zerohedge.com / by Tyler Durden on May 31, 2016 7:30PM
Sadly, everyone has seemingly forgotten that the lessons of the past can help prepare us for the future. For example, one would assume that the sting of owning an truck or SUV during the financial crisis would stick with consumers long enough to deter them from falling back into the same trap again just because oil was trading lower… then again, just as assuming market participants would remember that time period, one would be wrong.
So here we are once again. Last year, SUVs outsold any other type of passenger vehicle in Europe for the first time, and the trend has continued into 2016 as Bloomberg reports.
The same is occurring in the US, as today light trucks, vans, and SUVs account for 60 percent of the total vehicle sales, a level only reached briefly in 2005 when Brent averaged $55/bbl – meaning that once again low oil prices have lured consumers back into buying less fuel efficient vehicles.
In April, the average car sold achieved a fuel economy of 25.2 mpg, down from a peak of 25.8 mpg set in August 2014. As Bloomberg notes, at current trends, 2016 will mark the first drop in average US fuel economy since at least 2007.
“Fuel economy improvement is really flatlining. The gains completely stopped right at the same time that oil prices started to decline” said Sam Ori, executive director of Energy Policy Institute at the University of Chicago.
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