New Perils At The Pump

Hummer drivers, welcome to the era of the $100 fill-up. No matter what you drive, the new normal is monthly gas bills that look like car payments. After a year of $2-a-gallon gas, we worry that it could pass $3 and approach the inflation-adjusted record. Analysts blame a combustible mix of Mideast instability, Chinese demand and overtaxed refineries. The result: accelerating inflation.

The effect is most dire in Detroit, which still derives most of its profits from SUVs and pickups. The national average for a tank of gas is about $2.55. The Big Three always viewed $3-a-gallon gas as the threshold that would drive car buyers out of their guzzlers and into gas misers. But consumers have already started changing their habits. Even before this summer, sales of big SUVs were off significantly. Now Detroit is scrambling to re-engineer its lineup. Chrysler's new CEO, Tom LaSorda, is asking his engineers to look at sacrificing horsepower for mileage--once heresy in Motown. "No economist in the world ever predicted fuel prices like this," he says.

Detroit had better shift gears quickly. Philadelphia math teacher John Beach just parked his Cadillac and bought a Honda Insight Hybrid. Annual fuel savings: $3,500. "It's a rougher ride," he says, "but every time I pass a gas station, I'm glad I did this." As pump rage picks up speed, more drivers will be following his lead.