Reading summary 3: Business
Petrol Prices Fuel Hunt for Alternatives
1. Fuel protests and threats of blockades are not the only
consequences of soaring petrol prices at the pumps. Consumers,
angry at paying more than £1 a litre for petrol, have started looking
around for cheaper alternative fuels, and European car manufacturers
have made a belated spurt to develop new engines based on hybrid
technology.
2. Companies, especially those from eco-conscious Germany, have
been falling over themselves at this week's Frankfurt motor show, the world's largest,
to announce alliances to develop the new technology. They are aware that they need
to catch up with Japanese carmakers, above all Toyota, which have taken a lead in
producing hybrid cars such as the Prius for their local market and the US, where,
post-Katrina, petrol costs $3 a gallon (44p a litre).
3. General Motors, DaimlerChrysler, and BMW have formed one such venture to
share research and development costs for engines that promise to cut consumption
by 10%-20% but match the performance of petrol-powered cars. Volkswagen and
Porsche have announced another this week, with the luxury sports-car firm
promising a hybrid for its Cayenne sports utility vehicle by 2009.
4. However, it is not just hybrids that are capturing the attention of the car firms and
consumers. Replica pumps at the show display unleaded petrol at €1.35 a litre (91p)
and liquid natural gas at €0.80. There are 700 service stations capable of providing
natural gas in Germany and the aim is to raise this to 1,000 by 2007. VW is using it
to power some of its admittedly niche models such as the Caddy van but hopes to
expand to include its core models.
5. Jean-Martin Folz, chief executive of PeugeotCitroën, sees a growing role for biofuels, which
help run most of Brazil's 20m cars. These are
powered by a mixture of 25% ethanol and 75%
petrol and, according to Johannes Lackmann,
president of the German renewables trade
association, biofuels are 20% cheaper for
consumers. Mr. Folz, whose company has a joint venture with Ford making it the
world's biggest diesel-engine producer, is also keen to promote the use of biodiesel,
partly as a way of cutting greenhouse gas emissions when combined with particle
filters. Peugeot is also working with the British engineering consultants Ricardo and
QinetiQ, the technology firm, on a new diesel-hybrid engine, which promises to be
even more fuel-efficient.
6. The project, sponsored by the British government, is to put a pilot engine into the
Citroën Berlingo van early next year and, according to Mr. Folz, then decide later in
2006 whether to embark on industrial development. "It all depends on performance
and costs," he says. These are the key issues for both proponents and critics of
hybrids and alternative fuels. The Swedish government has developed the most
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extensive range of fiscal advantages to encourage the use of hybrids and biofuels in
Europe, while hybrids are exempt from congestion-charging in London and other
cities.
7. John Fleming, president of Ford Europe, is sceptical that consumers will be
prepared to pay the extra costs of hybrids. "We know they are hugely expensive and
there are other technologies which, hopefully, will be lower cost and customers will
be prepared to pay for them," he said, citing flexi-fuels and micro-hybrids He added,
"Until we find a way of significantly reducing hybrid costs, it's difficult to see them in
smaller vehicles where they would double the price." Stefan Krause, finance director
of BMW, which is expanding hybrid research, estimates that at this stage, hybrids
would add €5,000-€6,000 to prices and, like Mr. Folz, believes that diesel is as fuelefficient and cleaner.
8. Japanese firms such as Toyota and Honda have rapidly expanded the use of
hybrids in their domestic and the US market where diesel accounts for only 1% of
the market, and refute arguments that hybrids are that much more expensive.
Toyota, which aims to sell a million hybrids a year by early in the next decade,
expects to double European sales of its luxury Lexus models with the technology in
2006 and of its Prius model this year.
9. "I have a fantastic dream that, including diesels,
every single engine will be hybrid," said Kazuo
Okamoto, head of research, at Toyota. "If we think of
the environmental impact of cars and growing emission
controls, it's the only way we can move forward." Mr.
Okamoto, who is also developing technology to
produce the collision-free car, insists that hybrids can
marry clean energy with high performance. Aides point
out that, with fiscal advantages and higher resale
values, the true extra cost of hybrids is closer to €1,000
a car. They say they can already operate in electric
mode but only at 40mph.
10. Hans Riedel, Porsche's head of sales and marketing, insists there is a greater
demand in Europe than even his officials estimate, even for SUVs in urban areas.
"There's dynamism in the market which goes way beyond the mere fact of rising fuel
prices since the New Orleans hurricane. The time is right for such a concept."
11. BMW's Mr. Krause says they could be a stage on the way to the hydrogen
economy in which fuel cells power cars as fossil fuels run out within 50 years. But
Dieter Zetsche, new chief of DaimlerChrysler and head of Mercedes, believes petrol
prices will drop again and the combustion engine will live on. "We're convinced
there's no silver bullet. You cannot just focus on one solution or alternative fuel. The
solution will include all of those we know now, including hybrids, and more to come."
Consumers searching for cheaper, cleaner fuels will clearly be faced with an
increasingly bewildering choice.
Gow, David. "Petrol Prices Fuel Hunt for Alternatives." The Guardian. 15 Sept. 2005.
Words: 960 Flesh Kincaid: 12.0 Readability: 38.8
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