The Wall Street Journal reports that Michael Jackson is joining a growing chorus shouting "take your medicine." No it's not MJ handing a can of Coke to a young fan. It's the CEO of mega-dealer AutoNation, who thinks "high gas prices are good for the U.S. auto industry." Just as Scott McClellan trash-talking the Bush administration, Jackson is biting the hand that feeds. "We are highly skilled at selling size, horsepower and speed at a premium price, and giving away fuel efficiency," Jackson opines. "Now, going forward over the next 10 years we are going to have to convince consumers why they should pay more for a smaller engine, or some new technology, that is going to give them a tremendous benefit on fuel efficiency." Surely it's a new day in the US of A when the top car salesman in the land embraces the challenge of selling fuel efficiency. Who's bad?

Toyota's iQ is shaping out to be some of the toughest competition in the sure-to-grow city-car class. Winding Road has spy shots of the SMART-fighter road testing in Japan. Photos reveal the model's radical wheel-at-each-corner stance, facilitated by Toyota's newly developed differential, flat underfloor gas tank and angled rear suspension. By maximizing interior space, the Toyota will offer back row seating: room for three adults and one child or bag of groceries. The iQ is nearly two feet longer than the SMART, making it both more commodious AND better-proportioned. The small-but premium Toyota was caught in camouflage, but it's not hard to imagine the Geneva showcar's production-ready sheetmetal on this car. Toyota expects to sell 100k iQs per year, after launching the model into the teeth of the European city car market later this year. If it succeeds there, if gas prices continue their precipitous climb, don't be too surprised if the iQ shows up stateside, possibly in micro-ute Urban Cruiser form. We'll let you know.

Once it was big shiny convertibles that caught the ladies' eyes. Then it was Corvettes, Lambos or anything else low, fast and expensive. But the times they are a-changin'. Yahoo! Green reports that hybrids are this generation's automotive codpieces. A survey done by GM during this year's Challenge X competition reveals that 88 percent of women say "they'd rather chat up someone who owns the latest fuel-efficient car versus the latest sports car." On top of that, 80 percent of American car buyers would rather talk with someone at a party who has the "latest fuel-efficient car" than someone with a sports car. And for the fashionists out there, 45 percent of "18- to 43-year-olds say it's a fashion faux pas nowadays to have a car that's not green or environmentally friendly." But does that now mean that those who buy the highest mileage cars are overcompensating? And what does that say about all those who put down deposits on Teslas and Volts? The mind– or something– boggles. 

Until now, Hyundai had told us about two engines in the upcoming Genesis sedan: a 375 horsepower 4.6-liter V8 and a 3.8-liter V6 with 290 horses. But data mining on the EPA website tells us that the 2009 Hyundai Genesis will also feature the same 3.3-liter V6 that's in the Sonata. The 3.3-liter V6 is/was schedded for the Genesis overseas; until now there was no news that Hyundai was planning to offer it to us North Americans. In the 2009 Sonata, this engine makes 249hp– which sounds like a more than suitable number for an entry-level Genesis powerplant, considering that cars like the BMW 3-Series start with 230 ponies. Uh-oh. Hyundai's depending on the value equation for the Genesis to sell. When the new model clocks-in with 249 horses in base trim, and Infiniti's G35 offers 300+, they risk losing the stat-sheet buyers. Now I can hear the clicking already "But the Genesis doesn't compete with the G35." Yes, but– all cars that overlap in price can and do compete with one another. One last note on the smaller V6. The EPA ratings for the 3.3 are 19/27; the bigger 3.8-liter V6 is rated at 18/27.

Automotive News [sub] dutifully reports that the auto industry's lobbying group are arguing that proposals to strengthen vehicle roofs conflict with recently-increased CAFE standards. [Never mind the fact that heavier lids are dubious from a safety point of view.] In testimony before the Senate, the Alliance of Automobile Manufacturers' shills argued that roof-strengthening measure sought by safety advocates could hurt the fuel economy of large pickups and SUVs by up to ten percent. But since CAFE increases (along with those crazy gas prices) basically herald the demise of mainstream "large pickup and SUV" ownership, it seems that the AAM is barking up the wrong tree. Meanwhile, lawmakers are playing-up to telegenic emotional outbursts from "victims" of "heartless car companies" during their public hearings. While all of us know someone who's been killed or seriously injured in a car accident, automotive regulations should be based on proper scientific analysis of the full implications of existing and proposed regulations– research into which the National Highway Traffic Safety Administration excels. Those who criticize NHTSA's new roof crush standards– requiring roofs to support 2.5 times the vehicle's weight (up from the current 1.5 times)– should consider the possibility that not all government agencies work against the public interest. Besides, if this is such a serious problem, why are convertibles still exempt from ALL roof crush standards? 

Last week, we told you the EPA had certificated the Aveo-based Pontiac G3. We posited it would hit Pontiac showrooms in the U.S. next year. Now Automotive News [sub]  is thinking the same thing, citing "dealer sources" who say it's true– even though many Pontiac Buick/Pontiac/GMC dealers say they didn't ask for the car. Nor do they want it. Interestingly, several Pontiac executives found out the EPA had certified the G3 over the Memorial Day weekend, about the same time we did. Like it or not, GM needs to raise its CAFE averages in a hurry and adding something small, cheap and based on an existing car is the easiest way to do it. It just isn't the best way.

CNNMoney reports that the price of crude oil may finally have spiked– you know, if you look at it that way. "Crude oil prices retreated into the $126-a-barrel range Wednesday after dropping almost $5 a barrel from intraday highs to settle at $128.85 on Tuesday." While CNN is almost happy to make the link between dropping crude prices and "relief at the pump," it's worth noting, uh, what they note. "Gas prices have been pushed to record levels in the past year on the back of record oil prices. As the price of crude oil has more than doubled, gas prices have increased by almost a quarter." Anyone see an ominous disconnect there? Anyway and meanwhile, gas prices hit record highs for the 21st day in a row. "The nationwide average for a gallon of regular unleaded rose to $3.944, up 0.7 cent from $3.937 Tuesday." Detroit shouldn't pop the cork on those SUV-shaped champagne bottles just yet. Most analysts reckon that increased demand worldwide will prevent the price of crude from returning to last year's levels. Ever.

Just paid $4.37 per gallon this morning for premium. Oy. While patiently waiting for (another) $60 to leave my wallet a lady pulled up in a Smart Roadster. I haven't driven a Smart yet, but from I'm told, it blows. However, it really doesn't weigh very much. A few days ago, a dear friend called me and asked if she and her one-year-old should buy a used Audi. Let me rephrase that: she wanted to buy a used A4. I tried explaining that when new, the A4 sold for three times what a Mazda Protege went for. Today the Mazda is worth more. She wasn't hearing it. I then touched on the fact that she could well be paying $400 a month in bizzaro repair bills, like CV joints and a new electrical system. And the (relatively) poor mileage. "But Jonny, it's so cute! My friend has one– I love it" I finally talked her out of it by mentioning that the auto-dimming rearview mirror will eventually leak mercury all over her infant. That worked. Long story short, she's got about $15k to spend. I told her to get a Honda Fit. "Oh no! My friend says they're death traps." Based on what? Her friend– a TV actor– test drove one and thought it was a death trap. From the test drive. Long story short, even though she wants a clean, high mileage car, she ain't going small. Because of her baby. You?

You'd think that Exxon shareholders would be pretty damn happy about rising gas prices (in terms of the company's alt. fuel investments) and the fact that the energy giant booked $11.7b worth of profits in the first financial quarter of the year. That should go double for the Rockefeller family, whose unimaginable lifestyle is supported by their Exxon stock. But nooooooooo. The New York Times reports that the Rockefeller family have thrown their weight behind a "shareholder rebellion" aimed at pushing Exxon further and faster towards an alt fuel future. "The resolutions ask Exxon to take the threat of global warming more seriously and look for alternatives to spewing [sic] greenhouse gases into the air. One resolution would urge the company to study the impact of global warming on poor countries, another would encourage Exxon to reduce its emissions and a third would encourage it to do more research on renewable energy sources like solar panels and wind turbines." Yes, “Exxon Mobil needs to reconnect with the forward-looking and entrepreneurial vision of my great-grandfather,” Neva Rockefeller Goodwin announced in a statement. “The truth is that Exxon Mobil is profiting in the short term from investments and decisions made many years ago, and by focusing on a narrow path that ignores the rapidly shifting energy landscape around the world." 

Truck buyers shouldn't feel like eco-pariahs just because they want to use huge trucks as commuter cars or SUVs as grocery-getters. An unknown writer on Commercial Auto Dealers' GMC Truck Dealer blog wants you to know that hybrids aren't "really that much better for us than trucks." He/she warns you hybrids make you drowsy because "with their quiet motors and lack of exhaust noise, you can't hardly [sic] tell the car is on" which "could be a problem for people who want to drive at night or even during the day after a long shift at work." And if the risk of pandemic narcolepsy isn't enough to scare Prius owners back into a professional-grade Sierra 3500 Dually, "the electricity that the car uses to operate the vehicle isn't good for our health either." So while hybrid drivers are microwaving their tender parts, you can "just smile and walk away secure in the fact that you won't be subject to the same potentially harmful electromagnetic fields that they encounter every day." The anonymous writer concludes "if you want that large truck or SUV, don't hesitate to visit your local GMC truck dealer." And don't worry about $4/gallon gasoline. After all, what's a $136 fill-up compared to the peace of mind that hearing your engine and exhaust noise can bring? 

The Detroit Free Press reports that a little-known loophole in California's greenhouse gas emissions standards will allow some foreign manufacturers to avoid meeting the tough standards. Under the 2004 rules set by the California Air Resources Board (CARB), automakers averaging fewer than 60k annual unit sales in the Golden State would be exempt from the 2016 emissions standards. The Big 2.8 and Toyondissan would have to meet the 35mpg by 2016 standards; Volkswagen, Hyundai and (possibly) BMW would not. The loophole was revealed in discussion of a Senate bill designed to overturn the EPA's decision not to allow California to set its own emissions standards. GM spokesmouth Mark Kammer was unimpressed. "There's a lot of cherry-picking opportunities for a [foreign] manufacturer." The United Auto Workers' Legislative Director Alan Reuther also spoke on behalf of the his members' employers and… the planet. The loophole "undercuts the effort to reduce CO2 emissions and improve fuel economy. And it gives a major competitive advance to newer entrants into the auto market." CARB rules indicate that the exemption sales limit could drop to 4k units per year after 2016, but the proviso is not legally binding. At least not yet. 

Automotive News (sub) has a headline that the industry will likely latch onto as it continues its PR campaign to beg for federal funds to offset coming increases in CAFE requirements. And there's little denying the Global Insight research that says that CAFE compliance will cost American automakers considerably more than their Japanese counterparts. The Detroit three can expect to pay some $30b bringing its fleet up to the 31mpg average mandated by 2015, while Japan's big three will pay only about $14.85b to meet the standards. That's less than GM alone is expected to pay, according to Global Insight. The "fast start" 2015 goal is blamed for much of the expense, as it allows little flexibility for product planning, mandating a short-term 25 percent jump in efficiency, to be followed by a total 40 percent improvement by 2020. But wait, that still doesn't explain why Japan's companies can expect to pay so much less for CAFE compliance than Detroit. Is currency manipulation saving the Nipponese bottom line? Secret manufacturing techniques? Did someone hire Godzilla's lobbying firm? Actually, the reason comes in the form of a single-sentence paragraph. "Japanese automakers won't be hit as hard because their fleets already are more fuel efficient." How is that fair?

The Wall Street Journal [sub] reports: "The world's premier energy monitor is preparing a sharp downward revision of its oil-supply forecast, a shift that reflects deepening pessimism over whether oil companies can keep abreast of booming demand." Previously, the International Energy Agency had forecast an ever-increasing supply to match ever-increasing demand. Oops. The U.S. Energy Department's own forecasting shop, the Energy Information Administration, has long adhered to the same demand-driven scenario. Now, both agencies have been caught with their analytical pants down. While some blame oil speculators for rapidly rising fuel costs, most economists and oil analysts point to increasing world-wide demand combined with the difficulties of finding new oil and oil suppliers unwillingness to spend the money to find more of the stuff. Speaking on CNBC's Squawk Box, Dr. Robert Hirsch, Management Information Services Senior Energy Advisor, fueled speculators' speculation. "The prices that we're paying at the pump today are, I think, going to be 'the good old days,' because others who watch this very closely forecast that we're going to be hitting $12 and $15 a gallon, and then, after that, when world oil production goes into decline, we're going to talk about rationing."

Who woulda thunk it? Due to their high gas mileage, old Geo Metros are sought-after cars. Laugh if you want, but "Marci Solomon is hoping she'll be the one laughing- all the way to the bank -when her Geo Metro saves her from skyrocketing gas prices," according to CNN. Solomon has a 100-mile commute to work and her Honda Element was getting 28MPG, causing her to fill up twice a week at a cost of almost $100. So she began searching for an alternative and initially "toyed with the idea of purchasing a Prius," until she "rediscovered" old Geo Metros for sale on eBay. She focused on a 1996 two-door, three-cylinder, which opened with a $200 bid, and eventually "won it" with her winning bid of $7,300! Her ‘96 Metro's "average of 40 miles per gallon approaches that of a new Toyota Prius," and "bests most current cars by a long shot." Solomon says "I used to be a car snob, and I used to be too vain to drive anything that doesn't shine; but now it's about, ‘do I want to eat, or do I want to make it to work?' I want to do both." Even though she paid "more than five times the Blue Book value of the car," Solomon figures it's "an investment in the future." "It was all about saving money," she says. Indeed: Solomon has acquired another Metro, is "considering flipping [it] on eBay for profit," and "has her eye on a third at a local car lot." You go girl!

Expectations for VW's 2009 "60mpg" TDI Jetta "Prius killer" ran high. And VW threw plenty of (diesel) fuel on the heated passions of oil burner fans. Press materials just a few weeks ago predicted EPA city mileage numbers "in the 40's" and highway mileage "as high as 60mpg." The EPA has released the numbers and they…suck. We're talking 29/40 for the DSG version; 30/40 for the stick. Combined mileage: 34 mpg. The Prius' 46mpg combined mileage is a whopping 35 percent higher. Diesel fuel is running 20 percent higher than unleaded. Annual fuel costs for the two (15k miles): Jetta TDI: $2010; Prius: $1,240. Don't say I didn't tell you so. But I'll repeat the key part: to comply with US emissions regs, diesels lose five percentage points off their efficiency advantage over gas engines. Throw in a global diesel fuel shortage, and its diesel RIP. No word yet on how much VW will charge for the TDI option.