Pity poor Ford. They were just turning things around, when high gas prices started decimating their highly profitable truck business. Now they're having to pare their white collar salary budget by 15% as their expected return to profitability in 2009 evaporates.
I was talking to a cab driver the other day about gas prices; much of the DC fleet is made by Ford. These cars get, according to the driver, only 10-12 miles a gallon, presumably because they spend so much time in stop-and-start traffic. The cab drivers are extremely worried about gas prices. At what price point did that worry kick in, I asked. He said $3.50--that was when it really started hurting. The problem is that with prices so high, it's hard even to make up the lost profit by driving more.
The airlines are suffering too, of course; Continental just became the latest to announce massive cutbacks. The next hit will be to parts and airframe makers, followed by their suppliers . . .
Supply shocks are not happy occasions. But if the seventies are any guide, at least this one will leave our economy less driven by oil than it was before.
The fact that GM is closing its truck plants, trying to sell Hummer, and is convinced that high prices are here to stay... seems like a good indication that oil prices are about to collapse.
Always a day late and a dollar short and all that :-)
The fact that GM is closing its truck plants, trying to sell Hummer, and is convinced that high prices are here to stay... seems like a good indication that oil prices are about to collapse.
But even if they do, I doubt that would really help the pickup/SUV market that much -- prices have been high long enough that people would expect any price crash to be temporary. At this point, I think it would take several years of sustained low prices for people to be interested again in gas guzzlers.
a questions and some observations
1. Why don't the airlines just raise ticket prices? Pass the costs to the consumers. Sure fewer people will fly, but not much fewer as most passengers don't have much of a choice. And its better to have fewer passengers flying on fewer planes than to fly more people at a loss.
2. Cabs are the one instance where hybrids actually make some economic sense. They drive tons of miles, and all in stop and go traffic, where the hybrid advantage is strongest. Aside from hybrid its not really fair to fault ford for the cabs poor gas mileage, as it would be similarly poor even if all the cabs were civics. The stop and go cycle is really inefficient with an ICE engine. The engine spends too much time idling, and even when the power is used, it is all spent in low gears, where more fuel is consumed to travel less distance.
Hydraulic hybrids would be good in this application, as they are cheaper than electric systems, a proven technology that doesn't depend on some new breakthrough, and much lighter. I cant seem to find a good reason why they aren't used in more application than just garbage trucks, and so far they just dont seem as "cool" and the profit margins are slimmer since they are not so exotic.
I wonder about those cabs in NYC that were switching over to hybrids. Do you think that the market will reward those who drive hybrid cabs? I don't that much about the taxicab industry, but it seems that they face an interesting intersection of demands: large cab to accomodate large fares, and high fuel efficiency to reduce overhead costs.
"large cab to accomodate large fares"
DO you mean number of people? Most oft he cab rides that I have taken have been one or two people so a hybrid was fine. It is true that large groups of club hoppers might have to rent two cabs but that actually would be an advantage for the cab company (more profit).
Since a cab costs are regulated, you can't charge differential prices for the large cab so companies are better off (overall) with the hybrids and relatively few people will be put out.
At least that would be my take.
Could the poor gas mileage that cabbies get have anything to do with their style of driving? When's the last time you saw a cab ease to a start at a green light?
Are you willing to accept an ever declining lifestyle? Choose:
FOREIGN WARS OR DOMESTIC OIL
A rapidly devaluing dollar, aggravated by the cost of the War in Iraq, contributes to recent rapid increases in the price of gas. And if the trillion plus dollars the US spent fighting that war had been invested in a Manhattan like project to produce oil from known reserves in the Gulf of Mexico, the Continental shelf and synthetic diesel/gas from America’s abundant coal fields, gas would be $2 a gallon or less.
And reducing trade deficits keeps jobs in America. Every billion of trade deficit costs 13,000 jobs. $400 billion for oil last year: do the math.
Plus declaring American energy independence is the neighborly thing to do. It would place downward pressure on world oil prices by making more OPEC oil available for the UK, France, Japan, Turkey, etc.
Harness your anger at the pump. Call Congress and demand domestic production in this decade. Raise your voice or the oil companies and politicians will assume you are ready to pay even more.
http://www.house.gov/house/MemberWWW_by_State.shtml
Why can't cab fares be tied to the price of gas?
<sarcasm>...or maybe the cabs could start charging if you have a bag</sarcasm>
freddiemac - FYI - a Prius has 41.9" or rear seat leg room. A Crown Vic has 41.6".
They talked about cab drivers switching from Ford Crown Victorias to hybrids on the radio here in San Francisco recently. I’m not sure how the cab companies are structured in other cities, but here apparently the cabs are owned by the cab companies and then leased to the drivers. The cab companies receive the same amount of money per cab per month regardless of how much money the drivers are taking in. So the incentive to switch cars isn’t being felt by the car owners. Also, the cab companies own tons of replacement parts for their fleets of Crown Vics, which would probably have to be sold off before completely switching to hybrids.
"1. Why don't the airlines just raise ticket prices? Pass the costs to the consumers. Sure fewer people will fly, but not much fewer as most passengers don't have much of a choice. "
They calculate the cost of flying their least feul efficient jets on their least profitable routes. If there is no market price that can generate a profit, they eliminate the route and idle the jets.
It makes sense that in stable times, they have some capacity that is operating in such a way that it can barely turn a profit. When costs go up, that capacity is idled, or eliminated if cost increases are a long term phenomenon.
Cabs are actual ideal vehicles for hybrids, as they maximize the "hybrid advantage"-- lots of braking and idling. (Or not idling, actually.) I understand what people are saying about the ownership of the cab fleets not having much incentive to lower fuel usage, but I have to think eventually there will be a trickle-up effect. Particularly when gas hits $6.50 next year.
By the way, I would like to store this post away in everyone's memory banks for future arguments about unions, because it seems that-- despite what I'm constantly told around here-- Ford itself thinks that cutting white-collar sector jobs can also be a way to reduce costs.
Airframe manufacturers might do okay. A big problem for many (especially domestic US) airlines is that they have fleets of old, inefficient jets. Replace all the DC-9 and derivatives planes with new 737 and A-320 family planes and you would substantially reduce fuel costs. Same thing with old v. new wide body planes.
[@ken]
Even in the best of conditions airlines require high load factors to turn a profit. High load factors have as a prerequisite high demand.
So, what creates demand for flying? ...Cost competitiveness, comparative comfort, and speed of travel.
The Feds have singlehandedly whittled away a broad regime of trips that make flying faster than driving.
The need for high passenger counts has long since obviated advantages of passenger comfort (except, of course, the fact that Somebody Else is always flying the plane)... and the chain restaurants obliterated the parity in meal quality long before airlines stopped serving meals on flights.
Which means that cost is the only advantage air travel has left. Remove that by passing on increased fuel costs entirely to customers, and you've just demolished any hope airlines have to turn a profit.
Somehow, I see America's long distance travel market rocketing forward to the past.
How big is the trunkspace on a Prius? How expensive are the repairs? I'm not sure the comparison is apples to apples. Now if there were a crown vic hybrid . . .
Anybody know what happens when you try to drive a Prius 300,000 miles? What about all of the minor accidents taxis get in? Crown Vics are particularly rugged cars, and are probably pretty cheap to buy used from police departments.
But hybrid technology does indeed seem perfect for taxis. Perhaps current gas prices and potential environmental initiatives will cause that kind of shift. I could see San Francisco or Berkeley doing something like mandating hybrid technology in their taxi fleets.
Toyota claims you never have to replace the battery, and apparently there are taxi fleets in Canada with 200,000 plus miles on their Prius's, so that's an interesting data point.
As I understand it:
"Vancouver's Andrew Grant says his 2004 Prius paid for itself in less than 24 months through savings on parts, service, labour and fuel.
Grant and his partner keep their Yellow Cab on the road for 22 to 24 hours a day, and average 160,000 kilometres a year"
"His current Prius recently surpassed 400,000 kilometres with no hybrid component failures."
"How big is the trunkspace on a Prius? How expensive are the repairs? I'm not sure the comparison is apples to apples. Now if there were a crown vic hybrid . . . "
The repairs are the issue - a Prius is more than adequate size-wise for the vast majority of cab fares. But cabs take an unbelievable beating - there's a reason most of them (and most police cars) are Crown Vics or one of the few other reasonably priced RWD vehicles available. I'm not sure what the deal is with the story about the Vancover Prius, but if you saw vehicles like that in common use in cab fleets, I'm petty sure that record would be an outlier. However, the reader who commented that the hybrid drivetrain is ideal for cab use is right. I would guess we'll see RWD cab hybrids eventually, or you might see cab companies start moving to hybrids like the Chevy Tahoe.
As to why cabbies and cab firms like large cars - they can take a beating and win most small accidents where a civic or prius wouldn't; they can take families or 2 business travelers to the airport, a great route that all cabbies want, whether or not they get all that many airport fares; they can take 4-5 people, great for long post bar routes where individual passengers pay little but the cabby gets lots of $, small cabs and you get an effective 2-2.5x price increase, diminishing that market.
The important thing isn't the # of long haul high capacity trips, but what % of profit and revenue that represents to cabs. It's like the people that whine about the number of single passenger trips in large cars/SUVs: the point is the ability to carry large #s of people and large amounts of goods at any time. That has a huge value, especially when buying a capital asset. Motor bikes and scooters are great to move 1 person around downtown, not so much when you need to get to a meeting in the rain, carry home food for more than 2 people for one night, bring home a new tv or chair, buy lumber...
The reason most cabs are Crown Vics is because most cop cars are. After a couple years of heavy use, governments auction their cop cars off and many (most?) are bought by cab companies. Besides the low cost and known defects (the cars are auctioned with important info. such as "needs transmission") cab companies usually have in-house mechanics who specialize and a wealth of extra parts from crashes and totalled cop cars bought for parts. Single model fleets make the most sense.
Also, many cab drivers are unknowns and turnover is high, so the companies don't want to put them in expensive cars which have a good chance of being destroyed quickly.
Hybrid tech may be the answer, but I would happily lease for an extra $15 a shift a Corolla taxi because its in-city mileage is massively better than that of a CV. Even driving in a wussy fashion in Seattle, I'm still spending a dollar to drive three miles in a CV.
Also, never believe a cab driver who's driving you and whining about his costs; he's exaggerating his way into a bigger tip.
The Feds have singlehandedly whittled away a broad regime of trips that make flying faster than driving.
I'm not sure what this is supposed to mean, but what the Feds did, correctly, was to deregulate the market. So air travel has become much cheaper, and you're no longer forced to pay a ridiculous amount of money for a piece of rubber chicken and a hot towel. Passengers who value that sort of thing can pay extra for a seat in premium economy, business or first class.
The Feds have singlehandedly whittled away a broad regime of trips that make flying faster than driving.
This means (for those who didn't get it) that adding a 2 hour wait to the start of every flight for "security" reasons means that there are now a lot of short haul flights where it is faster to drive.
The "lower maintenance" costs of Prius taxis depends on Toyota offering free or heavily subsidized maintenance on the Prius as it is a new product that they want to promote.
If every cab in the country was a Prius, this would soon vanish.
'The "lower maintenance" costs of Prius taxis depends on Toyota offering free or heavily subsidized maintenance on the Prius as it is a new product that they want to promote.
If every cab in the country was a Prius, this would soon vanish.'
But they would be replaced by economies of scale. If every taxi was a Prius, more mechanics would know how to fix them, and suppliers would have parts on hand - not to mention the intrinsic supply of used parts from totalled vehicles.
It is only the economy of scale and superior experience that make traditional vehicles cheaper. They are inherently more expensive to maintain since they put more stress on the drive train.