Thursday, June 05, 2008

Profiting from high gas prices

With gas at almost $5 a gallon, Americans are driving less. The Federal Highway Administration said U.S. drivers traveled 11 billion fewer miles in March 2008 than in March 2007, a decrease of 4.3 percent!

People are driving less, and they're driving slower to increase gas mileage. Miles driven are probably linearly correlated to the number of accidents. Insurers are not going to drop premiums and few drivers will think about reducing the miles per year they're insured for. Thus, car insurance companies are probably making a bundle. Is this the time to snap up some stock?

1 comment:

Dan said...

Good idea. The only problem is that there are very few car-only insurers out there. Most insurance companies are conglomerates that insure everything from homes to lives to cars.