Tuesday, March 13, 2007

Bush fuel economy plan has rough debut in Congress

Automotive News had an interesting article on Bush's proposal to increase our nations fuel economy. Here's the article along with my comments.

The Bush administration estimates that its plan to improve fuel economy would raise the price of the average General Motors car $1,800 by 2017. In contrast, the price of the average Honda would increase less than $600. President Bush wants to raise fuel economy standards by as much as 4 percent a year, to meet his goal of cutting U.S. gasoline consumption by 20 percent over 10 years. You know unfortunately I think it has to be done. We have to challenge the our automotive industry improve the overall fuel ecomony. I think that this is a real opportunity for our "D3" automakers to work together and find solutions that will help them get to the goal faster and cheaper. The bottom line is the Japanese have been working on perfecting their engines and improving fuel economy for years.

Data on the plan's possible disparate impact on automakers emerged last week during a House hearing. Administration officials appeared before a subcommittee of the House Energy and Commerce Committee to defend the plan. They conceded it is a work in progress, especially the 4 percent-a-year provision."It's a target," said Nicole Nason, administrator of the National Highway Traffic Safety Administration. "I don't know that we'll get there." NHTSA has set higher fuel standards for light trucks through the 2011 model year, although nowhere near 4 percent a year. The administration wants Congress to authorize NHTSA to set separate fuel standards for different sizes of cars. The fleet car standard has been at 27.5 mpg since 1990. Amazing, the same since 1990. We had 16 years to work on improving the fleet fuel economy and we didn't improve it. So with flirting with $3 gas again, we need to get on with it.

Lawmakers of both parties challenged details of the plan. The debate over vehicle fuel economy is further complicated by the growing interest in Congress to enact a broader law that would limit greenhouse-gas emissions from all sources. Rep. John Dingell, D-Mich., chairman of the full committee, historically has allied himself with automakers opposed to higher standards. But he said last week, "The old debate is no longer sufficient."

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Locking In Gas Prices When They're Low

I saw an interesting article at NPR on locking in low gas prices. Here is what they said along with my comments.

There you are, steamed at paying $3 for a gallon of gasoline. So how does it feel to learn that some people are paying $2 dollars, or even a buck a gallon? That's because they bought it from a small chain of gas stations in central Minnesota that allows customers to pre-pay for gasoline, and stockpile it for when prices jump. Remember the summer of 2006? I paid as high as $3.40 per gallon. I would love to be able to lock in low gas prices now and use it up in the summer. Like most people our summer hobbies end up consuming a lot of gas and the gas companies tend to like to raise the prices during the summer.

First Fuel Banks has six gas stations in the St. Cloud, Minn., area, where customers can buy as much gasoline as they like, whenever the price seems right. First Fuel then stores the gasoline in its oversized tanks, or buys futures contracts for really long-term purchases. Pre-paying for gasoline requires that customers tie up their money for a while. Think about it, if you buy 400 gallons of gas today at roughly $2.50 per gallon that is $1000 dollars. If gas goes up to $3.50 this summer you end up saving $400. That is a 40% return on you hedge. Take a look at the 3 year chart below compliments of Gas Buddy. Gas prices over the last 2 out of 3 years peaked in August. Even if gas didn't peak they sure didn't go down in the summer.

But otherwise, there's no charge for the program, aside from a one-dollar membership fee. And it can yield huge savings. Thousands of First Fuel customers are able to fill their tanks for less than $2 a gallon. CEO Jim Feneis says that a few hundred of his customers actually locked their prices in at less than $1 a gallon. The advance-purchase option was once only available in Minnesota. But soon it will get a tryout in 11 northeastern states. Gulf Oil CEO Joe Petrowski plans to introduce the advance-purchase option later this year at about 1800 Gulf stations from Delaware to Maine. Bring it on. I hope more gas companies will do this. When you think about it how often do you go to the same gas station. Chances are you buy from a lot of different locations. If you pre-bought your gas, guess where you would buy it from? The same station. In principle gas station owners told the general public that they did not make anymore money when gas was $3.00 vs. $2.00 per gallon. So if that is true the gas companies can sell it to you when it is low price and then you can consume it when it is higher. Sounds like a great idea to me.
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Sunday, March 11, 2007

New EPA Ratings Hit Fuel Sippers Hardest

Scott Anderson at WardsAuto.com had and interesting article called New EPA Ratings Hit Fuel Sippers the Hardest. Here is what they said along with my comments.

Makers of the thriftiest cars and trucks on the road have less to brag about under new vehicle fuel-economy ratings the government says better reflect Americans’ real-world driving.
The U.S. Environmental Protection Agency recently released new vehicle fuel-economy estimates that, for the first time, account for current interstate highway speeds, heavier use of air conditioning and other modern-day driving habits. In some ways it is hard for me to believe that it has taken this long for the EPA to get around to this? When did we change the speed limit from 55 MPH to 70 MPH/ That is pretty much the day when people started driving 80 MPH. When did you no longer need a radar detector? Remember back in the days of 55 MPH on the freeway, everyone had a radar detector. I think over that time period I bought 3 different types because the technology kept changing so fast. Another thing that doesn't make sense to me is when they say "air conditioning use". In most cars the auto setting or default setting is air conditioning on? I am constantly turning my A/C button off in my car. During the winter months the only time I need to run the A/C is when I have 3 people in the car with me and the windows get all fogged up. Otherwise you don't need it.

Under the EPA’s new ratings system, city mileage for all ’07 U.S. light vehicles, on average, falls 12%, while average highway estimates drop 8%. Combined fuel economy for the current fleet is about 10% lower. I am sure the automakers will whine about this and complain or already have but come on fellas the Corporate Average Fuel Economy hasn't changed since 1988. What was up with continuous improvement during this time frame, I know there wasn't any. I would love to drive a Ford Expedition that gets 30 MPG but it is not available. No one cared, fuel was cheap.

For some vehicles, particularly fuel-sipping power trains, the new ratings system can mean as much as a 30% reduction in city fuel economy and a 25% cut in highway driving averages.
“The most efficient vehicles on the market are gas-electric hybrids,” an EPA spokesman says. “They’re more affected downward as a percentage than other vehicles. Smaller engines pay a higher penalty for accessory usage, such as air conditioning.” This makes sense, when you consider the amount of power required to run an A/C compressor or to fire up 2 heated electric seats. That little 2.0L engine is going to pay a lot higher price than my 5.4L V8. It is all in the percentages. It is sort of like comparing a Clydesdale horse to a pony pulling a wagon. Put another 4 people on the wagon and the Clydesdale doesn't even know they are there. The pony on the other hand will just stop and eat grass.

Toyota Prius fuel economy dips 16% as result of new ratings.
For example, Toyota Motor Corp.’s Prius hybrid-electric vehicle saw its combined city/highway numbers fall from 55 mpg (4.2 L/100 km) to 46 mpg (5.1 L/100 km), or a 16% drop, according to the new measurements. The impact is far less on trucks and SUVs. The ’07 Chevrolet Tahoe, for instance, when equipped with a V-8 5.3L engine, slipped from a combined rating of 18 mpg (13 L/100 km) to 16 mpg (14.7 L/100). So the Prius goes from sort of amazing gas mileage to just great gas mileage. The Tahoe goes from crappy mileage to really crappy. The point here is that when you buy a car and the sticker says here is the mileage that you should get you really should get that mileage. Don't you think? It is sort of truth in advertising. I don't really care what mileage the car will get sitting on the test dyno in the back of a lab, I want to know what I will get when I a barrelling down the road at 80 MPH with the heated seats on, the A/C blarring (because I forgot to shut it off), my arc source head lamps and fog lights on, navigation system's LCD telling me which way to turn, charging my Treo and the Bose stero system thumping out the new Daughtry CD.

The new mileage ratings do not affect auto makers’ corporate average fuel economy totals. It is funny how the article ends with this. This is the root of the problem. When the SUV craze hit the U.S. market and we had low fuel prices there was no incentive to improve. And it looks like here we are in the year 2007 flirting with $3 gas prices again and we still don't have an incentive to improve. American's want to drive large cars, we will always want this, if the CAFE targets don't change then we will never improve. The auto industry has not self regulated it self over the last 20 years so what makes us think they will do it now. It was a missed opportunity to not improve the CAFE over the last 20 years it is a missed opportunity now. The Japanese car manufactures on the other hand have quietly develop powerful gas engines and hybrid electric vehicles. The Europeans manufactures have developed small displacement diesel engines to cope with $6.50 per gallon gas prices. The "D3" automakers have not.