Retail gasoline prices dropped for the 34th consecutive day on Tuesday, hitting a summer low of $3.73 per gallon. Supply and demand curves in auto and gasoline markets are squeezing Americans between declining gas prices, reduced consumption (on pace to decline for the first time in 17 years), sustained interest in smaller cars, and rising nerves about when the price of gasoline could spike above $4 once again.
Last week, former Intel CEO Andy Grove called for a massive effort to put 10 million plug-in hybrids on the roads in the next four years. His plan is simple: Harness the ingenuity of America’s entrepreneurs to convert a sizable chunk of America’s existing non-hybrid gas guzzlers to plug-in hybrids. Groves comments illustrated how an expert in one industry can reveal himself as a novice in another.
Some forward thinking auto-watchers imagine using vehicles with large-capacity batteries as adjuncts to the power grid so that cars become “cash-back hybrids” that would, in theory, make money for their owners. But for those worried about the present, it's more a matter of: “Let’s just get the batteries driving the wheels first!”
Unless you have limitless amounts of money to spend on gasoline, buying an SUV recently has proven to be a losing gamble on oil prices staying low. And the pain doesn't end at the pump—resale values of SUVs and light trucks have dropped precipitously with the increase in gas prices. Hybrid owners on the other hand, have seen their used Priuses' residual values go up just as dramatically as those of the gas-guzzlers have fallen.
Expensive gasoline is not bad news for every segment of the economy. Oil companies are making out like bandits. Hybrid car sales are way up. And so are sales of gas cap locks, designed to prevent thieves from siphoning precious fuel from your tank.
There are very few cities where there is not a compelling practical advantage to having a car. But a new trend in transportation has many citizens rejecting personal automobile ownership in favor of sharing cars and/or bicycles.
Oil surged to a new height today, almost reaching $114 a barrel. Retail gas prices rose to a new record of $3.38 per gallon. Diesel jumped to $4.19. And AAA is warning that these prices will continue to rise. The first reaction might be to panic, or make a mad dash toward a single technology solution. But a recent talk by John German, manager of environmental and energy analyses at American Honda Motor Company, suggested that we remain calm.
One journalist after the next purports the same point about hybrid gas-electric cars: they are not worth the extra cost. The writers' lack of originality is only surpassed by their inability to get all the facts. When they proclaim that the extra cost of buying a hybrid will not be recouped in savings at the pump—as if they were the first person, rather than the thousandth, to "discover" a nefarious plot against American car buyers—the writer usually fails to consider tax credits, reduced maintenance, and historically excellent resale value.
In May, 2005, Edmunds.com did an analysis for USA Today, and concluded the cost for advanced hybrid technology isn't "completely offset by gas savings and federal tax credits over the five years that owners typically keep their vehicles." The story proclaims, with dramatic flair, that hybrid owners would have to drive tens of thousands of extra miles a year, or gasoline would have to hit $5.60 a gallon before reaching the break-even point with a comparable gas-powered model.
