India has announced that fuel prices are going to be raised by 10 percent. The state-owned oil companies had no other option but adapt pump prices in response to the increase of crude oil prices in international markets. According to an article in Autoplus, gas stations in New Dehli were selling gasoline at 45.52 rupee and diesel at 31.76 per liter. That's about $1 and $0.75 (U.S.) per liter, respectively. Unlike Europe and the U. S., the price of fuel in India is regulated by the government, although prices differ from state to state.

[Source: Autoplus]

How much is filling up going to cost you this Summer?

Gas prices are once again steadily climbing with Spring approaching, the possibility now looming for prices to equal last year's highs of $3 a gallon. Prices in Detroit are up 38 cents in just the last month and are now as high as they were in early December. While prices may fail to reach the $3 level, the fact that Summer prices have for two years running now indicates that the market can sustain such prices during the warmer months.

Analysis: It almost feels like people have come to terms with high gas prices in the same way that most people now believe that climate change is well under way. Why would the oil companies do anything but push the prices to $3 a gallon over Summer if they know everyone will keep filling up?

Related:

• USDA: Biofuel use in U.S. will see spike in next few years, then drop
• London's congestion charge expansion will cleanly fuel Honda's sales
• In Europe, fuel efficiency is the primary concern

[Source: Detroit News via Wired]

It seems like all summer as we watched gas prices rise, we also saw countless reports on how American auto consumers were moving towards more fuel-efficient vehicles. J.D. Power and Associates has another report to add to the list called the 2006 Escaped Shopper Study with a few more insights.

Their study says that for new vehicle shoppers, gas mileage is increasingly being cited as a reason to not purchase a particular vehicle or model. It's at 17 percent, the third most cited reason, up from 13 percent in 2002. The first two reasons in order are "total price too high" and "total monthly payment too high."

Jeff Zupancic, director of retail research at J.D. Power, says that shoppers who reject one type of vehicle will typically purchase a smaller vehicle that is similar in configuration. As an example he states that about 50 percent of auto consumers who would have considered a compact sport utility vehicle with an average fuel economy of 18 mpg end up purchasing a compact crossover which on average will get 24 mpg.

One particularly interesting note from the study reveals that premium vehicle shoppers are just as likely to reject a car because of high cost. J.D. Power's press release doesn't extrapolate as to whether the same is true between premium consumers and the rest of us when it comes to rejecting a vehicle for low gas mileage. Though, one might imagine there is a correlation between the two.

Zupancic offers a bit of advice for the automakers and says that, "In the long term, vehicle models that offer a choice of engines, such as fuel efficient four-cylinders for those more sensitive to fuel prices, as well as more powerful six-cylinder engines for those seeking power, will have a distinct advantage in the market place."

One thing to keep in mind is that the study was conducted in May and July when gas prices were on the upswing, and as they say, what was true then, may not hold firm now. Although, now that the seed of high fuel prices has been planted in consumers' minds, we may very well see a continued concern for high mileage vehicles.

[Source: J.D. Power and Associates]

As we've been reporting, demand for ethanol has been extremely high this year. The cause is not just due to consumer demand but government mandates to double the ethanol supply by 2015 and to replace MTBE, a petroleum additive. According to analyst Tom Kloza, the demand adds as much as 30 cents per gallon of gasoline.

However, the prices could possibly drop by year's end and remain low into next year. July and August are peak vacation months in the U.S. and have the highest fuel consumption. Replacement of MTBE in the fuel supply would be complete while new ethanol production plants (33 by year's end) would be ready to start production in 2007. Note that E85 prices are not affected by current prices due to negotiations between fuel sellers and their suppliers.

[Source: USA Today]