Get your free car – Part 2

Not long ago, I talked about the Renault Logan, a car with good mileage and a very low sticker price that made converting from a gas-guzzler to a better mileage car virtually free, based on gas savings. Unfortunately, it is not available here in Canada yet.

First of all, it should be clear that I don’t support one particular manufacturer of vehicles. We should all celebrate superior fuel and emission technology wherever it may come from. In recent surfing, I came across the Volkswagen Polo BlueMotion, which is sold in Europe for roughly $20,000. It has a combined mileage rating of 60 miles per imperial gallon (4.7 liters / 100 kilometer).

The average vehicle travels 20,000 km per year (12,000 miles) for discussion purposes and the cost of gas is $1 dollar per litre. The annual fuel cost for the Polo at 60 mpg is $908. A typical gas-guzzler at 20 mpg would cost $2,724 per year in fuel. The difference saved is $1816 per year, which although substantial, is not quite enough to make the payment on the car.

What is likely to happen within several years are dramatic increases in fuel cost. My calculations indicate that fuel at $1.57 / litre would provide enough savings to pay for the vehicle over a long period. BINGO! You now get your car free, paid off with the savings ($2,851) you would have made at the gas pump every year. (Calculated with interest at 7%, payments over ten years) If payments can’t be stretched that far, the car will cost you money out of your pocket.

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The Polo is a 1.4 L three cylinder turbo-diesel with CO2 emissions of 102 grams / km. In comparison, the best vehicle on Natural Resources Mileage list is the Prius hybrid, which has 98 grams of emissions and a fuel rating only slightly better. The Prius costs $10,000 more than the Polo.

Alas in real life, you can’t have your car that almost makes it’s own payments, because they aren’t sold in Canada yet. You might ask your Member of Parliament or local Member of the legislature why we don’t insist that manufacturers sell more models with excellent fuel ratings.

After the oil embargo of 1973, fuel efficiency standards called CAFE (corporate average fuel economy) were introduced in the United States. As with all things, enthusiasm waned as fuel prices took a dive and Canada never saw the need to define its own objectives. Groups such as the Sierra Club of Canada note that while Automakers stonewall efforts to increase fuel economy in North America, they are implementing improvements in Europe.

In a discussion with Jack Keir, the Minister of Energy, it was suggested that the Provincial government is preparing a program to help New Brunswickers purchase vehicles with high fuel economy. This would be in addition to the Federal program in place.

The amount of the subsidy per vehicle or the method of program delivery is always subject to debate. It would be possible to finance this program by only a cent or two at the pumps. A one-cent increase per liter affects the average person by $16 per year. The revenue would be $15 million. Considering that approximately 30,000 vehicles are purchased in NB each year, perhaps 6000 units would be high economy units. The subsidy could be $2500 on the 20% of vehicles purchased.

Think of this idea as a lottery ticket where a huge number of people win big every year. Your ticket is $16 / year and you decide if and when you want to win. When you do, the feds chip in $2000, the province $2500 and your gas bill saves you $1800 a year. If the price of fuel rises, the savings are high enough to pay for your new vehicle over time. The odds on this bet are considerably better the Lotto 649.

Now if we could only get some exceptionally high economy vehicles on sale here. Detroit based manufacturers have consistently been trying to convince us that we need 320 hp in a car. They don’t realize that the real target is 100 mpg and it isn’t far away if they could focus on the future.

The five stages of oil grief

In the book “On death and dying”, Elisabeth Kubler-Ross talks about the five stages of grief and tragedy: Denial, Anger, Bargaining, Depression, Acceptance.   Categorizing our reactions to traumatic events is a way to understand how the human mind copes and eventually gets beyond the situation.

In the similar way, the reaction of our minds to the decline of the oil era is quite predictable.  Living in North America in the midst of the oil era has given us greater power than an Egyptian pharaoh.  It’s no surprise that we don’t want to give it up. The decline of world oil resources is off the radar of our political leaders. As one of my former bosses used to say: “The general doesn’t tell the soldiers that they are out of bullets.”

What politician in his right mind wants to tell you: “OK, we screwed up, we’ve sent too much of our oil and natural gas south of the border. We’ve allowed poor gas consumption ratings because larger cars are more profitable for car manufacturers. We’re sorry that you can’t afford to heat your home because your job at the factory has closed due to high energy costs that could have been avoided.”

No, the smart politician operates on rules that guarantee we make the wrong choices.

Rule #1 – Never accept blame or admit an error. If an error exists, it must be the previous administration that caused it. Blame them.

Rule #2 – Get new jobs announcements at any cost. Growth is absolutely necessary. Environment concerns are expendable.

Rule # 3 – Think short term. If the problem is more than six months away, it can wait. If it is more than 4 years away, it doesn’t exist and the next government will take the heat.

Our denial of reality takes many forms, such as the technology fix: the urban legend of a carburetor that gives 140 miles a gallon but the oil companies or Ford bought up the patent and it’s in a vault somewhere.  They don’t explain why George Bush wouldn’t love to reduce oil dependence of the US or perhaps they believe he is a tool of the oil industry and on it goes.  There are others who think hydrogen, ethanol, or use of electricity in cars will be the silver bullet.  But we don’t look closely at the mathematics of the proposed solution and the politicians don’t mind spending our money on useless subsidies for fuel and technology that aren’t going to work.

Or the conspiracy theorist, “the oil companies just want you to believe that there is a shortage so that they can benefit from oil prices. There is plenty of oil”.

Fairly soon, perhaps within five years, the second stage of oil grief will hit you.  When oil prices skyrocket, you’ll get a sickening feeling in your stomach and anger that this can’t be happening to you – Every time you fill up your vehicle and it costs $250 or more. Perhaps you’ve just bought a gas-guzzler, a half ton or SUV and it is now virtually worthless. You are locked into car payments that you can’t afford to drive, a house you can’t afford to heat, you live too far from the grocery store to walk, your job is miles away and there is no public transport from your subdivision.

The widespread anger of the public will drive politicians out of office and lead to some forms of anarchy.  Hard on the heels of anger is the “bargaining” phase when truck drivers will shut down the highways in general strikes as they go broke from fuel costs. There will be demands that the cost of fuel be subsidized but the government won’t have the money to comply, as job losses will drive down tax revenue. The government won’t be able to subsidize home heating, the levels of employment insurance benefits along with companies’ demands for help.

Unfortunately, it will be too late to help most people through the hard times that are coming.  The depression stage will hit many people who are stressed beyond their capacity to cope financially and emotionally with the changing reality.

Somewhere between six months and one year after “the event” we can expect that a large number of people will have moved towards the acceptance phase and make the difficult but necessary changes in their lives.  Approximately 3% of the population are presently involved in farming to support everyone else. Back in 1900, the figure was close to 40%.  The question we might want to ask ourselves, given the gradual elimination of fuel from agriculture in the next fifty years, is:

How quickly will this country revert to a higher percentage of farmers and do I like farming as a career choice to provide food for my family?  Secondly, if not, what other valuable contribution can I bring to a totally different sustainable society that will be forced on us by necessity in the coming years.

Some in denial will insist that this can’t be true. According to George Bush, “the American way of life is non-negotiable.”  Here in Canada, the lack of a coherent energy policy, courtesy of Stephen Harper and his predecessors, makes the possibility of a soft transition to a post oil economy less likely than a real tragedy.

Our oil intoxication is about to end but hopefully the withdrawal symptoms won’t be as painful as I fear.  But we may all have to start that garden plot sooner than later. Hey, what about a solar powered electric tiller or one recharged by wind energy?  I just hate using a shovel to turn sod.