These are interesting times. A remarkable historical event is unfolding before us at breakneck speed – the beginning of the end of the oil era and the gasoline car. On a superficial level we get emotionally involved with our cars and it’s such a pain. Either there’s a repair bill, or higher operating expense these days with gas going through the roof. It makes you want to reach out and sign on the dotted line for a new shiny reliable model. But wait a minute.. Let’s think about this a little deeper.
My car just cost me $73 to fill up and it isn’t a large tank. My sister’s van with a 90-liter tank costs $125 to fill each time. She recently bought a small car. The saving in gas bills makes their payment. The older van sits in her driveway and is used sparingly. Such is the discipline of higher prices.
The Federal government introduced the ecoAUTO Rebate program for two years. Penalties are being levied on big gas-guzzlers and bonuses given for vehicles that sip fuel. Looking closely, it seems to have been the proverbial horse designed by a committee (ends up as a camel). It has selections that are totally illogical unless one realizes that the domestic auto industry has a powerful lobby.
Take the example of the Honda Fit, 6.6 L/100 km, not being included in the 2007 Federal government ecoRebate program by .1 liters / 100 km. Honda was not impressed as it’s competitor, Toyota’s sales took off and their figures dropped. As a result of quick re-engineering by Honda, it now qualifies for 2008.
Under the flex fuel category, the Chevrolet Impala at 12.3L/100 km, and the Chrysler Sebring, at 13L/100 km, is eligible for a $1000 rebate. The Sebring uses double the fuel of the Honda Fit. Impala is made in Oshawa, Sebring from Illinois, and the Fit is from Japan.
The federal program ends in December as Transport Minister Lawrence Cannon indicates that “it has served its purpose in raising consumer awareness of fuel-efficient models”. Can you follow that reasoning? A recent CBC story says higher than expected buyer interest will result in overspending of the program budget.
There are five provinces that offer a sales tax rebate for hybrids – BC ($1,000) PEI ($3,000), Quebec ($2,000 for vehicles under 6L/100 km), Ontario ($2,000), Manitoba ($2,000). A number of these programs will be phased out in coming years, presumably as the technology evolves and price differentials decline. If you buy a hybrid in Ontario, the combined rebates are $4000.
The rationale for these programs had been primarily reduction of greenhouse gas, and not peak oil. In the last year, the peak oil theory has made the jump from blogosphere to some main stream media.
As gas price rises, all of the usual suspects (declining US dollar, speculation, and instability in oil producing countries) have been rounded up but will be eventually released. The idea that we are at the peak of oil production will eventually gain credence in the general population.
The International Energy Agency (IEA) recently indicated that world oil prices were “justified by fundamentals… Often it is a case of political expediency to find a scapegoat for higher prices rather than undertake serious analysis or perhaps confront difficult decisions.” It’s very startling to hear such clarity from that organization.
In a column last October, I indicated that when gas rose to about $1.60 a liter, replacing a gas guzzler vehicle with an efficient model would pay for itself from reduced gas bills. Well, we are almost there! If the tendency continues we could be there within several months.
If you have to buy a new car in the near future, you might consider the future cost of fuel. It could be at $3 a liter in the next several years or even higher. We just don’t know. Consider the case of a full size vehicle like the Dodge Avenger, or the Chevy Impala. At roughly 12 L / 100 km, that’s 2400 liters for the average driver (20,000 km). Annual fuel cost of $7200 a year ($600 per month) is higher than your car payment.
The alternative would be something like the Toyota Prius or Honda Civic hybrid at roughly 4.5 L / 100 km. Only 900 liters are used annually, which translates into $2700 ($225 / month).
The former CIA chief James Woolsey drives a hybrid and compares the local gas station cash register to a collection box for al-Qaeda. Whether a link as direct as that can be drawn is difficult for me to say. However, the best way to moderate prices for gas will be for all people to use less.
Do we have a plan in New Brunswick to ensure that most vehicles sold have excellent fuel economy? The life of vehicles is typically 12 years. Are we planning for a transportation alternative after the personal car era is finished?
We’re about two years into the mandate of Shawn Graham’s government but I haven’t seen an energy policy and little transparency. We do hear the phrase “Energy Hub” quite often, describing private sector energy investments for export. At what point will “peak oil”, a once in the lifetime of this planet event, sink into the consciousness of this government?