WASHINGTON, March 5 - Falling oil prices could hurt investment in fuel efficient vehicles and capital projects designed to promote energy saving technologies, an automotive research firm warned on Thursday.
CSM Worldwide told the Environmental Protection Agency that some conditions for that scenario appear in play already with recession pushing oil prices down nearly 4 percent on Thursday on expectations of lower fuel consumption overall.
"It's simple economics - consumers and investors are not likely to invest in fuel efficient vehicles and capital intensive new technologies if a sharp drop in oil prices undercuts them," said Eric Fedewa, vice president of CSM's global powertrain forecasts.
Fedewa comments were delivered at a public hearing on California's plan to impose strict limits on tailpipe emissions to reduce fuel use and cut pollution. The initiative backed by more than a dozen other states requires a waiver from federal law.
To underscore his point, Fedewa said oil prices -- which closed under $44 per barrel on Thursday -- are well below the level at which corn-based ethanol becomes uncompetitive.
In addition, Fedewa said families are spending about the same for fuel as they did in 2002 when sport utilities and pickups were king.
Also, the Renewable Fuels Association estimates that the ethanol industry has lost 10 companies and 24 plants over the past three months, idling about 15 percent of the 12.5 billion ethanol production capacity. About a dozen more companies were in distress, Fedewa said.
"Shares of alternative energy companies have fallen even more sharply that the rest of the stock market," he said, adding that Toyota Motor Corp has suspended work on its Prius hybrid factory in Mississippi while Ford Motor Co is expanding production of the F-150 pickup.
CSM Worldwide told the Environmental Protection Agency that some conditions for that scenario appear in play already with recession pushing oil prices down nearly 4 percent on Thursday on expectations of lower fuel consumption overall.
"It's simple economics - consumers and investors are not likely to invest in fuel efficient vehicles and capital intensive new technologies if a sharp drop in oil prices undercuts them," said Eric Fedewa, vice president of CSM's global powertrain forecasts.
Fedewa comments were delivered at a public hearing on California's plan to impose strict limits on tailpipe emissions to reduce fuel use and cut pollution. The initiative backed by more than a dozen other states requires a waiver from federal law.
To underscore his point, Fedewa said oil prices -- which closed under $44 per barrel on Thursday -- are well below the level at which corn-based ethanol becomes uncompetitive.
In addition, Fedewa said families are spending about the same for fuel as they did in 2002 when sport utilities and pickups were king.
Also, the Renewable Fuels Association estimates that the ethanol industry has lost 10 companies and 24 plants over the past three months, idling about 15 percent of the 12.5 billion ethanol production capacity. About a dozen more companies were in distress, Fedewa said.
"Shares of alternative energy companies have fallen even more sharply that the rest of the stock market," he said, adding that Toyota Motor Corp has suspended work on its Prius hybrid factory in Mississippi while Ford Motor Co is expanding production of the F-150 pickup.
