is an extreem example. Our government regulates all the time if it's in the best interest of the nation -- energy is our biggest issue at the moment and will become a larger issue as time passes.
My fear is that we will wait until it's painful, and if we do, it will be the fault of our government (both Democrat and Republican) for not heading off a potential economic disaster.
I am clearly in favor of expanding ethanol, nuclear, clean coal, wind, solar, hydro, domestic oil exploration, hybrids, EV's, converting oil burning homes to electric, tranes to electric, and so on and so. We will have to pay a price to do these things, but we should view it as an investment with a measurable return. And we had better do it quick because a storm over oil is brewin' and we very well be the ones left out in the rain. Even if we're not the ones, it's entirely likely that we will have to use force in the future to secure our supply. We may have to kill people to keep this black gunk chugging towards our shores. Or, we could make ourselves rich and creat a whole new industry employing million. Seems like an easy decision to me.
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Wildgoosechase 3:20PM (2/05/2008)
Oil prices have continued to rise as demand for cars have risen worldwide. This has impacted nearly every product we buy, including the price of food. This is precisely why ethanol is vital to our future economy. Everyone knows it will be imposible to replace our oil imports with it, but bio-fuels like E85 dampen the rise in the price of oil by providing an alternative.
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Throwback 3:30PM (2/05/2008)
We elect people to REPRESENT us, not be smarter than us. The problem with a floor for gas (TAX)is what will the money go to. It's not like we don't pay a lot of taxes already. If I have to pay higher taxes on gas, where do I get relief from? Should I not save for my kids college tuition, or retirement because the government wants more of my money to spend?
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stevejust 4:10PM (2/05/2008)
@WiseGolden:
The threat of the Tata is that there won't be a need for the madated floor you speak of; that the demand in the developing world will ensure that any loss of demand in the developed world will be poured into the tanks of Tatas.
Now, one part of the analysis that is lost is if the competition for the gasoline accelerates the way I believe it will, there might be a time in the near future where you've got a bunch of Tatas sitting in people's driveways in India idle because while they might have been able to afford to buy the $2,500 car, they won't be able to afford to fill it with gasoline--anymore than your typical $50,000-a-year family with a $30,000 SUV sitting in the driveway of their sub-prime mortgaged McMansion in the suburbs can.
And I will sit back and shake my head at all the people trying to analyze what Tata did wrong when they hit financial troubles, and I will laugh when the media says, "no one could have predicted this."
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Mort 4:56PM (2/05/2008)
Someone will undoubtedly come up with a cheap EV conversion package for that. It looks light, and probably has standard steering and brakes.
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rgseidl 5:05PM (2/05/2008)
Oh right, so it's all India's fault. How about looking at the numbers: India currently consumes 1 barrel for every 9 consumed in the US, yet has a population that is almost 4 times as large.
Perhaps Mr. and Mrs. America would like to review their own consumption patterns before they start pointing fingers at everyone else.
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Charles S 7:14PM (2/05/2008)
I don't like tax for fuel not because I dislike taxes (as we need it for infrastructure and maintenance), but because it is not a good way to raise revenue. At the time when we try to encourage conservation and reduce importation of fuel, the end result would mean that we'd want people to use LESS fuel, thus taxing fuel by the gallon will only backfire.
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texmln 9:56PM (2/05/2008)
Obviously the solution is e85! We just need to start turning as much of the world's food supply as possible into ethanol for use in the U.S. Pretty soon these annoying third world 'undesirables' will simply starve and cease to be gasoline consumers. Cheap gas will soon follow. And less illegal immigration. And less crime.
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BlackbirdHighway 5:44AM (2/06/2008)
If successful, the Ford Expedition will likely push up gas prices.
If successful, the Chevy Suburban will likely push up gas prices.
If successful, the Ford F150 will likely push up gas prices.
If successful, the Dodge RAM trucks will likely push up gas prices.
If successful, the Hummer will likely push up gas prices.
If successful, the Toyota Tundra will likely push up gas prices.
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Tim 10:35AM (2/06/2008)
rgseidl (#6)
Do you REALLY want to have the same standard of living in the US as they do in India?
Before you answer that, you NEED to go visit India.
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dilioi2601 8:17PM (2/06/2008)
How about a Nuclear Car. Based on calculation a nuclear car the size of the Ford Excursion willl used a little cell of plutonium and will go 50 years without refueling.
How about that ?
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USABargain 8:38PM (2/06/2008)
They should stick that car on this Believe it or not site, of Bigfoot , UFO's and many other crazy things...
http://heather48dd.bravejournal.com/entry/20870
at least that's what I think...
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Doug 8:45PM (2/06/2008)
I sure hope those people in India and china are paying through the nose for gas too. I doubt it though. They are paying probably less than a dollar a gallon is my guess. We are probably subsidizing them. I have yet to read what the price of gas is over there. Anyone know?
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brian 8:57PM (2/06/2008)
Thanks for the misleading headline....."if people buy more of these...."
Instead I get commentary, if thats waht you want to call it, from a witty little punk.
Get real Sebastian, this country has huge problems, corrupt and diabolical leadership, foreign dependance, loss of high paying jobs to communist governments, just to name a few.
Grow up Sebastian, turn your friggin hat around, pull up your pants....we've got a helluva lot of work to do, and if we dont do it, you might get to die for your country someday soon. War is what is next.
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Teri 9:02PM (2/06/2008)
That car is positively the worst looking that I have ever seen. No way would I personally buy a car that looked like that !
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Tom 9:07PM (2/06/2008)
The Nano is a bold concept and if done correctly, will reshape the American philosophy on transportation. This vehicle is being introduced more out of necessity than greed. Families riding on mopeds seems irrational to me and I wouldn't subject my family to that if avoidable. Imagine if Americans replaced a fraction of their transportation needs (like a quick run to the store for milk nd bread) with the Nano. Our oil consumption will go down, not up (let's also be realistic that under normal circumstances inflation will drive up the cost of gas anyway). This reversed trend of oil consumption will not make the Middle East happy (I am cynical in believing a collapse in world oil consumption will devastate the volatile Middle East economy), yet we all have to be reasonable and say "Will oil last forever?" I think not and the sooner we shift from a fossil fuel based power grid and transportation system to renewable alternatives will only make our planet a better place to live. The Nano is a wake-up call to the Oil and Energy Industries to stop milking the consumer and do some worthwhile investing with the fat profits you are earning today!
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MIKE 9:12PM (2/06/2008)
simply, if this world revolves around oil, then we need to get into the market, we have plenty of oil right here at home, yet the liberals have banned anykind of drilling, or exploration, liberals have also banned the building of refinery's. you right, we need to all buy motorcycles, and scooters, and have our demand for oil go down, you'll see the oil companies dropping the price like crazy
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osborn120 9:20PM (2/06/2008)
Jimmy Carter was a peanut farmer and got 3.00 -4.00 a jar during his term and Bush got record profits for the oil companies. People just don't get it.
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Rick 9:19PM (2/06/2008)
I would get one of those but I doubt it would do well in the 6 inches of snow we have on the roads here, or durring mud season where my vehicle with fat tires sinks up to its axle. Looks like 4" or so clearance.
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patrickgawne 9:31PM (2/06/2008)
As has been previously asked in this thread, what about Nuclear power units? If we had spent 1/10th the effort developing and refining nuclear power in the last 20 years that we have spent on I/C engines, we might have the ability to produce cars and trucks that are actually fuel efficient. As a by-product, we would eliminate the need for use of fossil and biological fuels to produce electric power for our homes and businesses.
Instead, we continue to base our National Energy Policy on a poorly written movie script from the 1970's. It's too bad that people in the early 1900's didn't fall for all the fearmongering then over the horseless carriage that we in the 80's fell for the Anti-Nuclear campaign.
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