Will Plummeting Gas Prices Hurt the Push for Alternative Fuels?
Some Say Current Fuel Market Reminiscent of 1980s
With such uncertainty, federal loan guarantees will be critical, a spokesman for a major cellulosic ethanol producer wrote in response to a BIO survey.
"With the collapse of the credit markets, access to capital has become and will likely remain much more difficult to access," the spokesman wrote in an e-mail shared by Mr. Winters. "The high price of oil has been a trigger for the current melt-down that we are facing by sucking a lot of oxygen out of the US economy."
Gas-Sipping Cars May Be Vulnerable
Fuel-efficient vehicle technology also looks acutely vulnerable to falling oil prices. Cash-strapped auto giant General Motors last week announced it was suspending new product development efforts, including several hybrid models.
But GM will continue developing the plug-in hybrid Chevrolet Volt, which could go 40 miles on one charge. Energy security experts say such capability is vital since it would replace imported oil with power from the electrical grid derived from coal, natural gas, wind, and other domestically derived sources.
But will GM stay with the Volt if oil prices drop further? Will consumers pay $40,000 for it if gas is $2.50 per gallon?
"With the economy in the dumps and gas prices coming down, people right now are thinking 'I'll hold onto my car and drive it less … rather than moving to a more fuel-efficient car,' " says Bradley Berman, editor and founder of Hybridcars.com, a website that focuses on hybrid vehicle trends.
For the US auto industry, recession may be a greater threat than cheap gas.
"Interest in hybrids is not anymore at the fever pitch with long lines, but it remains solid," Mr. Berman says. "A lot of people still want higher fuel economy just to save money."
The big question, he says, is what happens when the economy strengthens and people start buying cars again. Will they buy fuel-efficient vehicles – and will Detroit offer them in volume?
"There's going to be plenty of demand to absorb the initial ability of car companies to produce these new fuel-efficient vehicles," says Reid Detchon, executive director of the Energy Future Coalition, a coalition of energy security experts and environmental groups who favor a shift to 25 percent renewable energy by 2025.
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