High Gasoline Prices and their impact on Fuel Economy

Two interesting data points:

1. Falling share of V-6 and V-8 engines since 2005

“It’s pretty clear that the V-8 is on its way out of the mainstream,” said Ford’s chairman, William Clay Ford Jr.

General Motors recently canceled a $300 million program to develop a new V-8, citing new fuel-economy standards that require a 40 percent improvement in overall gas mileage by 2020. “That cancellation was a direct result of the 35-mile-per-gallon legislation,” Robert A. Lutz, G.M.’s vice chairman, said Tuesday.

Even the famed Hemi V-8 from Chrysler will be quieted at stoplights when it is paired this year with hybrid technology in some big S.U.V.’s.

.....

Mr. Ford, the 50-year-old great-grandson of the company’s founder, Henry Ford, said the passing of the V-8 era is somewhat bittersweet for baby boomers like him.

“We all grew up when the coolest guy on the block had the most cubic inches under the hood,” he said. “That feeling dies hard.”

2. Driving Behavior and Vehicle Markets (pdf)

The 100 percent increase in real U.S. gasoline prices since 2003, which is larger even than the record increases of the early 1980s, has induced motorists to adjust their driving habits and the types of vehicles they purchase.

* Freeway motorists have adjusted to higher prices by making fewer trips and by driving more slowly.

* After increasing steadily for more than 20 years, the market share of light trucks (including sport–utility vehicles and minivans), relative to all new passenger vehicles, began to decline in 2004.

* Used-vehicle prices have shifted, reflecting changing demand, particularly with respect to fuel economy: The average prices for larger, less-fuel-efficient models have declined over the past five years as average prices for the most-fuel-efficient automobiles have risen.

Shall we say bring on the 100 dollar oil? (May be, May be not?)

How many cars per person?

ABC News teaches basic facts about number of cars per person around the world.

Getting More Miles per Gallon

From Market can Fuel Energy Solutions:

The irony is that engine and vehicle technologies have improved steadily in the past 20 years, and vehicles have become more efficient. But without either a push from CAFE standards or a pull from soaring fuel prices, the higher efficiencies are routinely offset by the increasing size, weight, speed, and performance of many vehicles. According to EPA studies, the fuel economy of the new 2007 light-duty vehicle fleet would have been more than 20 percent higher if it had weight and performance characteristics similar to 1987 vehicles. The unsettling result is that in the last 20 years the average fuel consumption in new vehicles has not changed.

Breaking this trend now through stricter CAFE standards will not be free. Tighter standards would require manufacturers to increase spending to reduce vehicle fuel consumption. The question is whether consumers are willing to pay more for that. Even at today's gasoline prices, there is little indication that consumers are demonstrating a sustained preference for fuel economy over vehicle performance.

IMHO, resolving this performance-size-fuel consumption trade-off is the most important element if we are to move forward in any meaningful fashion on reducing automobile fuel use.

Whither CAFE?

Washington Wire reports:

CAFE CLASH looms among Capitol Hill Democrats.

Senate leaders, including incoming Energy Chairman Bingaman, back an Obama plan forcing government to raise corporate average fuel-economy standards for autos by one mile per gallon each year, unless regulators prove it isn’t feasible. Obama notes the current U.S. car standard of 27.5 miles per gallon has been “frozen” for 20 years, while Japan has gone to 45 mpg.

House Energy Chairman-to-be Dingell of Detroit blasts CAFE as outmoded, and instead backs incentives for flex-fuel cars. Deron Lovaas, a vehicle expert at the Natural Resources Defense Council, says House Democrats, the auto industry and United Auto Workers face rising pressure to “cut some sort of deal” with the Senate.

Perhaps Rep. Dingell will recognize that pressure to increase CAFE is only likely to rise further, and will help to negotiate an arrangement that helps Detroit with it's healthcare costs?

Still Miles to Go for the Plug-In Vehicle

Matt Wald reports why the Plug-In Hybrid may get here later rather than sooner.

...if the plug-in goes four miles on a kilowatt-hour, and does its first 40 miles on electricity, the incremental cost would be about $20,000, but the saving is only about $15 a year larger than for the Prius-type vehicle.

...Ricardo Bazzarella, president of Hymotion, a Toronto company that sells conversion kits, said that gasoline would probably have to hit around $5 to get a four-year payback. So for the moment, his sales are limited to people who are interested in technology, not money.

...Cars for a plug-in hybrid are a different problem than batteries for cars like a Prius. Engineers evaluate batteries on two main characteristics: how much they will store and how fast they will accept or deliver energy. Prius batteries are more like a shot glass, accepting and delivering a small quantity very quickly.

The battery providing the sole source of power for an electric car is shaped more like a decanter, with a large volume delivered and accepted at slower rates per pound of battery.

But batteries that wore out too quickly — or proved capable of occasional fires, like the ones now being recalled from laptop use — would sour the public on the plug-in concept, experts say. It also has to make economic sense.

So, when will we see a market ready Plug-In hybrid vehicle? 2010? I doubt it. 2012? may be. 2015? likely?

Coal-to-Liquids news from China

Mish points to a bunch of news articles from China about the rise in Coal-to-liquids (CTL) activity.

Bike, It's good for you and for me!

Bike MPG = ?

Threadless via Barry R.

"Car-free" homes?

A BBC News article:

As concerns about the environmental impact of cars continue, a new breed of housing developments are appearing in cities across the UK. Flats and houses are already being built without parking spaces, to deter residents from owning a vehicle. Instead there are pool cars which can be hired out as needed - be it a for weekend away or a trip to the supermarket. But residents are encouraged to use the vehicles only when they really have to.

As Congestion, vehicular noise and pollution and concerns about petroleum increase, we might see a proliferation of such experiements. The efficacy remains to be seen.

Who really killed the electric car?

I promised to write something more than just a rant about who really killed the electric car. I had not read Mark Rechtin's review in Automotive News before I saw the movie (see readers responce here). I think that Rechtin makes a good point that instead of engaging in conspiracy theories, the filmmakers could have done a much better job of bringing out the complex technical, economic and social aspect of automobile purchase, and use. A similar, but slightly more angrier sounding take comes from MotorAlley.

I agree with Rechtin and Wasserman on many points. The acquittal of batteries in the movie is quite surprising. The batteries used in EV1 were not up for the job a regular that is expected of an internal combustion engine powered car. It is true that battery technology continues to improve, but even the current Ni-MH batteries would not lead to a satisfactory vehicle performance. Could the next generation of Li-Ion batteries do the job? Possible, but not yet certain since there are a number of cost and safety issues involved.

It is not unvcommon to find a small but highly motivated group of individuals who are supporting a cause such as the group portrayed in the movie. It should be noted, however, that a mere expression of interest by 4000 people in the state of California does not mean that there was a real market for EV1. Most Americans demand not only acceleration and fuel economy, but a number of other vehicle attributes such as interior and luggague space, safety, increasingly automatic and electronic features that consume more power, reliability, convenience and yes, least I should forget, low initial cost of purchase. Neither the EV1, nor other EVs in the movie fit that bill well.

The movie was quite critical of Alan Lloyd and California Air resources Board (CARB) in general. In the end, we should all remember that it was CARB which effectively mandated EVs with its Zero Emission Vehicle (ZEV) rule. As the movie notes, CARB got the idea after seeing a GM demonstration vehicle at an auto show. If CARB is to be blamed, then the blame should lie with the original ZEV ruling which was too optimistic in its estimate of development of electric vehicle technology. Even with the compromise with automakers, the ZEV rule has not been a complete failure. It can be very easily argued that the development of hybrid vehicles by Honda and Toyota would not have been as quick had the ZEV rule not been in place. In short, the CARB was at least partly successful in its technology forcing goal.

Of course, I have noted far too often that the hybrid vehicles, even after being on the market for several years, currently account for less than 1.5% of new vehicle sales. Even with the kind of buzz that hybrids have generated, there are several skeptics. Quite simply, they make a strong argument that even at 3 dollar a gallon of gasoline, the hydrid vehicles just barely make economic sense for a consumer with lower than average discount rate. The fact is that mainstream vehicle technology keeps getting better, and it is hard for newer technologies to break in to the market.

All this being said, my gripe with a movie like Who Killed the Electric Car? lies in the fact that they perpetrate the myth that somehow we are going to solve our energy, and specially oil, problems by means of technology alone. If we are to get serious about challenging the ever increasing petroleum consumption and greenhouse gas emissions, not only will we need better technology, but we will need a change in behavior and strong fiscal and regulatory policy measures that will induce the change. Too often our attention is foucsed on having our cake and eating it too. It is time to stop living in the wonderland.

Coal To Liquids article in NYT

King Coal? Search for New Oil Sources Leads to Processed Coal, says Matt Wald in NYT. Not only in Coal to Liquids (CTL) an expensive way to produce liquid fuels, it is also a very carbon intensive process as illustrated by the accompanying graphic. The Annual Energy Outlook from EIA does not forsee significant contribution from CTL until 2020 in the high oil price scenario.

The real question we should be asking is whether it is possible to avoid going CTL route altogether. The answer obviously has to do with changing out behavior: reducing our use of vehicles, purchasing less fuel consuming vehicles, driving them as few miles as possible, and using less carbon intensive fuels. Sounds easy, right?

No, then we have more dirty sources of oil for you! There is pleanty to be obtained from the tar sands in Canada, the heavy oil in Venezuala, and the master of them all: Shale Oil right here in America!

In short, if you want Energy Security you could get there by two paths. One path is conservation, energy efficiency, and higher fuel prices. The other path is shameless exploitation of dirty sources of nonconventional oil right here in America at relatively modest fuel prices even if that means ruining any chances we may have to save ourselves from disastrous climate change.

Yogi Berra once said, When you come to the fork in the road, take it! We have come to the fork in the road, and we must take it!

Fuel Economy in the News

Matt Wald reports in the NYT -- Plan to Reshape Mileage Standards Could Buoy Detroit:

The administration wants to keep vehicle size constant but to force automakers to use materials and technologies that will improve fuel economy in whatever size vehicle is offered.

In March, when transportation officials rewrote the truck standard, the new rules demanded only a small increase in overall mileage, although they pushed the minimum required fuel economy for some small sport utility vehicles to above the level now required for cars.

Setting the standard vehicle by vehicle is important because existing car standards make no difference to some manufacturers. For example, for 2005, the most recent year for which statistics are available, Toyota and Honda both averaged 33.1 m.p.g., partly because they sold a lot of small cars, and they had no CAFE concerns.

DaimlerChrysler averaged 26.6, and Ford, 26.9, and unlike Toyota and Honda, both manufacturers had to worry about technology and sales mix. If cars were judged individually, even small cars that performed poorly considering their size would have to be improved. Thus, the burden would fall for the first time on companies that make mostly smaller cars, generally imports.

To be honest, I will take whatever at this point of time to help increase the fuel economy. I do not think personally that size/attribute based standards will create a long term perverse incentive to build bigger vehicles just to avoid stricter CAFE stnadards. Rep. Boehlert (R-NY) is in favor of much stricter fuel economy standards than what is likely to be palatable in Congress, but I guess he will take any increase in fuel economy standards just like me!

Tom Daschle and Vinod Khosla co-wrote an op-ed titled Miles per Cob advocating Carbon Alternative Fuel Equivalent.

The CAFE standard does nothing to encourage that change (...towards renewable fuels). It requires American automakers to build cars and trucks that meet a minimum standard of average mileage traveled per gallon of gasoline. But the current standard for minimum mileage traveled per gallon of gas consumed is both too low and focused on the wrong challenge.

We need to upgrade to a new CAFE: Carbon Alternative Fuel Equivalent. This new CAFE will measure "petroleum mileage" and give automakers incentives and credits for increasing ethanol consumption as a percentage of fuel use of their vehicles, not least by promoting flex-fuel vehicles, which can run on either gasoline or E85 fuel, a blend of 85 percent ethanol and 15 percent gasoline. This approach promises several significant benefits.

I am not sure of Mr. Khosla is aware of the dual fuel credits, but I presume that Mr. Daschle is. Unfortunately, the 1.2 million or so flex fuel vehicle on road are rarely filled up with E85. Not only are most owners of E85 aware that their vehicle can run on E85, in most cases they will be unable to fill up with E85 due to lack of availability of sufficient ethanol fueling stations. Personally, I am not sure that E85 should be pushed on a nation-wide basis. Creating regional clusters -- starting with midwest of course -- may be a more prudent strategy.

The Politics of Oil

(Cross Posted on Tech Policy)

As I was listening to the politicians and people complaining about the gas prices, I could
barely restrain myself in saying: "Where were these people when gasoline
was 99 cents a gallon in the summer of 2000 1999? So now, Suck it up and pay you fools!"

Of course, that is not a very productive strategy. The editors at the Oil Drum have released a very nice statement titled The Politics of Oil: The Discourse Must Change that should be read by the widest audience possible. Please forward it to your friends, and family, and ask them to do the same. Policy Pete on the other hand is in no mood to use such polite language. I am reproducing his post verbatim:

Every two hours or so a new wave of hypocrisy skims in from the hinterlands, roars over the beltway, and hisses to an end somewhere near Chevy Chase Circle. The Volk are clearly upset. $3 gas has them scared and angry. Their winter heating bills haven't yet been fully paid and now the gougers down at the local pumps want them to kiss away $60 for each fill-up. They're right to be alarmed. They're wrong to be mad - it's a democracy after all and they and the freebooters they elect have been in charge. Everyone could see
it coming for a generation; no one did anything useful. It's their own damn fault. Let them suffer the consequences for being such rash fools.

Except that's not the way democracies work. The denizens of the beltway now have to scurry around and find some lamb worth sacrificing to assuage the anger. This part of the game is well understood: it's called The Chant. The Chant tends to get started over in Virginia, somewhere near Great Falls. What'll work? Let's see: heads must roll? No, not bloody enough. Heads of assistant secretaries on pikes along Pennsylvania Avenue might do, hard to say, but it still may not be enough. Another parade of oil company executives forced to sit quietly and listen to Nancy Pelosi at her illogical best? No, frightening indeed but not theatrical enough. Windfall profit taxes? From Dubya? not in this life. But don't worry. Once The Chant gets going, it gets loud, really loud really quickly, and the crew on Capitol Hill will get it frighteningly well. They'll do something, however temporary and ineffective, but it'll be enough to bring quiet for a while.

And then what? We're left with $75 oil, a planet in trouble, the fourth or fifth failed presidency in a row, leaders who are worthless, and an economy distorted by hideous pretzel-like structural problems while chugging merrily along toward the wall.

Come on, lighten up a bit. There's a whole transition away from fossil fuels to start to puzzle out. If you want to drown your tears in your beer, try ethanol instead. Works better and faster anyway, if you can get some.

In a few weeks time, the gasoline prices are likely to come down from $3 level to somewhere around $ 2.60 - $2.70 range and stay there unless a some storm, geopolitical or weather related, hits us. The TV and papers will soon forget that we still stand on the edge of a crisis, life will go on, until we are really hit hard on our heads. It will be a time when 3 dollar gasoline will start to look like good ol' days!

Interesting Discussion on Econbrowser

Some worries for 2006 : Actually, skip the post head straight to the comments (Sorry Prof. Hamilton). I don't have time to respond to some of them, but I'll try to do that later as I think this is a worthwhile discussion.

2006 Auto Industry Outlook from WSJ

Five issues identified in the WSJ 2006 Auto Industry Outlook are:
* Future of GM
* Fuel Economy (and Hybrids)
* Boom in Luxury car segment
* Resurgence (?) of small (compact?) cars, and
* Crossovers are the new SUVs

It is clear that US auto industry is in for some rough weather over the next two or three years. In that time, GM and Ford will continue to downsize and will perhaps emerge as nimbler organizations. GM might be the starve off chapter 11 following the sale of GMAC.

Arrival of Camry hybrid model and several hybrid models as well as smaller more fuel efficient gasoline ICE vehicles will indeed challenge the US consumers to put their money where their mouth is. On the other hand, if we see another year of volatility in oil prices like 2005, these more fuel efficient vehicles may indeed become popular. There is also likely to be a move in both the Congress on passenger car CAFE standards as well as NHTSA on light-truck CAFE standards. I will be watching this more closely than other issues.

I really don't have anything to say about the luxury car sales.

As for the crossovers, the trend has been clear now for the last couple of years. Large SUV sales are in a big decline after having peaked in 2001/2002. Crossovers, which are cars disguised as SUVs, having been growing in popularity already. With high gasoline prices ($ 2.35 a gallon on average for the year?) we may see that trend accelerate.

Ford Report on Business Impact of Climate Change

(cross posted on TechPolicy)

In response to a shareholder resolution urging the company to outline its strategy to deal with climate change, Ford Motor Company has released a report on Business Impact of Climate Change. Related WSJ article here.
As such you may not find anything new in this report, specially if you were looking for specific targets and so on, but yet it is an interesting piece of document. Firstly, Ford has embraced "Fuel+Vehicle+driver" formula:

Within the road transport sector, we see the opportunities to reduce in-use GHG emissions defined by three inter-related factors:
• The embedded carbon content of the fuel available to consumers.
• The carbon efficiency of vehicles.
• The purchase decisions and driving behavior of customers, including vehicle miles traveled
This “fuel + vehicle + driver” formula underpins our engagement with both fuel companies and consumers in addressing the GHG challenge.

Readers of this blog may find this argument vaguely familiar.

Secondly, Ford has very nicely outlined the constraints faced by the auto companies:

...our business involves a long product lifecycle with greenhouse gas emissions that vary at each stage.
...we face at times conflicting regulatory, market and technological signals. The picture varies by geography, market segment, and demographic profile. (Some times) governments are often tempted locally to encourage specific technology solutions, but there is considerable uncertainty about which technologies, combinations of technologies and technology pathways will prevail and over what time frames, ...some policy makers favor demand-side measures such as fuel taxes and Green Public Procurement policies, while others prefer supply-side controls such as fuel-economy or GHG emissions standards, creating significantly different market dynamics and product strategies from one region to another.
...the GHG footprint of the in-use phase of light duty vehicles must be measured on a well-to-wheels basis, that is, the total emissions from the production of the original source of energy (e.g. crude oil, bio-fuels, etc) into a usable fuel, the amount of energy consumed to produce the vehicle, to the fuel consumed by the vehicle during its in-use lifetime.
...the automotive industry operates on long product development times and major capital investments.

All of these points are well made. The heart of this argument is that there are inherent business risks in trying to respond too enthusiastically with all the market and regulatory uncertainties present.

Third, Ford's take on policy matters is in favor of emissions trading system:

...(emission) reduction programs should be based on upstream, carbon trading systems that establish reasonable, gradually reducing the limits on carbon
introduced into the economy. In addition, they must include a safety valve that is based on economic/energy indicators that would allow for the
release of additional emission allowances at reasonable prices to avoid unintended constraints on economic growth, maintain price stability...

Economists would argue that an upstream carbon trading system would be most efficient. Oil and Gas companies are not always happy with the upstream system though. This brings us to the part of the report dealing with stakeholder issues (taken from Ford's sustainability report):

Many factors influence greenhouse gas emissions from vehicles, and many institutions and individuals influence those factors. (click on picture for a larger image)

... to have meaningful, long-term impacts, global patterns of consumption of fossil fuels must be changed. For the transportation sector, this will require not only improvements in fuel economy, but also changes in fuels, infrastructure, mass transportation and driver behavior, as well as a reduction of the overall number of vehicle miles traveled.

Again, this is an argument that readers of this blog should find familier.

What is to be made out of this report? Frankly, not much, but it is a step in the right direction. The reality is that we are going to have to deal with how to respond to climate change sooner or later. Some tough decisions will have to be made. The sooner we prepare ourselves to make those decisions the better off we will be afterwards.

Impact of AEO estimates of Oil prices on proposed CAFE standards for light-trucks

Silly of me not to thought about this before, but buried deep inside Tuesday's WSJ was a short piece on how the significantly higher AEO estimates on oil prices could have important consequences on NHTSA's proposed light-truck CAFE standards.

...(EIA estimate) also raised its forecast for gasoline prices, a value that figures into the government's proposed new fuel-economy standards for trucks and SUVs. The toughest of those standards, for model-year 2011 vehicles, is based on gasoline prices of $1.51 to $1.58 a gallon beginning by 2008 from EIA's outlook last year. The outlook released yesterday bumps those prices to a range of $1.99 to $2.20 for the same time period.

Auto makers already were grumbling that proposed fuel-economy standards would be tough to meet. "The current proposals are a challenge," said Chris Preuss, spokesman for General Motors Corp. He declined to comment on the impact of even higher targets.

..."If they're going to be intellectually consistent with the methodology they proposed, they would have to set higher standards," said Eric Haxthausen, an economist with Environmental Defense, an environmental-advocacy group based in New York. His organization has tried to replicate the National Highway Traffic Safety Administration calculations and estimates that the new gas prices alone would bump up the targets by one mile a gallon.

This means that light-truck CAFE standards could be bumped up to around 24 or 24.5 mpg by 2010 (rough estimate for a schedule 22.7 mpg for 2008, 23.5 for 2009). This would further reduce the gap between light-truck CAFE standards and passenger car standards which are currently frozen at 27.5 mpg. Onus has been on the Congress for quite some time now to take up the issue of light-duty vehicle fuel use either though CAFE or other means.

In the mean time, car companies who have been betting on their fortunes on light-trucks (you know who they are) will see their profit margins sqeezed further unless they are able to pass on the costs to the consumers without a drop in sales. Combine this with possibility that we might see gasoline price spikes, like the one after KatRita, due to various reasons and the stage is set for a very turbulent couple of years in terms of auto sales.

$ 55 as the new floor for oil prices?

This Week in Petroleum sums up three different takes on medium to long term oil prices and concludes that if there are still any illusions about going below $40 a barrel any time soon, we should get over those.

Earlier this week, three different organizations outlined their views of the future in global oil markets. Perhaps most interesting, was that each of the three looked at different future time horizons, resulting in different conclusions.
...as OPEC looks towards the first quarter of 2006, it foresees global oil markets as being well supplied, albeit at much higher prices than seen previously during this time of year.
...the AEO2006 reference case includes much higher world oil prices than were projected in AEO2005. In other words, EIA expects oil markets to remain tight (meaning spare production capacity will continue to remain low, both upstream and downstream) causing oil prices to remain elevated for the foreseeable future.
...(Oil Market Report) OMR highlighted the IEA’s view of oil markets through 2010 and concluded that there is “ … no strong evidence of a significant change in current [oil] market conditions over the next five years.”

The cat is out of the bag, I guess. I hope that spinning will stop now.

Honda's FCX Experiement

Danny Hakim in the NYT reports on Honda's experiment of leasing a fuel cell vehicle. Honda is also experimenting with natural gas cars, but those vehicles are available for sale. It is also steadily improving it's hybrid technology, and at the same time produces many small and fuel efficient vehicles. (They also make the Ridgeline). A very sensible strategy overall.

Hybrids: Will they or Won't they?

An interesting piece in the IHT titledAt auto show, all the talk is of fuel:

As one automaker after another made clear at the auto show, which continues through Sunday, Toyota is not setting a universal standard for new technologies. It may be setting the pace, but mostly what it has shown is that high gasoline prices have made buyers more open-minded to alternatives.

"There is not going to be a one-size-fits-all solution," Ford's chief technical officer, Richard Parry-Jones, said when asked if an industry standard would emerge for hybrids. "We are in for a fairly confusing decade."

I would argue that we are in for at least a couple of confusing debates. Emergence of new generation of Hybrids and Diesels by the end of this decade, potential entry in to the market of Plug-in Hybrids around the same time, developments in fuel cell and battery electric vehicles, volatility in petroleum markets, and increasing concerns about climate change: These along with steady improvments in mainstream ICE gasoline vehicles are all going to work together to create (excuse the term) a perfect storm in the auto markets.
GM still has the audacity to claim that they will have a market competitive fuel cell vehicle by 2010, when most others have agreed that it will be hard to do before 2015, but much more likely in 2020.

"We believe we can design and validate a competitive fuel cell propulsion system by 2010," GM's vice president for research and development, Lawrence Burns, said before showing reporters the prototype.

In an interview, he sniped at hybrids, citing their expensive price tag and the limits to their efficiency.

"Hybrids could be another niche, low-volume technology that is nice to have," he said. "But is that going to make an impact if you are not penetrating the 64 million new cars and trucks?"

Even then, the question whether Hybrids will or will not become a mainstream technology, and by mainstream I mean present in at least a third of new vehicles sold, is up for grabs.

Toyota and Honda want to persuade buyers to pay a premium for hybrid technology.

"Toyota is looking to do with hybrids what Volvo did with safety, trying to get people to pay more for hybrids," Christopher Richter, an auto industry research analyst at CLSA Asia Pacific Markets, said after touring the motor show. "It is very similar to the debate a couple years back: whether you want to have air bags or not. American automakers were fighting it tooth and nail. Volvo got people to pay for it."

Some Americans are already paying several thousand dollars more for the cachet of driving a car powered by what is seen as a technology of the future.

*Some* is the key word. As GreenCarCongress reported, Honda may be offering some incentives on its Accord Hybrid. Overall, the picture is really murky at this point in time, with the sales of hybrid vehicles in August and September being really distorted by very high gasoline prices in US. A much clearer picture will start to emerge from Nov-Jan. sales data, but as I said above it's unlikely that the dispute will be solved any time soon.

Two pieces for Automotive News

May require subscription:

* Industry opposes possible gas-guzzler fee in Canada

exceprts:

The government is considering a "feebate" program, under which it would add a fee to the price of vehicles with poorer mileage and give money to consumers who buy gasoline sippers.
...

Feebates "don't work," Huw Williams, chief lobbyist for the Canadian Automobile Dealers Association told Automotive News. Incentives to scrap the 2 million pre-1987 vehicles still on the road would be much more effective in cutting emissions, he says.

What Canada is thinking about is a feebate program. I think that it will be a great idea if Canada can make it work.


* Lighter vehicles are not unsafe

"In the last 40 years," Hall said, "auto racing speeds have increased, yet deaths have decreased significantly while the weights of the vehicles have gone down progressively. Why? Crushable fronts that absorb impact, 'tubs' that shelter drivers after the entire car has disintegrated, a relocation of the front axle and, yes, crash bags. In this case, lighter is markedly safer."
...If the automakers could be forced to create unsafe light vehicles, would they be stupid enough to do it? Would their defense in a class-action suit be that "CAFE made me do it"?

There has been a recurring contention that heavier vehicles are safer. But even the experts disagree on that point. The more important question is whether lighter-weight vehicles can be made to be as safe as heavier ones. The evidence suggests they can be.

Amen.

Summarizing the Oil debate

Robert Feldman of Morgan Stanley GEF takes a shot at explaining that the oil debate may be converging towards the following:

Develop fossil fuels, research alternative energies, push conservation.

I think that this is a good summary. If I were to prioritize, I would place conservation on the top of my list, followed by developing liquid fuels (not necessarily just fossile, could be biomass), and yes not ignore the long term and invest in technology development for the future.

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.