With gas prices soaring straight into oblivion, automobile customers and the rest of the auto market are looking for vehicles that would save their pockets from getting into trouble. Studies and research have found out that the numbers are showing that customers are leaning towards those vehicles that would assure them that they would not have to spend much on gas.
The market is actually looking for vehicles with smaller engines. This is because with smaller engines, owners would not need to have to refuel much for these types of engines only consumes a little amount of gas. This is actually a trend that has been seen in the sales of two Ford Motor Company vehicles - Ford Fusion and Mercury Milan. According to the sales of both vehicles, starting January up until the middle of May this year, the sales of these vehicles that held four-cylinder models almost doubled. In fact, sales for both have taken more than 20 per cent of all Ford vehicles' sales.
George Pipas, the manager of Ford's Sales Analysis, states, "Along with the Fusion and Milan, the increase also includes Focus and Escape. Clearly, higher gas prices are increasing consumer demand to look at more fuel-efficient vehicles and powertrains." Indeed, the whole analysis shows that the auto market is now turning towards vehicles that are more efficient when it comes to fuel mileage. Of course, it also shows that people are becoming concerned and are becoming greatly affected by the whole gas price surge.
Pipas adds, "For February of this year, the Fusion's rate for the I4 was 41 percent, meaning that 59 percent of Fusion sales were for models with a V6. In March, the four-cylinder rate rose to 47 percent, and in April the rate jumped to 53 percent."
Fuel Efficient Luxury Cars
This week, legislation will emerge from committee, and almost certainly soon head to the floor of the U.S. Senate. It might not get that much notice in itself, but it ought to, because it tells you how much has changed on energy issues. And, given its probable passage (or that of something along its lines), the new legislation will have a big impact on the automobile industry, on gasoline consumption, and on what people drive.
The bill is the "Ten-in-Ten Fuel Economy Act," and it is coming out of the Senate Committee on Commerce, Science, and Technology under the joint sponsorship of Democratic Chairman Daniel Inouye and Republican Vice Chairman Ted Stevens. Whether it is the provisions in this bill, or something like it, fuel efficiency standards for American vehicles are going to go up.
It's no longer left versus right, Democrats versus Republicans, Congress versus the Administration. In this year's State of the Union address, President Bush cited the need to "reform and modernize fuel efficiency standards," and the Administration is working on its own proposals. Putting it simply, on this formerly contentious issue, bipartisanship prevails.
We even know pretty much by how much efficiency will go up. "The Great Mentioner" (to borrow a conceit that the columnist Russell Baker invented years ago) has decided on the "Four-Percent Solution." That is, fuel efficiency is meant to go up by about 4% a year (though, some of the time, by 3.5%). That translates into about a 10-mile-per-gallon improvement over the next ten years. That's your "Ten in Ten."
There are some key characteristics of this "Ten in Ten." First, it will apply not only to cars, but also to SUVs, vans, pickups, and medium and heavy trucks, all at the same rate. Secondly, it will be based on "attributes." That is, it will allocated across class of vehicles (measured by weight and size and functionality). This will help eliminate the rigidities of the current Corporate Average Fuel Efficiency Standards, which measure changes across a company's entire output - a problem when the public tilted to larger, less fuel-efficient vehicles, forcing companies to produce smaller, less-profitable or barely-profitable cars to meet the targets.
There is still one hot issue - the appropriately named "off-ramps." Tuesday's legislation would give the National Highway Transport Safety Administration the authority to reduce or waive the 4% target in a given year if it was proving not cost-effective.
Off-ramps are controversial, so expect much debate on that question before this is all over, but don't expect the debate to go off road.
Where did this consensus come from? The answer is clear. It's the coalescing of concerns about energy security, prices at the pump, and climate change. And it is a very powerful consensus.
In his opening statement at last week's hearing on the legislation, Senator Stevens captured the new tone: "The issue of fuel economy of our cars and light trucks is significant as our country faces an increasing energy crisis." He then went on to talk about the effects of climate change on his state, Alaska.
Retired Admiral Dennis Blair, formerly commander of the U.S. Pacific Fleet, testified at the same hearing. He was representing the Energy Security Leadership Council, headed by Former Marine Commandant P.X. Kelley and FedEx CEO Fred Smith, which has been one of the key players in helping to shape this consensus. Over the last few months, the Council had worked with Democrat Byron Dorgan and Republican Larry Craig to draft legislation that embodies many of these principles.
"Improved security," said Admiral Blair, "will require greater conservation as well as increased production of petroleum and alternatives here at home. Put another way, improved vehicle fuel economy will increase our military flexibility and our overall national security, not just our energy security."
The ESLC estimates that this improvement will end up saving 4.5 million barrels a day by 2030.
The fuel-efficiency standards were originally established in 1975, two years after the 1973 oil embargo, with the aim of doubling fuel efficiency levels within a decade. It was a furious battle to get them enacted.
"We do not want any handouts, we do not way any taxes, and we do not want any regulations," said the CEO of one of the Big Three in the midst of the battle. "We do not like that sort of thing."
But a few years later, Henry Ford II declared, "It is fair to say" that the fuel efficiency standards "moved us faster toward energy conservation goals than competitive, free-market forces would have done."
They certainly did work, saving about two million barrels per day, compared to what would otherwise have been consumed.
At the same time, two million barrels per day of new supply was added with the construction of the Alaska oil pipeline. That's the same point that the ESLC and others argues today, about the importance of both greater efficiency and additional supply.
Our study Gasoline and the American People shows that fuel-efficiency gains have flattened out in recent years as Americans' love affair with the automobile turned into a passion for SUVs. Low gasoline prices further stimulated the ardor. The larger, less-efficient vehicles also turned out to be the part of the market where Detroit had competitive advantage. Any significant improvement in fuel efficiency standards was stalemated by, among other things, fear for the impact on beleagured Detroit, struggling as it is with heavy legacy and health costs compared with its competitors.
But circumstances have been changing over the last couple of years. In 2002, for instance, the National Academy of Science argued that fuel efficiency could be improved by a quarter over a decade with "existing and emerging technologies." Right now, the momentum for higher standards looks unstoppable. Tying the changes to class of vehicles, rather than across an automaker's entire output, is meant to help troubled Detroit steer it way through the challenges ahead.
Both Jason Moore & Daniel Yergin are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
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Daniel Yergin has sinced written about articles on various topics from Environment, Global Warming and Science. Daniel Yergin, chairman of CERA, received the Pulitzer Prize for "The Prize: The Epic Quest for Oil, Money & Power" and the United States Energy Award for lifelong achievements in energy and the promotion of international understanding. Vist CERA at. Daniel Yergin's top article generates over 40500 views. to your Favourites.
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