Oh! How I need my MPG

I still remember our driver of yester years in India, with much fondness. He used a number of methods to help conserve fuel or for that matter to get more bang for the ‘small’ buck in those days where a car was a luxury and gas cost Rs 10-15 per liter in India. As a child I remember him saying “Ah! Now we have a slope, I will coast after switching off the car and save us some money”. Or he would turn the air screw of the carburetor to make the oil air mixture as lean as possible, so that mileage was increased. And he would always park the car on a slope so that it could be started by dropping it into gear while rolling and without using the starting motor (How that helped, I am not sure).In those days with few cars on the road, pick up was not an issue & there were no traffic lights in most Kerala cities. Later when I started riding my bike, I would also play with the carburetor screw to get that extra 5 kilometers from every liter, finally mastering the technique. Then came Japanese mobikes with two and four cylinders and they even joked that one or two of them could run 10 kilometers if it had a mere sniff of the air near a gas station…

Today, such drivers, like the ones who coast on a slope and do the other things our old driver did, the ones who get the last mile out of the gallon and belong to that exalted ecofriendly group, are called Hypermilers.

So where are we at present? Everybody is talking about gas prices and I thought back about my two years in the UK. I drove a Diesel Jaguar for those two years, and other than the fact that it sounded a bit loud when you were outside the car, the performance was about the same, it was reasonably silent inside, decent engine pick up, and the fuel efficiency was excellent. It provided 45mpg (highway) over the two years I drove it!! Diesel cost about GBP1.00 per liter (i.e. ~ $3.78 per gallon). Today we pay $4.80 per gallon of gasoline and get less than half the mileage on the Toyota Rav4.How does all this make sense? Well, no wonder houses in distant towns are losing value as the cost of commute gets more and more!

The attached picture outlines gas prices around the world. Today gas costs Rs 50/- to 60/- per liter or $5.77 per gallon in India. You then start to wonder, who is at fault? Gas producers & refiners, Gas distribution companies, Federal taxes or automobile companies?

Look at some statistics - USA consumes about 400 million gallons or some 9 million barrels of gasoline per day. One barrel is 42 gallons (159 liters) and roughly 20 gallons (75 liters) out of it accounts for Petrol (US-Gasoline)!! Today’s oil price is $130 per barrel. Overall, today crude oil costs $3.126 per gallon as against a pump price of $4.80 per gallon. Consider the model of EIA which is 10% Distribution & marketing, 17% refining costs, 15% taxes over a $68 bbl price. According to EIA reports, the cost of crude rose from 47% of the retail pump price to over 80% in June 08. It is also understood that distribution prices fluctuate from 5-15% over a year. So the mechanics of gasoline pricing can tend to be rather complex and the gainers and losers change over time. European nations tax gas heavily, with about 75% tax content as compared to USA, where it is about 47-60 cents a gallon (EIA states 15% taxes).

Oil companies as I read, earn about 8cents per dollar of sales according to statistics (How could that be unless their costs and investment are shooting up?) which is considered in line with averages. Until recently, gasoline and diesel fuel prices closely tracked the cost of crude oil. But over the last year the supply and demand picture has changed. Gasoline prices are driven by the realities of global supply and demand for crude oil and a weak dollar and, I am sure, by speculator pressure.Bloomberg summarizes as follows on Indian and Chinese demand - China , the world's second-biggest energy user, will consume 7.89 million barrels of oil a day in 2008. China's passenger car sales jumped 22 percent to 6.3 million last year and may rise 16 percent to about 7.3 million this year. India will use 2.9 million barrels of oil a day in 2008, more than is pumped by OPEC member Venezuela .

The average person in China consumed less than 20 percent as much energy as the average American in 2005, the latest year data is available, according to U.S. Energy Department. In India, energy use is less than 10 percent of America’s on a per capita basis. The 2.45 billion people in China and India combined used only half as much crude as 300 million Americans last year.

Compare the total Chinese and Indian demand with the US consumption of 20 million bpd (25% of global oil production). Pointing fingers at India in this case is as silly as it sounded when a remark was made that food prices rose due to larger consumption by the Indian middle class!!

For the car owner, there are a lot of snake oil type of solutions to increase mpg (miles per gallon) out there, like adding air vortex creating devices on the air inlet, various additives to the fuel, special spark plugs or even some time tested solutions like filling the tank before dawn, switching off the AC, over inflating the tires, slow braking, mixing various octane’s, stopping idling, filling on Wednesdays, special gas tank caps, parking in the shade, upgraded air filters……

All of a sudden Chevy and a number of Japanese car models have come out with 30-45 mpg compared to the previous 20-25 mpg. If they had this technology all this while, why did they wait until now? Why did they not release it all these years? Answer: Timing is the essence of good marketing. It was also not politically correct until now and the ‘fickle’ public perception was different. After all, here in the USA, gas guzzlers were more popular due to cheap gas, the heavier, flashier, fully equipped and bigger SUV and truck baddies were in vogue. On the other hand, there are new gas stingy cars coming out in the future. Ford (Prodigy 80mpg), Chrysler (Intrepid 72mpg) and GM (Percept 80mpg) have many versions coming out with as high as 80mpg, all in the works.

And there is this fact – Chrysler, Ford and GM and others already make high performance, high mileage diesel vehicles in the USA, but are only allowed to export them (mainly to Europe).They deliver between 35-60 mpg depending on the version. But even though it is costlier to produce, but with higher demand than before, diesel production volumes are not in line with gas (supply and demand issues). But it is catching up and more than a third of the cars in Europe run on diesel. Why the delay in US introduction? It is due to the critical 50-state test here. The U.S. has strict emissions standards for diesel vehicles and it must meet them in every state, most notably California, with its tough standards. Then there is the distribution problem - According to the Diesel Technology Forum (D.T.F.), only 42% of American filling stations sell diesel. State subsidy and promotion helped launch clean diesel technology in Europe. But on the whole, it is the feeling that they are clunky, smelly things, coupled with EPA restrictions that have delayed their introduction.

General Motors Corp. officially blew up its old business model recently, closing four pickup truck and sport utility vehicle factories, announcing a new small car that could get 45 miles per gallon and shedding 8,350 jobs in the process. Wagoner also announced that the board of directors has approved production of the Chevrolet Volt plug-in electric car, which GM plans to bring to showrooms by the end of 2010. Fully charged, the Volt could drive about 40 miles without using any gasoline, and a small conventional engine would recharge the vehicle, extending its range and allowing it to get the equivalent of 150 miles per gallon.

So a lot of good news is around the corner. Diesels are coming, electric cars and hybrid models (talk of 100mpg vehicles abound) are increasing, Diesel production should increase and gas prices may decline due to less speculation. Until then, some good driving techniques and common sense are the only solutions.

Pictures - courtsey EIA and other sites, thanks