Ford Motor Company (F), General Motors Company (GM), And The Real, Real Price of Gasoline

Daniel Yergin, an energy analyst who won a Pulitzer for his book The Prize, calls efficiency and conservation “the fifth fuel,” writing that “many would not even think of it as a fuel or an energy source. Yet in terms of impact, it certainly is.” He continues:

The United States uses less than half as much energy for every unit of GDP as it did in the 1970s … a new car in the 1970s might have averaged 13.5 miles to every gallon. Today, on a fleet average basis, a new car is required to get 30.2 miles per gallon.

It will also probably serve as one of the most important solutions to global energy problems, writes John Authers of The Financial Times:

This spasm of activity [shale boom] has put to rest the fears that “peak oil” production had arrived, fashionable during the price spike five years ago. But there is a limit to how far supply can be increased, and political and economic limits to the environmental damage that can be tolerated.

Once popular bets on alternative energy technologies have now fallen out of favor. Ethanol production led to a spike in agricultural commodity prices, for example. That leads to a new theory: that the next five or 10 years will be devoted to a bid to improve energy efficiency.

It’s already more than a theory. The new fleets of vehicles being produced by Ford Motor Company (NYSE:F) and General Motors Company (NYSE:GM) have a common denominator: A forceful push away from power and size toward efficiency. Whether it’s an SUV or a tiny commuter car, efficiency now sells, and that’s what automakers are delivering.

Oscar Wilde once wrote about those who know “the price of everything but the value of nothing.” He may as well have been talking about how we think about gas prices.

The article The Real, Real Price of Gasoline: Probably Lower Than You Think originally appeared on Fool.com and is written by Morgan Housel.

Fool contributor Morgan Housel has no position in any stocks mentioned. The Motley Fool recommends Ford and General Motors and owns shares of Ford.

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