Great Gas Phaseout

If you're like most people, you're feeling the pinch of record gas prices on your pocketbook. It seems the price of gas only goes in one direction, and the trend doesn't appear to be reversing anytime soon. Coupled with environmental concerns hyperbolized by Fox's (NYSE: FOX) apocalyptic epic The Day After Tomorrow, these record prices underscore the need for cleaner and more efficient fuels.

Thankfully, consumers have many options when it comes to improved fuel efficiency. Technological improvements, prompted by both legislation and marketplace demand, have led to cleaner-burning gasoline from the likes of ExxonMobil (NYSE: XOM) and BP (NYSE: BP), while zero-pollution hydrogen fuel cells -- still too costly for mass production -- are also an appealing long-term technology.

Arguably, though, the biggest step towards more efficiency and cleaner vehicles was the development of gas-electric hybrid automobiles. Honda Motor (NYSE: HMC) was first to market in the U.S., releasing the Insight in 1999. Toyota (NYSE: TM) followed with the Prius in 2000. Tremendously fuel-efficient, these vehicles had the unfortunate drawbacks of low power and speed, while costing more than comparable gas-only vehicles.

Americans like powerful cars, and early hybrids were seriously deficient in this matter. That's about to change, as 2004 marks the year hybrids finally catch up. This year, Honda plans to release a 240-horsepower V-6 Accord hybrid with the fuel efficiency of a compact Civic. And the release of powerful hybrid SUVs this year by Toyota and Ford (NYSE: F) should finally squelch the horsepower criticism. With power issues finally resolved, hybrid sales should grow to 1% of the total auto market in 2005, and more than 5% within the next decade.

Cost remains the final barrier to full acceptance of hybrids, which can cost as much as $5,000 more than a comparable gas-only model. The average driver would take years to recover that extra cost in fuel savings. And you'd better hope that electric battery doesn't die on you, because it will cost you over $2,000 to replace it.

High costs are the curse of early adoption, but just as hybrids are catching their predecessors in terms of power and speed, costs will eventually come down as well. When automakers begin building comparably priced hybrids with equivalent power, it's almost a no-brainer that gas-only engines will be phased out in what's likely to be a win for environmentalists and investors alike.

Are cars and investing your thing? Do you have a need for speed? If you are looking for other like-minded Fools, head on over to our Cars and Drivers discussion board. It is hopping. Join the fun!

Fool contributor Chris Mallon misses big engines and four-barrel carburetors, but is glad automakers are finally addressing environmental concerns. He owns shares of Honda through his private investment partnership.