Will $5 a Gallon Gas Lead to Another General Motors Bailout?: Remember 2008?

In 2008, gas prices throughout the United States hit record prices. As $3 a gallon became $4 a gallon, Detroit's most profitable vehicles sat on lots because most people didn't want to spend the $100 or so it took to fill them up. We are talking trucks, SUVs, and larger luxury cars. Ford, Chrysler, and General Motors suffered in part because of higher fuel costs, and in less than 12 months all three needed bailouts even though Ford decided it would be in their best interest not to sell their soul to the federal leviathan.

So what did foreign dependence on oil cause while more restrictions were placed on American oil exploration? Well, because we couldn't make a dent to increase production, gas prices stayed up and Americans stayed home. The economy slowed. More cars sat on the lots as stories that Americans didn't want to take out more debt for a new car payment while the total monthly filled up came near to matching their car payments, or at least totaled a large percentage of those car payments. When more cars sat on the lot, less production took place and all Detroit's Big Three was hit hard. Within months, billions of dollars in taxpayer money went to bailout two of the three.

Could it happen again? Well this economy is fragile as it is, and both General Motors and Chrysler are not healthy companies. GM, despite claims they have been picked off the ground, still owes taxpayers billions, and enthusiasm for the brand still hasn't recovered as a recent poll showed more than 40% of Americans would not consider buying a Chevrolet or other GM product after the bailouts.

We aren't even to spring yet and oil prices are skyrocketing. In about a month, summer formulation changes will further drive up the costs as winter supplies drain and new formulations must catch up to demand. Remember, gasoline has a short shelf life, and then the summer driving season traditionally maintains higher prices. We are already way over $3 a gallon throughout the United States. The economy is weak, and higher fuel prices are going to weaken the economy even more. What does this mean for American car manufacturers like Chrysler and General Motors? More bailouts come 2012? I wouldn't bet against it.

Want to take a step further? When energy prices increase, food prices increase, and consumer goods rise driving a steak in your income, what happens to those Americans who barely survived the housing bubble collapse? Will they survive the next round?

It is irresponsible at this point based on all the federal investments and bailouts, which I do not support, not to be drilling for American oil based on the chain of events in 2008. Yet, America never seems to learn as we may possible see a repeat and then some in 2011.