Falling oil prices are driving up stock prices, increasing consumer discretionary spending, and compelling car buyers to steer away from hybrid vehicles. Art Wheaton, automotive industry expert and senior lecturer at Cornell University’s ILR School, says that overall, the lower oil prices have a positive impact on industries ranging from cars and trucks to restaurants.

Wheaton says:

“Lower oil prices have an overall positive impact on the auto industry. Consumers are likely to purchase higher-priced and bigger vehicles if gas prices are low. These vehicles generate more profits but get worse fuel economy.

“As gas prices fall, consumers have more discretionary income and are more willing to buy or use their vehicles. Lower gas prices also tend to hurt small car and hybrid vehicle sales as people choose comfort over miles per gallon.

“Consumers use gas prices as a gauge of their budget. If gas is low they are more willing to spend money on restaurants, vehicles, movies and other goods. When gas prices are high they focus more on fuel economy, fewer trips and saving money.”

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