Don't buy car just because of gas prices, analysts say

Buyers shifting their shopping to small, fuel-efficient vehicles because of high gas prices run the danger of making a long-term decision on a short-term price spike.

They could find themselves driving a car they don't want, some analysts warn.

"It is like people who look out the window, see that it is raining and then think it is going to rain for the next four years," said Jack Nerad, an analyst with auto information company Kelley Blue Book Co. Inc. in Irvine, Calif.

Though most oil watchers believe the cost of petroleum is on an ever-upward curve, the steepness of the climb is likely to be uneven, and it's not clear whether prices will remain high if political turmoil in Arab oil producing nations recedes.

"The prices of gasoline could collapse overnight if things settled down in the Middle East," said Phil Flynn, an oil analyst with PFGBest Research in Chicago.
Unpredictable

The problem is that no one can predict whether the revolution in Libya and unrest in neighboring nations will be limited or spread, disrupting oil supplies from Saudi Arabia and other Persian Gulf nations.

That means gas and oil prices will remain high until commodities traders and petroleum buyers have a better sense of where the political situation is headed, Flynn said.

For now, there is significant spare petroleum capacity in Saudi Arabia and reserves in other major markets, "which could be very helpful in defraying a price-spike episode," said Ellen Hughes-Cromwick, an economist at Dearborn carmaker Ford Motor Co.

But with gas prices well into the $3-a-gallon range nationwide and hovering at $4 in some areas, consumers are starting to migrate to smaller cars. Ford's subcompact Fiesta sells best in California, where gas prices are among the highest in the nation.

The trend is reflected in Web traffic at auto information and pricing Internet sites.
Interest way up

At kbb.com, the Web portal for Kelley Blue Book, searches for hybrids and electrics jumped 73 percent from the weekend of Feb. 19-20 to Feb. 27-28. Traffic to compact cars as a segment blossomed 46 percent in the same period.