Gas prices to force 10 mn vehicles off American roads: Study

June 27th, 2008 - 1:43 pm ICT by IANS  

By Gurmukh Singh
Toronto, June 27 (IANS) With gas prices forecast to reach $7 a gallon in the next two years, America will witness the `greatest mass exodus of vehicles from the roads in its history, warns a report by a top Canadian bank. The rising fuel prices will soon dramatically change driving behaviour in America, the report by the Canadian Imperial Bank of Commerce (CIBC) said Thursday.

Prepared by CIBC World Markets (the bank’s main division), the report said, “The freeways are about to get less congested. Not only will the number of vehicle registrations in the United States not grow over the next four years, but by 2012 there should be roughly 10 million fewer vehicles on the road in America than there are today.”

It said the sales of SUV and light truck sales, which until 2006 accounted for almost 60 percent all vehicle sales, will drop to less than half that level by 2012.

“For the past half century, America has spent the bulk of its infrastructure money on building highways - only to see that soon, $7 per gallon gasoline prices will lead to fewer and fewer people using them,” the report said.

Tracing the declining vehicle sales since 2004 when gasoline cost just $1.80 per gallon, it said, “After averaging close to 17 million units per year over the first half of the decade, sales have already declined to 14 million, and are expected to decline further as pump prices rise to as much as $7 per gallon. In fact, we expect vehicle sales to fall to as low as 11 million units by 2012.”

The biggest victims of surging gas prices will be 24 million American households earning less than $25,000 annually. “One in five of those low income Americans, or roughly five million households, will probably stop driving or give up the second vehicle,” the report said.

Canada will be slightly less hit than the US. “Canada will feel the pain, but it’s not going to be the same as in the US,” CIBC economist Benjamin Tal told a TV channel.

He said there will be about 700,000 fewer cars on Canadian roads by 2012 and a 10 per cent decrease in average kilometres driven.

“In Canada more low-income Canadians have access to public transportation, therefore the adjustment will not come from them. The adjustment will come from middle class families that will start giving up the second or third cars,” Tal told Canadian TV.

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