The rising cost of gasoline threatens to stall an already anemic economic recovery, leaving many Americans to wonder whether another recession might be just around the corner. Among industries that could be deeply affected by the rising cost of fuel is the domestic automotive sector, which has only just begun to return to prosperity.

Both Ford Motor (F) and General Motors (GM) recorded stellar profits last year as both consumers and businesses resumed new-car purchases. On Thursday, GM reported its first profit in six years -- totaling $4.7 billion for all of 2010. That's the best performance the Detroit-based company has seen since 1999, when sales of gas-guzzling sports-utility vehicles and pickup trucks drove up profits.

Similarly, Ford reported in January that 2010 was its best year since 1999. Last year, the Dearborn, Mich.-based automaker racked up $6.6 billion in profits as sales jumped 20%, in part because of rising demand for its full-size F-Series pickup trucks.

Consumers May Put the Brakes on Car Purchases

But just as it did in the summer of 2008, when prices at the pump soared above $4 a gallon, the cost of gasoline may give car buyers reason to pause and cause vehicle sales to stall.

Gas prices on Friday were nowhere near those lofty levels, but consumers are indeed shelling out a lot more. At a nationwide average of $3.29 a gallon, according to AAA's Daily Fuel Gauge Report, filling up costs 22% more than it did a year ago.

Three years ago, when gas prices hit record levels, consumers put the brakes on purchases, contributing to the recession, says Jill Schlesinger, editor-at-large at CBS/MoneyWatch.

"You also saw the car sales plummet after that," Schlesinger told the MarketPlace Morning Report radio program. "And certainly when you look at the U.S. automakers now, if gas prices are up, this really does not portend well for them."

Still, gas prices will have to rise a lot more -- reaching the range of $4 to $4.50 a gallon -- before consumers start thinking twice about buying new cars and trucks, says George Magliano, auto analyst with IHS Global Insight. Further, he says, pump prices will have to stay at those high prices for a sustained period -- a year or two, before automakers begin seeing a shift in buying habits.

Fuel-Efficiency Will Be a Key Consideration

The reason for the drawn-out response lies in the automakers themselves, "It's different from the way it was in 2008," Magliano says in an interview. Car companies now offer a greater number of smaller, more fuel-efficient vehicles and can make money selling them. They also sell fewer big cars and trucks, he says.

Chrysler Group, the smallest of the Detroit Three, is perhaps most vulnerable of all. It has yet to return to profitability, despite improved sales last year, and its vehicle lineup is one of the thirstiest in the industry, according to the Environmental Protection Agency.

With an average 18.7 mpg for its fleet, Chrysler trails Ford's average, 20.5 mpg, and GM's 19.9, and is significantly lower than that of Toyota Motor (TM), the most fuel-efficient manufacturer in the U.S. with a fleet average 25.4 mpg, based on final production data for the 2009 model year, the most recent available.

High fuel prices may not only affect the automakers' sales but their stock prices as well. Despite its upbeat earnings report on Thursday, shares of GM sank to the lowest levels since the stock went public last November. Higher gas prices combined with instability in the Middle East led U.S. markets down overall. GM shares sank as low as $32.05 each, before rebounding to close at $33.02 -- just pennies above last fall's initial offering price.

That's proof that GM, despite its remarkable comeback, can't escape problems half a world away. Fear of uncertainty in the Middle East and higher gas prices directly affect car sales and GM, Gary Bradshaw, investment analyst at Hodges Capital Management, said in an interview on NPR.

"I think that person walking in the showroom, when he walks by a pump and it's $3.29 or $3.39, they're going to think, 'well, you know, maybe I ought to hold off and wait a little bit,'" Bradshaw said. "And so there's a little hesitation right now."

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Neither Ford, nor Toyota required a BAILOUT to remain very good auto makers while GM sank. Wonder if they are setting us up for another BAILOUT?

March 07 2011 at 6:28 AM Report abuse rate up rate down Reply

Gasoline prices will not do the damage to GM that government interferrence will do.The only reason GM exists is the BAILOUT that came from all of our pockets to support the demands of the ever demanding UNIONS who ruined GM before and are back in control again. Our government keeps demanding investigation of Toyotas simply to make it appear that the NUMBER ONE AUTO PRODUCER should not outrank GM.
I'm not a fan of Japan but they make a very good automobile.

March 07 2011 at 6:24 AM Report abuse rate up rate down Reply

Want to buy some land? there is a house with many rooms and quite a bit of land in D.C. that was bought for $700,000.00 IN 2008, IT IS LOCATED AT 1600 Pennsylvania Avenue Mike

March 06 2011 at 3:12 PM Report abuse rate up rate down Reply

We have plenty of oil and should go get it and tell OPEC to go take a walk, this would creat plenty of jobs abd we should put a high tariff on Chinese goods this would put Americans back to work immediately, but this is what happens when you put a rookie senator in charge paired with the old foggies so the people deserve to suffer. Mike

March 06 2011 at 3:05 PM Report abuse rate up rate down Reply

There is an email circulating around now to boycott the biggest of the big, Exxon/Mobil. If we could band together and do that, and get to their profits, it may cause them to lower prices. Then the others would follow suit. It would take a concentrated effort though from alot of people. I would say to start this as soon as possible, and take it through Memorial Day. That is the offiical opening of the summer driving season. Between now and then, DO NOT BUY EXXON/MOBIL PRODUCTS. LETS SEE IF WE CAN COME TOGETHER AND AMKE A DIFFERENCE.

March 02 2011 at 7:04 AM Report abuse rate up rate down Reply

pass this on, and repost it on everything you see about oil, high gas prices, or anything related to gas or oil...TAKE OIL OFF OF THE STOCK MARKET, NO MORE SPECULATORS OR SPECULATING ON OIL! all it is doing is making big oil richer, and the speculators are laughing all the way to the bank. and DRILL! DRILL! DRILL!! open up the Alaska wilderness and let's tap that oil. we need it now, not in another generation or two...the animals will be ok, and they will adapt, as they are already doing so.

February 28 2011 at 5:00 PM Report abuse rate up rate down Reply

Another idea is for the auto makers to agree to a univeral battery for EV. Gas stations can keep a supply of fully charged batteries. When a EV runs low on battery power, the driver goes to the nearest gas stations, pay a standard price, and swap the battery in the car. I am sure someone will work out the details but this will make it possible to travel longer distance without having to worry about charging the battery.

February 28 2011 at 10:12 AM Report abuse rate up rate down Reply

In order for EV to take off, the cost of the battery must come down. We need to encourage more solar power, not a centralized solar farm, where there is energy loss in the transimission but rather solar power on roof tops of homes, warehouses, single story supermarkets, malls, lamp posts, etc. Batteries will be used to store unused electricity during the day when homes are not occupied and lights on lamp post are not turned on. The utility companies should be the ones investing in solar power as this will provide a new source of power during the hot days of summer for AC. The batteries on lamp posts will provide lights even if power lines are blown down in winter snow storms.
As more batteries are produced, the cost will go down and make the cost of EV more affordable.

February 28 2011 at 10:06 AM Report abuse rate up rate down Reply

Mid-east unrest.How about a little American unrest over speculators running the price of crude up. Enough American unrest and we can get crude taken of the New York Stock Exchange. It should not be there, it should be on the commodity market and controlled. No more gambling on crude if you want to gamble go to the casinos,

February 27 2011 at 11:20 PM Report abuse +2 rate up rate down Reply

I am tired of having to pay high gas prices because of a religion being shoved down my throat. Blind obsession and totally closed to an opposing viewpoint that has the same amount of fact backing its claims is going to destroy this country. Forcing me to accept your religion will just make me rebel, even tho some of it is what I believe. I am talking about the GREEN religion. Stop with the regulations because Al Gore(a known LIAR) said we need them.

February 27 2011 at 6:00 PM Report abuse +1 rate up rate down Reply