High gas prices mean emptier roads

Gasoline prices are becoming so high that one of Canada’s top banks is predicting a “mass exodus" of vehicles from U.S. highways within four years, with a slightly less dramatic drop expected in Canada.

CIBC World Markets said in a report today that gas prices in the U.S. will hit US$7 a gallon — the equivalent of C$1.86 a liter — two summers from now. That marks a 70 per cent increase over today’s record levels.

As a result, there will be about 10 million fewer vehicles on U.S. roads by 2012 and average kilometers driven will drop 15 per cent, the report said.

“Over the next four years, we are likely to witness the greatest mass exodus of vehicles off America’s highways in history," chief economist Jeff Rubin wrote.

The meteoric rise in crude oil prices, which hit a record US$140 a barrel on the New York Mercantile Exchange today, has been a major factor in soaring pump prices.

CIBC predicts crude will hit $200 a barrel by 2010.

The average pump price in Canada today was C$1.38 a liter, nearly 30 cents higher than what it was a year ago, according to the price-tracking website Gasbuddy.com. Americans were paying US$4.07 a gallon, the equivalent of C$1.08 a liter.

Canada will only experience about 70 per cent of the U.S. decrease in driving, CIBC senior economist Benjamin Tal said.

“Canada will feel the pain, but it’s not going to be the same as in the U.S.," Tal said in an interview, noting that there will be about 700,000 fewer cars on Canadian roads by 2012 and a 10 per cent decrease in average kilometers driven.