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Backseat Driver: Has the time come?

Crude oil prices are down today - to around $107 a barrel.

Down, I guess, is relative.

The fact is oil prices, adjusted for inflation, are now at their highest level ever. And with those prices starting to permeate every other aspect of our lives, I think we are beginning to see a sea change in people’s attitudes toward transportation – from increased interest in smaller, more fuel efficient vehicles to trains and buses.

Yes, I know that some of the increase in the price of oil has been caused by speculators drawn by the weakness of the dollar. Better to put your dollars in oil than watch them fade away.

But underneath the froth and bubbles of the market place, the fundamentals are also changing. Demand from developing nations is exploding with the pace of economic growth in China and India totally unprecedented.

U.S. gas prices are now at record levels – like I need to tell you! And there are strong indications they could keep going up and through $4 a gallon in the near future. We are actually pretty close already.

With these prices, I think we may have finally reached a tipping point for the average consumer who is basically level headed. Witness the success of the Asian manufacturers who have grown to take on Detroit’s Big Three by producing core cars that are “reliable.” Nothing more, nothing less.

Now I am hearing more and more from people who say they are seriously looking into buying fuel efficient cars. And not only that.

Most of us are also concerned about global warming and want to combine our immediate concerns about family budgets with a desire “to do our bit” for the environment.

Automakers have responded by investing millions in alternative fuel systems, with the most significant gains being made by Toyota with hybrid electric-gas technology and Audi/Volkswagen and Mercedes with clean diesel technology.

That is why it makes my blood boil I hear that General Motors vice chairman Bob Lutz declare that he thinks “the concept of global warming” is nonsense. He told a bunch of journalists that back in January.

Such statements do great disservice to the engineers at GM who are working hard to produce alternative fuel technology and vehicles, most significantly lithium-ion batteries and the much-ballyhooed – by Mr. Lutz himself – electric Chevrolet Volt.

They also undermine GM’s reputation let alone reflect a point of view out of touch with the weight of scientific evidence. I find it is interesting that the most intemperate emails I receive are from people who believe, like the buffoonish Mr. Lutz, that global warming is a “crock of sh*t.”

Emotion, in their case, seems to trump, reason. But then, everyone is shouting at everyone else these days.

I believe companies are built by people who passionately believe in what they are doing. So it’s no surprise to me that GM has lost ground on the alternative vehicle front to the Asian and German manufacturers.

Toyota, obviously, leads the pack with its iconic best-selling hybrid, the Prius. Now Honda is planning to be selling 400,000 hybrids a year in three models in five years.

Indeed, the story of Toyota’s development of its Prius hybrid is lesson unto itself of what ails Detroit.

In 1993, President Clinton initiated the Partnership for the Next Generation of Vehicles to fund research by American manufacturers into fuel efficient vehicles. However, Toyota, excluded because it was a Japanese company, decided to go it alone. The result: By 1997 it was producing the first generation Prius. The third generation was introduced in 2003 and has become THE iconic alternative fuel vehicle.

The Partnership for the Next Generation of Vehicles? It ended in 2001 when all funding was cut by the Bush Administration.

- Peter C.T. Elsworth

Posted by Peter C. T. Elsworth  at 10:57 AM to commentary | Permalink | Comments 1