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Though some businesses, such as commercial aviation and the petrochemicals industry, will benefit directly from lower petroleum costs, others may see their business plans disrupted. Key among them, ironically, is the long-troubled American auto industry. The industry is now in the midst of an $80 billion retooling program to switch over to the production of smaller, more fuel-efficient cars, but could have trouble selling them if fuel prices continue to drop. Says Philip E. Benton Jr., vice president for sales at Ford: "As an industry, we are so heavily committed to small cars that it cannot be reversed." Summed up Chrysler Corp. Chairman Lee lacocca, when questioned at a recent press conference about sagging gasoline prices: "If the price goes to $1 per gal., I am going to go out, buy a gun and shoot myself."
Automen are having nightmares that drivers will return to big cars just as they did in 1976, when a temporary glut led many people to think the energy crisis was over. Americans do not seem interested in small cars whenever long lines at gasoline pumps have vanished and fuel is plentiful and cheaper. Though overall domestic auto industry sales for the first three months of the year were down 19.2% from depressed 1981 levels, larger cars have been moving relatively briskly. Sales of the full-size Mercury Marquis rose 27% during the first quarter, and Ford's assembly plant in St. Louis has added an overtime shift to meet demand. Sales have perked up as well for Chrysler's New Yorker sedan, and an extra shift has been added at the company's Windsor, Ont., plant. Meanwhile, sales have fallen flat for the firm's fuel-efficient line of Omni and Horizon subcompacts.
In trend-setting California, the number of miles logged by motorists in February showed a slight 3.5% increase over the same period a year before. But energy experts do not yet detect any signs that Americans are returning to their old driving habits. Says Dan Lundberg, publisher of a leading gasoline-industry newsletter: "People have imposed upon themselves new strictures of driving that they will be reluctant to modify for even another 20¢ per gal. drop in the price of gasoline."
The oil industry has also been thrown off balance by falling petroleum prices. During 1981, three of the nation's top six oil giants—Texaco, Mobil and Standard Oil of California—alone racked up a total of $7 billion in profits. This year they are not expected to do so well, and that is one reason that the stock prices of the major oil companies have lost about half their value since reaching a peak two years ago. Meanwhile, oil companies have begun scaling back capital investment programs. Says Charles Kittrell, executive vice president of Phillips Petroleum: "We are having to cut back in investments all across the board. I am not asking for any get-well cards, but I do not think we will be able to provide as well as we might have for the country's energy needs under these circumstances."