Run Up on Gas, and the Real Cost of a Gallon
Oil markets have been throwing fits again. But the higher prices at the pumps don’t begin to reflect the $825 billion we spend every year on oil-related defense expenditures, supply disruptions, and lost economic activity and tax revenues.

Hybrids Top List of Annual Green Car Rankings

For the fifth consecutive year, Honda’s natural gas-powered Civic GX took top honors as the greenest vehicle, according to the American Council for an Energy-Efficient Economy. The Toyota Prius and Honda Civic Hybrid claimed spots two and three.

Hybrids on the Way

Finally, a hybrid pickup truck is heading our way. That only scratches the surface when considering PSA Peugeot Citroën’s move to go all (micro)hybrid.

Holding Your Breath for a Diesel Hybrid

Volkswagen joins BMW, Mercedes, Toyota, Ford, and Peugeot-Citroën in talking about diesel hybrids. Don’t hold your breath.

Small is Big in Geneva and New York

With gas prices breaking new records every day, subcompacts are poised to get big. Small fuel-sipping vehicles made a big impression at the recent Geneva and New York auto shows. Maybe size does matter after all.


Greetings, Hybrid Car Enthusiasts,

A few years ago, Hurricane Katrina destroyed much of New Orleans and the comfort of a two-buck gallon of gasoline. Just when we got used to the new reality of forking over $3 per gallon at the pumps, oil markets throw us for another loop. Between these gas price fluctuations and new fuel economy laws, the auto industry finally is confronting the need to make fundamental changes. Plug-in hybrids and diesel hybrids are on the drawing board—but are still very costly. New hybrids are on the way. And simple strategies like downsizing are here now. This issue of our newsletter guides you through the latest developments. Enjoy.


Run Up on Gas, and the Real Cost of a Gallon

In late February, the price for a barrel of the oil surged past the $100 mark, settled for a few days, and then rose to record highs day after day until it reached nearly $112 per barrel—only to drop down again below $100 one week later.

A gallon of regular averaged $2.96 on Feb. 11. By March 17, the price was $3.28 on average around the country—with parts of California breaking past $4 per gallon. And it’s only March. The early record does not bode well for motor travel during the peak summer driving season.

How are these fluctuations affecting consumer behavior? Not all that much, according to some analysts. Bob Schnorbus, chief economist at J. D. Power & Associates, suggested that consumers have not yet fled larger vehicles. He told U.S. News and World Report, “If $4 gas is only short term, people will do what they’ve been doing the last five years: complain but keep on buying.”

But it might be a completely different story if prices at the pump reflected the real cost of a gallon of gasoline—which is more than $11.35 per gallon, according to Gal Luft, executive director of the Institute for the Analysis of Global Security.

In Dr. Luft’s recent opinion piece in the Miami Herald, he estimates that the United States is sending $460 billion per year overseas to finance the daily buying of 12 million barrels of imported oil. Luft cites calculations from the late Milton Copulos, an energy economist, who sets the grand total from the cost of oil-related defense expenditures, amortized cost of supply disruptions, and lost economic activity and tax revenues, at $825 billion per year.

“To put the figure in perspective, this is equivalent to adding $8.35 to the price of a gallon of gasoline refined from Persian Gulf oil, making the cost of filling the gasoline tank of a sedan $214, and of an SUV $321.”


Hybrids Top List of Annual Green Car Rankings

For the fifth consecutive year, Honda’s natural gas-powered Civic GX took top honors as the greenest vehicle, according to the American Council for an Energy-Efficient Economy (ACEEE). Hybrids and small cars dominate the rest of the list.

The Toyota Prius and Honda Civic Hybrid claimed spots two and three, while the Nissan Altima Hybrid and Toyota Camry Hybrid also made the list of the 10 greenest vehicles. “Hybrids stand out, even after being taken down a notch by the new fuel economy calculations,” said ACEEE vehicle analyst Shruti Vaidyanathan.

The ACEEE score incorporates unhealthy tailpipe emissions, fuel consumption, and global warming emissions to produce its annual environmental scorings of all model year 2008 cars and passenger trucks.

Diesels performed poorly due to the high levels of oxides of nitrogen and particulate matter—despite offering greater fuel efficiency and therefore reduced greenhouse gas emissions. In fact, the diesel-powered Volkswagen Touareg receives the dubious honor of being the year’s most environment-unfriendly vehicle.

ACEEE’s website is a great source for more info:

And “Gas Mileage Impact Calculator” utilizes data from ACEEE’s green rankings to produce the calculator’s results:


Hybrids on the Way

GMC will break the dry spell on a hybrid pickup, when the 2009 Sierra Two-Mode Hybrid goes on sale in late 2008. The Sierra Hybrid is another application of General Motors’ full hybrid system. It achieves 40 percent greater city fuel economy, and a 25 percent improvement in overall fuel economy, compared to its gas-powered counterpart. It also offers a hefty 6,100 pounds of towing capacity. The Sierra Hybrid’s gas power comes from a 6.0-liter V8 outfitted with cylinder deactivation. Prices have not been announced.

Applying full hybrid systems to gas-thirsty pickups could help reduce our collective oil consumption—but not nearly as much as the use of a stop-start or “microhybrid” system on each and every car and truck. Sounds crazy? Well, that’s exactly where French-automaker PSA Peugeot Citroën is headed. In a March 5 news item in Automotive News Europe, PSA CEO Christian Streiff said, “We are investing extremely massively in micro-hybridization.” Pascal Henault, the automaker’s head of research and innovation, added, “By 2011, we want to produce and sell 1 million Peugeots and Citroëns in the EU with that system, and 1.6 million in 2012. That includes both diesel as well as gasoline models.” The response from a visitor by the tag of “Jim from the Foothills” was, “Come on GM and Ford. This is proven technology. Every single car, just like an airbag.”

Micro-hybrids—also known as “stop-start” for the ability to stop engine idle when a vehicle slows down and comes to a stop—can reduce fuel consumption by 5 percent to 15 percent depending on the driving conditions.

Perhaps GM’s Bob Lutz took note of the PSA announcement. A couple of weeks later, he said, “Ultimately by 2020 we figure that 80 percent of vehicles will require some sort of hybridization,” because of new U.S. fuel- economy standards. “We cannot get to 35 miles per gallon with anything resembling the current product portfolio with anything resembling current technology.”

One more note: On Mar. 24, 2008, Automotive News reported that Audi will not sell the Audi Q7 Hybrid in the United States. Johan deNysschen, head of the Audi brand in the U.S., said Audi could not make a business case for the gas-electric version of the Q7, based largely on a weak dollar.


Holding Your Breath for a Diesel-Hybrid

Volkswagen is the latest car company to announce plans to introduce a vehicle that combines hybrid and diesel technologies. The company said that a diesel-hybrid Golf, to be offered in Europe as early as 2009, will achieve 70 miles to the gallon, and pass tough diesel emissions standards in Europe and California. VW showed a concept version at the recent Geneva Motor Show.

In the weeks leading up to Geneva, BMW and Mercedes also released plans for diesel hybrids. BMW is talking about the BMW X5, a seven-passenger vehicle utilizing a 2.0-liter, four-cylinder diesel engine and a mild hybrid system. The X5, which is expected to achieve 36 miles per gallon and 200 horsepower, is still in the concept phase. Mercedes-Benz is offering more details about its S400 gasoline-electric luxury sedan, expected in 2009—but has only hinted at a diesel-hybrid version in 2010.

Combining diesel and hybrid technologies could offer dramatic fuel economy benefits, but the combined cost of the two systems is a major obstacle. In an interview with, Dr. Johannes-Joerg Rueger, vice president of engineering for diesel systems for Robert Bosch LLC, a leading manufacturer of diesel vehicle technologies, said, “From a cost perspective, that’s definitely a nightmare. The diesel engine itself is more expensive than a gasoline engine. And a hybrid device on top, definitely that’s the most expensive combination you can have.” Based on our conversations with Rueger, and insiders at Volkswagen, we shouldn’t hold our breath for a diesel hybrid in the United States.

Also: See our report on the “Clean Diesel” panel at Auto FutureTech – Summit 2008, in Vancouver, British Columbia:


Small is Big in Geneva and New York

With gas prices breaking new records every day, subcompacts are poised to get big. “There’s a downsizing effect,” said Paul Willis, chief operating officer of Kia Motors Europe from the Geneva Motors Show. “We’re seeing a change in the mix of vehicles.”

As the European Commission is cracking down on greenhouse gas emissions by proposing a reduction of 25 percent from the current levels of 160 grams per kilometer, automakers are realizing that shrinking the size of vehicles is a feasible and practical way to reduce their carbon footprints.

Small fuel-sipping cars were featured throughout the show in Geneva. The Ford Fiesta garnered a lot of attention, as Ford prepares to migrate the efficient European subcompact to U.S. shores. The Fiesta is expected to go on sale in Europe as a 2009 model, before being offered in the U.S. in the following year. The Fiesta engine lineup will include a portfolio of small and efficient powerplants: two gas engines, a 1.3-liter and a 1.4-liter four, and three diesels, including a 1.6-liter diesel with 85 horsepower.

Toyota also showed the tiny iQ concept car, first shown in Frankfurt last year, and its Urban Cruiser. Toyota calls the Urban Cruiser an “environmentally responsible SUV” due to its small size and low emissions. The four-door was originally introduced as a concept vehicle in 2006, and has now taken a more conventional design than the first iteration. If introduced in the United States, it would fit neatly into the Toyota lineup, just below the RAV4 in both size and price. The Urban Cruiser’s Toyota bloodline runs thick, as its platform is borrowed from the Yaris sedan, while its body design and overall aesthetics mimic the Scion xD.

It is unclear which of these vehicles will be approved for U.S. sale, but either could help Toyota to move in the direction of meeting new CAFE standards. “As we look to 2020, when we have to get 35 miles per gallon, that’s a big challenge,” said Jim Lentz, president of Toyota Motor Sales, USA. Smaller and more efficient is undoubtedly part of the answer.

Meanwhile, in New York a few weeks later, Honda introduced the redesigned version of its highly successful subcompact car, the Fit, expected to show up in dealerships in April. The 2009 Fit will have a 118-horsepower engine that could achieve a hybrid-like 40-plus miles per gallon.

In New York, Mitsubishi showed off its ultra-compact i-minicar. Unlike the electric version of the vehicle, i-MIEV, the gas-powered i-minicar is a production model that has been selling in Japan since 2006. The four-seat i-minicar uses a lightweight aluminum chassis. It’s powered by a three-cylinder 64-horsepower gas engine, combining a turbocharger with variable valve timing to achieve approximately 55 miles per gallon—proving small can beat hybrid in the high-mpg game.


That’s it for this report on hybrids, small cars, diesels, mpg, gas prices and the crazy mixed-up world of cars, energy, and the environment. Thanks for tuning in.
Happy Driving,
Bradley Berman
[email protected]


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