Huffpost Business
The Blog

Featuring fresh takes and real-time analysis from HuffPost's signature lineup of contributors

Charity Knight Headshot

Oil Prices Back Above $100 a Barrel -- Is It a New Dawn for Green Cars?

Posted: Updated:

Oil export sanctions on Iran, in response to its nuclear program and its association to extreme conflict zone Syria, has caused the price of a barrel of oil to reach a global maximum of $102. Although lower than January prices ($113), will this change consumer automotive trends to greener government backed vehicles?

Unfortunately this threat to Iran's economic structure, due to its decreasing petroleum export industry, does not seem to worry Iran. President Ahmadinejad said that it was not something that Iran will notice, let alone worry about, for another two to three years.

However, we need to think of how this oil embargo will affect us. Will this herald the long awaited surge in the development of environmentally friendly cars? 

The move to 'greener' cars has been progressing due to the wider availability of mass production vehicles, such as Toyota's Prius and Honda's Civic Hybrid. The continued economic situation and the constant threat of an increase of gas prices is encouraging consumers away from gas-guzzling cars and into the lap of cost efficiency. This is further boosted by lower insurance and tax costs in a rising market, represented in the best sales record of the Prius for 12 years in the U.S., according to the Chicago Tribune.

The main threat to greener vehicles may be that old technology is showing remarkable resilience. Gas-fueled internal combustion engines are less friendly on the environment, but they keep getting more and more efficient. Not only that, the automotive industry continues discovering that consumers aren't close to giving them up. 

While the Chevrolet Volt, an electric car, was America's car of the year in 2011, only 8,000 were sold in its first year. In a total market of 12.3 million vehicles it hardly registers on the sales statistics. 

The UK government has promised approximately $484 million (£300 million) for the "plug-in car grant," an incentive of $7700 (£5,000) per customer, but prices of these cars remain stubbornly high in the UK with the Nissan Leaf costing $40,335 (£25,500) even after the grant has been deducted. 

This however, does not seem to deter car manufacturers. Honda has just announced the arrival of three new hybrid models into the Chinese market matched with Citroen's latest campaign with the new, sporty and seductive DS5. Renault has shown that e-mobility technology shall continue with the introduction of the tiny Twizy, a vehicle similar in size and shape to an off road quad bike (although with triple the price tag).

Steven Chu, the U.S. Energy Secretary, speaking at last year's Detroit Motor Show, is hopeful that changes will occur, commenting: "Do I think electric vehicles 10 years from today will be major part of the market? Yes, because the battery costs and the electric motor costs will be dropping." 

As ever, things never move as fast as we want or need, most especially when it comes to changing the world to a place that cares more about saving the planet through decreasing its emissions.  

The price of oil may go up and down but it will always move faster than people change cars, or their beliefs. A sustained high oil price may increase people's enthusiasm for saving money at the petrol pump, but it will do little for profits in the automotive industry where the necessary technology needs to be developed for a greener future.