Archive for Gas Prices

The Price of Fuel Efficiency

The Price of Fuel Efficiency

Obama administration set to raise fuel efficiency standards, but by how much?

As the first Toyota Priuses took to U.S. roads more than a decade ago and celebrities such as Leonardo DiCaprio and Cameron Diaz touted their virtues, enthusiasts predicted that hybrid cars would quickly become mainstream. But there was a problem: They cost too much, and consumers spurned them. Last year, the vehicles represented less than 3 percent of cars and light trucks sold in the United States. Now the Obama administration is deciding how much to push U.S. drivers into fuel-efficient cars. Among the proposals under consideration is one that would lift average fuel economy under the law to as much as 62 mpg by 2025. The preeminent issue in the debate is how much the price of cars — gas, hybrids, plug-ins or whatever inventors come up with — would rise if regulations dictate such standards. On one side are automakers, which warn that the highest targets could add as much as $10,000 to the price of a new car, devastating a U.S. industry … Sales could plummet by 25 percent, they say, and 220,000 auto manufacturing jobs could be lost. Regulators “need to ensure that their standards do not result in vehicles that consumers cannot afford,” the Alliance of Automobile Manufacturers, a trade group, warned in a letter this week to officials. Another study, conducted at MIT, suggested that even while fuel-efficient cars might save consumers money in the long run, they are reluctant to pay for fuel efficient technology up front.

Sounds good though right? I mean what is wrong with really fuel efficient cars? ARE YOU KIDDING ME? If cars start becoming more and more fuel efficient and using less gas, do you think that Big Oil will just be fine taking a 30% pay cut over the next few years? Not likely! Watch gas prices soar as the EPA pushes gas mileage requirements! Makes you really wonder whom is paying whom what?

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Gas prices put brake on spring break for many

Gas prices put brake on spring break for many

 

Vehicles drive along the beach in Daytona Beach, Fla., on Aug. 19, 2010.

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University of Iowa sophomore Jimmy Novak didn’t let $3.50-a-gallon gasoline prices keep him from making a spring break pilgrimage to Daytona Beach, Fla., with his fraternity brothers last weekend.

But the prospect of $50 fill-ups did alter his behavior: “We’re squeezing five people in a car to save money on gas, and we made a ton of sandwiches before we left instead of stopping for fast food,” says Novak. “We just told ourselves it’s going to cost a pretty penny.”

For Novak and thousands of other spring vacationers, escalating fuel prices are putting the brakes on road trips. According to the motorist group AAA, the average for a gallon of regular is up 37 cents since Feb. 22, the second-fastest rate of increase in the industry’s history.

Some would-be vacationers are staying home, while others will “still travel, but compensate by spending less,” says AAA spokesman Troy Green. According to an unscientific online poll by USA TODAY, a quarter of nearly 700 respondents said high gas prices had prompted them to cancel a spring trip, with an additional 24% traveling but staying closer to home.

And if Middle East uncertainty continues to translate into pain at the pump, the “staycation” could make a comeback: Green notes that the number of Memorial Day road trips took a nose dive in 2008 when gas prices were heading toward an all-time average high of $4.11 a gallon, set in July of that year.

For now, travel marketers remain optimistic that a trifecta of a severe winter, delayed gratification and improving economy will trump soaring gas prices. Advance bookings for March and April are up sharply at many destinations, and recent airfare increases tied to the rising cost of fuel are making road trips cheap by comparison.

Lodging reservations at the spring break hot spot Panama City, Fla., are on par with last year’s migration, which took place before the Deepwater Horizon oil spill in late April, says Dan Rowe, CEO of the Panama City Convention and Visitors Bureau.

March is the city’s third-biggest tourism month after June and July, and the bureau held promotional events at several Midwestern college campuses this winter to reassure students that area beaches were clean and free of oil.

“If you spread out the incremental cost (of higher gas prices) over several days, it’s still a relatively minor part of a trip,” says Rowe. “I don’t think people are going to sacrifice a week at the beach over a few extra dollars.”

But, adds Adam Weissenberg, vice chairman of Deloitte’s tourism, hospitality and leisure sector, “If prices continue rising to $4.50 or $5 a gallon, that affects people emotionally.”

Cutting corners

For Billy and Patricia Carr, who work part time delivering vehicles for a Georgia automobile dealership, the pain is already palpable. Last week, they stopped at a suburban Atlanta station to put $5 of gas into the pickup they were dropping off. “Normally, we fill them up,” said Billy Carr, 72.

The Carrs have canceled their vacation plans for this year, forgoing their usual spring and summer trips to Florida and North Carolina’s Outer Banks. Their RV remains idle in the backyard: It costs too much to fill it up.

In California, where average gas prices are the highest in the continental USA at $3.96 per gallon, San Francisco-based Personality Hotels just launched a Get Pumped package that includes a $10 gas card for each night’s stay. Such promotions, common during the gas crisis of 2008, could proliferate across the country this year as well, says Marti Mayne of the Professional Association of Innkeepers International.

California gas prices are a particular concern in Las Vegas, which draws nearly a third of its visitors from the Golden State and saw visitor spending plummet during the recession.

“We are becoming increasingly concerned about the rapid rise in the price of gasoline,” says John Restrepo, a Las Vegas-based economist.

“In the last 12 months, gas prices in Los Angeles have surged 28%, with a 15% jump in the last 30 days alone. And now the airlines are starting to raise ticket prices because of their rising fuel costs,” Restrepo says.

“When you combine that with an annual 2% rise in food prices, the highest since 2009, none of this is exactly good news for Las Vegas’ discretionary-spending-based economy, which finally appears to be stabilizing.”

Tourist traffic has been strong at South of the Border, the iconic Interstate 95 tourist attraction and watering hole at the borders of North and South Carolina, says spokeswoman Susanne Pelt.

“But it’s frightening to think what may happen if gas prices keep going up,” she adds. “We’re just kind of waiting and seeing.”