Gas prices: Are they past their peak?

July is historically a peak travel time in the United States, as gas prices surge in response to the demand, but indications show that prices may have already cooled off this summer.

A number of factors contributed to some anxiety over fuel costs this season and brought back memories of the sticker shock from last summer. Drivers saw prices increase by more than a $1 a gallon so far in 2009 and almost 60 cents from early May. This was due to an increase in demand while supply was low and an initial boost in consumer confidence. (See our blog “Why gas prices are going up?”).

However, the past two weeks prices have seen a decrease after an eight-week climb. Crude oil prices have dropped to about half of what they were last summer when they reached over $130 a barrel. A reduction in demand coupled with an increase in supply and production have helped to push prices back down a little earlier than expected. Plus, the economy and recession has forced many to change travel plans and stay closer to home. AAA expected July 4th travel to be down almost two percent from last year.

The Energy Information Administration (EIA) said in its latest, weekly report that “it appears that the summer market may be near, if not past, its peak.” And looking at the trends from past years, as illustrated in the embedded EIA graph, it is easy to see that prices historically dip after the July 4th weekend.

Unless there is a major hurricane or storm that affects refineries or an unexpected economic change, the June 22nd price of $2.69 a gallon could be the highest we’ll see for sometime. And that’s good news for people who still have road trips and other driving adventures planned for the rest of the summer.

—Liza Barth

Hyundai begins giving cash for clunkers rebates

Hyundai has begun giving cash for clunkers rebates, even though the official Car Allowance Rebate System (CARS) doesn’t roll out until around the July 23, according to the official cars.gov Web site. (Read: "Cash for clunkers not ready yet.") Consumers shopping other brands who want to take advantage of the cash-for-clunkers trade-in deal from the government may be left in limbo for the next three weeks, unless other automakers step up with similar dealer-assistance programs.

The CARS bill that President Obama signed into law on June 24 says the program is good from July 1 to Nov 1. But the program doesn’t officially take effect for 30 days, or until about July 23. Those three weeks provide the National Highway Traffic Safety Administration (NHTSA) time to establish the specific methodology for the federal government to reimburse dealers, ensure the old cars that qualify are crushed, and prevent fraud.

So for most of July, consumers with clunkers they want to trade in are left waiting – unless they want to buy a Hyundai. On Monday Hyundai announced a new incentive program loaning dealerships the money to take clunkers in trade before the program officially gets rolling. The company says it has already sold taken its first “clunker” in trade, a 1995 Ford Explorer traded on a Hyundai Elantra Touring wagon.

Other brands could follow Hyundai’s lead, though the National Automobile Dealers Association (NADA) is recommending its members don’t start accepting clunkers in trade for rebates until NHTSA starts the program.

Before buying a Hyundai, or a model from any other brand, be sure to check the Consumer Reports ratings to ensure you are getting a good car and a good deal. See a complete list of Consumer Reports recommended models in our interactive new car selector, available to online subscribers.

Also read, "Cash for clunkers: Recommended cars that qualify for a voucher" and “Cash for clunkers: The best gas guzzlers to junk.”

—Eric Evarts

First impression: 2010 Lexus HS 250h hybrid

At a recent New York introduction, Consumer Reports Senior Auto Test Engineer Gabe Shenhar and I had a chance to drive the new Lexus HS 250h hybrid, the brand’s first four-cylinder model. It’s designed for hybrid buyers who want a little more luxury without giving up great fuel economy. And for entry-level luxury car buyers who want a car with better fuel economy. So far, the HS is in a class of its own.

We drove two of the front-drive sedans about 40 miles, and thought we’d share some early impressions from our hands-on experience. (For a full preview, see the Lexus HS 250h report from the New York auto show.) First, the HS 250h is available with just about every whiz-bang new electronic feature on the market, including laser-guided cruise-control, forward and rear-view monitors, lane departure warning with steering assist, and a heads-up display.

Behind the wheel
Gabe and I found the ride rather stiff—especially for a car wearing a Lexus badge. Handling is OK, but the HS 250h is not particularly agile. Engine noise can be relatively pronounced for a luxury car.

Inside, the HS 250h feels narrow, with the back seat being especially tight. The second row struck us as being roomier than the Lexus IS rear seat, but not as spacious as the more accommodating Prius. Trunk space is compromised by the batteries. Adding green appeal, the interior uses organic fabrics on the seats that make a passable imitation of leather, and organic materials are also found in the carpet and dashboard.

Lexus says their customer research shows that 60 percent of hybrid buyers also own a luxury car, and 60 percent of luxury car owners express an interest in buying a hybrid. In addition to Lexus’s current performance-focused hybrids that are quick but yield only moderate economy gains, the HS 250h will soon give those buyers a thriftier alternative. Over a 9-mile city-loop driving route, we averaged fuel economy in the high 30 mpg range, according to the trip computer. EPA figures are 35/34/35 city/highway/overall.

To be offered exclusively as a hybrid, the HS 250h will go on sale at the end of August. We’ll buy one for our full test program shortly thereafter, and then we’ll see how the HS 250h really stacks up. 

—Eric Evarts

Learn about driving green in the Consumer Reports special fuel economy section

EPA grants California CO2 emissions waiver

After a five-year legal battle, the Environmental Protection Agency yesterday granted California permission to set the nation’s first greenhouse-gas emissions standards for cars. This paves the way for as many as 15 other states that have endorsed California’s proposal to follow suit.

The state’s victory is mostly symbolic at this point, because it already agreed to follow new federal regulations through 2015. But it provides a final resolution to years of legal wrangling over CO2 limits on tailpipe emissions.

Since cars emit carbon dioxide in direct proportion to their fuel consumption, the issue had been mired in dozens of lawsuits and countersuits among automakers, the various states, the EPA, and non-profit environmental organizations over whether the rule was an emissions or a fuel economy regulation, whether it was practical, and who had the right to enforce it. This action ends the long saga.

Under the 1968 Clean Air Act, California is allowed to set its tougher emissions standards than the rest of the country, but it can’t set fuel economy standards. Other states are allowed to sign on to the California standard or the national standard, but only with the permission, or “waiver” from the EPA. So 15 other states, including Massachusetts, Vermont, Maine, Rhode Island, Connecticut, New Jersey, Pennsylvania, Washington, and Arizona, which had signed on to the California standard were waiting for the ruling.

In May, EPA administrator Lisa Jackson put the issue to rest by passing the first national carbon dioxide emissions standard for cars, modeled after the California standard. The national CO2 limits would effectively require cars to average 35.5 mpg by 2015. In return, California agreed not to pass its own rules until after 2015.

This new ruling will allow California to again take the environmental lead after 2016.

The state’s original standards, which started the flurry of lawsuits, calls for CO2 limits that would require cars to average almost 40 mpg by 2020.

—Eric Evarts

Green carmakers may emerge as next U.S. car industry

Oil tycoon T. Boone Pickens is investing in a new car factory in Louisiana. The San-Diego-based company, V-vehicles, is keeping tight wraps on what type of car will be produced there, but Pickens said in a statement that it will be an “environmentally friendly” vehicle that will run on gasoline and eventually may offer a natural gas option. (In related news, the Potential Gas Committee on Thursday upped its estimate of available natural gas reserves in the United States by about 34 percent, due to improved recovery technology.)

This got me thinking about all the new start-up car companies popping up around the United States, as the traditional Detroit automakers (and even big imports with U.S. plants) are faltering.

Several we have written about here before include:

Tesla Motors – founded by PayPal billionaire Elon Musk, and based in Palo Alto, Calif., Tesla builds a $100,000 electric sports car, the Roadster, and has plans to build a seven-passenger electric sedan, the Model S. The company is seeking more than $350 million in funding from the Department of Energy to buy an existing factory to build the Model S.

Fisker Automotive – based in Irvine, Calif., is developing a plug-in hybrid (range-extended) electric luxury sedan called the Karma. Run by former BMW and Aston Martin designer Henrik Fisker, who designed the car, the company has outsourced everything from manufacturing to engineering. The Karma will be built in Finland.

Carbon Motors – Based in Hermosa Beach, Calif., former law-enforcement officers and automaker executives are leading the company to offer a new, purpose-built police cruiser. So far the company is still working on developing a legal framework for the car, although it has shown a prototype. It says the car will be made in the U.S.

Zap – This long-time electric bicycle-maker based in Santa Rosa, Calif., has branched out into making small electric cars, including the Zebra 3-wheeled coupe and pickup.

Aptera – Run by a group of former auto industry executives, based in Vista, Calif., is developing a three-wheeled electric two-seater that it says will be built in California later this year, and initially only sold in the state.

Bright Automotive – based on a spinoff from the Rocky Mountain Institute think tank, Anderson, Indiana-based Bright plans to market a small(ish) electric delivery van, called the Idea, in 2011.

Myers Motors – born out of the defunct Corbin Motors, Myers, based in Tallmadge, Ohio, bought the fiberglass tooling and design of the Corbin Sparrow, which it sells as the Myers NMG, for No More Gas.

EV Innovations – Based in Las Vegas, EV Innovations has been converting cars to electric power for years, and it is now developing two of its own vehicles: the two-seat Wave and the Inizio sports car. Both are supposed to be ready by the time the competition begins for the Automotive X Prize later this year.

Admittedly, this is only a partial list. Other companies, are launching new motorcycles in the U.S., including Zero Motorcycles, and Brammo, which will be sold through Best Buy stores. The XPrize alone has attracted dozens of competitors developing plans to build fuel-efficient alternative cars in the U.S. And an industry has developed to build low-speed neighborhood electric vehicles such as the G.E.M. car around the country.

Just like the dawn of the 20th century, which saw a proliferation of horseless carriage builder, most of these modern startups may not last. But one or two, or one that follows behind them, may eventually thrive. So as Chrysler and General Motors shrink and become dependent on government support, it is encouraging to see American ingenuity springing in to fill the void.

--Eric Evarts

Cash for clunkers bill cuts fuel consumption–running the numbers

Environmentalists and even some Democratic U.S. Senators have criticized the cash for clunkers legislation that President Obama is expected to sign as “Handouts for Hummers.”
 
They say the bill doesn’t set high enough fuel economy targets especially for SUVs. Cars have to get at least 22 mpg and 4 mpg better than the vehicles traded in, to be eligible for a $3,500 voucher. Light trucks and SUVs only have to get 18 mpg and 2 mpg better than the vehicle traded in to be scrapped. Full-sized SUVs only have to get 15 mpg, or an improvement of 1 mpg.

While those improved numbers may not sound like a lot, small mpg improvements can mean significant savings at the pump. Small mileage improvements to very inefficient cars yield bigger savings than similar mileage improvements to more efficient cars. To illustrate the point, the chart below lists five potential trades that would earn vouchers under the Cash for Clunkers program, and the amount of fuel and cash each would save. (We assume the cars are driven the national average of 12,000 miles per year. Mpg ratings are EPA-sourced combined averages, as the law specifies. And gasoline is $2.70 a gallon.)

We list five trade-ins from our “clunkers to junk” list and five Consumer Reports recommend cars that could replace them. Four of the cars get 5 mpg better than the car they are replacing; one gets 10 mpg better. The three light-trucks that achieve a 5 mpg improvement will get vouchers worth $4,500, while the car will get only a $3,500 voucher. The car trade that nets a 10 mpg improvement would earn a $4,500 voucher.

As the chart illustrates, if you own the new car for five years, the gas savings over the clunker can nearly double the dollars in your pocket when you add it to the amount of your voucher.

Trade-in	mpg	Purchase	mpg	Gallons saved per year	Money saved per year	Voucher
1993 Dodge Ram (4wd)	12	Chevrolet Silverado (V6, 2wd)	17	294	$794.12	$4,500
1998 Nissan Pathfinder (4wd)	15	Nissan Murano (AWD)	20	200	$540.00	$4,500
1996 Chevrolet  Astro	16	Ford Escape (4-cyl., AWD)	21	179	$482.14	$4,500
1998 Olds Aurora	18	Volvo C30	23	145	$391.30	$3,500
1998 Mercury Grand Marquis	18	Hyundai Elantra	28	238	$642.86	$4,500

—Eric Evarts

Update: President Obama signs Cash for Clunkers bill.

2010 GM model year changes boost fuel economy and safety

General Motors has released details of its model lineup for 2010. As might be expected from a company in bankruptcy, the number of model launches is modest, though significant. There are six new vehicles: the Buick LaCrosse, Cadillac SRX and CTS SportWagon, Chevrolet Camaro and Equinox, and the GMC Terrain, plus a special-edition Corvette, the Grand Sport.

But the bigger news may be what isn’t included in the plan; GM won’t be building the mild-hybrid versions of the Chevrolet Malibu, Saturn Aura or Saturn Vue, according to an AutoBlog report. (Since the company has announced it is selling Saturn, eliminating Saturn hybrids is not surprising.)

GM spokesman Brian Corbett confirms, “Production of 2010 model year Malibu hybrids is suspended due to high inventories of ’09 models for the remainder of the calendar year.” After that he says, the company will reassess whether to continue building Malibu hybrids. Production of the Saturn hybrids is also suspended for now pending final arrangements with Penske Automotive Group, the company buying Saturn.

Since GM is phasing out Pontiac, the laudable G8 sedan is also history (along with a number of other Pontiac models we won’t miss). The lone Pontiac listed for 2010 is the CR-recommended Toyota Matrix twin Vibe.

Beyond the new models, General Motors has new technology coming to improve fuel economy, including:

• Adding cylinder cutoff technology to the 6.2-liter V8 engine used in the Cadillac Escalade.
• Adding variable valve timing all 5.3-liter V8 and 6.2 liter V8s. (Flex-fuel capability will also be expanded to almost all the company’s V8s.)
• Making a single-speed transfer case standard on Tahoe, Yukon, Avalanche, and Suburban SUVs which means they become full-time four wheel drive. (A two-speed transfer case will still be optional.)
• Expanding the range of special XFE fuel economy trim lines to its large and small pickups.

Safety technology will also be expanded, with side and side-curtain airbags standard on Chevrolet Colorado and GMC Canyon pickups, a rearview camera available on the Chevy HHR, and lane departure warnings and blind zone alerts available on the Cadillac DTS.

USB ports for connecting portable music players will become more commonplace, as will XM Traffic alerts and advanced OnStar 8.2.

We hope these new technologies will help GM vehicles become more competitive. And, of course, we will test the new models as soon as they are available. In fact, we already bought a Camaro.

—Eric Evarts

Toyota: Electrics coming, but won’t replace gas cars

Electric cars are no replacement for conventional cars, despite what you might have read.

That’s the conclusion of Bill Reinert, Toyota’s manager of advanced technology planning. In an interview at a New York City conference on sustainable development, Reinert said the company would produce an electric version of it’s tiny Scion iQ. He added that the company is looking at new business models for electric cars, and it won’t be focused on suburban use.

Electric cars may make the most sense to operate in the city, where vehicles usually drive at low speeds and for short distances. However, a real challenge for city use is that most urban dwellings don’t have dedicated parking with access to a plug. So plug-in cars that work on the expectation that consumers will charge them every night at home won’t work.

So, Toyota says it is looking at “new business models,” such as car sharing, leasing batteries or cars, and fleet sales for its EVs. Some will be sold to traditional consumers as well, he says.

Toyota announced that it will put 500 plug-in Priuses on the street in a fleet demonstration program in 2009, with 200 examples in Japan, 150 in Europe, and 150 in the United States. Powered by lithium-ion batteries along with a gasoline engine, these initial plug-in vehicles will be for fleet use, with no opportunity for sale to customers.

In the end, Toyota predicts that perhaps 20 percent of vehicles will be electric by 2020.

—Eric Evarts

Updated 6/12/09

Fuel-efficient tire regulations and rolling-resistance ratings

The California Energy Commission (CEC) has moved another step closer to introducing a draft proposal for rating tires for fuel efficiency.

The State of California may well lead the nation, introducing a draft proposal for rating tires for fuel efficiency. The proposal will be the topic of discussion in a June 10 workshop presented by the CEC. (We know the federal government is also working toward a proposal but that is not expected out before the end of the year.) The California Energy Commission has been working diligently on a proposal through the Assembly Bill (AB) 844 Statutes of 2003. To this end, the CEC’s own research, and deliberations with tire manufacturers and retailers, and interested parties have formed the basis of the draft proposal.

Consumer Reports Auto Test Center was asked to be part of the proposal process as we are the only independent group that rates tires for both performance and rolling resistance.

Highlights.

• The ratings process will cover all passenger (P) and light truck (LT) tires available for sale in California, excluding winter tires; space-saver and temporary spare tires; tires with wheel sizes of 12-inches or smaller; motorcycle tires; and tires manufactured for use on off-road-use-only vehicles.
• There will be a rating system for each tire size designation and load index (load capacity). Tires will be ranked by lowest to highest rolling resistance (most to least efficient tires). Those rated as a “Fuel Efficient Tire” will have a rolling resistance force within 15-percent of the lowest rolling resistance tire for that specific size designation and load index.
• Tire manufacturers will be required to submit rolling-resistance data on every tire size within every model line sold in the state. Data will be reported by product SKU (Stock Keeping Unit), a unique number identifying a manufacturer’s tire model, size, and specific features. 
• The determination of a tire’s rolling resistance is measured using ISO 28580 rolling-resistance test protocol or produced by calculation (i.e. numerical modeling).
• Manufacturers must submit information on effected tires by July 1, 2011.  New tires will require submission of data prior to being sold in California.

What’s it mean to consumers?
Aside from Consumer Reports’ own tire rolling-resistance ratings, there are few other avenues open to consumers for information on this subject right now. The CEC proposal will be much more comprehensive, essentially covering most tires sold for light-duty vehicles and since what is sold in California is sold elsewhere around the nation, the availability of the data should have broad appeal.

The negative impact could be the misunderstanding tire rolling resistance and the compromises that come with some tires that have very low rolling resistance. In general, consumers should understand that as a rule, a 10-percent reduction of rolling resistance can improve vehicle fuel economy by only one to two percent. But typically consumers purchasing low rolling resistance tires should not expect a huge windfall savings in fuel costs. Also, some tires trade-off key performance features like tread-life and wet-grip for low rolling resistance.

The CEC is mindful of the trade-offs some tire manufacturers make for achieving low rolling resistance vs. traction and tread-life,  but technology is at the crossroads where some tire manufacturers are closing-in on breaking down those compromises. The CEC believes the tire efficiency rating system will encourage a competitive atmosphere for tire manufacturers to achieve the coveted “Fuel Efficient Tire” rating. Consumer Reports has already been asked to participate in this next phase, as well.

Consumer education will be an important part of the Tire Efficiency Program. The CEC understands the success of the program is in educating the consumer on what tire rolling resistance is, expected fuel savings, and possible trade-offs associated with low rolling resistance tires. The CEC’s plan is to make public access to the entire database for consumers interested in the researching tires which will include rolling resistance and tire sidewall data.

Bottom line:
Rolling resistance should not be the primary reason for a tire purchase. The most important considerations are safety-related performance features including dry- and wet-braking, hydroplaning resistance, handling, winter traction if applicable in your region, and tread-life. Low rolling resistance should be a secondary consideration in your tire-buying decision.   

The CEC would like to know your interest in the Fuel Efficient Tire Program and you can make comments here or in TireTalk (an expert forum available to online subscribers).  

Before buying, be sure to consult our car, truck, and winter tire ratings and buying advice.

—Gene Petersen

Behind the wheel: Mini E

We recently had a chance to drive the all-electric Mini E at a local press event. The car is not for sale yet, but in what amounts to an extended market test, a selected group of customers in the Los Angeles and New York City areas will pay $850 per month to lease one for a year. (See our Mini E preview.)

The Mini E is a two-seater with a large, 35-kwh lithium-ion battery pack occupying the space where the back seats would be. The electric motor running off that battery produces the equivalent of 204 hp and 162 lb.-ft of torque. To put that in perspective, a gasoline-powered Mini Cooper S produces 172 hp and 177 lb.-ft. So this electric Mini has oodles of power. The claimed range of the E is 150 miles. A full recharge is said to take about four and a half hours if you have access to a 240-volt power source, but almost 24 hours if you have to use standard 110-volt power. (See our Mini Cooper ratings and reviews, available to online subscribers.)

We took turns driving the electric Mini around a hilly, curving, five-mile loop in Bear Mountain State Park, along the Hudson River north of New York City. Driving it was a hoot. With the electric powertrain’s instant torque, it’s easy to light up the front wheels at launch or even while accelerating out of corners. The motor pulls strongly, eagerly, quietly, and effortlessly. Power delivery to the wheels is similar to a Cooper S—right down to the torque steer. Handling is similar, too, with go-kart like agility. The regenerative braking system, which recaptures braking energy to recharge the battery, lets you descend hills without touching the brakes. It’s a pretty aggressive system that we think a lot of people will find strange at first. The only noise from the powertrain is a muted electric whine. That’s too bad in a way, since the regular Mini’s exhaust note is quite exhilarating.

Similar in appearance to its gasoline-fueled brethren, the Mini E adapts subtly to the electric format. For instance, the instrument cluster does away with a tachometer, substituting a gauge that shows the state of the battery’s charge. Open the fuel flap and you find an electric receptacle instead of a gas cap. One thing that can’t be hidden is the lack of luggage space. Behind the battery is room for a carry-on bag, but not much else.

After a group of heavy-footed journalists had taken turns pushing the Mini E hard around the park’s hilly terrain for a few hours, it became clear that the car wasn’t going to achieve anything close to its 150-mile range in these extreme usage conditions. The point was freely conceded by the BMW/Mini representatives on hand, and it came as a surprise to no one.

The Mini E may still need some work, such as less intrusive regenerative braking, but it proves that green and fun-to-drive are not mutually exclusive. It also shows both the advances in battery technology and the need for those batteries to get a lot smaller. At this point, electric mobility still demands tradeoffs: You can get high performance, good range, and adequate interior space. But you get to pick only two.

—Gabe Shenhar

Learn about driving green in the Consumer Reports special fuel economy section.