American Automobile Fuel Consumption Debate: 04/01/2004

Just say no, to hydrogen??

Joeseph Romm: Just say no, to hydrogen.

You may need to view an ad to get to the article.

P.S. Joeseph Romm wrote this piece in the Technology Review (subscription required), and is the author of the book " The Hype about Hydrogen: Fact and Fiction in the Race to Save the Climate".

Hyundai Near Top of a Quality Ranking

Well, that's the headline here. But, I want to point out the following:

The most common complaint was wind noise audible inside the car. Poor fuel economy was a top 10 complaint, but less so than in last year's survey, even though gasoline prices are higher now than in 2003.

"It suggests consumers are adjusting to higher fuel prices," said Brian Walters, J. D. Power's senior director of vehicle research.

The Case for a War Tax - on Gas

This is not a new argument. Thomas Friedman made the same case last year.

Fuel-Cell Hype vs. Economic Reality

Matthew Wald has a thoughtful article in the May issue of Scientific American. He was on NPR the other night discussing the issue.

High gas prices don't faze Americans

High gas prices don't faze Americans:

''It would be one thing if gasoline prices had steadily crept up,'' Shore said. ''But there's a spike. People haven't planned for it and suddenly their budget for gasoline has changed dramatically.''

''If people are alarmed about gasoline prices, they have a funny way of showing it,'' said Jerry Taylor, director of natural resource studies at the Cato Institute, a Washington, D.C.-based libertarian think tank.

Taylor cites the uptick in SUV sales as a prime example. In the first three months of the year, SUV sales rose more than 10 percent from the 2003 period, with luxury SUV sales growing 5.7 percent, according to industry data. Sales of large pickup trucks rose 13 percent from a year earlier.

Sales of fuel-efficient smaller cars dropped more than 7 percent.

Demand for gasoline is another sign that the consumer culture remains unruffled by high gasoline prices.

Gasoline demand from April through September is expected to reach a new high of 9.32 million barrels per day, according to the Energy Information Administration. Demand for the week of April 16, the most recent numbers available, was 8.97 million barrels per day.

''I think it means that Americans intuitively understand that the price of gasoline is low and not particularly bothersome,'' Taylor said. ''Not only in inflation-adjusted terms, but as far as the percentage of their paycheck that goes to buying gasoline in any given month.''

Light trucks beat car sales in all but 4 states

Light trucks beat car sales in all but 4 states.

Consumers fret over soaring gas, but don't change their driving habits

Consumers fret over soaring gas, but don't change their driving habits.

No time to post comments, just trying to catch up on the stories from the last week.

Exec Order

Gov. Schwarzenegger's
Executive Order on "hydrogen highway".

Hybrid Sales to Nearly Double This Year

Here is a Greenwire news.

As the national average price for gasoline continues to rise, auto dealers said last month they expect sales of hybrids to increase. Toyota Motor Sales USA increased its 2004 sales target for the Prius from 30,000 to 47,000 units, and American Honda Motor officials said they expect to sell about 20,000 Civic hybrids this year.

But federal tax credit for buying hybrids decreased from $2,000 last year to $1,500 this year. The tax deduction is scheduled to end entirely in 2007. Without that tax break, the added fuel efficiency of hybrids may not be enough to offset the higher cost of the vehicle compared to a traditional model.

The article also notes that even though doubling of hybrid sales sounds impressive, it is still a very small fraction of total number of vehicles sold.

Tomorrow is the date for Air Resource Board's workshop on technology assessment of light-duty vehicles and the potential of new technology to reduce greenhouse gas emissions. Unfortunately, I will not be able to listen to the webcast. However, I expect the presentations to be up on the web later tomorrow. AB1493 is a very important development. I am not sure where this is leading us, but we need to thank the CARB on taking this initiative.

A Fuel-Saving Proposal From Your Automaker: Tax the Gas

NYT Article by Danny Hakim.

When the last oil well runs dry

I have no time to comment, but this is worth reading. Of course, always take all predictions about running out of oil witha pinch of salt.

Do Consumers Really Care About High Gas Prices?

Here is an NYT story.

Blame China Contd.

More on the increasing Chinese demand for oil.

World oil consumption will rise faster than expected this year because of the surging Chinese economy, the International Energy Agency said Friday.

"The driving force is the expanding economy," said Klaus Rehaag, editor of the report. " We have a significant recovery from the recession that's primarily driven by the U.S. At the same point in time, China and India are expanding extremely rapidly."

The agency increased its forecast for growth in oil demand by 60,000 barrels a day to 1.7 million barrels daily, the sixth consecutive monthly rise in the forecast. Consumption of fuels will drop by 2 million barrels a day in the second quarter - 300,000 barrels less than expected last month - to 78.3 million barrels a day, the agency said in a monthly report.

"China's fast-rising energy consumption fuels most of the growth in global oil demand," the IEA said. "Second-quarter apparent demand may again exceed expectations, despite seasonal maintenance at several large refineries."

China is expected to grow at this blistering pace for some time to come and I don't think that India is very much behind. Meanwhile, Warren Brown from Washington Post on Car Culture:

Current U.S. gasoline prices are high, but they aren't nearly high enough to bring about significant changes in America's automotive tastes or its auto-buying behavior, car executives say. Unless and until that happens, car companies will be forced to build the fuel misers society says it needs along with the gas guzzlers many American buyers really want, judging from their actual market behavior.

It is not that the consumers WANT gas guzzlers. They don't DEMAND low fuel economy vehicles. Instead, they desire certain features. Those features in the past have at the expense of fuel economy. This is a sensible thing to do for both the consumers and manufacturers. The US car makers however have made several mistakes. Firstly, they have not invested enough in hybrids and now they lag significantly behind Toyota and Honda. For regulatory reasons concerning particulates and NOx emissions, american manufactuers are not hot on diesels either. Secondly, the US car makers have lost their edge in the cars market and now rely on the light-trucks (minivans, trucks and SUVs) market. Until now the Japanese were not in this market, but they are making inroads. Detroit is going to find it increasingly difficult to catch up to Toyota and Honda. If I were an investor, I sure wouldn't want to put my bets on Ford!

Putting gas prices in perspective

More on Ford's plans

NYT Story is here.

Mr. Ford, the chairman and chief executive of the Ford Motor Company, said yesterday that his company now planned to make three hybrid vehicles, two by the 2007 model year. He also said it would redouble efforts to build more efficient vehicles. This year, Ford, if it sticks to its current product plan, will become the third automaker to sell a hybrid vehicle, offering a version of its Escape sport utility vehicle.

Mr. Ford also reiterated Detroit's past support for substantially higher gas taxes - a notion recently pilloried on the campaign trail - as well as incentives for consumers buying vehicles like hybrids, which supplement internal combustion with electric power.

"The importance of fuel economy will only increase as we go forward," Mr. Ford said at a press preview of the New York International Auto Show, which opens to the public tomorrow at the Jacob K. Javits Convention Center. "The question is how high are they (fuel prices) going to get and will they (fuel prices) remain high."

Combinations of Policy Options

Ford made a case for a combination of gas tax and incentives to spur sales of more fuel efficient cars.

Bill Ford Jr. said he has supported a gas tax of 50 cents a gallon, but he preferred tax breaks for consumers who buy cars with new fuel-saving technology such as hybrids which are powered by gas engines and batteries to boost fuel economy.

"Even going back four or five years I used to say that I'd support a 50 cent gas tax," Ford said at the New York auto show. "I think that a combination of gas taxes and incentives would also be something we could support. But I don't know how high."

Ford is not sure. I am slightly more sure than Ford.

The trick is to combine measures so they work together. For example, one proposal is a "feebate" system in which customers pay an extra fee to buy big gas-guzzlers but get a rebate if they buy small, fuel-efficient models -- a measure that can be revenue-neutral. The feebate system combines well with stricter corporate average fleet economy (CAFE) standards. Auto manufacturers will be required to make smaller, more efficient cars -- and that's what their buyers will want. Adding higher fuel taxes to the package will both discourage additional driving and add further incentive for customers to buy fuel-efficient models. Tax credits elsewhere can offset the added fuel costs so vehicle users will feel no extra financial burden.

So. Mr. Ford will you back the following proposal?

* Increases in CAFE standards phased in over a 25 year period: 43 MPG for cars and 31 MPG for trucks by 2033
* Trading of CAFE credits permitted
* Modest level of Feebates introduced in the market (Fees for gas guzzlers, Rebates for gas sippers: Combine the current gas guzzler tax with the credits for hybrid/fuel cell vehicles. This can be made revenue neutral.)
* A gasoline tax increase phased in over a 25 year period at a rate of 5 to 10 Cents/gallon/year. Tax credits to make it revenue neutral.

I hope you will!

More Hybrid Cars (SUVs) Come...

Yes, more is better here for the time being. However there is a real danger. In technical jargon it is called the "Rebound effect". When your car or SUV gets better miles per gallon, the average cost of driving per mile goes down. This makes it more attractive to drive, so people drive more. It is estimated that this rebound effect is of the order of 20%. This is not insignificant. Hence, Drive Lite!

Chinese Fuel Economy Standards

So, here is some news on the China's plans to regulate fuel economy. China has decided to go with the weight class system adpted by the Japanese, but the individual class size is a lot smaller. Thus, there may be a slight incentive to add weight to the vehicles to fall in to the next (less stringent) class. However, the effects of this happening should be small. I have no idea about what India is planning to do on this front. It is equally, if not more, dependent on foreign oil and should move quickly on this front while the auto market is still nascent.

Drive Lite Contd.

This counts as Drive Lite!

Imagining a $7-a-Gallon Future

Daniel Yergin of CERA expresses his opinion about the possibility of a sharp increase in gas prices.

Historically, then, dire oil predictions have been undone by two factors. One is the opening (or reopening) of territories to exploration by companies faced with a constant demand to replace declining reserves. The second is the tremendous impact of new technology. After World War I, seismic technology, used for locating enemy artillery, was adapted to oil field exploration. And in the 1990's, it became feasible to drill into deep offshore fields, which was inconceivable during those crisis years of the 1970's.

..Those who don't believe a shortage is imminent do not deny that a peak will eventually be reached. They just believe that it is much farther off into the future.

"You can certainly make a good case that sometime before the year 2050 conventional oil production will have peaked," said the head of exploration for a major oil company. He and others believe, however, that oil production will simply plateau, and then farther into the future begin to decline.

...The world will need all these sources of supply, since even with increased energy conservation, economic growth, led by China and India, could well mean that the world will use 20 percent more oil a decade hence.

Yet it looks as if supplies will meet that demand. If there is an obstacle, it won't be the predicted peak in production, at least in the next few decades. Rather, it will be the politics and policies of oil-producing countries and swings in global economic growth. And the extent of these difficulties, whatever they turn out to be, will register in the ups and downs at the gasoline pump.

Yergin is right. The question Americans should ask themselves is whether they want to be tie their economic prosperity to the unstable geopolitical situation in the middle east.

Gas Attacks!

Matt Miller at the Center for American Progress suggests that gas tax is not such a bad idea, afterall other countries have done it.
I would like to point out one thing. Gasoline taxes are indeed regressive. They do hurt the poor people more than the rich. So, unless effort is made to consciously address this issue, the objections raised to oppose higher taxes stand.
So, what can be done to mitigate the impact of higer gas taxes. Here are some options:
* Provide appropriate tax credits to people on their income. In fact, we can make the tax credits progressive i.e. rich people need not get these tax credits. Wouldn't that mean that we will charge more for gasoline to the rich people. Yes, but that is what a progressive tax system attempts to do. Tax the rich more than the poor.
* Alternatively, the fuel tax revenues can be used as rebates for people to purchase more environmentally friendly vehicles. For example, the hybrids currently do cost a couple of thousand dollars more than the compareable IC engine counterparts. So, the rebate on purchase of a hybrid helps you and in addition you will save more gas when you drive one. Remember, not to drive too much though!

These are very simple ideas. The people who write tax codes can figure out many other ways so that the additional tax on gasoline does not pinch the pockets of ordinary people. The real question is whether the ordinary people like you and me understand that this can be done and support it.

Debate on Refinery Capacity and Gasoline Prices...

...is unfolding here.

Missoulian: Gas consumers can fight higher prices

Here is a suggestion on what consumers can do to reduce gas prices: "

There's only one short-term remedy for these high prices, and it doesn't involve the government. It involves you.

The proper response to rising prices is reduced consumption. Use less gasoline, buy less gasoline, and you'll send an unmistakable signal to global markets. Falling demand for fuel will have an immediate effect on the supply and price of gasoline and oil.

Use less gasoline? What? Are we crazy? Not really. If you really take time to honestly examine your driving habits and fuel consumption, you'll probably recognize any number of ways you can reduce the amount of fuel you use. Consuming less isn't always easy or painless, of course, but neither is $1.70 a gallon - or, for folks living in parts of the country, $2 or more a gallon."

Now, the trouble is that the term energy efficiency and savings brings to the mind of most people the image of President Carter wearing a sweater and tuning down the therostat to save on energy! However, the energy savings can be had in a more sensible way. For example, the fuel consumption of a car varies considerably depending upon how you drive the car. As compared to a sporty,fast or aggressive driving a slightly more restrained driving can save you up to (hold your breath) 25% of the fuel! It's your same SUV or full sized car, but driving more sensibaly helps. So, Drive Lite!

Blame China!

I just suspect that there is soon going to be speculation that the growing Chinese economy and its rapidly increasing demand for oil is causing the current gas prices to go up.
So, it is the god given right of the US to use as much oil as we want, but if the Chinese start to think about it and if the Indian follow the lead tomorrow, then that is wrong! There is a real need to think about how much oil we consume here in the U.S. and whether there is anything we can do to reduce that consumption of oil. Unfortunately, everybody seems to forget about the issue whenever the prices fall or go back to their original level.

The fundamental problem is that China is following the path of the United States, and probably the world cannot afford a second United States.
----- Zhang Jia nyu, Beijing Office of Environmental Defense
New York Times, The Week in Review, March 14, 2004.

How much damage the increasing use of oil is causing to the environment is a topic of a complete new blog. As many people say, we are not running out of oil, but we are running out of the environment.