You gotta sit up and take notice when a new technology claims a 40 to 50 percent increase in fuel economy. Either that or hide your checkbook. Personally, professionally, I’ve never heard of a hydraulic hybrid vehicle (HHV), never mind a diesel hydraulic hybrid vehicle (DHHV?). But IndustryWeek has, as well as the United Parcel Service, which plans to deploy a fleet of two (count ’em two) HHVs in Minneapolis early next year. The only explanation for the taxpayer-funded technology involved is, to say the least, literally, marginal. “The technology, originally developed in a federal laboratory of the Environmental Protection Agency, stores energy by compressing hydraulic fluid under pressure in a large chamber.” Does one of our Best and Brightest care to elaborate? Meanwhile, it’s kinda weird to hear our government officials talk about the hybrid premium: “The EPA estimates that when manufactured in high volume, the added costs of the hybrid components can be recouped in less than three years through lower fuel and brake maintenance costs.” [thanks to nutbags for the link]

I’ll bet most folks are happy about their $2.99 gas. They might even like it enough that they forget that back in 2000 it was only $1.00 a gallon. Despite my continuing belief that the price of a gallon of regular in the U.S. is going to shake out between $5 and $10 in the next five years, the world of analysts and short-term economists seem to be of the mindset that lower fuel prices are at least semi-permanent. And that makes OPEC very nervous. Lower demand makes lower prices, that makes lower profits, and the result of that is fewer shiny exotic cars. The New York Times reports today that OPEC is working on strategies to put their monopolistic cartel to work for the good of the world their profits. While they would like to cut production levels, the problem (and this is always the problem with cartels) is the risk of cheating. If everyone else cuts production and prices go up, an individual member has an incentive to produce and sell more. Considering that many of the OPEC member states (and oil producing non-member states like Russia) depend on oil to balance their budgets, it’s hammer time for oil countries. Or, as the terrorist nation Iran’s oil minister said, “The era of cheap oil is finished.”

The New York Times reports that a casualty of lower oil and gas prices: interest in funding renewable energy projects. Among the Times’ laundry list of programs hurting for money: Tesla (duh), corn ethanol (hooray), other biofuels, and wind and solar power. The financial troubles are the consequence of a pretty simple financial concept – that there’s only so much money to go around. And we hear there’s a credit crunch in progress. So with gas and oil coming down in price, renewable energy isn’t where opportunistic investors want to be risking their somewhat-limited resources. The depressing part of the story is this all-too-obvious observation from Times writer Clifford Kraus:

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Toyota’s announced that Canadians will no longer have to spend $30k to import a grey market Scion xB from The Land of the Free. Soon they can overpay for a Scion at their very own local Toyota dealer. Maybe. In 2010, Toyota will open Scion sub-stores at Toyota dealers in Toronto, Montreal, and Vancouver. Unfortunately, Toyota seems to be sticking with the “urban youth music snowboarder DJ myspace iPod tuner culture” marketing image, rather than the “people that don’t have a ton of money but want a practical, reliable, relatively fuel efficient Toyota.” The Scion that does do well with the youngins: the aging tC – which hopefully will be replaced by the time Scion launches in the Dominion. Overall, Scion should have good prospects for our neighbors to the north, where “hatchback” and “downmarket econbox” aren’t synonymous. While Toyota of Canada has nothing to say about whether Canada will get the forcoming iQ – heading to the stateside as a Scion – will come to Canada, you can bet your zimmer frame on it.

There was a time when $10m seemed like a lot of money.  It still does to me personally, but on the scales of corporate and government finance it is, well, almost nothing. Lest we forget, Ford’s lining-up for its share of $25b in low-interest loans provided by you [via The Department of Energy] to retool its way out of a sea of red ink (in theory). Meanwhile, the AP dutifully reports that Ford’s receipt of a $10m Department of Energy grant to cover half the cost of a planned 20 vehicle plug-in Escape test fleet. “Ford is working on a three-year project to demonstrate the vehicles and understand how they will interact with utilities around the country, a key step in commercializing cars that can be recharged by plugging into a standard wall outlet.”  At one million bucks per test vehicle, they’d better be good!

So there I was, browsing a Bloomberg (three terms or bust!) story about automakers fessing-up to the fact that electric vehicles must take a back seat to “normal” fuel-efficient small cars– which is a pretty good piece of Parisian bloggage in and of itself– when BANG! I run smack dab into a quote from the highest paid auto exec on planet Earth: Porsche SE Chief Wendelin Wiedeking. “Do you believe people will actually switch to smaller cars?” Wendy asked, in the midst of discussing Porsche’s yet-to-unveiled fuel-sucking four-door. Uh, yes? Nein! “This car fits into these times,” Wiedeking insisted. “You should go on a journey in a small car with your four-person family. What will happen is you will have had enough when you get to the border after a couple of kilometers.” Hmmm. Why is Wendy dreaming of heading for the border? Of course, by “people” Wendy means the same sort of customer GM Car Czar Bob Lutz referred to when confronted by the fuel-suckage of the then-new GMT900 SUVs (i.e. rich people don’t care about the price of gas). Meanwhile, back in the world of mass motoring, GM Europe Prez dismissed the impact of his company’s Hail Mary plug-in hybrid Volt: “The ordinary guy has to be able to afford these technologies, and the technology in the beginning will be quite expensive.” Toyota, for some reason, gets the last word. “The Japanese company’s executive vice president for strategy, Mitsuo Kinoshita, was more blunt about a world without low-emission technologies that supplant gasoline. In that scenario, ‘There is no future for automobiles.'”

Pssst. Wanna buy a $25K Honda Civic with a 220-mile driving range and the trunk space of a Miata? Me niether. Since its introduction over a decade ago, the Honda Civic GX has sold between 500 – 1000 per year; production has just been boosted to a mere 1500 p.a. The Civic Hybrid sells more than double that every month. Honda cites parts shortage as a bottleneck, primarily the greenest Civic’s lightweight and costly carbon fiber fuel tank. The Cutting Edge News’ Edwin Black isn’t satisfied with that explanation. In fact, Black claims a conspiracy to suppress production of the GX. Citing the inability of the Spokane, WA school system to secure a fleet of CNG-mobiles, Black chides Honda for milking maximum PR mileage on a car they CLEARLY don’t give a damn about. Even worse (for hardly anyone), the Civic GX is going out of production until June 2009 while production is moving to Honda’s new Indiana plant.  Black contrasts this green conspiracy to GM’s promise to manufacture and sell as many hundreds of thousands of Volts and other electrified vehicles to as many as it can as quickly as it can at the best price that it can.” So why isn’t Black giving GM (and Ford) a hard time for discontinuing their CNG vehicles a few years back?

Say what you want about oil tycoon-cum alt-energy evangelist T. Boone Pickens, the man has some instincts on him. Wal-Mart has been studying ways to reduce its energy usage (for purely altruistic reasons, of course) and Pickens smells blood in the water. Reuters reports that the Texan CNG honcho has convinced Wal-Mart CEO Lee Scott to consider retrofitting its entire diesel truck fleet with CNG power as an energy-saving, cost-cutting measure. Wal-Mart currently operates some 8,500 diesel trucks in its supply-chain network, and a presentation by Pickens to a Wal-Mart associates meeting has convinced Scott to consider the retrofit. According to a weekly Pickens email, Scott was “impressed by the Pickens Plan.” The email continues, “to have America’s largest retailer looking into shifting their trucking fleet to run on natural gas is a major step towards our country’s energy independence.” And a major step towards making Mr Pickens a boatload of cash. Pickens has invested his oil fortune in wind power and CNG, and a Wal-Mart retrofit could mean a huge contract and increased media exposure for CNG as a transportation alternative. Like Pickens though, every decision at Wal-Mart comes down to dollars and cents. We still don’t know how much a CNG fleet conversion would cost or save Wal-Mart. Until we do, there’s no telling whether Pickens’ CNG revolution will get off the ground.

While American automakers struggle to find something small and profitable to sell, the UK has been forcing people into teeny tiny passenger cars for decades. As a result of high gas prices, speed camera fines, insurance, VAT, insane repair and maintenance rates and motoring taxes that would make an American drive his car straight into Boston harbor, British motorists can choose from a huge range of really small, really slow, really frugal cars. AutoExpress, which never met a car it didn’t want to take home to mother, offers a run-down on its top five four-wheeled “penny pinchers.” Despite the fact that some American pistonheads [claim to long] for small, cheap, fun, Euro-style cars, the chances of these glacial yet parsimonious machines making it In The Land of the Free are somewhere between “not on your Nelly” and “only when U.S. gas prices triple.” Still, it’s nice to know they’re out there, somewhere.

From a crowd-pleasing chant at the Republican National Convention to op-eds at the New York Times, the refrain “Drill, Baby, Drill” is looming large in the American psyche. In the Gray Lady’s pages, Robert Hahn of the American Enterprise Institute and Peter Passel of the Milkin Institute (motto: Milkin’ The Issues) investigate the idea of penetrating mother Earth for more of that sweet, sweet dino juice. Opponents of drilling offshore and oil extraction in the Arctic National Wildlife Preserve (ANWR) argue that the benefits would be marginal. Hahn and Passel don’t necessarily disagree. They reckon 7b barrels could be pulled from ANWR, with another 11b available offshore, Hahn and Passel estimate the U.S. could thusly increase output by six percent, resulting in a 1.3 percent drop in worldwide prices. Meh. But the two argue that at $100/barrel, that oil would be worth nearly $2t not including the benefits of reduced pump prices for consumers. Development costs including environmental clean-ups would cost only $400b, making drilling an “economic no-brainer.” Hahn and Passel estimate the “non-use value” of ANWR at “only” $11b. The authors could “imagine a political bargain in which several hundred billion dollars went into a fund with a charter to preserve wilderness in the United States, or climate-stabilizing rainforests in Africa and Latin America.” In short, to protect the environment we must defile the environment. In reality, drlling is one of those idealism vs. pragmatism issues where win-win is a no-no. As long as the “Drill, Baby, Drill” refrain is still echoing out of St Paul, this kind of compromise is a long way off.

Chevy’s upcoming Cobalt replacement sibling replacement, the Cruze, has been spotted out in the wild wearing New York dealer plates. In rental white and with black door handles, it looks pretty generic and just a little strange. Compared to the original press photos, it also looks pretty large, which is not necessarily a bad thing. As we’ve said before, the key for this vehicle will be whether GM can live up to their 40+ mpg promise for this car. If it can, that may be enough to cut into sales of vehicles with immense intertia, like the Civic and Corolla. The Cruze will ride on the Delta platform that is also set to underpin the Volt, which oddly enough is also targeting 40 miles as its range on a full charge. Maybe. And while the Volt is set to cost some $40,000, this Cruze should be available for well under $20,000 when it hits dealers in the summer of 2010.

In keeping with the horsepower numbers for the Hemi in the new Challenger, Dodge has announced that the Hemi in the Charger sedan will get an upgrade for 2009 as well. Rather than continuing to produce a puny 340 horsepower, the newly revised 5.7 liter Hemi will now crank out 368 horsepower. Take THAT, Pontiac G8 GT. In addition to the increase in ponies, the Charger R/T will also benefit from an additional 5 lb ft of torque, raising the total to 395 for 2009. The Hemi adds variable valve timing as well, meaning highway fuel economy gets a modest bump from 23 to 25 mpg (city remains the same at 15). You think this isn’t enough to save Chrysler? That they really need competitive small cars? That Chrysler is dead in the water? Well yeah, probably. But they only had enough money to either give the Charger R/T a little more power, or to buy Bob Nardelli a new toupee. Frankly, I think they made the right choice.

Scion is still pushing the individualist, customized youth brand schtick. The melodramatic ad above– which one can only hope is meant in a tongue-in-cheeck tone– once again flogs the tuner car image and notion of a Scion owners’ community. There’s no question that Scion’s lineup has some character– even if the linch-pin xB was diluted beyond recognition last year. But pursuit of the Fast and the Furious set is so five years ago. A company with clever small cars, small engines, decent MPGs, practical hatchbacks, and low no-haggle MSRPs should be selling itself as just that. Or, to quote former Scion exec and current Lexus exec Brian Bolain, “If we could relaunch Scion, I wouldn’t ever have called it a youth brand, because it’s a kiss of death.” So why didn’t the ad department get the memo?

“‘The ultimate solution is the electrification of the vehicle,’ said [Ford Car Czar Derrick] Kuzak, who stressed he was speaking as an engineer and was not commenting specifically on Ford’s future product plans.” God forbid Ford should commit to a single technology, ’cause that might cause more of the old bureaucratic infighting for which The Blue Oval Boyz are famous. Anyway, The Detroit News reports that Derrick’s mate Jim Farley (of the RI Farleys) also reckons ethanol hydrogen the flux capacitor electricity is the “gas of tomorrow’s cars.” “Speaking to reporters separately [so as not to coordinate their stories], Ford’s chief marketing officer, Jim Farley, echoed Kuzak’s enthusiasm for electric vehicles. ‘All I know is that when I talk to customers about electrification they say, ‘That’s cool!’ We better be prepared as an industry.'” Yes, well, by the end of this electrifying cheerleading session, Kuzak backpedals from his “one alt power to rule them all” prognostication. “Kuzak said government intervention or consumer preference could ultimately make one of the other alternative power technologies a more viable choice and that’s why Ford is committed to developing all of them. ‘We have to, because we don’t know how it’s going to play out.'” That’s cool!