by Paul Panabaker

ppanabaker@cogeco.ca

October 20, 2009 

Fuel sense

Fuel Efficient Cars Make Sense

Even with unforeseen low fuel costs, simple, higher mileage vehicles make the most sense. 

The major changes affecting all areas of the automotive business have never come so fast, and with such profound disruption to decades of industry status quo. Having gone through the “cause” events of 2008, we are now in the first steps of managing and dealing with the many “effects” that will lead into an up and down industry recovery over the next few years.

One thing is certain, even though we suddenly have record low fuel prices, we will not be jumping back into a world where consumption and horsepower is King. Many fresh and powerful forces will shape the next era of the automotive world, guiding it down many new paths.

Economic issues

All companies are in a belt tightening—and even survival—mode, with serious directives given to cutting operating costs with the least impact to their business. While fast rising and record breaking gas costs became a major concern earlier in 2008, this has all but evaporated with the sudden and dramatic recession arrival and crude oil price crash.

Today’s business focus is towards cost reduction in all areas of operations, and the smaller size engines and more fuel efficient cars that were previously being forced by record high fuel costs still translate into overall cost savings to operators. These vehicles cost less to buy or lease, and continue their saving by using less fuel and having less engine to maintain. This is straight common sense and good value in today’s situation,  and provides for future saving during the life of the vehicle. As we know, fuel costs will rise directly in parallel to any economic recovery—it’s just a little early to know when.

What about the environment?

Beyond the obvious operating savings gains of fuel efficient vehicles is a more subtle gain that will provide much more opportunity and payback in the next few years. Although the recession moved one of Canadian’s previously “most important issues”—that of climate change and green house gases—quickly down the list of immediate importance, the issue is far from going away and will resurface quickly once the U.S. political landscape changes with Obama’s presidency.

One of the ironies of our current economic situation is that the unwelcome reduction in oil, gas, and coal consumption will do more for reducing our current greenhouse gas (GHG) emissions than all the costly “feel good” initiatives that marked our early efforts in this area. The new goal is to insure we can guide the retooling of our economic and business efficiencies such that there will be significant spin-off gains in reducing fuel related GHG emissions.

This means businesses will see significant incentives for reducing their GHG emissions that can be then directed into other areas of business recovery. With proper support, the much maligned carbon “tax” will be reworked into a more positively received carbon “refund.” Companies running efficient fleets will stand to gain the most here and be best positioned for the future.

Provincial governments, along with the Feds, have been clear in stating their intent to combine recession fighting expenditures with climate change initiatives. Given that automobiles account for roughly half of our personal GHG emissions, the link to reducing fuel consumption in business and personal use will be rewarded, and should work towards countering our long standing apathy with fuel efficiency during times of low gas prices.

The survivors and winners of the next few years will be those who can quickly turn up their efficiency while turning down their GHG emissions—an ideal setup for the next economic era.