The winners and losers of low gasoline prices

U.S. drivers are no doubt cheering on the drop in gas prices, which began this summer and looks set to continue into autumn. But makers of small, fuel efficient cars are paying the price as car shoppers worry less about gas mileage. That spells deals for those buyers who still appreciate a good gas miser.

Fuel Efficiency on Sale

At $2.39 per gallon of regular unleaded, the national average price of gasoline is already well off its summer peak. And as demand eases and refiners switch to making cheaper winter blends of fuel, more and more drivers should start seeing prices that begin with a 1 instead of a 2. The average pump price in South Carolina is already down to $1.97 per gallon, and other states should slip beneath the $2-per-gallon threshold soon.

Cheaper gas is great for consumers, and it should lend some support to the overall economy because drivers who save at the pump have more cash left over to spend on everything else. But one thing they’re not buying: Small cars.

That’s a real reversal from several years ago, when gas prices spiked as high as $4 per gallon and compact, fuel efficient models were all the rage. Manufacturers responded by rolling out higher-quality compacts with snazzy styling, plush interiors and new electronic amenities that let buyers downsize their rides without feeling that they were settling for less car. The age of the big SUV seemed to be over.

Then along came 2014 and the rout in oil markets that sent gas prices as low as $2 per gallon by early 2015. Sales of big SUVs and pickups, which had already been trending up as the economy showed signs of improvement, shifted into higher gear. While not exactly thrifty, those big rigs do get significantly better mileage than their predecessors of several years ago. And with gas nearing $2 per gallon, the cost of fueling up a new Ford F-150 or Jeep Grand Cherokee doesn’t seem so daunting anymore.

The latest monthly auto sales data tell the story. Motor Intelligence, a provider of auto data and analysis, shows that sales of all cars in August were down about 10% from the same month a year ago. Sales of small cars were down 13.5%. Pickup trucks, by contrast, logged a year-over-year gain of about 8%. SUVs were up a whopping 11%, with gains being fueled by sales of new, smaller models (which don’t use as much gas as their full-size cousins but can’t compete with conventional compact cars on mileage).

That spells bargains for car shoppers seeking good mileage. Granted, many buyers need the towing ability or cargo payload of a full-size truck or SUV, and thus won’t care how good a deal they might get on a fuel-sipping compact. But folks who don’t have heavy loads to haul and want to compound the benefit of today’s cheap gas by using less of it should have plenty to choose from.

Late summer always brings sales to dealer lots as manufacturers sell off their remaining inventory to make way for the next model year autos, which tend to arrive in fall. This year, says car shopping website, some of the best deals should be on fuel efficient models that were already struggling to get off car lots and are due for major overhauls.

They include the 2015 Chevy Volt plug-in hybrid and the 2015 Toyota Prius, both of which will be heavily updated for 2016. Also going for a discount: Honda’s fuel-sipping 2015 Civic and the 2015 BMW 3 series, which is a powerful car but also nets up to 36 miles per gallon on the highway for gas-powered versions and up to 45 mpg for diesel.

Discounts on these and other models will vary by region, since different dealers have differing levels of inventory that need to go. But the potential savings are substantial. Edmunds calls the 2015 Chevy Volt a “steal,” with discounts of almost $4,000. The 2015 Prius is being marked down by about $3,000.

What to Expect Next from Gas Prices

Speaking of saving at the pump, where do gas prices go from here? With Labor Day and the summer travel season behind us, gasoline demand figures to fall a bit at the same time that refineries stop producing summer-blend fuel (a variant that suppresses smog in the warm months and costs more to produce). And with oil prices largely stagnant, look for further price declines at the pump.

The question is, How much more of a drop in gasoline prices can drivers expect? If the price of crude oil continues to hover around the mid-$40 per barrel, we will look for the national average price of regular unleaded to fall 20¢ or so per gallon, into the neighborhood of $2.20 per gallon.

But another tick down in oil prices can’t be ruled out. If it occurs, gasoline could hit its lowest prices since early 2009. Should crude dip well below $40 per barrel this fall, it wouldn’t be surprising to see the national average gas price fall well below $2 per gallon. That would be even lower than the lows plumbed early last winter, when the average fell to about $2 per gallon. By comparison, when the U.S. economy was diving into a deep recession in late 2008, gas fell to as low as $1.61 per gallon on average.

Odds are we won’t see prices fall quite so far as they did during the last recession. But don’t be surprised if they come within shouting distance sometime this autumn.