I found a link to a new report from CIBC Word Markets that really made me pause to think. In the June 2008 issue of StrategEcon, Chief Economist, Jeff Rubin raised CIBC’s target for West Texas Intermediate by $20 per barrel to an average price of $150 in 2009 and by $50 per barrel to an average price of $200 per barrel by 2010.
According to Rubin,
“Under prevailing refinery margins that should translate into a near-$7 per gallon pump price within two years, a 70% increase from today’s already record levels.â€�
Furthermore, Rubin says,
“Over the next four years, we are likely to witness the greatest mass exodus of vehicles off America’s highways in history. By 2012, there should be some 10 million fewer vehicles on American roadways than there are today…â€�
“By 2012, there should be some 10 million fewer vehicles on American roadways than there are today—a decline that dwarfs all previous adjustments including those during the two OPEC oil crises. Many of those in the exit lane will be low income Americans from households earning less than $25,000 per year. Incredibly, over 10 million of those American households own more than one car. Soon they won’t own any.”
This last statistic might be more shocking to me than $7/gallon gas. For most, cars are indispensable assets — unlike say Starbucks addictions, cable television or clothes shopping.
What happens when people can no longer afford to get to work?