Hummer versus Prius: Who wins

There is an old joke about why sharks don’t attack lawyers. Answer – professional courtesy. Sharks do attack other sharks, however. Rosie O’Donnell and Donald Trump, both entertainment sharks, have been verbally biting each other gathering excessive news coverage. In contrast, the average print columnist rarely attacks other journalists because they are usually too busy writing to worry about what someone else may be saying.

But let’s make an exception and examine what drives the news makers and the reporters who transmit the message to you. CNW Marketing Research spent two years gathering information on the relative life cycle cost of different vehicles, called the “Dust to Dust” report. Public interest was definitely aroused by their suggestion that the Hummer is more environmentally friendly than the Toyota Prius. Common sense would indicate that the Prius, which uses considerably less gas, emits considerably less CO2, costs considerably less to purchase than the Hummer, would be the superior vehicle from a environmental and consumer cost point of view.

Most people buy a vehicle to meet their needs for transportation and typically the mileage varies little from year to year. To help choose that vehicle, we compare fuel economy figures provided by government test data that uses a standard course.

Remarkably, the CNW study indicates the Hummer H1 would last 35 years and is driven 379,000 miles before being scrapped. (Good luck in finding parts after 15 years) In contrast the Toyota Prius was judged to last 12 years and be driven only 109,000 miles before final adieu. This is a difference of 347%. The ultimate measuring stick of this report is a cost per mile, making any difference in mileage very significant to the final costs. Are the owners of small cars really that different than large vehicles?

The CNW study also considers the energy cost of the complete life cycle such as construction cost and disposal of the scrapped vehicle parts, which is an excellent idea. However, there are few details on how this is calculated for different vehicles. In addition there is no consideration of the cost of CO2 contribution of various vehicles.

A number of other studies have shown the cost of disposal of a vehicle to be roughly 5% of total costs. CNW includes a charge of 30 to 65% of the total costs for the disposal of the non-recyclable parts of the vehicle. The increased weighting of this aspect reduces the value of fuel economy. Not enough information is shown in the report to judge whether it is a reasonably based environmental accounting method.

The response of some journalists was predictable. George Will, of the Washington Post, accepted the report at face value, indicating that a campaign without precedent is underway to indoctrinate the population on global warming. His implication being that there is really no harm to buying a Hummer, that we can’t really reduce CO2 emissions and that the other guy (China) isn’t playing his part anyway. The Globe and Mail, Car and Driver and many other publications raised no questions either.

The easy ride given by the press wasn’t to be found in the environmental community such as the Rocky Mountain Institute or the Pacific Institute. Those groups initiated reviews of the available documentation, with RMI pointing out “the deep divide between CNW’s study and all scientifically reviewed and accepted work on the same topic”. Dr Peter Gleick of the Pacific Institute indicated that “the report’s conclusions rely on faulty methods of analysis, untenable assumptions, selective use and presentation of data, and a complete lack of peer review.”

The EPA green vehicle guide gives the Toyota Prius the best rating on GHG’s, air pollution and mileage ratings of 60/51 mpg but the Hummer had a poor pollution score and no data on the mileage ratings. I did find the H2 Hummer ratings listed elsewhere at 10/13 and the H3 at 16/19 miles per gallon city/highway.

So we have two questions of interest. Why would a report effectively assassinate the benefits of hybrid cars and promote the value of large vehicles? Secondly, should seasoned journalists have raised red flags about a report with claims that were outside the common sense box?

In a worst case scenario, CNW may have tailored its research to benefit its subscriber’s interests. Portrayed in a generous light, CNW has demonstrated incompetence in the design and execution of its research. The 400 + page report is three hundred pages too long.

The Society of Professional Journalists suggests that “public enlightenment is the forerunner of justice and the foundation of democracy. The duty of the journalist is to further those ends by seeking truth and providing a fair and comprehensive account of events and issues”.

Have you read virtually the same article in different newspapers written by different journalists? Theoretically this shouldn’t happen but press releases often become news stories without serious research. Call it “cut and paste” journalism or just working to a tight deadline but the result is the same. Many journalists missed the boat on this item.

The standards of journalism are relaxed to a degree for op-ed columnists and the right / left wing ideology sometimes creates an interesting counterpoint to the standard view of journalists. George Will and Neil Reynolds, as staunch defenders of the status quo and the corporate interest, have let their denial ideology trump basic journalistic values. They can best be considered as light entertainment with little educational value.

If the evolving energy crisis related to peak oil weren’t so serious and compelling, one could laugh about the folly of those involved in this process. Unfortunately, the CNW report is essentially corporate dis-information that will add to the general confusion on energy matters over the world.

Get your free car

After you’ve made your car mechanic a rich man and terminal rust is devouring the metal frame of your car, it may be time to re-evaluate your “investment” in your car. Statscan figures there are 1.6 million commercial and passenger vehicles sold annually in Canada. There are roughly 20 million on-road vehicles registered in Canada, which means that the average vehicle life is 12.5 years.

Collectively we burn 55 billion liters of gas and diesel.   At $1 a liter, we spend $55 billion per year to keep our tanks with fuel.

A rough value of Canada’s vehicle fleet is $560 billion if we assume an average value of $28,000. Remember that trucks are included in this total.   Each year we spend $45 billion on new vehicles.

My ailing vehicle is 12 years old and has six months to live. The tedious process of finding a replacement speaks volumes about the state of my finances. The rich write a cheque for the new car of their choice. The “financially challenged” agonize over mileage ratings, the sound of an engine, the slip of a transmission or the colour of exhaust. Options are weighed as salesmen spin their stories and our heads.

But there is a glimmer of hope in the distance. Perhaps you’ve read about the new low cost cars being built in Romania, China, Brazil, India and elsewhere. Some of these cars may cost as little as $3000. On the higher end is the Renault Logan, which costs roughly $8600 and has sold over 300,000 units. It has mileage ratings of 40 mpg (6.8 L/100 km) with a gas engine.

logan.jpeg 

Where this car becomes very interesting is combining the low initial cost with annual fuel savings by replacing gas-guzzlers in Canada. With an average 20,000 km annually, the fuel used would be 1360 liters or $1360 dollars. Large numbers of Canadian vehicles are getting less than half the mileage rating of this car (20 mpg or less) and would use $1360 more. Over a 12-year life, the present value of gas savings for those people changing to efficient vehicles would be $10,802 (based on 7% interest).

This means that a new low cost car would be totally paid for in less than 12 years with the money that is saved on gas, with benefits of reduced CO2 emissions and reducing national oil consumption. The annual benefit of taking a gas-guzzler off the road and replacing it with something like this is 3600 tonnes per year. If ten million vehicles were replaced and efficiency doubled, then we have reduced CO2 by 36 Mt per year and that is 20% of the required Kyoto reduction. And it doesn’t have to cost the government any money to accomplish this.

So, could we turn this idea into a practical program without costing much government money? The key is to use the existing financial institutions as the administrators and source of funds. A minimum program would see loans of $10,000 at commercial rates to every person who wishes to replace their vehicle with a new vehicle that gives double the gas mileage. It is necessary that the previous vehicle be certified as scrapped / recycled off the road to derive the maximum benefit for the environment. The loan is repaid from cash available from fuel cost reduction. When fuel prices rise, the business case just gets better.

Not all people would want a Renault Logan or similar low-end vehicle.  Some individuals would purchase vehicles of greater cost and absorb the repayment costs above fuel savings via income, as is the case today.

We should expect that as world oil production tends toward a decline, the status quo will become unacceptable.  I got a chuckle hearing that GM is building a Yukon / Tahoe hybrid in 2008 that will take it’s average fuel rating from 18 to 22 mpg.  Minor tinkering with fuel consumption is unlikely to save the SUV models and won’t stop GM from bankruptcy in the near future.

Automakers can’t immediately change course without large retooling costs but is there a really a choice if Ontario wishes to retain an auto industry?  Witness the rise of the Japanese, Korean, and soon the Chinese automakers.  What future exists for a Canadian industry that is anchored in the past and doesn’t provide vehicles that we will need in a post oil society?

The annual purchase of $45 billion worth of vehicles has an enormous impact on Canada. Our choices are influenced by auto industry spin (advertisements).  It would be interesting to see an effective long-term liquid fuels strategy by the federal government. At what point will Stephen Harper inform Canadians that we urgently need vehicles with superior mileage ratings? His mantra that control of CO2 emissions is either impossible or requires enormous tax dollars wears thin.