President Obama is warning Americans not to get too used to low prices at the pump, saying that people will be hurting when gasoline prices rise back to previous levels.
“I would strongly advise American consumers to continue to think about how you save money at the pump because it is good for the environment, it’s good for family pocketbooks and if you go back to old habits and suddenly gas is back at $3.50, you are going to not be real happy,” Obama said, according to The Detroit News.
“The American people should not believe that … demand for oil by China and India and all these emerging countries is going to stay flat. Just demographics tell us demand is going to continue to grow, that over the long term it will grow faster than supply and we have to be smart about our energy policy,” Obama added.
Obama’s remarks came as he is touring the country’s auto manufacturing hubs, including a Ford plant that got federal funding for electric cars. Obama will address plant workers and reporters Wednesday afternoon and talk about his administration’s role in financing Ford’s electric and hybrid car factories.
Electric and hybrid cars have been touted as an alternative to gas vehicles because they don’t need to use high-priced gasoline — a year ago the average national gas price was $3.31 a gallon. But now that gas prices have fallen below $2 a gallon for much of the U.S., electric cars are looking less attractive than before.
But because of a $85 billion auto industry bailout and billions in spending to help the fledgling electric car industry, U.S. automakers are producing light-weight hybrids and electric vehicles that can meet stringent federal fuel standards imposed by the Obama administration.
The Obama administration gave Ford a whopping $5.9 billion for 13 factories to build hybrids and electric vehicles, including the Focus and C-MAX. The factory Obama is visiting previously produced SUVs, but was retooled to produce smaller cars.
“It’s been a good deal for the American taxpayer. It’s been a good deal for autoworkers. It’s been a good deal for America and it saved about a million jobs,” Obama said.
But Detroit News notes that Ford Focus sales fell 6.4 percent over 2014 levels and C-MAX sales fell 21.6 percent.
Low U.S. gas prices are the result of plummeting oil prices, which have fallen more than 40 percent since June 2014. Oil prices are falling as U.S. oil production from shale booms and demand for oil lags, creating a supply glut.
Prices were pushed down further around Thanksgiving time when OPEC voted not to cut production to buoy falling prices. The move shocked markets and drove oil prices down even further.
Energy experts predict oil prices will average around $70 per barrel (depending on which price index one chooses) for 2015. Prices could be kept lower in the long-run if production continues to creep up against demand.
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