2 Winners and 2 Losers From Cheap Pump Prices

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Park the Prius: Pump prices are heading lower for the second straight summer. But even as individual drivers get more for less, shifting preferences could sideline some auto investors. I'll look at the price predictions, and I'll outline two winners and two losers from this latest trend.

Pump it up
The Energy Information Administration released its 2013 Summer Fuels Outlook report (link opens a PDF) this week, and things are looking up for gas prices to head down. According to the report, summer retail gasoline prices will drop to a national average of $3.63 per gallon, $0.03 below 2012's summer and $0.08 below 2011's price tag.

Two winners
Heavyweights win on this latest news. In the game of supply and demand, cheaper gas prices make gas guzzlers more affordable for Mr. and Mrs. Smith. Ford (NYSE: F  ) and General Motors (NYSE: GM  ) are revving up their latest line of pickups, and new sales could pour in with less wear on drivers' wallets. General Motors announced last week that its new Chevy Silverado and GMC Sierra will sport the most fuel-efficient V-8 engines in their market. The Silverado's 5.3-liter engine will get a whopping 23 mpg, with more pulling power than any of its competitors.

In an ironic twist of fate, Ford's F-150 could make even more gains than GM. The F-series has been America's best-selling truck for more than 30 years, and GM's efficiency ace-in-the-hole could come up short of toppling the Blue Oval's omnipotence. Ford sold 14,000 more trucks than GM in March, and cheap gas could keep this upward trend constant through summer months.

Who killed the electric car?
Innovation drives our economy, but the greatest solutions only emerge from the greatest problems. With high oil supplies and cheap prices, who needs fuel-efficient cars? Tesla Motors (NASDAQ: TSLA  ) is a pure-play electric automaker that could feel a major summer squeeze. Founder and CEO Elon Musk is trying fancy new financing tricks to make his luxury vehicles more affordable, but the price might just not be right for the gas-vs.-electric argument.

Likewise, Toyota Motor's (NYSE: TM  ) fuel-efficient fleet could suffer significantly. The automaker's Prius has long demanded a price premium for its light consumption and currently controls 68% of the non-plug-in hybrid market. Overall hybrid sales grew 14% in Q1 2013, but Ford's F-Series and GM's Chevy Silverado remain the No. 1 and No. 2 best-selling vehicles in America. Cheap gas prices certainly won't help lightweights like the Prius topple those top picks.

When macro affects micro
Summer pump prices could put fuel efficiency on the back burner, significantly affecting upcoming sales for your investment. But cheap gas for a few months is no substitute for visionary engineering and innovation. The companies that can consistently create the best vehicle at the best value will win out in the long term, and investors should make their portfolio picks accordingly.

Worried about Ford?
If you're concerned that Ford's turnaround has run its course, relax -- there's good reason to think that the Blue Oval still has big growth opportunities ahead. We've outlined those opportunities in detail, in the Fool's premium Ford research service. If you're looking for some freshly updated guidance to Ford's prospects in coming years, you've come to the right place -- click here to get started now.

Read/Post Comments (5) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 15, 2013, at 10:01 AM, dssdbs wrote:

    Cheap pump prices? Gasoline is still overpriced by at least $2.00. Nothing above $2.00 is "Cheap".

  • Report this Comment On April 15, 2013, at 10:08 AM, SmartPredator wrote:

    Is this article for real?

    Are we really supposed to break a bottle of Dom and buy a Unimog over a 3 cent drop.

    And for how long will this 3 cent average last? Oh..

    I Know! Till the next hiccup in the Middle East. Well

    that's a long time away.

    Wasn't all this new technology to get the future of our children's energy needs in check.

    This incredibly incompetent author has obviously been schooled in the system where they are taught to seize the moment, to gain the profit of the time, to rape without any care or course for anyone but themselves! Period!

  • Report this Comment On April 15, 2013, at 10:09 AM, Film911 wrote:

    How dumb do they think we really are. I suppose the fact that we've allowed gas at the pump to be this high without a revolt, gives them the position that there is little we can do about it.

    But really... to say (without belly laughing) "get ready... prices are going to be so low this summer - joy!" really is a joke. The prices could be cut in half before I'd declare gas prices are low. Or at least declare it with a straight face.

  • Report this Comment On April 15, 2013, at 10:10 AM, ponchoman49 wrote:

    Seriously! How is 3.63 per gallon cheap? I highly doubt that consumers are going to shift from small cars and Hybrids back to SUV's with a few pennies cheaper fuel prices. Don't worry, all it will take is a little instability in the Middle east and fuel prices will skyrocket to $5.00 per gallon in a heartbeat by Summer.

    PS- cheap fuel prices are $1.00-2.00 per gallon.

  • Report this Comment On April 15, 2013, at 11:22 AM, Film911 wrote:

    I can go up .10 and .15 over a couple of days. I find this article and insult. I'd get rid of this guy. If he thinks this little of readers to try to position an article this way.

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