December 7, 2006

Smartcar Looks Smart:: We want smart cars now!

Seen here outside Foyles, the largest book shop in London. The sad thing is, that was THREE YEARS AGO! Come on people now, let's sign together: We want fuel efficient cars NOW.

Nothing will cool the tension in the Middle East like a big fat drop in U.S. fuel consumption. Wise old Sheik Yamani figured that out back in the seventies: Jack the price of crude too high too fast and Americans will switch from Caddies and Lincolns to Toyotas and Hondas, cutting demand. Sure enough, gas consumption dropped off at the end of the seventies and didn't rebound until the late eighties.

Believe a former petroleum accountant when I say, there is a nightmare scenario for oil producers: Crude left in the ground. This can happen if price per barrel falls below the per barrel cost of extraction, which rises as an oil field ages. Here is an interesting snippet from Yamani back in early 2005. Note the correctness of his prognostications: oil has fallen off its highs.

And Americans can now buy the 40 mpg Toyota Yaris, the 38 mpg Honda FIT, and 36 mpg Nissan Versa, all introduced in recent months to round out high mileage offerings. Add a bunch of 60 mpg SartCars to the mix and average mpg could drop enough to scare producers into being more amenable to diplomatic negotiation (not to mention the reprise from pollution).

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