June 23, 2008 | posted by Michael Baxter in Automobiles, Oil |

Well it does smack a little of the bleeding obvious.

Yesterday, Ford chief, Alan Mulally said: “Demand for large trucks and SUVs [is] at one of the lowest levels in decades.”  He went on: “We view the move to smaller, more fuel-efficient vehicles as permanent, and we are responding to customer demand.”

Ford, like GM and Chrysler, is suffering.    Sales at the big three were down 15.8, 27.5 and 25.4 per cent respectively in the year to May, suggests data from Autodata.

Meanwhile, the Japanese companies, with their more fuel efficient cars, are seeing sales rising.

That Ford has finally woken up to this reality shows that demand in the US for oil will adjust too.

But it takes time. It takes time for car manufacturers to shift from one type of car to another. 

Ford is due to launch a new pick-up truck, for example.   It delayed the launch for two months, but in truth probably wishes it had put its resources elsewhere. 

But that decision was made years ago.

Speculators, on the other hand, can change tack on a sixpence.

There are two ways you can get down from a cliff to the beach below.  One way is to do a bungee jump.  The other way is to walk down some steps at the side.  The beachside café will only really make money when the steps have been built.     Speculators are busy doing bungee jumps, but it is the underlying forces that will really shape the long-term price of oil.