Gas Prices Worse than 1981 Spike

NEW YORK –- Gasoline prices have risen to levels never seen before at the pump as even the inflation-adjusted price for a gallon of unleaded topped the 1981 record price that had stood for 26 years.

And experts warn that higher prices could be coming as Americans prepare to hit the road for the Memorial Day holiday and the start of the summer driving season.

The Lundberg Survey, a bi-weekly gas price tracking service, showed the price of a gallon of unleaded at $3.18 in its latest reading released on Sunday. That's up more than 11-cents from its reading of two weeks ago.

The Energy Information Administration's latest pump price, when adjusted for inflation, also reached a new record high. The EIA said yesterday that the average price for regular unleaded gas soared 11.5 cents over the past week to a new record of $3.22 a gallon. That's the same all-time high fuel cost reached in March 1981.

Confirming those findings, the motorist group AAA said its daily survey of up to 85,000 gas stations nationwide has been showing a series of record high prices in current dollars since May 13, and Monday the average price for a gallon of self-serve unleaded hit $3.196. The AAA said that's the ninth straight record high and up from Sunday's record of $3.178.

Before this recent run of record-high gas prices, the highest price ever recorded in current dollars was $3.057 in the AAA survey, and that was set Sept. 4 and Sept. 5, 2005 in the wake of Hurricane Katrina. That storm disrupted refinery operations and pipelines and caused a temporary spike in prices above the $3 mark for eight days.

Experts agree the current price increases are due to problems in gasoline supplies and refinery output. The average gas price went above $3 a gallon on May 4 and has continued to climb since.

The AAA said that unless prices fall suddenly, Wednesday will mark the longest stretch of $3 gas in its survey's history.

Nationwide, few states showed an average gas price below $3. California had the highest average price, with a gallon of self-serve unleaded coasting $3.457, up a bit from Sunday's $3.453.

New Jersey continued to have the least expensive gas price — the average price on Monday was $2.938 a gallon.

Four more states — Alabama, Mississippi, Tennessee and Virginia — became the latest states to cross the $3 a gallon mark.

Cerberus must guard the personal data

Edward Lapham is the executive editor of Automotive News. He writes commentaries for Automotive News online every business day. His commentaries also can be found here.

Edward Lapham

Automotive News
May 22, 2007 - 3:31 pm

What worries me most about the pending Cerberus takeover of Chrysler has nothing directly to do with the automobile business or even the way the private equity firm will treat the automaker's other stakeholders.

My biggest concern is what could happen after Chrysler Financial is tucked into the Cerberus portfolio.

The issue isn't really the specter of a hookup between Chrysler Financial and GMAC Financial Services. GMAC and Chrysler are in the same business but they don't directly compete because, mostly, GMAC finances GM products and Chrysler Financial finances Chrysler products.

Call me paranoid, but what makes me nervous is the massive consolidation of personal financial information that will be in the possession of companies controlled by Cerberus, and therefore in the possession of Cerberus itself.

And it's not just GMAC and Chrysler Financial.

Cerberus also has investments in the department store Mervyns, Houston-based Aegis Mortgage and Green Tree, a consumer loan company in St. Paul, Minn.

And that's just in the United States. Aozora Bank, based in Tokyo, and Bank Leumi, which is headquartered in Tel-Aviv, also are in the Cerberus portfolio.

I'm sure that each of those financial institutions complies with all applicable regulations and uses the utmost care to safeguard its customers from identity theft and other abuses of their personal information and data.

The powers that be at Cerberus undoubtedly are mindful of the awesome responsibility they have and almost certainly have installed firewalls and other protections to keep the data separate and prevent anyone from co-mingling them.

But in this era of rampant identity theft, when a stolen laptop can be a treasure trove of personal information with the potential to wreak havoc in thousands of lives, anything is possible.

Is it so tough to imagine someone -- a disgruntled employee, determined terrorist, cunning mobster or even a hormone-deranged teenage hacker -- defeating the security system and violating millions of us?

Yes, I know, I know. That stuff only happens in the movies or on TV.

Call me paranoid, but I'd just as soon not risk it.

Chery says deal with Chrysler not halted

Reuters |
May 23, 2007 - 9:00 am

SHANGHAI (Reuters) -- China's Chery Automobile Co. said today a framework deal with DaimlerChrysler AG to build Chrysler-branded cars was still proceeding, denying a German paper report it had been halted.

Chery, which reached an initial agreement with Chrysler last year, wants to re-examine the deal, Handelsblatt said this week, citing a senior Chery executive.

The decision, the paper said, came after DaimlerChrysler agreed last week to sell its money-losing Chrysler group to private equity firm Cerberus Capital Management LP in a $7.41 billion deal.

But a Chery spokesman told Reuters today that the newspaper had misquoted his colleague and that the earlier deal with Chrysler was progressing.

Under the agreement unveiled in late December, Chery would build small cars under the Chrysler badge for sale in Europe and the United States, paving the way for the ambitious Chinese automaker to sell its own-brand vehicles in mature markets eventually.

The Chery spokesman declined to elaborate on the status of that deal, which still needs Chinese government approval, or confirm whether Chery wants to renegotiate the terms with Chrysler's new owner.

"I don't think the deal will be called off," said George Magliano, director of North American auto industry research at Global Insight.

"There's a lot riding for both Chery and Chrysler in this," he said, noting that this would be the quickest and safest way for the Chinese automaker to tap the U.S. market, while Chrysler needed a small car.

Chery, a mid-sized but fast-growing player in east China, had made some inroads in emerging markets in Southeast Asia, Africa and the Middle East, where pricing remains a critical factor to push sales.

However, it has had little success so far in breaking into mature markets in the United States or Europe.

Some in industry favor California CO2 rules

Harry Stoffer
Automotive News
May 22, 2007 - 8:55 am
UPDATED: 5/22/07 1:48 P.M.

WASHINGTON -- Not everyone in the auto industry is opposed to letting California and other states have their own greenhouse gas emissions rules for cars and trucks.

Dealer Adam Lee, who heads a 12-franchise group in Maine, testified at a U.S. EPA hearing today in favor of a waiver for California to implement its own rules.

Lee, who describes his Lee Auto Malls as Maine's biggest seller of hybrid vehicles, told a panel of EPA officials that automakers "need a not-so-gentle nudge" to produce more environmentally friendly vehicles.

Also testifying for the waiver was Joseph Kubsh, representing companies that make components to cut vehicle pollution. He is executive director of the Manufacturers of Emission Controls Association.

That left an official of the Alliance of Automobile Manufacturers as the only industry witness against granting a waiver under the Clean Air Act.

But Doug Greenhaus of the National Automobile Dealers Association, observing from the audience, told Automotive News that NADA will be submitting written comments against the waiver. He is NADA's director of environment, health and safety.

At today's hearing Steven Douglas of the alliance testified that California has failed to prove that its "regulations would help address the issue of climate change or global warming in a concrete manner" or improve air quality.

He is director of environmental affairs for the alliance, representing the Detroit 3, Toyota and five other automakers.

Numerous witnesses from states and environmental groups lined up to testify in favor of allowing California to implement vehicle emissions different from those of the federal government.

A second hearing is set for May 30 in Sacramento.

EPA Administrator Stephen Johnson has promised to move expeditiously but responsibly on the explosive issue, which could force automakers to make fundamental changes in cars and trucks.

Eleven other states have adopted the California-style rules, which require an estimated 30 percent reduction in greenhouse gases from cars and trucks by 2016. Together with California, those states have nearly 40 percent of the U.S. new-vehicle market.

Automakers and dealers have challenged the rules in federal courts as an illegal attempt to regulate fuel economy, a power reserved by the federal government. The main greenhouse gas is carbon dioxide, a byproduct of burning fuel but also a natural part of the atmosphere.

California Gov. Arnold Schwarzenegger and Connecticut Gov. Jodi Rell, both Republicans, said Monday, May 21, that "it borders on malfeasance" for the federal government to block efforts by states to protect public health and welfare from the effects of climate change. The remarks were in a joint column published by the Washington Post.

California submitted its waiver request 16 months ago.

The EPA has granted frequent waivers over the years to California to have air pollution rules different from those of the federal government.

But the Bush administration held the position that the EPA could not regulate -- and could not authorize states to regulate -- carbon dioxide under the Clean Air Act. The law is aimed primarily at toxic pollution and tailpipe emissions that cause lung-damaging smog.

But the U.S. Supreme Court ruled on April 2 that the EPA must determine if greenhouse gases pose a threat to public health and, if so, to regulate them, using the Clean Air Act.

Meanwhile, Congress is considering a range of measures to cut petroleum consumption and greenhouse gas emissions.

Douglas, in his testimony for automakers today, said industry support for a comprehensive national solution makes a patchwork of state rules "not just unnecessary but actually counterproductive."