The Obama administration says that proposed higher fuel economy standards can be expected to increase vehicle prices about $2000 but that owners will save an average of $6,600 in fuel costs over the life of the vehicle.

In order to be as realistic as possible (see figure above), we made a slightly less rosy analysis:

• current purchase price of $25,000 for a vehicle with 19 MPG vs.
• future cost of $27,500 (adding $2500 rather than $2000) for comparable vehicle with 36 MPG
• fuel cost of $3.38 per gallon & 15,000 miles driven annually (we used the same assumptions as fueleconomy.gov)

Total 5 year fuel cost for the 19 MPG vehicle is: $13,342.10
Total 5 year fuel cost for the 36 MPG vehicle is: $ 7,041.65

So, our fuel cost savings result was $6,300.45 — very close to the government projections. After deducting the additional purchase cost for the more fuel efficient vehicle, you would save $3.800.45 over 5 years in the example above.

Some vehicle dealers are concerned that increases in vehicle costs put them out of reach for many consumers, and wonder whether there will be sufficient demand for highly fuel-efficient vehicles. (Unsurprisingly, truck dealers have expressed more concern on this issue than dealers whose current lineup primarily features more fuel efficient models.) Obviously, that depends heavily on the cost of fuel – it’s no secret that when fuels costs skyrocket, people are incentivized to replace a “gas guzzler” with a “fuel sipper”.

Automakers seem much more enthusiastic about fuel economy as they show off new fuel-efficient models at Detroit’s International Auto Show. See our previous posts for auto show highlights.
]]> http://www.buycng.com/wordpress/2012/01/future-fuel-economy-savings/feed/ 0 http://www.buycng.com/wordpress/2011/05/new-vehicle-labels/ http://www.buycng.com/wordpress/2011/05/new-vehicle-labels/#comments Tue, 31 May 2011 17:17:10 +0000 gCNG host http://www.buycng.com/wordpress/?p=447 Read more...]]> On May 25, 2011 regulation was signed that requires automakers to implement new vehicle labels by 2013 – manufacturers can voluntarily adopt the new label earlier.

What does this mean for you? The new labels are intended to provide consumers with much more accurate information about the actual costs of fueling the vehicle of their choice over the next five years compared to the average new vehicle. For the first time, consumers will be able to compare energy use and emissions for new vehicles – side by side – including comparison between gasoline and electric, plug-in hybrids and other alternative fuels.

The new label features meaningful comparison of tailpipe emissions, and the energy factors that were used to create the rating. Consumers will be able to scan a barcode on the label with their smartphone at the car dealership to get information specific to their location in terms of electricity and/or local fuel costs, provided they have downloaded the scanner app. The same information will be available at fueleconomy.gov.

The bottom line is that the EPA and the National Highway Traffic Safety Administration are trying to give consumers the best information possible to understand the total costs of their new vehicle purchase, from fuel economy to environmental impact.
Learn more at fueleconomy.gov

Oil prices have rallied for two weeks, rising 12 percent as promising economic reports in the U.S. and troubles abroad pushed money into energy commodities. A refinery strike in France and general unease surrounding Iran’s nuclear posturings helped push up crude futures. Other petroleum futures were up for the fourth consecutive day.

Crude closed in on $80 a barrel Friday as investors focused on an ongoing refinery strike in France and reports that Iran may be building a nuclear weapon. An extended rally in oil will force gasoline and other fuel prices higher as well. Experts predict that pump prices will top $3 a gallon this summer.

Here’s a breakdown of how energy prices traded Friday:

On the New York Mercantile Exchange:

Crude: added 75 cents to settle at $79.81 a barrel.

Gasoline: added 1.65 cents to settle at $2.0857 a gallon.

Heating oil: rose 1.83 cents to settle at $2.0699 a gallon.

Natural gas: gave up 12.8 cents to settle at $5.044 per 1,000 cubic feet.

On the ICE futures exchange:

Brent crude: added 41 cents to settle at $78.19 a barrel.

The demand for petroleum products dropped sharply this year as American and European consumers and businesses used less fuel because of the economic slowdown. Meanwhile, fuel inventories swelled, filling storage facilities around the United States and forcing some petroleum companies to charter oil tankers for storage.

Oil demand typically rises in the winter, because of the higher demand for heating fuels – and vehicle fuel prices tend to rise along with overall demand. However, demand continued to decline late this year, resulting in the current downward price trend. Over the last four weeks the nation’s oil consumption fell to 18.77 million barrels a day, nearly a million barrels fewer than during the same period of 2008 and more than two million fewer than during the equivalent period in 2007, according to the Energy Department*.

Gasoline consumption has rebounded from its lows reached during last year’s crisis, in December 2008, but it is still down by about 3 percent from two years ago. Projections by analysts of where oil and gasoline prices are going beyond the next few months vary widely – not surprising since prices have been a roller-coaster ride in recent years.

Gasoline prices started at about $1.70 a gallon in January 2008 but climbed back to nearly $2.70 by June. Since then, national average prices have remained between $2.50 and $2.67. However, analysts at JPMorgan Chase expect oil prices to turn around by the end of the first quarter of 2010, and rise to $120 a barrel by 2013.

*Price trend data from Energy Information Administration (EIA)