Fuel Economy Articles Galore

Post KatRita, with gasoline prices flirting with Three dollars a gallon, there is an increased attention to the fuel consumption of cars and trucks driven around. Even President Bush has urged American citizens to curtail non-essential driving. NYT published a tongue in cheek article just before President's comments. In general, newspapers seem to be abuzz with articles discussing failure of Congress to raise fuel economy standards, even as some more trial balloons got floated. There is ever more attention to the hybrids and the early adoptors of hybrids/EVs.

The article that I was most interested in appeared in the WSJ. (How U.S. Shifted Gears to Find Small Cars Can Be Safe, Too:
Studies Discover Size, Quality Are as Important as Weight; Drafting Rules for SUVs; Honda Sticks Up for Little Guy).

For years, the accepted wisdom in the car industry held that, all things being equal, heavier vehicles are always safer when two vehicles crash. New studies highlight how other factors -- including a car's size, body design and advanced technology -- can do much to counteract the weight issue.

The newer studies also have homed in on the downside of weight: While a heavy vehicle protects its occupants in an accident, it inflicts more damage to those it hits. That means reducing the weight of the biggest vehicles could yield dividends in both fuel consumption and safety.

In spite of the title of the article or new studies, particularly the one commisioned by Honda and carried out by DRI, I do not think that the perception about vehicle weight and safety has changed a lot. Many people that I personally know have been stunned to know the answer to the question: Are SUVs are really safer than cars?

There needs to be a lot more awareness among everybody that reduced vehicles weight does not mean reduced safety.

Sustainable Mobility newsletter

I have a link for WBCSD Sustainable Mobility News on the right, but I just thought that I should specifically mention that they also deliver a Sustainable Mobility newsletter every month or so, and it is worth subscribing to. They carry intersting news items that you may or may not see around, for example check out Diesel beats Hybrid, and India's biofuel plans hit roadblock.

Update on Gasoline Prices

This Week In Petroleum states:

...the U.S. gasoline supply situation remains far from normal, and prices generally remain above pre-Hurricane Katrina levels. With as much as 5 percent of refinery capacity expected to remain shut down for months, it will take time for the gasoline supply system to return to normal, implying that prices could remain elevated (the U.S. average retail price was $2.61 per gallon on August 29) for some time to come. With significant volumes of refinery capacity expected to remain out for an extended period, consumers should not expect prices to decline quickly, since the disruption to supply is still occurring.

This is in agreement with my rough assessment of $2.60 a gallon price for gasoline in the coming six to nine months at least.

The New Prize?

Over the weekend, the NYT published a bunch of articles about increasing gasoline prices under a title Beyond Gasoline. I want to talk about just one titled The New Prize: Alternative Fuels written by Danny Hakim. The "old" Prize being reference to oil as made famous by Daniel Yergin's book. In particular, I want to focus on the chart that was pulished along with the article: Using Less Gas, or None at All. As I looked at the graphic, which I think is presents a balanced picture, I wondered why they chose to ignore both diesels and conventional hybrids in the graphic. Now, Diesel is a little more expensive than gasoline in the US, and hybrids still use a lot of gasoline. Yet, both of these technologies have a significant potential to improve upon mainstream ICE gasoline vehicles. These improvements are on the order of 25-30%, and these vehicles are available today.

I also wondered perhaps failure to mention hybrid in this chart means that hybrids are already a "mainstream" technology in some sense? Afterall, hybrid sales have shown a robust growth in the past year, even though the numbers are still small in absolute sense. Prius is already selling at 100,000 a year mark, a production level for which many of the new models are designed for. Still, hybrids are just 1% of new vehicle sales in the US market.

Then, as one thinks about the examples used in the article one starts to get a sense of what all of this is about. It is about an old American dream that is America can be Energy Independent, and Americans can keep driving their large, heavy and powerful vehicles around at the same time!

"One of the customers drove about 30 miles to the station; she said: 'I'm putting my dad's corn in the car. I'd rather do that than pay OPEC,' " Mr. Cobb said.
... In Madison, Wis., Rebecca Bell and her husband, Kevin, started using E85 in the last couple of weeks to fuel their Ford Explorer and their Chevy minivan. They have also started carpooling with neighbors.

Yes, as the article and In the Tank Report note, there has indeed been a modest shift from SUVs to CrossOver Utilities, BUT pickup and large van sales have been largely unchanged. The trend towards CUVs, I could argue, had started a couple of years ago (Ford think so too, see slide 11), and has perhaps little to do with the recent increase in gasoline prices.

The point I want to drive home is the following: Think about it in very simple terms. How about we make 90% of our vehicles 20% more efficient, as opposed to 10% of the vehicles 50% more efficient? By doing the first, we will get roughly (far from exact) 18% gain where as doing the second gets us 5% improvement. How about we start thinking about driving slightly smaller, lighter and less powerful GASOLINE (conventional or hybrid) or DIESEL powered vehicles which at the same or lower cost deliver 20% more fuel economy? We may be able to derive fuel saving benefits sooner than tinkering with plug-in hybrids or waiting for Fuel Cell Vehicles. The technology is with us in a very real sense as opposed to say fuel cell vehicles or even plug-in hybrids. May be the real prize is still the "old" prize. Perhaps, we just have not understood the value of the prize. YET.

Using Taxes to Keep Gasoline Prices High Makes Sense to Some

Bab Davis in WSJ:

Walter McManus, a University of Michigan automotive economist, estimates that if prices jumped to $2.86 a gallon and stayed at that level, sport-utility vehicle sales would fall 18% in five years. If gasoline rose to $3.37 a gallon, SUV sales would fall 28%. Sales of pickups and vans would plunge.
...Congressional Budget Office Director Douglas Holtz-Eakin calculates that a $1 increase in gasoline taxes would cut consumption 20% within 14 years.
...(Economy.com economist Mark) Zandi urges a flexible tax, aimed at keeping gasoline prices at roughly $3 a gallon; the tax would fluctuate with gasoline prices. A simpler way is to increase gasoline taxes by $1 a gallon. The idea is the same: make gasoline prices high and predictable.

More power to them.

John Dowd gets it!

Thanks to GreenCarCongress for pointing out the Senate hearing on global oil demand and gasoline prices, and highlighting the testimony of John Dowd. I would encourage everybody to read John's testimony, but here are some excerpts and comments.:

...it’s important to recognize that U.S. consumers and policymakers have far more control over long-term demand than they do over long-term supply. The demand side of the equation is where we have the most leverage and where we must focus our effort and resources.

We all know that oil production is US has been declining since 1970s and will continue to decline further. US may or may not be able to influence what goes on in Russia, Venezuala and other oil producing countries, but it can influence its own consumption habits.

...Meanwhile, a lively debate about whether we are, in fact, beginning to “run out” of oil has recently been picked up even by the mainstream press. My first response to that debate is to say that no one really knows. My second response is to say that I’m not sure it really matters. The question is not whether global oil production has begun to reach a peak. The question is whether the growth rate of supply can continue to keep pace with the growth rate of demand.

This quote very nicely puts in to perspective the debate about peak oil. It is not whether the world as we know it will end, but whether there will be increasing amount of volatility and supply shocks that may await us if we fail to moderate our consumption.

...I would recommend a stronger call for conservation. If, as a country, we were to obey speed limits for the next two months, we would probably conserve more fuel than will be lost by the refinery outages. Reducing speeds from 70 mph to 60 mph, for example, improves fuel efficiency by 15 percent. If Americans want to know what they can do to limit gasoline price inflation, the answer is simple: slow down. I don’t think this is generally known, or believed, by the U.S. public, and it should be. That may be all we can do in the weeks and months ahead.

This is a very poignant paragraph. Several months ago, I noted IEA report titled saving oil in a hurry. What Americans can do immediately to live with Three dollar gasoline is precisely what that report advocated. Most of us are not going to like it, but we can either do it or shut up.

...Our current predicament, simply put, is rooted in the near-total dependence of our transportation sector on petroleum fuels. Our nation possesses only 3 percent of the world’s estimated oil reserves but accounts for as much as 25 percent of global oil demand, the great bulk of it for use in our cars and trucks. When you look at these numbers it’s obvious that controlling our destiny in terms of oil security comes down to controlling the relentlessly growing demand of our transportation sector for gasoline and diesel fuel. Fortunately, the potential for efficiency improvements in this sector is also substantial if the political obstacles can be overcome. The National Commission on Energy Policy found, for example, that a concerted effort to increase fuel economy standards, and promoting hybrid and advanced diesel vehicles, could substantially reduce future petroleum consumption by the U.S. transportation sector. We estimate that improving the average fuel efficiency of the entire U.S. vehicle fleet by 2 miles per gallon—an objective that can be readily achieved using already available, conventional vehicle technologies—would reduce total U.S. gasoline demand by roughly 1 million barrels per day. This amount is equivalent to all of the growth in U.S. gasoline consumption over the past eight years.

This is an aside, but it seems like the National Commission on Energy Policy (NCEP) is slowly, but steadily drumming the beat for increasing CAFE standards. John Dowd works for Sanford Bernstein, which was responsible for playing out the Oil Shockwave Simulation on behalf of the NCEP and Securing America's Future Energy (SAFE).

... Gradually improving vehicle fuel economy through a combination of higher standards, manufacturer and consumer incentives, and other initiatives would essentially “buy us time” to develop the more advanced vehicle technologies and alternative fuels that will someday allow for a more decisive shift away from our current petroleum dependence. Even in the short run, moreover, the benefits of any efficiency improvements introduced in the U.S. vehicle market would likely be amplified as a result of their diffusion to markets in other countries, most of which have as keen an interest as we do in slowing demand growth and blunting their exposure to future oil shocks.

This is a two paths forward strategy advocated by many including this blog. Doing whatever we can to reduce the fuel use NOW is as important, if not more, as working on advanced technology vehicles such as fuel cell vehicles or battery electric vehicles running on hydrogen or electricty generated from renewable sources.

...What we can do is limit our future dependence on oil and our exposure to these risks through thoughtful, long-term policies aimed at promoting a greater supply and diversity of fuel options while at the same time significantly improving the efficiency of our nation’s vehicle fleet. Something good will have come of the current crisis if it impels us to take the long view. We should try to control what we can control. And we should start doing that now.

The key thought here is that the time for action is NOW. I think that John has hit on most of the important points, and I must applaud John Dowd's testimony. If we can make all our congressmen/women to read and understand this testimony, I (somewhat naively) believe that we would be able to move forward.

Chart of the Month: August 2005

I got the following question from one of the readers (paraphrased):

Our current mileage reimbursement rate is .$405 per mile. We want it to reflect the current gasoline prices. What would be an equitable rate to request and expect while prices are currently $3.19 per gallon for regular gasoline in our area?

I am not inclined to answer this question directly. I will, however, post a chart showing the costs involved in driving an automobile. The numbers are based on AAA's Your Driving Costs.
(click on chart for a larger image).
The numbers in the chart are not exact, specially because the 1990-2000 data has been adjusted at 1999 $ levels, where as 2005 numbers are in current dollars. The main point of the chart, however, is to show that gas and oil costs are a relatively small cost of overall driving costs. This may help explain, in part, why consumers will choose to buy a big vehicle with a big discount even when gas prices are quite high (think July 2005 auto sales).

Of course, at Three dollars a gallon, gas and oil costs are no longer less than 15% of the overall driving costs. Even at three dollars a gallon, cost per mile of a 25 miles per gallon vehicle is 12 cents, up from 8 cents per mile at 2 dollar a gallon gasoline. Yet, it constitutes no more than 20% of the overall driving costs. As I noted earlier, I expect the prices to be around 3 dollars for a few weeks before settling down to $2.60 a gallon.

Does this provide a large incentive for American consumers to change vehicle purchasing behavior? On a rational basis, I would say NO. Consumer choices are, however, driven by factors beyond economic considerations. Emotional appeal of a high fuel economy vehicle may be high right now, and I am all for people buying more fuel efficient vehicle.

Why Big Oil is not be blamed for everything...

The Oil Drum investigates a connection between high gas prices, price gouging, and record oil company profits.

Hybdris Updates from GCC

I hope you are keeping an eye on the periodic hybrid updates coming from Green Car Congress.

Getting used to $2.60 at the pump

While there are reports that gasoline prices have spiked above $3 a gallon in various parts of the country, in a few weeks those prices should start to come down towards $2.60 and stay there if the indicators at the New York Harbor Unleaded Gasoline futures are to be believed. In all likelihood, the prices will stay at or above this level for next several months. Better get used to paying $2.60 at the pump for a forseeable future!

In the Tank

Somehow, I missed this NRDC report titled In the Tank: How Oil Prices Threaten Automakers' Profits and Jobs. Add this report to the list of posts I plan to make over the weekend.