American Eye

$4 a gallon? It may seem peanuts to British drivers, writes Polly Ghazi, but in shell shocked America, soaring fuel prices are triggering a revolution in commuter habits, and a fundamental shake-up of the auto industry.

Cheap gasoline has long been considered a God-given right in the States, rendering fuel taxes such as those imposed in Europe a political impossibility. But prices have doubled since 2004 to reach the unheard-of heights of $4 a gallon. Crossing that threshold (broadly equivalent to 50p a litre) has sent out massive shock waves – and, as the cost of oil keeps rising inexorably, the market has led where politicians feared to go.

Across the USA, faced with having to pay $100 to fill up an SUV which ekes out 10 miles to the gallon, commuters are reluctantly deciding that the economics no longer add up. Instead, they are turning in their millions to light rail and buses, bicycles and even motor scooters.

From Denver to Minneapolis, Seattle to Dallas and San Francisco to Nashville and Salt Lake City, bus and train use is up by 10-15% on last year. In some traditionally car-centred cities the growth is eye-popping – up 35% in Charlotte, North Carolina, and up 28% on a commuter rail link running alongside a huge highway between Miami, Fort Lauderdale and West Palm Beach. Sales of fuel-efficient motor scooters have jumped 24% in January – March 2008 compared with the previous year.

“Americans drove 11 billion fewer miles this March – the first year-on-year drop since the 1970s”

The result is enough to warm a climate scientist’s heart. In March 2008, according to the federal Transportation Department, Americans drove 11 billion fewer miles than in March 2007 – a 4.3% drop and the first time in 30 years that traffic has fallen between one year and the next.

Nor is this shift in travelling habits likely to be a flash in the pan. With gas pump prices now rising almost weekly, polls report that Americans are resigned to living with ‘high’ fuel costs for the indefinite future.

Which brings me to the second revolution underway; a fundamental shift among US auto manufacturers away from climate-killing gas guzzlers towards fuel efficient vehicles. For the past two years, US consumers have been progressively abandoning people carriers, leading the media to dub the SUV an “endangered species”. And plummeting sales this spring of both sport utility vehicles (down by 38%) and small pick up trucks (down 20%) have got Ford, General Motors and Chrysler all apparently acknowledging that the writing is on the wall.

Ford's chief executive Alan Mulally gave the bluntest assessment, telling the Washington Post in May that the industry had “reached a tipping point” away from SUVs and that the shift in consumer preferences to smaller, more efficient cars was “now structural, not cyclical.” He also announced that Ford was cutting overall production by 15% for the rest of this year; the company will manufacture fewer SUVs, but more compact vehicles such as the Focus, Fusion and Edge. GM is also cutting production and jobs.

No longer pigeonholing hybrids and small cars as niche markets, Ford, GM and Chrysler are now openly engaged in a race to produce the most customer-friendly range of fuel efficient vehicles. All are designing a variety of hybrid-engine cars, SUVs and light trucks, as well as plug-in electric vehicles and models equipped with advanced gasoline and diesel engines. GM, for example, is developing a method of applying the compression-ignition efficiency of diesel engineering to petrol engines, which will cut their fuel consumption by 15%.

According to industry commentator Warren Brown, writing recently in the Washington Post, vehicle industry executives are even secretly applauding the high gas prices because of the heavy investments they are planning to make in this new generation of vehicles.

Toyota, of course, remains out in front, recently marking the millionth sale of the best-selling hybrid Prius. Half of those were bought in the US. But according to Brown, the big three US car makers are snapping at Toyota’s heels, aiming to get models equipped with new fuel efficiency technologies to market as early as 2010.

Given that hybrids and electric vehicles still barely make up 1% of the vast US market, that won’t be a moment too soon.

Polly Ghazi is US correspondent for Green Futures.

27 June 2008

Polly Ghazi

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