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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".
Observations on the U.S. Automobile Fuel Consumption Debate
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.
''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.''
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.
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."
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.
...according to the Department of Energy, "aggressive driving" (speeding and rapid acceleration and braking) can decrease fuel economy by as much as 33 percent at highway speeds and 5 percent around town. This can cost you as much as $0.49 per gallon.
Driving at high speeds creates additional wind resistance, which reduces fuel economy. Each five miles per hour you drive over 60 mph is like paying an additional $0.10 per gallon. Excessive idling will decrease your average mpg because idling gets 0 miles per gallon. Running electric accessories such as your air conditioner can decrease fuel economy. Limited, informal tests by the Environmental Protection Agency have shown a fuel economy reduction of roughly 5 percent to 25 percent for operating the air conditioner on "Max" compared to not using the air conditioner.
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."
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."
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.
* 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.
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.
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."
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.