Improved Fuel Economy May Affect Your Portfolio

If you find yourself filling up your gas tank more often than you'd like to, help may be on the way. The White House is looking for a big bump in fuel economy standards in vehicles, having them rise steadily to 54.5 miles per gallon between 2017 and 2025. Such a regulation will affect many companies, and it may affect your portfolio, as well.

Calls for improved economy have been made in the past, and the auto industry has often fought them. This time, though, following a period of bailouts and wrangling with the government, the automakers have capitulated, with 13 of them, including Ford (NYS: F) , General Motors (NYS: GM) , Honda (NYS: HMC) , and Toyota, signing on to the proposals. In their place, though, auto dealers are now objecting to the proposals, arguing in part that Americans don't want more fuel-efficient vehicles.

The dealers have a point -- less than 3% of vehicles sold recently have been hybrids. That's partly due to pricing, though, and as sales grow, prices are likely to come down. Sales have been growing, too, with total Priuses sold in the U.S. surpassing one million earlier this year.

Carmakers have been developing alternative energy technologies to power vehicles, such in as Nissan's all-electric Leaf and the turbochargers from Honeywell (NYS: HON) that General Motors is using in its Chevy Cruze. They're also looking into boosting efficiency by making cars lighter, via plastics instead of metals.

Portfolio ramifications
The price of gas isn't expected to come down significantly, which is likely to sustain interest in fuel-efficient machines. We investors may want to think through what that might mean for our portfolios.

One possible loser is the oil business, if our gas consumption falls markedly. Dig a little deeper before selling, though, because many big oil companies are busy developing alternative energies. Chevron (NYS: CVX) , for instance, has partnered with Weyerhaeuser (NYS: WY) on a biofuels-from-forests project. Aluminum giants such as Alcoa (NYS: AA) also stand to suffer, if auto bodies shift strongly from metal to plastic.

But despite their initial objections, carmakers may not suffer at all. Until commercially viable jet packs appear, we're likely to keep needing vehicles, and fuel-efficient ones are likely to fit the bill, meeting governmental regulations and being kinder to our wallets.

If you're invested in companies related to these industries, you'd do well to keep an eye on developments, as they can affect your future net worth.

Looking for some promising investments? Read this free report from The Motley Fool to find the names of five stocks we own that you should, too.

At the time this article was published Longtime Fool contributor Selena Maranjian owns shares of Ford, but she holds no other position in any company mentioned. Click here to see her holdings and a short bio. The Motley Fool owns shares of Ford. Motley Fool newsletter services have recommended buying shares of General Motors, Ford, and Chevron. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Gumby

Toytoa Pruses has smaller battery pack than Chevy Volts.. This is why Toyota Priuses cost far less than Chevy Volts... GM is trying to bankrupt our government wtih too m uch tax credit !!

November 05 2011 at 2:46 PM Report abuse rate up rate down Reply
Gumby

I dont see the need for Chevy Volts to have way too big a battery pack that can do 40 too much miles... REally, a 5 mile range battery pack is plenty .. You dont need to be pure electric for the first 40 miles which is silly! Chevy Volts, in case you are not mechanically inclined to understand the inner workings , is actually an electric car with a small gas engine whose sole duty is to keep the battery charged with a generator driven by the small engine itself.. That small gas engine is not connected to any gears or wheels at all. That small gas engine is connected to the generator only. So the battery pack doesnt have to be that huge as found in Chevy Volts.. This is patently silly and dumb of GM to put that huge battery pack in each Chevy Volt.. There is no way that it can or should be mimicked in all other models because there is not enough lithium coming out of booming mines in the world ,anyway.. I dont understand whath GM is trying to do or prove ?? To have the world's longest range electric car?? This is so dumb!! YOu cannot prople 3000 pound car very far on any kind of battery.. YOu have a better chance with lighter motorcycles , yes, but heavy cars , heck no! So I think GM ought to chop down the size of the battery pack in Chevy Volts and reduce the ridiculous price of $40,000 that cost our Government or even our Social Security Fund to pay each buyer $7500 to buy a Volt.. This is really retarded!! I am not going to allow GM drain our Social Security Fund with credits ... Car dealers has no business comp;laining about how buyers dont want smaller cars... Car dealers has no backbone themselves... and they will hurt themselves by kow towing to V8 mentality .... We have to get rid of all the muscle cars .. we cannot allow Big Oil to profit off the gas guzzlers who couldnt care any less about our economy being screwed by rising oil prices chiefly because of gas guzzlers who wont give up V8 mentlaity.. Now,, those people who are out of work, ought to occupy Big Oil instead of Wall Street... Lets occupy all gas stations and start heckling at those V8 car owners pumping gasoline!! mindlessly!~~!

November 05 2011 at 2:43 PM Report abuse rate up rate down Reply
anijjk

Your articles :Death to credit cards. Death to Wall mart,erc. All are stupid

November 04 2011 at 5:57 PM Report abuse rate up rate down Reply