The $2,500 car and higher gas prices

Cheap cars in Asia, expensive gas everywhere

Excerpt:

The debut of the $2,500 car may be billed as a mobility breakthrough for billions of people in the developing world, but for U.S. motorists it could mean one thing: higher gas prices.


Rising demand from the developing world has long been cited as a main driver behind the runup in oil prices. That demand will only get more intense with staggering growth in car sales - and by extension, gasoline use - in places like India and China.


"We'll get into a situation where we'll have to compete with them for gasoline, $4, $5 a gallon, who knows how high we could go." said Peter Beutel, an oil analyst at the consultancy Cameron Hanover.


He says that time could come much sooner than 2015, when light vehicle sales in India are expected to total over 3 million - doubling 2006 sales - according to J.D. Power & Associates. In China they're expected to nearly triple - to over 17 million - roughly on par with projected sales in the United States.


That huge growth doesn't even begin to scratch the surface of potential car buyers in those countries though. The 2 billion-plus combined populations of India and China could one day dwarf the 300 million potential car buyers in the U.S.


Comment: See The world's cheapest car. Here's the kicker: The U.S.'s appetite for imports drives the very economies that raise the incomes for there car buyers.