Gas high price time

With people taking a pounding at the gas pumps, interest in the country's future fuel policies and their economic and environmental impacts is quickly taking center stage.

Just as suddenly, the clean air crowd that had been pushing for tighter exhaust emissions standards has been thrust into the mainstream by a previously unconcerned motoring public that now sees firsthand how a fuel-efficient vehicle saves money at the filling station.

Democrats and others on the left are calling for higher vehicle fuel efficiency standards, while the Republican right favors increased domestic oil well drilling and production tax incentives.

There are others who contend the current pump rates don't look so bad when adjusted for inflation and compared to the past. In 1981, a gallon of gas would have set you back $3 in today's money--so stop complaining. At least you're not in Europe where petrol sells for up to $6 per gallon. They've had high gas prices for years.

As gas prices spiked in the United States this spring, just about every local media outlet ran stories extolling the virtues of hybrid cars and other alternatively fueled vehicles.

On the opposite side, pressure is building from the oil industry to open Alaska's Arctic National Wildlife Refuge for energy development.

In the short term, petroleum's peaking prices have hit the aftermarket with zooming fleet costs, delivery surcharges and higher prices for certain chemicals.

Yet wherever the gas pricing situation goes, the longer-term aftermarket outlook is that American motorists have no intention of putting the brakes on the time they spend on the road--nor is there a clamoring to abandon autos altogether in favor of bringing back the electric trolley.

To the contrary, sales have increased for larger vehicles including trucks, sport utility vehicles and luxury motor homes. As gas and diesel prices soared this spring, sales of Winnebago's newer diesel-powered models rose 127 percent.

And best of all for the aftermarket, even if the nation should ultimately embrace in a group-hug cars that can zip along on vegetable oil or water, these future vehicles will still need service and parts for maintenance, repairs and that all-important accessorizing that Americans love so much.

Crude observation

As June rolled into July, gas prices were on a slight downward trend. But the intricacies of the world oil market can change at any moment--meaning price spikes once again.

On a given June day, the national average gas price was hovering at $1.91 per gallon, according to the Fuel Gauge Report from the American Automobile Association (AAA). Last year's price was $1.48; a month ago, it topped $2.05.

There's a reason oil is often called black gold: Supply and demand economics are in play, and the U.S. drinks up a lot of petroleum in all its forms. Overseas mayhem plays a huge role as well.

"About half of the increase in gasoline prices can be attributed to the cost of crude oil," says Dave Costello, an economist with the U.S. Department of Energy's Energy Information Administration.

Fees and commissions eat up the other half, including hefty federal, state and local tax bites. Oil companies make a nice profit while your neighborhood gas station owners struggle with much tighter margins.

"Since mid-May, spot prices have decreased and they are making their way to the pump," Costello reports. "We expect the gasoline price to come down throughout the year at a gradual rate."

Come winter, Costello predicts that regular gas will be selling at a natural average of $1.79 per gallon.

However, this seemingly sweet-smelling apple cart can be upset in a hurry should there be a domestic pipeline failure or refinery problem,

plus terror strikes or political unrest in other countries can spike the cost.

The disturbing terrorist beheadings are adding yet another dimension, in that civilian Westerners operate much of the Middle East's oil equipment--and a mass exodus of fearful workers could create supply-pinching technological shortfalls.

"Crude oil and its price are such a hostage to overseas events," explains Geoff Sundstrom, a spokesperson in AAA's national office.

For reasons such as these, most aftermarket organizations do not take specific policy positions on major energy issues under debate in Washington, D.C. This is a battle fought among the big boys in a worldwide arena.

"We won't really sway anything," observes Alan Bostwick, vice president at the Parts Plus program group. "That will be determined behind closed doors."

Meanwhile, the motoring public shows few signs of downshifting their driving habits. "People aren't staying home, they aren't canceling vacations and they're not flying as an alternative," Bostwick notes.

"Changing driving habits is pretty far down the list" on what consumers will do, says Sundstrom. "They're still taking the trips that they can't eliminate from their daily schedules."

The fun-filled motoring activities also show no signs of abating.

For this year's Fourth of July holiday, the AAA was anticipating that a record-high 39.4 million Americans would roam 50 miles or more from home, up 3.4 percent from the 38.2 million who traveled last year.

About 34.4 million travelers (87 percent) expected to go by motor vehicle, a 3 percent increase from the 33.3 million who drove a year ago.

"With the drama of flying by air these days, people know that the family car is the place to be," says Dan McCue, a spokesman for the Specialty Equipment Market Association (SEMA).

"People are still looking at their vehicles as something that they will continue to invest in," he reports. "The American consumer is a pretty savvy customer, and they recognize that the freedom of the automobile is pretty unique."

Research by automakers indicates that consumers are not likely to drastically throttle-down their driving activity until the per-gallon price of gas hits $3.50 to $4.

Attuned to maintenance

Throughout this summer, some 1,000 Parts Plus-affiliated car care centers will promote the fuel efficiency that can be gained by keeping your car properly tuned. "The attitude of the American consumer has been, 'If it starts and moves forward it's okay,'" Bostwick notes.

He points out that motorists are going to learn that their vehicle's efficiency is far below what it should be.

Installers and retailers can help buck that trend by advertising to drivers increasingly attentive to vehicle performance standards and the impact on gas mileage, he says.

"The shops are selling more preventative maintenance," confirms Terry Bryden, general manager at XL Parts, a Pronto Auto Parts program group member with 21 outlets based in Houston. "That is keeping their bays full."

Jobbers and warehouse distributors should be urging their installer customers to purchase parts in higher volumes, thus building inventory and cutting down on delivery runs, according to Bill Maggs, Pronto's president.

XL has a fleet of 150 drivers and four contractor-driving firms that have upped their rates 5 percent to cover fuel costs. Bryden reports, though, that business is so brisk the company remains on budget despite the punishment being dished out at the pump!

"The customer is much more in tune with what they're spending on their cars," says Steve Marks, vice president of marketing and advertising for the Aftermarket Auto Parts Alliance, Inc. program group. "They're seeing that every time they go to the pump, so people will spend more money on their vehicles (for preventative maintenance) if they can save on gas."

Installers should be featuring highly visible vehicle inspections with an eye toward bringing fuel economy up to specifications, Marks advises. "Save your customers money by working on their cars."

The Automotive Aftermarket Industry Association (AAIA) is running with this concept through its Be Car Care Aware campaign, according to Kathleen Schmatz, the AAIA's president and CEO.

She believes the search for better fuel economy and global warming concerns will spur development of newer vehicle technologies, such as hybrids, alternative fuel vehicles, diesels and fuel cells.

"This changing mix likely will spell profound changes for suppliers whose current products will be offset by the new component requirements," Schmatz explains.

"While the new engine technologies will provide new product opportunities for the aftermarket, suppliers also could face the prospect that patents on certain new components and systems could limit aftermarket competition for years," she cautions.