Well, that didn't take long: thanks to falling gas prices, sales of light trucks and SUV's rose 1.2 percent last month. The good news, though, is that policy makers now know how much gas needs to cost before consumers start buying subcompacts. If I were a politician who didn't want to get re-elected, here's what I'd call for: a floating gas tax designed to maintain a steady price of $3 a gallon. If the price of crude falls, then the tax increases. Only by keeping the price of gas consistently elevated will we create a marketplace in which companies and consumers are willing to invest in fuel-efficient automobiles.
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I think that $3/gallon is actually too low to generate permanent consumer purchasing changes. I think on the whole, griping would be the main reaction. If gas were to increase to $3.50/gal for a couple of months and then drop back down to $3/gal, people would probably be relieved that gas was so cheap again. Gasoline probably needs to reach around $4/gal to make people change their automobile use habits, much less their purchasing habits.
It's probably easier to get people to change what they purchase than their driving habits. Efficient cars are generally cheaper, since size makes such a big difference to both. Also, you know what you're spending when you buy a car, but when you drive you don't notice the cost until you fill up.
You're right about changes in price, though.