 by Jack Kazmierski
June 10, 2009
Fuel economy
Fuelly Ready for the Future
When the price of crude oil recovers, sending gasoline prices higher, will your fleet be ready?
If you were able to peer into the future to see what your fleet might look like in five or ten years time, what do you think you would see? Even if you’re not the betting kind, you’d likely place your money on a future fleet made up of smaller and greener vehicles, with the mammoth SUVs of yesteryear gone the way of the dinosaurs.
Although going green is in vogue today and we’d all like to think of ourselves as environmentally-conscious, saving the planet didn’t become a priority for many until about a year ago when world oil prices forced us all to take a closer look at the vehicles we drive.
Gas-guzzlers are fine when oil is cheap, but they fall out of fashion very quickly when oil peaks at around $150 a barrel.
Planning for the future
The spike in oil prices has come and gone. The current economic slowdown has pushed oil prices back down into the sane end of the spectrum and prices at the pumps have decreased accordingly.
That said, some would argue that gas prices are still too high and that the current cost of crude calls for much lower prices at the pumps. Are the oil companies keeping prices artificially high? Is there a supply and demand issue? Only Einstein, were he still alive, would be able to explain how oil companies decide how much to charge the public.
Instead of trying to figure out the impossible, let’s concentrate on the facts: Although off their peaks, oil prices are inching upwards again, which means we’ll be paying more at the pumps in the near future. Some experts are predicting prices in the $1.10/L for regular by this summer. With current prices in the ninety-something cents range, $1.10 isn’t unthinkable or impossible.
Part of the problem is the normal seasonal run-up in fuel prices. Historically, the summer months see higher fuel prices, and this year will likely not be an exception. And if prices are rising this year, when economic growth has been stymied by the global recession, we can only imagine how high they will rise when global economies recover.
It would be unrealistic for anyone to think that fuel prices will fall in the future. When the world recovers from the recession, and countries like China, India, and the United States begin to consume oil in massive quantities again, the cost of crude and the price at the pumps are sure to rise. Will your future fl eet be ready?
Hedge your bets
If the price at the pumps is likely to rise in the future, what kind of vehicles should you be adding to your fl eet now, or during the next ordering cycle, in order to minimize your exposure to higher world oil prices?
The simple answer would be to buy “fuelefficient” vehicles. But what exactly does that mean on a practical level?
We’ve all heard that it’s a good idea to opt for 4-cylinder models, vs. those with a V6 or V8. We’ve also been told that a smaller V8 consumes less fuel than a large V8. This technically makes sense, but isn’t always true.
Many vehicles today are offered with either a V6 or inline-4 engine. At first glance, the V6 should consume more fuel than its inline-4 equipped sibling, and that is certainly often the case.
But sometimes manufacturers decide to equip their inline-4 models with a 5-speed transmission, while their V6 gets a 6-speed tranny. The extra gear allows the V6 to operate at a lower RPM, which in turn means lower fuel consumption. It may be counterintuitive, but in many cases it’s true. So always check the numbers before deciding which powertrain confi guration is more fuel-friendly. Smaller engines don’t always mean better fuel economy.
4WD
All-wheel-drive or 4WD is nice to have, especially here in Canada. But if fueleconomy is truly a priority, you will want to avoid models with this drivetrain configuration. Not only do AWD or 4WD vehicles generally cost more up front, they also tend to consume more fuel than their 2WD counterparts.
Fuel-economy purists will also point out that 4WD-equipped vehicles often weigh more, which in turn adds to the overall weight of the vehicle. It takes more fuel to move a heavier object, so keeping excess weight down by limiting unnecessary options or accessories makes sense.
If you really need vehicles with AWD or if you really need a fl eet of SUVs, you can limit your overall cost of ownership with a few simple tactics. First, consider a hybrid SUV. Not only will a hybrid reduce fuel costs, but it will likely fetch more at auction in the future when the demand for hybrids will probably be higher than for their gas-powered counterparts.
Since larger vehicles aren’t selling well today, you might be able to negotiate deep discounts up front when purchasing or leasing. This will help offset the depreciation hit you’ll experience in the future. Also, consider keeping these vehicles for more than 48 months so as to soften the blow from the depreciation.
The future may be uncertain, and the decisions you make today may not be easy. But if current trends continue, we can all agree that future fl eets will be much different from those we see today.
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