10/07/11
Some Unemployed Find Fault in Extension of Jobless Benefits
Source: NY Times By SHAILA DEWAN
Dan Tolleson, a researcher and writer with a Ph.D. in politics, has been out of work since 2009, except for brief stints as a driver. Still, he opposes President Obama’s call for Congress to renew extensions on unemployment benefits.
“They’re going to end up spending more money on unemployment benefits, while less money is coming in on tax returns,” he said, suggesting that the government should focus on measures that might encourage businesses to hire. “Far better to relax some of these outrageous regulations.”
Make no mistake — Mr. Tolleson, 54, has collected unemployment checks, saying he had little choice. But his objection to a policy that would probably benefit him shows just how divisive the question has become of providing a bigger safety net to the long-term jobless, a common strategy in recessions.
President Obama wants to continue offering benefits for an extended period of time, a maximum of 99 weeks, as is now the case. The measure is part of his jobs bill, which he once again called on Congress to pass in a press conference on Thursday.
If the extension is not renewed, benefits for more than 2.2 million people will be curtailed by mid-February, according to the Department of Labor. The Obama administration estimates that with no extensions, a total of six million people will run out of benefits over the course of next year.
Unless job growth picks up sharply, many of those people will struggle to stay out of poverty. Unemployment benefits, which average $298 a week, help families and serve as economic stimulus because most of the money gets spent right away on basics. Liberal and many centrist economists say that the economy is too weak now to withstand the shock of a sharp drop in those payments.
Still, conservatives contend that extending benefits pulls money from other parts of the economy, discourages people from finding work and increases the unemployment rate. Some Republican politicians have gone so far as to suggest that people living on unemployment are simply lazy. Even President Obama’s pick for head of the Council of Economic Advisers, Alan B. Krueger, has acknowledged that increasing unemployment benefits prolongs unemployment, as conservatives were quick to point out when he was nominated in August.
To some taxpayers, unemployment extensions are just another big government expenditure that comes out of their pockets and goes into someone else’s. Some would rather see the money spent on projects with a return, like building highways and schools. Others prefer freeing businesses of expenses like the health care plan and new regulations.
Even among those struggling to find work, Mr. Tolleson is not alone in his views. In a recent survey of the unemployed by Rutgers University, more than one in four respondents was opposed to renewing the current extended unemployment benefits. Three out of five said recipients should be required to take training courses.
Mr. Tolleson, who lives in Houston and whose last good job was working for a group that aims to replace the income tax with a national sales tax, said he filed for unemployment after a church said it could not help him otherwise. But, he said, he knows the money is not free: “They either tax it from somebody who’s making money or they’re going to print it — either way, the economy goes down.”
Theresa Gorski, a pharmaceutical sales rep in Detroit before losing her job 17 months ago, once shared his skepticism of prolonging unemployment benefits.
“If you would have asked me five years ago, I would have said no, because I always considered myself a Republican,” said Ms. Gorski, 50. “But now being in this position, with a college education and lots of work experience behind me, I find myself swinging more liberal, and more Democrat. And that would never have happened before.”
This recession has left more people unemployed for longer than ever before. In September, nearly seven million people were receiving unemployment benefits, and the Census Bureau says the payments lifted more than three million people out of poverty last year. Keeping the extensions in place for another year would cost $49 billion, the White House estimates.
Unemployment benefits vary from state to state and are based on the worker’s previous earnings, with most states using a tax on employers to cover 26 weeks after a job loss. In mid-2008, the federal government began to pay for a series of extensions that brought that total to 99 weeks in the states with the highest unemployment rates. About 20 states now offer the maximum of 99 weeks, but under Mr. Obama’s proposal, that would drop to nine states in March and three in April. That would leave most states offering about 70 weeks of benefits.
Michael Stravato for The New York Times
Preston Venzant of Houston lost his job as a technician repairing appliances three months ago.
Republican leaders in Congress have not said whether they will support the extensions, but they have opposed them in the past. In a Congressional hearing Thursday, they expressed frustration that repeated renewals of the extensions had not yielded better results.
Economists generally agree that unemployment benefits encourage some job seekers to delay accepting a job, thus raising the unemployment rate. A study by the San Francisco Federal Reserve last year found that the benefit extensions had increased the rate by four-tenths of a percentage point.
A more recent paper by Jesse Rothstein, an economist at the University of California at Berkeley, found that about half the increase was simply because recipients were required to look for work and therefore continue to be counted in the labor force. Otherwise, many would have dropped out. Only people actively looking for work are counted among the unemployed.
Though his nomination was approved by a Senate committee on Thursday, Mr. Krueger is avoiding speaking publicly as he awaits confirmation. That has prevented him from defending himself to those conservatives who have happily cited his acknowledgement that benefits may prolong unemployment.
But he has written that the impact was likely to be smaller in a harsh economic climate. In a study conducted between fall 2009 and spring 2010 in New Jersey, Mr. Krueger and his co-author, Andreas Mueller, found that only one out of five unemployed people had received a job offer, and that workers did not spend more time looking for work or lower their acceptable salary level after their benefits lapsed.
In interviews, job seekers insist they are applying for jobs at salaries far below what they are used to, in fields they have never worked in before, and are still not having any luck.
Preston Venzant, 47, who lost his job in Houston repairing commercial kitchen equipment, said he had decided not to apply for unemployment benefits over the objections of his wife.
“I don’t want the federal government giving me an incentive not to work, period,” he said. “My personal opinion is, you’re supposed to go find work, and if you can’t find it in the business that you were once in, be it a C.E.O. or a street sweeper, you have to find employment and your lifestyle has to change, so be it.”
After months of looking, Mr. Venzant said, he has gotten an offer that will give him two years of work, with free room and board and five weeks’ vacation. All he has to do is move to Russia.
9/19/11
Cold-Water Detergents Get a Cold Shoulder
Source: NY Times By ANDREW MARTIN and ELISABETH ROSENTHAL
Newly formulated laundry detergents can wash most clothes perfectly well in cold water, manufacturers say, but customers are stubbornly refusing to turn down the temperature. Although some of these detergents have been available for several years, customers cling to mom’s age-old advice that hot water washes best — squandering energy and contributing to greenhouse gas emissions.
Even in Germany, where consumers tend to be more environmentally attuned than in the United States, manufacturers have discovered that cold-water washing is such a hard sell that they have relegated claims about it — and the attendant green benefits — to the fine print, choosing to emphasize other attributes.
“For selling, it is much more effective to focus on stain removal and whiteness, performance and price,” said Dr. Thomas Mueller-Kirschbaum, a senior vice president for research and development at Henkel, the German company that markets cold-water formulas under the Persil and Purex brands. “In market research, when you ask consumers, they currently don’t see the immediate benefit of saving energy.”
Of course, some consumers have long preferred to wash their clothes in cold water to prevent them from shrinking or the colors from fading, and many others wash darks or delicate clothes on the cold cycle.
But the idea of reformulating detergent so that all types of clothes can be washed in cold water is relatively new, at least in North America and Europe. (In Japan, consumers routinely do their laundry in cold water.)
About three-quarters of the energy use and greenhouse-gas emissions from washing a load of laundry come from heating the water — a practice that, scientists say, is often wasteful and unnecessary.
Procter & Gamble, the consumer products giant that makes brands like Crest and Gillette in addition to Tide, takes credit for the innovation in North America, which emerged from an evaluation of the company’s energy footprint in 2003.
After realizing how much energy was used to heat water for laundry, Procter set a goal to convert 70 percent of all washing-machine loads to cold water by 2020; by Procter’s estimate currently 38 percent of laundry loads globally were done in cold water.
But in trying to create Tide Coldwater, Procter’s scientists were confronted with a problem: hot water does help get clothes cleaner. In fact, thermal energy is one of three secrets to cleaning clothes, along with mechanical energy and chemicals.
“When you reduce one, you have to do better in the others,” said James Danzinger, a senior scientist who works on detergents for Procter & Gamble.
So the company set its scientists loose to find new chemicals to compensate, and what they came up with was a detergent, Tide Coldwater, with different enzymes and surfactants that work better in cold water.
Tide Coldwater was introduced in 2005. Several competitors followed with their own cold-water formulas, including Purex from Henkel, Wisk from Sun Products and Biokleen from a small company by the same name.
Do cold-water detergents work? Consumer Reports ranked Tide Coldwater among its top detergents last year, though some of its competitors did not rate as high.
The chemical composition of the new cold-water detergents, which cost about the same as regular detergents, is “totally different” from what was found in detergents a decade ago, said Dr. Mueller-Kirschbaum of Henkel. Some even contain chemicals that coat fabric fibers so that they are less likely to absorb dirt in the interval before the next washing.
Tide Coldwater, by far the best-selling cold-water detergent, now accounts for $150 million in sales in the United States and $60 million in Canada, the company says. By comparison, regular Tide has well more than $1 billion a year in sales in the United States alone.
Kiem Ho, director of laundry care for Henkel, predicted that cold-water detergents would remain a niche, unless the government provided incentives to use them or the industry waged a major campaign.
Sales data provided by Henkel shows that sales of cold-water detergents have declined by 16 percent in the last year in the United States. Procter’s data shows a 5 percent increase, although company officials acknowledge some stagnation in recent years.
In Germany, a country dotted with wind turbines, solar panels and a Green Party that is part of the political mainstream, detergent makers waged an advertising war several years ago after they created detergents that worked equally well in all temperatures, including cold water.
On television and in magazines, on detergent boxes and bottles, they promoted the environmental benefits of the new cold-water products.
But the detergents languished on the shelves.
“I’ve never even tried it,” said Ottilie Theis, 53, who was shopping for detergent recently in Philippsburg, a city in southwestern Germany. “I’m just skeptical that normal dirt and spots can be washed out with cooler water.”
Dr. Mueller-Kirschbaum said he believed that consumer education, not advertising, would eventually change buying behavior. The average washing temperature is only slowly coming down in Germany, by about a degree a year, market research shows.
At a Target store in suburban New Jersey, Lara Snyder said she wanted to be part of the cold-water revolution and had bought Tide Coldwater. But so far, she said, she’s not ready to switch over entirely.
“I find that sometimes I wash it in cold,” Ms. Snyder said, “and have to wash it again in warm water.”
Despite the challenges, Procter & Gamble officials remain undeterred.
New advertising is promoting the virtues of Tide Coldwater, and the company is working with washing machine manufacturers to improve cold-water cycles in high-efficiency machines.
In September, for instance, Whirlpool’s Maytag brand is introducing the Bravos XL, in which the cold cycle has been designed to work with cold-water detergents.
Procter officials said they were encouraged by company surveys that showed more consumers were washing in cold water. When Tide Coldwater was introduced in 2005, just 30 percent of laundry loads were washed in cold water; now, it’s pushing 40 percent.
“We have people moving from warm to cold,” said Dawn French, the company’s director of North America laundry products research and formula design. “But hot-water loads have remained very steady.”
Currently, about 7 percent of white laundry loads are done in cold water, compared with 22 percent for lights and 57 percent for darks, according to company studies.
“If we can chip away, load by load, we can get to 70 percent,” Ms. French said.
9/14/11
G.M. Looks to Shepherd U.A.W. Pact
Source: NY Times by BILL VLASIC and NICK BUNKLEY
DETROIT — General Motors is aiming to set the framework of a new labor agreement with the United Automobile Workers union that would increase entry-level wages and establish a new profit-sharing formula for workers at all three Detroit car companies.
Both G.M. and Chrysler have been holding around-the-clock talks with the union for several days, hoping to reach a new deal before their current four-year contracts expire at the end of the night on Wednesday.
The third Detroit automaker, the Ford Motor Company, agreed with the U.A.W. on Tuesday to extend its contract until settlements were reached at the other two companies.
With its stock price lagging 33 percent below its initial public offering price of a year ago, G.M. needs a deal that bolsters confidence in its comeback from its government bailout and bankruptcy.
And with the strongest balance sheet of the Big Three, G.M. is in position to sweeten worker bonuses and raise the pay of second-tier workers in exchange for flexibility in its plants and profit-sharing tied to quality and productivity.
“With a vastly improved balance sheet, G.M. has a distinct advantage in negotiation its U.A.W. contract,” said Mike Jackson, a senior analyst at the research firm IHS Automotive. “It is working hard to set terms that are more favorable to its own cause.”
Historically, the union reaches an agreement with one automaker first and expects the other two to follow the framework for wages, benefits and work rules.
Recently, G.M. has stepped up its efforts to devise a competitive cost structure that both the companies and the union can live with for the next four years.
Underscoring G.M.’s aggressive approach has been the presence of its chief executive, Daniel F. Akerson, at the bargaining table. In years past, it was rare for any Detroit chief executive to be directly involved in the talks until the end of the process.
The U.A.W. agreed not to strike G.M. or Chrysler as conditions of the Obama administration’s bailouts of the companies. But G.M. is still 26 percent owned by the American taxpayers, and its executives are eager to avoid a prolonged arbitration process if a deal cannot be reached.
“A failure to reach a settlement would be looked at as almost a repudiation of the government funding,” said Gary N. Chaison, professor of labor relations at Clark University in Worcester, Mass.
Among the top issues to be reconciled is how much workers should gain now that the companies have greatly improved their finances. G.M. earned $5.7 billion in the first half of 2011, and Ford’s profit for the same period was nearly $5 billion. G.M. also has a cash stockpile of more than $30 billion, which it has been using to pay down debt and create what it calls a “fortress balance sheet.”
A deal that investors see as favorable for G.M. could help reverse the slide in the company’s stock price. Shares of G.M. closed at $22 on Tuesday, one-third lower than the price for its initial public offering last November.
Instead of increasing wages — which have been frozen since 2003 — analysts expect the carmakers to offer workers large bonuses that they would receive as lump sums after the contract is ratified. That avoids permanently increasing the companies’ annual labor costs, and the signing bonuses most likely would amount to considerably less than four consecutive years of small raises.
The bonuses will probably be $5,000 to $7,500 at G.M. and Chrysler, and slightly more at Ford, predicted Arthur Schwartz, a former G.M. negotiator who is now president of the consulting firm Labor and Economic Associates in Ann Arbor, Mich.
Ford would pay more because it is healthier and thousands of its workers have filed a grievance against the company over executive bonuses. A hearing on that matter is scheduled for Thursday.
“Their pay rates are already competitive, so why they’re entitled to a pay increase by definition is certainly debatable,” Mr. Schwartz said. “A nice-size signing bonus would go a long way.”
A U.A.W. spokeswoman, Michele Martin, said reports that the union had asked for bonuses of as much as $10,000 were “inaccurate” and creating “false expectations” among workers.
The bonuses are meant to increase the chances of ratification by rank-and-file members, but a large amount would undoubtedly draw criticism from opponents of G.M.’s government bailout and could even cause workers to think they are being taken.
“Most workers could see a large signing bonus almost as a sign of a bribe,” Mr. Chaison said. “If it’s too large then they’ll get suspicious about what they’re being asked to accept.”
The companies are expected to slightly increase pay for workers on the entry-level pay scale, which currently starts at $14 an hour, or half as much as most autoworkers earn.
Workers said that they expected the new second-tier pay scale to top out at about $18 an hour. U.A.W. and company officials, however, have not confirmed an amount they are discussing.
The union also is seeking to protect as many jobs as possible, and specifically wants to persuade G.M. to reopen closed plants in Tennessee and Wisconsin. But G.M. officials have said they will need to restart those plants only if market demand is sufficient, asserting that they do not need additional capacity yet.
9/02/11
Swimming Pool Stolen From Back Yard
Source: TheBostonChannel.com
BOSTON -- When a Greenfield family reported that their 24-foot diameter, above-ground swimming pool had been stolen, police knew exactly where to look for it.
The Recorder reports that officers went to a scrap metal company where workers said some men had come in to sell a metal frame pool that matched the description of the one reported stolen.
Police arrested 49-year-old Henry Stefanowich, of Chicopee, and charged him with larceny and trespassing. He pleaded not guilty Tuesday and was released on $500 bail.
The 52-inch-deep pool, with only a few inches of water in it, was stolen Monday in a 3 1/2-hour window when everyone in the family was at work.
Stefanowich told police he had permission to take the pool, but the family denies that.
Copyright 2011 by The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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http://www.thebostonchannel.com/news/28960224/detail.html#ixzz1WoG67tK0
9/01/11
Fancy Batteries in Electric Cars Pose Recycling Challenges
Source: NY Times
HOBOKEN, BELGIUM — With fleets of electric cars starting to hit the roads, the next big mother lode for salvage companies is expected to be the expensive, newfangled batteries powering them.
Yet even as automakers vaunt the ways these cars can benefit the environment, they are divided over how best to handle the refuse: recycle or repurpose.
That is worrying some companies involved in “urban mining” — a voguish term that refers to extracting valuable metals from all kinds of discarded electronics, from power tools to mobile phones. They have already begun spending money to build an infrastructure to handle the flood of partly depleted battery packs that are expected to enter the waste stream; Frost & Sullivan, a consulting firm, puts the number at about 500,000 a year by the early 2020s.
“There is no green car without green recycling,” said Ghislain Van Damme, a manager at Umicore, a company based here in Hoboken that is one of the world’s largest recyclers of precious and specialty metals from electronic waste.
Companies that fail to plan for recycling face “brand damage” at the very least, he said, as well as potential fines and legal action if the batteries end up being illegally incinerated or dumped in landfills. In many cases, automakers will be responsible for final disposal of the batteries — even if they did not actually manufacture them — because of stricter laws governing recycling, especially in Europe.
Any sense of urgency in developing recycling capacity has been dampened, however, by the cost factor. The newest, most-powerful lithium-based batteries are also less valuable to recycle than earlier ones.
Lithium is plentiful compared with the nickel and cobalt found in hybrid and all-electric car batteries developed earlier, even if the main sources of the metal, in countries like Chile and Bolivia, are far from auto production centers.
“You can count on a constant and growing thirst for metals including lithium,” said P.Aswin Kumar, an analyst with Frost & Sullivan. “But lithium still costs about five times more to recycle than to mine, so environmental laws will drive recycling for now.”
Shoebox-size, lead-acid batteries have powered ignition and lighting in gasoline- or diesel-powered cars for decades. They already are widely recycled, mainly because lead is such a health hazard.
The batteries for hybrid and all-electric cars are far more powerful and much larger, with some weighing up to around 250 kilograms, or 550 pounds. They also can be the car’s most expensive component, mostly because of the complexity in making them, rather than the value of the materials.
Complicating the question of disposal, a large amount of energy remains stored even in partially discharged batteries. These could deliver harmful shocks and pose a serious fire hazard if mishandled.
For now, automakers are going their individual ways.
Toyota Motor, whose experience goes back to 1998, shortly after the introduction of the RAV4 all-electric vehicle, has established partnerships in Europe and the United States to recycle batteries, including from the hybrid Prius. This year, it began shipping some batteries from Prius models sold in the United States to Japan to take advantage of a more-efficient recycling process at home.
Honda Motor recycled nearly 500 batteries during 2009 from the electric hybrid models it began selling in Japan more than a decade ago. But it still is exploring ways to structure that part of its business as it rolls out models like the Insight and the CR-Z.
General Motors and Nissan Motor, whose Chevrolet Volt and Nissan Leaf are newer to the market, are taking a different tack. They have agreements with power companies to develop ways of reusing old batteries, perhaps for storing wind or solar energy during peak generating times for later use.
Bayerische Motoren Werke, known for its premium BMW line, still is carrying out research on whether to recycle or reuse the batteries from its Mini E, an all-electric car it began leasing on a limited basis in 2009.
Meanwhile, some governments have begun to get involved to ensure their car industries are not undermined by sourcing or safety issues.
In the United States, the Department of Energy has granted $9.5 million to Toxco to build a specialized recycling plant in Ohio for electric vehicle batteries. It is expected to begin operations next year, handling batteries from a variety of makes and models.
Another pilot plant being built in the German state of Lower Saxony is expected to open at the end of September. The German government gave Chemetall, which is part of a consortium called LithoRec that includes Volkswagen and its Audi unit, €5.7 million, or $8.2 million, of the €14.3 million cost.
The British government this year granted £500,000, or $813,000, for a similar project to a group of companies including Axeon, which makes lithium-based car batteries.
Such recycling “is entirely nonexistent in the U.K. at the moment,” said Lawrence Berns, the chief executive of Axeon.
In Belgium, Umicore plans to formally open a €25 million plant in September in Hoboken, just outside of Antwerp, that can recover nearly all of the elements packed inside electric and hybrid car batteries including cobalt, nickel, lithium and even rare earths like neodymium.
The intense heat — more than 1,300 degrees Celsius (2,370 Fahrenheit) — strips away plastic coatings and creates a plasma, or ultrahigh temperature gas, to separate metals and other materials.
The process yields tree-trunk-size chunks of gnarled metal alloy, some weighing more than 2,000 kilograms.
Umicore refines those chunks to create metals for resale to manufacturers of car batteries,wind turbines and other high-technology products.
It also recovers a gravelly substance, or slag, that Rhodia, a French chemical company, refines for rare earth elements like neodymium. Given the recent restrictions by China on exporting such materials, more companies are looking at doing the same.
Mr. Van Damme said the Umicore plant’s design could be scaled up to handle more than a million car batteries each year from the current capacity of 150,000.
Even before the official inauguration, it has recycled some batteries from the Prius, mostly from models that were involved in accidents or scrapped early. Honda said that Umicore was “a serious option” for its future recycling plans.
But, so far, the only car company that has announced a deal with Umicore is Tesla Motors, of Palo Alto, California, whose electric Roadsters start at more than $100,000. Tesla will pay to recycle its battery packs from models sold in Europe after seven to 10 years on the road. The final cost to Tesla would partly depend on the market value of the metals recovered by Umicore.
Tesla said that it was also working with Toxco in the United States.
Some manufacturers, like G.M. and Nissan, are focused on deferring recycling for as long as possible. They estimate that even at the end of their motoring life, the batteries should still be able to hold about 70 percent of the power of a new one.
Nissan has formed a joint venture called 4R Energy with Sumitomo, a Japanese conglomerate, aimed at using the old batteries for storing energy from renewable energy sources like wind and solar and for backup power supplies in emergencies.
It might be possible to “make recycling a profitable business in the future,” said Takashi Sakagami, the president of 4R Energy.
Similarly G.M. is working with ABB, a Swiss engineering company, to identify ways to use old Chevrolet Volt batteries as backup power sources in the event of power failures, and to improve reliability of electricity grids.
Even after 10 years of driving, a “second life” of 20 years for the battery could be viable, said Pablo Valencia, a senior manager at G.M.
And afterward?
“We’re still working on that, so stay tuned,” he said.
8/29/11
U.S. Consumer Spending Rallied in July
Source: By REUTERS
Consumer spending in the United States rebounded strongly in July to post the largest increase in five months on strong demand for motor vehicles, a government report showed on Monday, supporting views that the economy was not falling back into recession.
But a private trade group reported separately that pending sales of existing homes fell in July in another sign of weakness in the housing industry.
The Commerce Department said consumer spending increased 0.8 percent, the largest gain since a matching increase in February, after slipping 0.1 percent in June.
Economists polled by Reuters had expected spending, which accounts for about 70 percent of American economic activity, to rise 0.5 percent.
When adjusted for inflation, spending rose 0.5 percent last month, the largest gain since a matching increase in December 2009, after being flat in June.
The data suggested that the economy started the third quarter with some strength after growth almost stalled in the first half of the year.
It also offered hope that output would continue to expand, though at a moderate pace. The risks of a new recession have risen, however, after a sharp drop in stock prices and the erosion of consumer sentiment.
Over all, spending in July was lifted by a 0.3 percent rise in income — in line with economists’ expectations — as employers stepped up hiring. Incomes rose 0.2 percent in June.
Disposable income increased 0.3 percent, but when adjusted for inflation, it fell 0.1 percent — the first decline since September. With spending outstripping real disposable income, savings fell to an annual rate of $582.8 billion from $638.6 billion in June.
The report showed inflation pressures remained elevated. The personal consumption expenditures price index rose 0.4 percent after slipping 0.1 percent in June. Compared with July 2010, the index was up 2.8 percent, the largest increase since October 2008; the year-over-year advance was 2.6 percent in June.
The core index — excluding food and energy — rose 0.2 percent for the second straight month. That index, which is closely watched by Federal Reserve officials, increased 1.6 percent in the 12 months through July, the largest increase since May 2010, after rising 1.4 percent in June. The Fed would like to see it close to 2 percent.
The National Association of Realtors pending home sales index, based on contracts signed in July, was down 1.3 percent, to 89.7, from 90.9 in June. The decline was in line with the expectations of economists polled by Reuters ahead of the report.
In a sign of how much the sector has recovered from a year ago, the index was up 14.4 percent from July of 2010.
The association’s senior economist, Lawrence Yun, said the latest monthly reading showed sales activity was underperforming but that underlying factors for sales were improving.
He cited rising rents and “record” affordability conditions as factors that could point to growth.
“It is now a question of lending standards and consumers having the necessary confidence to enter the market,” he said.
8/16/11
Almost Time to Change the Bulb
Source: NY Times By BOB TEDESCHI
YOU may have heard that the federal government wants to limit your choice of light bulbs, starting in January.
If only.
Thanks to regulations taking effect that month under the Energy Independence and Security Act of 2007, shopping for light bulbs is fast becoming akin to choosing a spouse: the options are almost endless, and the object of your affection might last longer in the house than you.
The misconception about limited choice is, specifically, that the new rules outlaw incandescent lights. But they don’t. They just place efficiency standards on incandescents. Starting in January, any bulb that can generate the amount of light produced by a conventional 100-watt bulb, but do so with roughly 30 percent less energy, will be eligible for the market. The new law is gradual — in 2013, the rule will be extended to 75-watt bulbs, followed, in 2014, by 60- and 40-watt bulbs — but the point is that nothing is outlawed if it meets the new mandated efficiencies.
What’s more, the looming rules have triggered rapid advances in a number of lighting technologies. Halogens, a type of incandescent that delivers light the way Edison intended, with a tungsten filament, are now available in the standard bulb shape. Compact fluorescent lights, or C.F.L.’s, have gotten better at delivering good light quickly, and without the buzzing and flickering for which they were known. And some bulbs with light-emitting diodes, or L.E.D.’s, now cast their light in all directions, not just one.
To help consumers, retailers like the Home Depot and Lowe’s are working to simplify shopping, with better merchandising and displays with samples of the forthcoming bulbs. Also, some manufacturers, like Sylvania, Philips and General Electric, are already putting “lighting facts” labels on at least a few bulbs, even though new labeling requirements do not take effect until January.
But the changes are still complicated. For instance, instead of categorizing bulbs in terms of watts, a measure of power, shoppers will speak of lumens, a measure of the light that bulbs cast. To ease this change, bulbs will be described in yet a third way, “watt equivalents.” A 60-watt equivalent bulb, for example, will emit as much light as the old 60-watt incandescent. And although the new law does not apply to fluorescent tube lights, three-way bulbs and other specialty lights, manufacturers are extending law-inspired changes to these exempt products, too.
Bottom line: If you go shopping without a good idea of what you want, you’ll leave the store with a headache and a fervent desire to never think about bulbs again.
I barely escaped that fate recently, during a massive bulb tryout for the roughly 40 sockets in my house. I gathered bulbs from three leading manufacturers — Philips, General Electric and Sylvania — as well as from niche lighting companies like Cree, TCP and others, to assess the latest technologies.
I sought shopping advice from three experts: Konstantinos Papamichael, a director of the California Lighting Technology Center at the University of California, Davis; Russell Leslie, a founder of the Lighting Research Center at Rensselaer Polytechnic Institute, in Troy, N.Y.; and Craig A. Bernecker, the director of the Lighting Education Institute, in Philadelphia.
Their advice: In the short term, you can continue to light your home with incandescents. But in the long run, they say, if you study the various lighting technologies, you can save money and time — and, perhaps, see every part of your home in its best light.
For most people, who are accustomed to a simpler light-bulb market, that’s asking a lot.
“Consumers generally bring habit, rather than intelligence, to their light-bulb purchases,” Mr. Leslie said. “It’s really problematic.”
Now, bulb buyers think primarily about the amount of light they need from a bulb, he explained, with the quality of the light and its suitability for the colors in a room as secondary considerations, if that. Still fewer people consider the different ways that bulbs distribute light. If you choose to wade into the waters of energy-efficient bulbs, however, these factors quickly come into play.
Don’t be daunted, Mr. Papamichael said. “Experiment with different light versions, and do it slowly.”
I followed his advice carefully. Except for the “slowly” part. Which I now regret. I gave myself 10 days, and a two-part mission. First, test the roughly 30 bulbs I had assembled in a few sockets in my house, and study their effects. Second, proceed to various rooms and see what looks good where — because what works in the kitchen might not work in the living room.
First up, halogens.
Because these bulbs are a type of incandescent, they share traditional incandescents’ qualities. They throw light in all directions (“omnidirectional” in the new light-bulb vocabulary), which makes them good for filling a lampshade or a chandelier. Also, their filament’s firelike glow produces light waves on the warmer end of the color spectrum — orange, red, yellow. Such light is a good match for similarly warm-colored rooms, but a weak one for rooms done in blues or grays.
I tried out three 100-watt equivalent halogens: the Philips EcoVantage, Sylvania SuperSaver and G.E. Halogen. Although halogens share traditional incandescents’ warm-light quality, when I tested these bulbs in a dining room fixture along with a conventional incandescent, their light appeared slightly whiter than the light from the latter.
The G.E. halogen was clear glass; the other two were frosted for a softer effect. It made a difference. In contrast to a traditional incandescent, the lighting element inside the G.E. halogen had a thick strip of glass that cast distracting shadowy stripes on the fixture. But the frosted glass on the other two halogens diffused the light in a way not noticeably different from the standard incandescent.
Compact fluorescents are also omnidirectional, and while in the past their light often threw a sickly pall on people, manufacturers are redesigning the bulbs with warmer tones. They can occasionally take a while to fully illuminate, though, and few of them work smoothly with dimmers.
I tested a bunch of compact fluorescents, both big brands and smaller ones. I noticed no substantial differences in color quality, and all the ones labeled “soft white” had the warmer tones of the new C.F.L.’s.
But there were many nuances. The EcoSmart Soft White R20 Flood — EcoSmart is the Home Depot brand — was dimmable, unlike most other C.F.L.’s I tried. And the G.E. Energy Smart 60-watt equivalent bulb needed a minute to reach full brightness, in contrast to most of my other test C.F.L.’s. But G.E. has recently introduced a Bright From the Start Energy Smart bulb, a hybrid that uses a halogen element to emit light instantly while the fluorescent portion warms up. When I installed that bulb above the kitchen sink, it lighted up right away.
The third major bulb type is the L.E.D. If the C.F.L. is the girl you never considered dating in school, but who now looks pretty darned good, the L.E.D. is the trophy wife: really expensive, nice to look at, not much of a track record.
At least not yet.
The basic L.E.D. contains silicon chips that throw light in one direction (“unidirectional,” in the new lingo). Because they are computerized, they can be programmed to produce any kind of light, at least in very expensive custom installations. And because they require fins or notches to keep the chips cool, they can look like lava lamps and other shapes that Thomas Edison never imagined. (Some are also as heavy as rocks.)
But even basic nonprogrammable L.E.D.’s are costly — $20 to $50 for the most common types. L.E.D.’s with dimmers cost even more.
Breathe.
However, manufacturers quickly point out that L.E.D. bulbs have a very long life — 25,000 hours compared with, say, 6,600 hours for an equivalent C.F.L. You won’t have to change L.E.D.’s for 20 years.
The quality of L.E.D. light, even the “soft white” types, is noticeably cooler than that of halogens or C.F.L.’s. And because most L.E.D.’s are unidirectional, they work well for recessed lights or lamps that spotlight artwork. But this single-focus nature is a problem for standard shaded lamps. The packaging of Sylvania’s Ultra A-Line L.E.D. suggests that it’s suitable for a shaded lamp, but when I tried it in a lamp in my living room, the top half was lit, while the bottom saw little light.
However, Sylvania will release an omnidirectional L.E.D. this winter, and two manufacturers are now making them. When I tried them — G.E.’s Energy Smart L.E.D. and the Philips AmbientLED — they lighted up both the top and bottom of my lamp. The Philips bulb was softer than G.E.’s — so much so that I now have two of them gracing my living room.
Not before they earned my wife’s blessing, naturally.
Next came my second mission, roaming our home and selecting the best bulbs for specific rooms.
As I did this, I silently repeated to myself: “That’s not brown.”
My wife, Karen, recently asked me what I thought of one of her outfits, and I told her it was nice, because it was a brown top and a brown skirt.
“You’re not serious,” she said.
I was. She stepped closer and informed me that her skirt was black.
I suspect that my wife can see colors far better than I, so I accede to her chromatic judgment. Even if I don’t love her choices, I can get used to just about any color. I grew up in a dining room that looked as if it were painted with Pepto-Bismol.
Like other light-bulb matters, color will soon become more complex. But with any luck, the new rules may help even someone like me see color more clearly.
For today’s shoppers, the light emitted by conventional bulbs is limited to two hues: soft white and whatever color that light is that radiates from a clear incandescent bulb.
But manufacturers and regulators want you to understand the fine distinctions of light quality, so they have adopted something called the “correlated color temperature” index. Oddly, this measure goes in the opposite direction of how you might think. The warmer, or more yellow, the light, the lower the color temperature, and the cooler, or more bluish, the light, the higher the temperature.
Color temperature is measured in kelvins — at 5,000 kelvins the light has more blue, and at 3,000 kelvins it has more yellow — but don’t worry about them. That’s because the soon-to-be-required label will feature a color spectrum pinpointing a particular bulb’s light quality.
Some manufacturers may also choose to include another color-related measure, the “color rendering index.” This index shows how accurately the bulb displays the color of the objects it illuminates. Anything higher than 80 is adequate, but be sure to check that number. Also, to further enhance the rendering of color, be sure to match a bulb’s color temperature to the tones of your room. A traditional incandescent has a color-rendering score of 100, Mr. Leslie said, but because it has a low color temperature it renders warmer colors better than colder ones.
With these concepts in mind, and repeating my mantra about the color brown, I headed to my living room, which has yellow paint, hardwood floors and a brown couch (yes, I’m sure it is brown). I tried G.E.’s Energy Smart L.E.D. and the Philips AmbientLED. The funny thing was that although the color temperature of the G.E. bulb was 3,000 kelvins, it was far cooler than the Philips L.E.D., which was rated at an only slightly warmer 2,700 kelvins. The lesson: labels are helpful but not a foolproof substitute for testing the bulb on site. Seeing is believing.
Given the warmer tone of the living room, I thought the warmer tone of the Philips bulb worked well. The yellowish light didn’t war with the furnishings.
My wife agreed.
I tried L.E.D. lights in the dining room chandelier, but without a lampshade to warm the light they were much too cold. Meanwhile, not all of the compact fluorescents worked with the fixture’s dimmer, so I settled on 100-watt equivalent bulbs from Sylvania and Philips.
My wife agreed.
We also agreed to replace an ugly “twister” compact fluorescent in our entryway with a G.E. Energy Smart compact fluorescent that resembles a traditional bulb. It was slow to illuminate, but looked better than the one that was there before.
On to Karen’s desk. I thought Home Depot’s three-way EcoSmart Soft White C.F.L. worked nicely in her desktop lamp.
She did not agree.
The EcoSmart omnidirectional L.E.D. better matched her steel-and-glass desk, she thought, and also offered sharper light for reading.
We didn’t need to agree on the big bulbs that are used in recessed lights, since we are among the few households without such fixtures. So I took a few to a friend’s home, including a dimmable Philips AmbientLED and a dimmable Philips EnergySaver compact fluorescent.
My friend and I both liked the color of the C.F.L, until we tried an EcoSmart L.E.D., which gave off a warm, well-dispersed light. The prospect of not having to climb a ladder to replace that long-life bulb was the clincher.
It’s like finding a trophy wife you can grow old with.
The Choices, Room by Room
DIFFERENT rooms present different lighting challenges. Here are room-by-room guidelines, and the Pragmatist’s own recommendations.
BATHROOM Diffuse lighting works best, and that is a strength of globe-shaped compact fluorescents and of halogens (if you want to bear the higher running cost of the latter). Either way, choose the intensity of light that matches your workplace setting, since that is how others will see you.
For the vanity, I chose the EcoSmart G25, a 40-watt equivalent, globe-type C.F.L. in soft white ($10 for two). It’s a good match for bathrooms with warmer color schemes, and the twister shape is mostly hidden by the cover.
KITCHEN Food preparation requires direct light on specific areas, so consider L.E.D.’s for those recessed kitchen fixtures. L.E.D.’s are costly, but focus light better than C.F.L.’s and halogens. L.E.D.’s also produce cool light, which nicely enhances blues and grays. If the kitchen has warm tones, consider a C.F.L. or a halogen.
For over the sink, we picked a G.E. Bright From the Start Energy Smart C.F.L., a 75-watt equivalent in soft white ($10). It costs less than an L.E.D. and features a halogen component that lights up immediately while the fluorescent component kicks in. We don’t have recessed ceiling fixtures, but after tests at our neighbor’s, my choice is the EcoSmart 75-watt equivalent dimmable L.E.D., which gave a soft, diffuse light ($30) and, given the long life of L.E.D.’s, will require fewer trips up the ladder to change bulbs.
BEDROOM On night tables, try compact fluorescents of different brightness levels to see what works for you. Some research suggests you may sleep better without the blue light waves of C.F.L.’s or L.E.D.’s. If that’s a concern, try halogens, which cast warmer light but cost more to operate.
The Sylvania Living Spaces 60-watt equivalent C.F.L. ($12.50 for two) emits soft light good enough for reading. If our sleep is affected, we will experiment with halogens.
DINING ROOM For the dimmable lights in many dining rooms, halogens work best. Some compact fluorescents work with dimmers, but for now they are a hit-or-miss proposition, and filling a multibulb chandelier with L.E.D.’s is costly.
Two 100-watt equivalent, soft-white halogens — the Sylvania SuperSaver ($7 for four) and the Philips EcoVantage ($3 for two) — were equally good, with warm, well-dispersed light. Both are dimmable.
LIVING ROOM C.F.L.’s, with their diffuse light, work well and economically in table lamps and torchiers. For overhead lights, or for illuminating artwork, consider the more focused beam of L.E.D.’s.
In one living room, the new Philips AmbientLED 75-watt equivalent ($40) and 60-watt equivalent ($20) furnished great reading light that was softened by warm-toned lampshades. In a lamp in our other living room, which has a warmer color scheme, a three-way EcoSmart soft-white C.F.L. (50/100/150-watt equivalent) ($10) worked nicely.
Easing Into The Light
TIPS for buying bulbs in the complex world to be ushered in by the new lighting law.
TAKE IT SLOW Don’t shop all at once for every socket in the house. Lighting technology, particularly for L.E.D.’s, is improving rapidly, and prices are dropping steadily, so it makes more sense to replace bulbs as needed.
STUDY UP There are more types of bulbs, and more yardsticks by which to compare them. (Halogens emit light in all directions, for instance, while most L.E.D.’s are unidirectional.) Before you shop, consult sources like energystar.gov, energysavers.gov and homedepot.com, which offers a video tutorial on the new law.
BRANDS COUNT There is wide disparity in bulb quality. “For a lot of offshore manufacturers, the performance is uncertain,” said Craig A. Bernecker, director of Philadelphia’s Lighting Education Institute. He suggests sticking with well-known brands and bulbs that carry the Energy Star designation, which means they meet standards for energy efficiency and overall quality.
READ THE LABEL The Federal Trade Commission mandates that most household bulbs carry a label specifying basic characteristics, like the “correlated color temperature,” a measure that can spell the difference between a room looking vibrant or washed out. Be sure to consult it.
EXPERIMENT Even with a smart shopping strategy, some trial and error is required to find the best bulb for a given room or fixture. Be flexible.
CONSULT OTHERS Learn the needs and preferences of other family members. It’s a matter of biology as much as diplomacy. “Fifty-year-olds need twice as much light to read something as well as a 20-year-old,” Mr. Bernecker said. “It’s a sad story.”
MEN, PREPARE TO BE WRONG According to Konstantinos Papamichael, a co-director of the California Lighting Technology Center at the University of California, Davis, “Certain women perceive a much richer spectrum of colors.” Some recent research, he explained, shows that up to 50 percent of women have four color sensors in their retinas, while most other people have just three. (Some men have two.)
8/16/11
For Coal Plants, a Game of Chicken
Source: NY Times By MATTHEW L. WALD
In an article in Friday’s paper, I described how some companies that operate dirty coal-fired power plants are playing chicken as they face a decision on whether to retire them or install expensive scrubbers and filters. They are waiting to see what their neighbors will do as new environmental rules take effect: as with two restaurants in a town that can support only one, if your neighbor goes out of business, more business comes to you, and prices may well rise.
In fact, in the largest grid jurisdiction in North America, the one operated by PJM Interconnection, money comes to plant owners in several different ways. The biggest is selling energy, or kilowatt-hours, and that price varies by time of day. Plants in areas where there is a lot of congestion on the grid and new supplies cannot easily be shipped in will enjoy something close to a monopoly and take in very high revenues on peak summer days.
American Electric Power, a multistate utility based in Columbus, Ohio, has been arguing that if it and its competitors close some big low-cost plants, customers will face abrupt rate increases of 10 to 35 percent. The nature of the PJM market magnifies the importance of losing a cheap generator; all producers get the same payment, equal to the highest-cost generation running, and if a low-cost generator is retired, then the most expensive generator needed to replace it will set a higher price for everyone.
But the consulting firm Bloomberg New Energy Finance identifies a second mechanism by which prices will increase. In PJM and in parallel organizations covering New York, New England, the upper Midwest and California, electric generating stations are selling several services at once, each with its own price.
The simpler thing they sell is electricity, which is priced in units of megawatt-hours. A megawatt-hour, or 1,000 kilowatt-hours, is the amount of energy that a suburban house uses in a month or so. But they also sell capacity: each utility that serves customers has to go into the wholesale market and buy not only energy but the actual availability of generation.
There are few parallels outside the electricity world; it is as if a restaurant charged upfront for a reservation for a table, independent of the price of the food. The way the electric system works, the equivalent in a restaurant would mean paying for a table of adequate size, whether or not everybody showed up.
The capacity market is not only a way to compensate generators; it can also be used to set a value on the services of “demand response” companies. Those are companies that line up electricity customers who agree, in exchange for a payment, to turn off their equipment on peak days.
Companies that serve retail electricity customers must buy as much capacity as the retail customers used in their last peak load day, plus a margin. And this summer, many of the companies had new peak loads.
Eventually electricity customers pay for both the energy and the capacity. The mechanism is intended to compensate generators that sit idle much of the year but are really important on hot days. The price also serves as a signal to companies thinking about building new plants; if it rises high enough, they know it is time to build.
Capacity payments have mostly been low in the last few years because the recession has cut demand for electricity and supply has been high relative to demand in the auctions or individual deals between utilities that serve customers and companies that own generation.
In a research note released late Friday, Bloomberg New Energy Finance said that capacity payments in 2014 and 2015 would reach a level equal to $7 per megawatt-hour of electricity sold — in other words, about $7 on the monthly bill of that suburban house, or seven-tenths of a cent per kilowatt-hour. The national average retail price of a kilowatt-hour is about 10 cents, although in some parts of the Northeast it can be triple that amount.
Higher capacity payments are one of the mechanisms through which surviving electric plants will get the revenue needed for add-on antipollution devices.
Charles Blanchard, an analyst at Bloomberg New Energy Finance and author of the research note, said in an e-mail that capacity payments may reach 25 percent of total revenues as supply is reduced.
For the Independent System Operators, or I.S.O.’s, like PJM, the capacity problem will become more important as fewer generators are coal- or gas-fired power plants, which can be switched on at will to meet peak load, and more are wind or solar, which must be compensated for times it is not sunny or windy.
“This trend is going to continue, as intermittent resources like wind and solar force I.S.O.’s to pay to keep gas-peaking plants online even though they’re not used enough to be profitable based on electricity sales,’’ Mr. Blanchard said in an e-mail.
8/04/11
Brands Now Direct Their Followers to Social Media
Source: NY Times by ANDREW ADAM NEWMAN
MARKETERS promoting their products online have followed a fairly standard arc historically, first buying digital ads and building their own Web sites in the early years of the Internet, and more recently amassing followers on social networks like Facebook and Twitter.
Now, companies increasingly are running online ads that focus less on pitching their products than promoting their Facebook pages and Twitter accounts.
The ads, which have menu tabs and increasingly resemble mini-Web sites themselves, allow users to click within the ad to see a brand’s Twitter messages or Facebook wall posts in real time, or to watch a brand’s video content from YouTube — all without leaving the Web page where the ad appears.
A recent online ad for Mrs. Meyers, the cleaning brand, for example, said, “Clean should smell better” and instructed users to “Hover to expand.” When a cursor is placed over the ad, it extends downward to expose an area that, depending on what button is clicked, displays real-time Facebook wall posts, Twitter users posting about Mrs. Meyers, or a video from the brand about Thelma Meyer, for whom the brand is named.
Although Internet users rarely click on an ad to be taken away from a page — only one in a thousand do so, according to Google — they could engage with all those tidbits in the Mrs. Meyers ad without leaving the Web page they were visiting.
And engage they did, according to Flite, the media and technology company that produced the ad.
Consumers on average spent 30 seconds interacting with the ad, compared with an average of what, according to Google, is just 11 seconds. In addition to spending more time on the ad, consumers were more likely to click on a “learn more” button to go to Mrs. Meyers’ own Web site, with 35 of every 1,000 users clicking through, compared with an average, again, of just one in 1,000.
“Brands are building a great presence on social networks and are looking at ways of making it more accessible,” said Giles Goodwin, president for product and technology at Flite.
The company refers to its technology as a “cloud-based ad platform” because it infuses ads with live content from other sites including Facebook and Twitter, and it has produced such ads recently for brands including Coca-Cola, Lancôme, Volkswagen and AT&T.
Another media and technology company, Kontera, is taking a similar approach with in-text advertising, where advertisers pay for keywords to be hyperlinked within an article or blog post. While clicking such words often takes users to an advertiser’s Web site, with Kontera, ads pop out in a window on the same page, and many ads that Kontera is doing these days highlight advertisers’ social networks over their products.
In recent ads for Ritz crackers, the Kraft brand, for example, the brand wanted to highlight a promotion with “Glee” that included a sweepstakes to win a trip to meet the cast of the Fox show on their set in Los Angeles.
On the Kontera network of sites — which include those for the magazines U.S. News & World Report, Shape and Men’s Fitness — words in content likely to relate to the show, including of course the word “glee” and the names of both the characters and the actors who play them, were highlighted. Positioning the cursor over those words caused an ad to pop out in a window that promoted the sweepstakes and highlighted posts on the Ritz Facebook page about the show and contest.
“Social media is not a tactic that stands alone from your advertising campaigns,” said Chris Karl, a senior vice president at Kontera.
The “Glee” in-text ads presented themselves to fans of the show when they were most likely to be reading about it, then ended up signing them up as followers of the brand on Facebook, which was required in order to enter the sweepstakes.
As for why Ritz aligned itself with the television show to begin, the crackers, often served at social occasions, share the show’s spirit of being “all about fun and a champion of fun,” said Sheeba Philip, the marketing director for Ritz.
“A program like Kontera’s is really effective for reaching consumers with common and shared passion points,” Ms. Philip said. “It really was a push to drive people to Facebook to learn more about the brand.”
For other in-text ads by Kontera for Verizon, the brand did not even promote its own social network account, but rather that of Will Power, the race car driver who competes in the Indy Racing League, and whom Verizon sponsors. While Mr. Power is not, of course, likely to send Twitter messages with Verizon slogans, in the photo of the driver posing alongside his car on top of his Twitter page, the Verizon logo is prominent on both his uniform and car.
Andy Smith, a co-author (with Jennifer Aaker) of “The Dragonfly Effect: Quick, Effective, and Powerful Ways to Use Social Media to Drive Social Change,” said incorporating live content from Facebook and Twitter allows online ads “to feel less static,” and even to be “at least as current if not more current” than adjacent editorial content.
Even if those live snippets in ads include brands apologizing about missteps or customers griping, it still could benefit advertisers because in an era when consumers actually become friends with companies on Facebook, those consumers may expect some warts-and-all human characteristics.
“There is transparency in being willing to say, ‘This is what people are saying about us,’ ” Mr. Smith said. “And with the relationships that people have with brands today, the more honest and human they seem, the more likely consumers are to like them and stick with them.”
7/29/11
Fuel economy rules to get tougher
Source: CNNmoney.com
NEW YORK (CNNMoney.com) -- President Obama plans to announce an agreement tomorrow on a new round of fuel economy standards for cars and trucks that would require mileage gains through the year 2025.
The proposal is expected to call for all passenger vehicles sold in 2025, combined, to average 54.5 miles per gallon, or nearly double the current figure. They'd ramp up to that level over seven years, starting in 2017 when current rules end.
Environmental groups had been pushing for a 60 mpg fuel-efficiency requirement but industry representatives objected that meeting such a high standard would be too costly.
Under requirements currently in place, the fuel economy of all 2011 cars and trucks sold has to average out to 27.3 mpg. By 2017, when the current rules run out, they will have to average 34.1 mpg.
Each automaker will be given fuel economy targets tailored to the types of vehicles it sells. Automakers like Ford (F, Fortune 500) and Toyota (TM) that sell large trucks and SUVs as well as small cars and hybrids might be given a lower fuel economy target than automakers like Honda (HMC) and Hyundai (HYMTF) that sell no large trucks. And Ford, say, could offset sales of a few V8-powered Mustangs with sales of popular Fiesta subcompacts.
Still, fuel efficiency requirements for pick-up trucks and SUVs would rise more gradually than those for cars. Cars would be required to average a 5% improvement in fuel economy each year from 2017 through 2025, while trucks would only need to rise 3.5% a year through 2021.
The plan amounts to an "agreement in principle" between automakers and the government, but a formal proposal won't be issued until the fall. Then, after a 90- day "public comment" period, details of the requirement will be worked out. Official regulations aren't expected until fall 2012.
Corporate Average Fuel Economy (CAFE) figures like these aren't calculated using the familiar EPA fuel economy numbers seen on new-car window stickers.
EPA figures are adjusted to reflect real-world driving and are typically about 20% lower -- indicating worse fuel economy -- than the figures used to calculate CAFE compliance. For instance, a car that gets 21 mpg according to the EPA window sticker might count as a 27 mpg car for CAFE requirements.
CAFE regulations are jointly administered by the National Highway Traffic Safety Administration and the EPA.
Tougher for smaller car makers
Stricter fuel economy requirements could spell trouble for smaller automakers that lack the research and engineering staffs to come up with new fuel-saving technologies, said industry analyst Dave Sullivan of Autopacific.
Also, smaller automakers don't have as broad a range of models to work with. Their larger competitors can improve their average fuel economy simply by incentivizing sales of smaller cars at the expense of larger ones.
"This could really squeeze some of the smaller automakers out of the U.S. marketplace," he said.
These new fuel economy increases will almost certainly require price increases as automakers add new technology and more expensive lightweight materials to cars and trucks.
To meet the standards, automakers will likely charge more for gas guzzlers, said Motor Trend magazine editor-in-chief Angus MacKenzie.
"A simple rule of thumb is the bigger and less efficient a vehicle is, the more expensive it's going to become," he said.
Higher car prices will be a major concern for consumers, said Jeremy Anwyl, chief executive of the automotive Web site Edmunds.com, in a draft of a letter he sent to the EPA. Anwyl expressed frustration with the secretive nature of the government's discussions with automakers and environmental groups in preparing the new rules.
"The two things that concern consumers most are the availability of vehicles that they prefer, and the pricing of those vehicles," Anwyl wrote.
The biggest challenge will be meeting the demands of American car buyers, who expect fuel economy without substantial compromises, said McKenzie.
"The industry can build these cars, no problem," he said, "but will American consumers want to buy them or drive them?"
First Published: July 28, 2011: 1:06 PM ET
