$7-a-gallon gas, 10-million Fewer Cars: Rubin

(Matthew Trevisan — Globe & Mail)

A new forecast calls for gasoline prices to hit $7 (U.S.) a gallon in the next two years and oil to soar to $200 a barrel by 2010.

The report by CIBC World Markets also predicts there will be 10 million fewer cars on the road in the United States by 2012.

“Over the next four years, we are likely to witness the greatest mass exodus of vehicles off America's highways in history,” Jeffrey Rubin, the lead author, wrote in Thursday's report.

Economist Benjamin Tal, who co-authored the report with Mr. Rubin, said Canadians can expect to pay about $1.85 to $2.00 per litre of gas at the pumps by 2010.

Mr. Tal also expects the numbers of Canadian vehicles on the road to drop by 700,000 by 2012 – much less than the 10 million predicted in the U.S.

“We don't have the same story in the sense that most low income Canadians have better access to public transportation,” he said, referring to the report's U.S. calculations that estimates that about half the cars coming off the road will be from Americans who make less than $25,000.

In Canada, the decrease will be mainly come from middle-class families that own two or three cars, Mr. Tal said.

By 2012, the report predicts, the average miles driven in the United States will decrease by 15 per cent, and sports utility vehicles, which accounted for almost 60 per cent of U.S. market share in 2006, will drop to less than half that level. Overall vehicle sales will drop from 14 million to 11 million by 2012 – the lowest level since the early 1980s. Read the complete article.