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Cars with better gas mileage drive up the cost of fuel!


Guest Kyle Hershey

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Guest Kyle Hershey

I have noticed that people are buying gas sipping cars. I was wondering If they understand that they are responsible for driving the cost of fuel up. It's supply and demand, If we use less gas, the oil companies will, and are offseting their losses by raising fuel costs! No matter what we do they will always profit, and we will always pay out whatever they want.

 

I don't deny the fact that a gas sipping car is good for the environment, I just think it is really bad for the economy.

 

Anyone wish to share their thoughts? Is there really a viable alternative for gasoline/diesel? Unfortunately, we can count out electric vehicles because they will not make any money for the automotive industry, or the oil companies, and they do drive the economy.

 

So I guess the question is; Is there a viable economic, and environmental alternative for oil?

 

I dont want this to turn into a debate, I was hoping to solicit this topic as a "think tank" session only.

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Guest Kyle Hershey

Thank you Justin!

 

I like the Alge bio-diesel idea. I first read about that in National Geographic. The only dilema is, how to we take on the oil companies with this idea? They have all the power, as far as the economy goes.

 

I'm thinking that the big electricity producers, will need to expand into this arena. They would have two means of production if they did, and could break into the largest energy market in the world if they produced both electricity and bio-diesel. That may give them the power to finally shut down the big bad crude oil companies.

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Oil companies? I'm not thinking they are in the equation at all.

It's been proven that Biodiesel works, the biggest problem has been attaining a reliable supply of biological matter for the conversion process.

I'm thinking this algae may be the answer. I won't replace regular gasoline, but it sure will make a big difference for Truckers, or anyone/anything that relies on diesel at current. There are a lot of independent truckers really hurting right now. They cannot afford to fill up the tanks to keep on truckin'. Real sad state of affairs. All that contributes to the rising cost of, well, everything.

This Algae idea has massive possibilities.

Power stations, autos, trains, you name it. Might even be cheap enough to run a oil forge on, once the technology gears up.

 

~ Justin

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Guest Kyle Hershey

You can't deny that the oil companies are in the equation. I'm not sure what you mean. Oil costs $140 a barrel today and we are stuck, we have to buy the oil to go on with our daily lives. They are the richest industry in the world.

 

What I am asking is, is it possible to use a good idea like this to fight the deepest pockets in the world? Bio diesel is a good idea, But is it truly a viable resource when money rules? How would you implement this idea in the face of economic adversity?

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Oil companies? I'm not thinking they are in the equation at all.

 

There are a few people who died sudden and questionable deaths over petroleum alternatives. Stanley Meyer for example (google him...smart/interesting guy). Plenty of others have been paid and/or threatened to shut up. Those guys aren't going to let all that money and power just slip away.

 

I've been playing with electrolysis of water to produce hydrogen on demand to SUPPLEMENT gasoline. Lot's of people are doing it successfully. I have one that works, but I want to get higher production.

 

Edited to add:

I've seen plans to burn water in a carburated engine with a plasma spark. A couple of people claim that they are doing it, but also claimed that they and their families have been threatened...hard to say for sure. As soon as I can get an engine, I'm going to experiment with it.

Edited by jkv
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I don't know if there is a real alternative to oil ! the reasons are many . If you were to take away all of the products produced from petro chemical s there would not be much left . I think however that, we may find an alternative to gasoline for your vehicle But, it would be very hard to replace the other products .Which are in the thousands . I could name a few but, I am sure everyone knows what they are. I think the key is to develop all our resources to benefit everyone . As far as oil goes , you don't see the chinese setting on their behinds while we argue which is the best way to go . They are driilling oil 100 miles from florida . a joint venture with the cubans .The real answer may be very elusive and political.???? ............. Bubba -san

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http://www.recoveredenergy.com/

 

These plants generate an excess of electricity, and hydrogen/fuel gasses.

 

I think they are self maintaining/powering, eliminate our land fills, provide an excess of electricity, are nearly 100% clean, and can provide hydrogen and other fuels depending on how they treat the bi-products.

 

If we could run all of the countrys power on these, and shy away from useing non-renewable fuels, we would be set to go.

 

Mike Lambiase

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Coal is the answer...... oh yes.. that lovely black substance can do alot... ;):D heard we have big reserves of it...

 

so wonderfully smokey ... and smells great ! time to throw another coffee can of green on the fire...hahahaha ;)

 

 

Greg

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I have noticed that people are buying gas sipping cars. I was wondering If they understand that they are responsible for driving the cost of fuel up. It's supply and demand, If we use less gas, the oil companies will, and are offseting their losses by raising fuel costs!

 

Your logic is not correct. Oil is a commodity. If the supply goes up, oil companies with tanks full because people buy less, prices go down. Prices go up because things are scarce. They go down when things are plentiful. That's why coal is cheap. There is a lot of it and people haven't been using it because it's dirty.

 

And by the way, what Oil Company losses are you talking about? Seems like they are making record profits recently. Where are the losses?

 

This equation is not as simple as you've laid it out.

Edited by Mike Blue
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It's supply and demand, If we use less gas, the oil companies will, and are offseting their losses by raising fuel costs!

 

The law of supply an demand is the opposite of that. As demand drops, so should the price.

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:blink: Edited by J.Arthur Loose
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I think things are relative. There is very little outrage if a knife maker turns ten dollars worth of steel and wood into a three hundred dollar knife. Of course, it's not that simple. I think the US of A needs to support a good percentage of it's own energy needs so that world market is forced to be competetive. To this point, I'm leary of many biodiesel, hydrogen, fuel cell, etc. options. Very promising, but many folks ingnore the energy that's needed to manufacture or process those systems. It'd also be nice if policy makers would impose the same environmental and safety regs on fossil fuel export nations. I wonder if congress can shut down middle east oil because of damage to the great deserts and to improve workers rights?

 

Take care, Craig

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Guest Kyle Hershey
Your logic is not correct. Oil is a commodity. If the supply goes up, oil companies with tanks full because people buy less, prices go down. Prices go up because things are scarce. They go down when things are plentiful. That's why coal is cheap. There is a lot of it and people haven't been using it because it's dirty.

 

And by the way, what Oil Company losses are you talking about? Seems like they are making record profits recently. Where are the losses?

 

This equation is not as simple as you've laid it out.

 

That's my point, they offset thier losses by raising the cost of fuel.

 

 

The law of supply an demand is the opposite of that. As demand drops, so should the price.

 

We don't have a bearing on demand, we are at the mercy of supply. The model is price driven, not demand driven at this point. So we will, and do pay more if we use less.

 

(Edit: assuming all swords are created equal)

Let's use swords as an example; Everyone doesn't need a sword, therefore swords are expensive. If everyone suddenly needed a sword then the price for a sword would drop. Right? The same applies to oil.

 

"The law of supply states that quantity supplied is related to price. It is often depicted as directly proportional to price: the higher the price of the product, the more the producer will supply, ceteris paribus ("all other things being equal"). The law of demand is normally depicted as an inverse relation of quantity demanded and price: the higher the price of the product, the less the consumer will demand, ceteris paribus. The respective relations are called the supply curve and demand curve, or supply and demand for short."

Edited by Kyle Hershey
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"Everyone doesn't need a sword, therefore swords are expensive. If everyone suddenly needed a sword then the price for a sword would drop. Right?"

 

Well not really, the reason the price would drop is because China would be doing what it does best, making cheap knockoffs just to meet the supply, which would cost hardly anything, but be pieces of junk.

 

The good swords would still be fairly high.

 

It's funny though...the "cheap" gas with ethanol added, actually costs more, than the higher quality gasoline only fuel.

I did some figuring and with ethanol it actually costs me a cent more per mile. So I've been buying from stations with no ethanol.

 

What sucks is they talk about all these alternative, like one night on the news...Natural Gas only 0.98$ per gallon. Nice right? Well to get your car converted costs about 12,000$...ugh...then where do you get the fuel?

 

Same deal witht he hydrogen cars that Honda (I thin it was) is releasing over in California...only releasing 200, but they can only put them in areas that have stations to get the fuel.

 

You can get plans on the net to build your own electric car, but again it's fairly expensive.

 

I'm wishing there were alternative fuels would could burn right in our unleaded gasoline engines.

Just dump it in and go.

 

What's really mind boggling is when you sit and actually think about how many gallons of Gasoline we use each day.

It's a lot!

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Guest Kyle Hershey

I want to thank everyone for participating in this topic. I have already learned quite a bit from the thoughts posted.

 

I don't want to get off subject. The supply and demand model will always favor the capatalist.

 

How do we change the model? Can we change the model by introducing alternative energy sources, or are we to surrender to any capatalist venture. That is a scary thought. I'm already 99% sure that the "American Dream" left us in the late sixties. The average person would need to live 150 years to attain the "American dream" at the current rate of economy.

 

Some say that the government is "asleep at the wheel". I'm sure that we are the ones sleeping behind the wheel. How can we wake up, and take charge of the situation? Barring civil war, of course. That is the real question.

 

I'm looking for more ideas. Debate prolongs the the situation.

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As to the oil companies not being in the equation, I meant that I believe them uninterested in researching alternative sources of oil, organic or otherwise.

Seems silly to me, TBH, since they have such large pocketbooks, why not buy up a bit of cheap land and work on perfecting the technology.

 

On another note, we know we are sitting on the second largest oil reserve in the world, sitting under the montana area. It's locked up in shale, but estimates were that it would become economically feasable when oil hit $80 per barrel.

We hit that a while ago, why aren't the oil companies clamoring to get that going? It's $143.57 per barrel at close today.

 

My thought? The oil companies are perfectly happy as they are. Profits are still rising for them. Nothing will change unless they are forced to, kicking and screaming all the way.

 

My 2c.

 

~ Justin

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Not to nitpick, but while the interest in alternative energy sources is great, your premise that more efficient cars drive up the price of gasoline is simply wrong, what drives up the price of gasoline is the rapidely increasing demand for oil by developping countries such as China and India.

 

The demand is increasing faster than the the increase in supply thus the price of oil increases. Buying cars with good fuel economy will not drive up the price of gasoline, it will likely decrease it or have no effect at all.

 

On an other note, severale gas producing countries don't want the price of oil to reach too high a price because the alternative energy sources, that don't make economical sense when oil is relatively cheap, become viable alternatives.

 

Geneticaly enginereed micro-organisms will most likely provide the only viable solution, that is if a method of capturing CO2 efficiently can be devised.

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My Two Cents;

 

Let me preface my comments with this fact; I am a financial advisor. With that in mind, I would like to say that there are a number of issues driving up the costs of fuel/oil. I think the big oil companies are being made out to be the bad guys with all the talk of their windfall profits. There is a large amount of skewing of fact in these statistics. Oil companies are making more money than they ever had, this is beyond a shadow of a doubt FACT. But these dollars that they are making are not exactly profits. So what do I mean by this? Well their profit margin has been steadily decreasing. Would it surprise anyone to know that a company like say, Microsoft, has a profit margin nearly three times that of any of the big oil companies. Again, what does this mean? This means that for every dollar that big oil or Microsoft puts out with the hopes of making a profit, Microsoft gets back 3 times the dollars that big oil does. So if this is true, and it is, why is this the case? It is not what some might think... no it is not just environmental protections that restrict their profit margins. It is simply Supply and Demand at work in a global economy. What is causing shrinking oil profit margins and rising oil costs is, in part, due to the fact that some new players have come to the table, namely, China. Lets say that there is an oil rich lease up for bids and all of the big oil companies put in 5 billion dollar bids to exploit the oil in the ground. This is a figure that had been considered a great bid on an oil lease of this size. But then China comes in and puts a bid for 20 billion dollars. Who do you think is going to get the lease? Don't believe this is the case? Ask any of the big oil companies' executives who their competitors are. The XOM people will not say BP, the CVX people will not say BP or XOM, and vice versa. They will list nations as their largest competitors. This is the chief reason that oil should be about $80/barrel.

 

So why is oil upwards of $140/barrel? Now we are going to talk about the real greedy folks called the speculators. In the past, these were people whose companies wanted to secure an average oil price for their company which uses a large amount of oil, eg airline companies. They would be able to protect themselves from the short term fluctuations in the price of oil by going out and buying a piece of paper that would allow them to buy large sums of oil at a fixed price sometime in the future. Again, some other, new players have come to the table and are capitalizing on the fluctuations in oil prices. Someone like say, George Soros, whose hedge fund would buy these oil futures contracts, never intending to actually use the oil, and when there was bad news from Katrina, the war, Opec, etc. they sell their paper off for huge profits. And in doing so they artificially drive the price of oil further up.

 

I think that we should all be cautious of the statistics that get thrown around. Statistics are like bikinis... what they show can sometimes be alluring and revealing but what they hide is crucial. On a final note, I really dislike the argument that big oil should be investing in technologies for alternative fuel sources. Think about this... what other business is there in our great nation, have some of the populace and some in the government outraged that they have not invested in technologies to put their current business model out of business? Lets look at this from the perspective of a bladesmith. Steel prices have gone up, this is a fact. Who in our government has told any of us to start making ceramic knives? The answer, no one. Bladesmiths just raise their prices to compensate for the increase in the price of steel.

 

In the words of Earl Pitts, "Wake up America."

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Edit to note: not addressing the above comments, directed more toward the orig poster. I still don't think it's just supply/demand at work because it's too simple, there's more going on. Allen's commentary on speculation is spot-on. Someone at a commodities trading desk in June said "I bet oil will be over $140 a barrel by 4th of July weekend" and it shot up $3 THAT DAY!.... /edit

 

 

The economics of the situation are a lot more complicated than supply and demand. OPEC nations are doing what they did in the late 70s, they're withholding production. That changes the equation. S/D requires that all resources be made available all the time and S/D only applies to the short term. In the long term production and demand can vary quite a lot for most products. Once you get into a situation where people/companies provide a product and can then agree on the quantities that each will provide and at what cost, you have Nash equilibriums (each side only wins when they maximize production in an attempt to get the upper hand on the other guy) and cartels. It's amazing that every fiscal quarter the heads of the major oil companies are brought before congress to explain their ever-increasing profits and their answer is "we need the money to support our infrastructure..." Yet there hasn't been a new refinery built in the US in how long?

Matikins hit the nail on the head. US consumption has little to do with the current price. Its that we've helped bring China and India into the modern age (and the resource consumption that is required to live like an American in 2008) coupled with middle east production.

(I won't comment on conspiracy theorists who think the current administration has "fixed" oil prices in an effort to get ANWR opened to drilling)

 

With the higher MPG cars the question that consumers don't ask is, is it better to stick with my 22MPG car that I own outright or to finance a hybrid at 40MPG? Recently I've read that efficiency is more meaningful in gallons per mile (GPM) as it's more reflective of what consumers will see at the pump and can be more easily translated into dollars.

 

Biofuels are only a viable alternative IF they don't deplete another resource: i.e. corn. That same corn can go to feed a cow. Have you seen the price of beef and chicken lately? That increase is not all due to the cost of transportation, it's more expensive to feed those heifers, too. If an algae based fuel can become viable you can bet the "energy" companies will jump on it. But, like all good companies, they'll wait for universities and inventors to do the hard work- making it viable. Then they'll buy the rights to use the technology or possibly sue the real inventor under the guise that the development of the fuel actually infringes on patents that the oil company already owned so the inventor/university had no right to make fuel in the first place. The price of biofuels is actually higher than dino-juice, in many places in western Washington it's $1 per gallon more for biofuel and you have to drive to a boutique shop to get it.

We would need a non-food source for the oil AND we would need major automotive industry involvement to start producing diesel engines. You're partly right that an increased demand for biofuels will increase the supply of biofuels and then the price -might- come down. But they'd have to develop methods that make biofuel production super cheap so they can "pass the savings on to the consumer." At the same time, if people are willing to pay $5.50 a gallon for biofuel, then why would the company reduce the price? No reason.

 

J Silva- those same shale oil fields in Montana extend into North Dakota. This week I've seen three articles about how ND is making one millionaire a DAY from people selling the rights to the oil that's underneath their fields. National Geographic did a story earlier this year about large swaths of ND becoming ghost towns because nothing will grow there and they can't attract industries... oil may help revitalize parts of their economy. Montana at least has grain production, so I'm sure MT land is far more expensive but I haven't done a price comparison, so please forgive the conjecture.

 

How do we change the situation? Civil War :) I say that half jokingly. Without a forceful overthrow of the gov't it will take a couple generations of voters saying "we don't want special interests to dictate our national policy." But that requires that we have a populace that has a voter turnout similar to that of Iraq AND that these people vote with their heads instead of picking an elephant or donkey. Should we wake up and vote out local, county, state and federal bureaucrats who don't support policies that benefit the majority of Americans, then we'll affect a change... otherwise we continue to get more of the same.

 

For what it's worth, the question of what to do about oil will seem quaint by the end of the year. All of the major auto manufacturers took a huge hit in June of this year. GM is considering bankruptcy. The World Bank has a scheduled review of the US treasury in 2009 and it's pretty much assumed that we're not going to do very well. The aforementioned OPEC countries (especially Iran and Saudi) are calling for a new standard for oil- a consortium of international currencies to determine the value. That's effectively a no-confidence vote in the US$. Also recall that the USD hasn't been back by gold in several decades- the Euro was developed in part to return to the gold standard to give that currency more international credibility.

 

I'm off my soapbox. Interesting discussion that's taking place all over right now. I'm hopeful that we'll figure something out sooner rather than later.

Edited by Kristopher Skelton
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Guest Kyle Hershey

I'm glad that some of you can read between the lines. There is alot going on in the American economy. Much more than meets the eye. There is a whole range of ideas, speculation, and international turmoil that is driving the economy.

 

The inital idea that I was posting is that no matter what the populace does, we are at the mercy of the capatalists. Reguardles of whether they produce bio-fuel, refined oil, ehthanol etc...

 

I stand by my opinion that fuel efficiency will raise the price of fuel. Let's say everyone goes out and buys a prius, assuming there are enough for everyone. All of the sudden, the oil companies/speculators are losing money, what will they do? Jack the price into orbit! Oil does not degrade, it can be stored indefinately, in fact as some of you pointed out, reserves are just left in the ground. Now they can juice us for the last reserves over a longer period of time (demand has decreased) at ever higher prices. Were talking $30...$50 dollars a gallon, maybe even more. Did the prius save us?! Nope.

 

Is there any reason for them to EVER lower the price of oil. Nope. We are oil addicts, I know I am one! We need our oily fix, every day all day, for the rest of our lives. We will "shoot up" our cars with this oily dope, sold by the unscrupulous oil dealers like wacked out lemmings while they eat fillet mignon. And I believe that there is nothing we can do about it.

 

(Edit: BTW "simple economics", their in lies the joke :D )

 

Thanks again for all the interest, and participation in this topic. Keep the good stuff coming!!

Edited by Kyle Hershey
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Guest Kyle Hershey

I should have given a little back ground on the way I see things involving oil.

 

I like consuming oil! I like my 300HP Dodge truck, that will pull a trailer like a raped ape up a 7% grade. I like big comfortable vehicles that can seat 6 to 8 passengers. I LOVE big 500 CI old school cadilacs will send glorious clouds of smoke from the tires with a light tap on the gas pedal. I like driving a vehicle that can roll end over end 6 times and I can walk away.

 

Things I don't like are; cars with tires smaller than my lawn tractor, and a steering wheel that feels like it will come off if I sneeze hard! I don't like cars that are so small that an accident would surely be close to fatal, or would involve cutting me out with the jaws of life for two hours. I cant stand piddly little cars that do absolutely nothing when you floor the pedal, but ping and grunt like it has hemoroids.

 

I don't care about the environment. Why? Because I don't believe that we could hurt it if we tried. Sure we can screw up our niche, and eventually wipe our selves off the earth. The cockroaches will just go about their business as though we never existed. And so will everything that is left.

 

How do you feel about these things? I'm not saying that there anything is wrong with what you like. I am just a diehard American, who still believes that we should be allowed to have our own opinions, and do what makes us happy! A toyota prius wont do it for me! :lol:

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Maybe we could elect folks that could fix pump prices at $3.50 a gallon, and while they're at it they could set custom knife prices. I think capitalism is red, white and blue. If it's ok for the small person to establish their market and set their prices, why not big bad business. The prius logic still doesn't quite work with me, but hey, I'll see your Dodge and raise you 60 hp with my Chevy. I really like my pickup, but I admit I don't like filling it up. I'm not real fond of a lot of current politics, but I hope we can slow some of the creative court system activists.

 

Take care, Craig

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Guest Kyle Hershey

Muahahaha!! The more horsepower the better!! I should have got a Hemi! :lol:.

 

I love my truck too, and if it costs me $150 dollars or more to fill it up, so be it! That is a small price to pay to be a happy american!!

 

Bladesmiths are not in the same catagory as a capitalist. We are honest tradesman, who simply make an honest knife, for honest pay! That makes us better than any capitalist. I sleep really well, every night.

 

Thanks, Craig!

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While I agree that the hybrids won't save the US economy or environment, it's for different reasons. Primarily it's the battery system that worries me- that's hundreds of pounds of toxic waste in need of disposing once they stop holding a charge and are useless.

 

Which afternoon radio show/blog are you getting your information from that indicates greater fuel efficiency will lead to higher fuel prices? Maybe my question is, who cares? If gas at $5 a gallon gets me 25 MPG but at 60MPG I pay $7 a gallon, I'm still getting the better deal with the more efficient vehicle.

 

I'll disagree completely that we cannot or do not make an impact on our environment. Look at heat maps of major urban centers, especially Atlanta, and you'll see that concrete does behave differently than vegetation. You'll recall that vegetation, especially trees, absorb carbon dioxide and exhale oxygen (for the bulk of their respiration cycle, I seem to recall certain conditions in which older trees might release a small amount of CO2 but I only took the minimum requirements for biology). I see your point -you're trying to say that it's arrogant to think that we'll destroy the planet. But that's NOT the argument. It never has been unless you're making 10 second sound bites for your radio show. The point has always been that we need to be aware of how our actions may make this planet uninhabitable for human life. Save the whales was a scam to try to get people to think about saving the humans. My only issue with the environmental movement was that they started by showing the impact of environmental damage to animals but didn't drive home the message that we live here, too. Sewage or other industrial wastes (my favorite- medical waste) in the water? Bad for fish, but it's also bad for the people who rely on that water for drinking and bathing. Pesticide levels too high? Bad for migrating birds and bad for your kid when she eats that apple. We don't know what this stuff does to people when it is used in concentrations greater (and in many cases many times greater) than recommended.

 

To switch to automobiles, I don't believe that we can't have efficiency AND power. For example, my 2002 Lancer gets 22/27MPG per the EPA. Once I finished the modifications for racing, she gets 26.5 on average in mixed driving and nearly 36 on the highway. Plus she's still emissions legal in WA. Based on that, I can't see any reason that we cannot have a car with more power and better fuel efficiency.

That said, I'm willing to bet you've not been in a modern small car, much less driven one, much less driven one competitively. Those small tires make for faster lap times on courses with a lot of turns (i.e. autocross). Put your butt in a Mini Cooper S (37MPG highway) this weekend and see what it can do. I'll bet you'll be trailering that little guy to your local race track in no time :)

Trucks have their place, I'm looking for one myself and it will be used for a few specific tasks. But I don't believe they should be used as commuter vehicles unless you're also hauling a bed full of construction equipment. That's my opinion, since we're sharing ;)

 

As an American, a believer in the Constitution and Bill of Rights, an auto racer, blacksmith, brewer and card carrying NRA member, I take offense to your implication that in order to be a "proper" American one must have the attitude of a crass consumer. We have a responsibility to future generations to ensure that THEY have a place to live. Perhaps ironically, I don't have children (nor do I want that responsibility) yet I'm just as concerned for your grandkids as I would be for my own. I'm genuinely concerned about our economy, its potential collapse, our ability to sustain food supplies, our current energy crisis... maybe the difference between you and me is that I don't sleep well most nights...

Edited by Kristopher Skelton
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