HinesBrad

Oil Pressure Not Helping an Economy Under Stress

I think we're missing some very obvious things that have happened in the last few years with the oil markets. One key observation I have made is that American cars overall have gotten bigger. The proportion of Americans driving big trucks, SUV's and vans has increased significantly in the last decade. Even cars - like the Nissan Altima, Honda Accord and Toyota Camry are about Double the size that they were 15 years ago. They also seem to get poorer fuel economy relative to what they did 15 years ago. Yes, the engines are better and more efficient, but those benefits are canceled out by having to haul a substantially larger car. I had a 1989 Honda Accord that got about 35 miles to the gallon highway. My new 2007 Accord gets 26 because it's much larger. The Civic of Today is the same size an Accord of yesteryear was.

What this means is that there are a few obvious benefactors: Alternatives are finally becoming competitive with oil in price/benefit analysis. It means people will finally start scaling back on their consumption. People will also start buying smaller cars (which is FANTASTIC news for Hyundai, Kia, Honda, Toyota and Nissan). It also means that solar panel manufacturers, Biodiesel and other alternatives can finally get the capital infusion they need to become competitive with big oil. I'm actually excited to see oil go even higher - lower carbon emissions, a better chance for more market choices, and less jerks on the freeway going 20 miles an hour under the speed limit in their suburbans.

Disclaimer: I hold positions in a Solar ETF: KWT, and I am also a shareholder in Honda Motor Company.