Congestion Charging at The Energy Lean Buffett
Warren Buffett, CEO of Berkshire Hathaway holding group, is the world’s second-richest human. Buffett’s no stranger to the transportation sector, having mopped up profits with Geico, Forest River (RV’s), McLane Company (foodstuff distribution) and the XTRA Corporation (semi-trailer renting and leasing). Berkshire Hathaway recently took a ten percent stake in the railroad company Burlington Northern Santa Fe Corp. Warren Buffett’s seen the future.
The future will have fewer trucks and a lot more rail carriages. Fewer people and goods will travel by road. Cars will be smaller and cleaner. People will use them less. Diminishing oil supplies and increasing demands upon this declining resource (especially with the explosive economic growth of fomerly third world countries like China) will make it so.
And if that doesn’t do it, concerns about global warming, clean air and healthy living will. In fact, a few years from now, anyone cranking up an internal combustion engine close to children will be hauled out of the car and forced to suck his own exhaust—and then plant a tree. OK, maybe I got a little carried away there, but you get the idea: The Energy Lean Age is here.
While Americans are just waking up to the enormous implications of this shift, their European counterparts have been living it for almost a decade. For a quick look at America’s future, let’s hop over to the capital of The Land of Hope and Glory.
In February 2003, London introduced a Congestion Charge for motorists entering the heart of the City. Currently, motorists entering the Congestion Zone must pre-pay an eight pound ($16) fee. If they forget, they’ve got to pay $20 before midnight on the following day. If they miss that deadline, but pay within two weeks, it’s a $50 fine. After that, it’s $200. Remember: this is PER DAY.
London is now looking to modify the charge to change the automotive mix. To that end, Mayor Ken Livingtone’s administration is set to introduce ”Emissions Influenced Charging.” Cars entering the City which emit up to 120g/km CO2 will pay nothing. Cars emitting 121-225g/km CO2 will stump-up the current charge. Cars emitting more than 225g/km CO2 will fork over £25.
A Range Rover Sport entering London will cost its driver a staggering $50 a day. On the flip side, if your car is small and clean, you won’t have to pay for the privilege of using London’s roads (any more than you already do through petrol taxes). You’ll also get a Politburo-style fast-track through town during rush hour and special parking areas.
Other European cities and towns are contemplating similar moves. (As you’d imagine, Germany’s Green Party is all over this one.) Meanwhile and additionally, there’s a growing move towards emissions-based ”road pricing,” a pay-per-mile scheme that monitors driver behavior via a GPS tracking device or number plate recognition cameras. Since 2005, German trucks pay between €0.09 and €0.14 ($0.12 and $0.19) per kilometer depending on their emission levels and number of axles.
The road pricing debate is fierce; critics on the left attack it as a regressive tax, while critics on the right warn it will stifle economic growth. Even so, road pricing’s environmental component has given the concept a huge boost. It’s clear European governments are bound and determined to use dramatic (not to say drastic) measures to skew the automotive market towards smaller and more fuel efficient vehicles.
It seems highly unlikely that the widening rift between activist European governments pushing carmakers to go small and clean, and the American government’s relative tolerance for gas guzzlers, will remain forever. Whether it takes a cataclysmic economic shock, or a gradual increase in gasoline prices, or environmental concern/lobbying, the U.S. will eventually move more in line with the European model. And begin adopting European ”energy lean” solutions.
Meanwhile, Japanese and European-based automakers are busy building cars that conform to this political paradigm. You can also count on the Chinese accelerating production of the cars GM Car Czar Bob Lutz derided a few years ago, when he told the world that ”Rich people don’t care about the price of gasoline.”
Whenever Bob looks at a large car, he would do well to think of a spitoon. That’s how popular large cars with internal combustion engines will be a few years from now. And they’ll soon be just as gone as spitoons– unless they somehow manage to become Energy Lean and Air Clean large cars.
Which is why Warren Buffett’s moving his money to trains and evaluating other green energy alternatives, including electric cars. Trust me. Mr Buffett knows a sure bet. (He may even sell his shares in NetJets one day.) You better hope what’s in your garage is Energy Lean by then: the second hand value of voracious landcruisers will drop in inverse proportion to Berkshire Hathaway’s spectacular investment history.
Brand strategist and conceptualizer. Working with communicating premium brands for manufacturers around the world.
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