Hybrid cars and the high costs of oil

Earlier today I argued that market incentives are not enough to drive consumers to purchase fuel efficient vehicles and technologies. As I've sat back and thought about that, I'm reminded of Toyota Prius demand.

Long before this spike in gas prices, the Toyota Prius had been very difficult to find. Even when one was found, there were very few choices. Demand was simply far beyond supply.

Perhaps gas prices are driving this demand even higher, but the increased demand will, ultimately, have little affect on overall sales. However many Prius hybrids Toyota can produce, they will sell - even if gas prices drop.

Recently, I have gone to Toyota dealers in the Los Angeles area numerous times and have had a very hard time finding a Highlander hybrid. I've been told that each dealer gets only a few hybrid Highlanders per month, but they are sold almost as soon as they hit the dealership.

I've had a little better luck finding the Ford Escape hybrid, but Ford maintains they will easily sell all the hybrids they can make - only about 25,000 this year.

There has been a good supply of Honda Accord hybrids and Honda Civic hybrids, but these vehicles aren't as 'hybrid' as either Ford or Toyota hybrids. While I think both vehicles are excellent vehicles, they do carry some issues. On the one hand, the Accord Hybrid is a performance hybrid, not a hybrid derived solely for fuel efficiency.

On the other hand, the Civic hybrid is a fuel efficient vehicle, but so is the standard Civic. Yes, the Civic hybrid is more fuel efficient, but it just doesn't carry the glamour of the Prius hybrid. (Something I hope Honda's next generation of hybrids will address - which are coming soon!)

The point is, market forces can't have much impact on hybrid car technology this year. Yet, Hugo Chavez could have a huge impact on the American economy this year. Perhaps he won't or maybe he'll suffer an unexpected heart attack. Who knows? Still, market forces cannot meet consumer expectations fast enough, or many more hybrid cars would now be available.

While rich Americans can walk away from very high oil prices, even gas lines, the average American; however, could be affected for years by these issues.

Are those 'free' market conditions really worth the costs? And are 'free markets' really free?