Gas pains and luxury lemons

Remember the debacle caused by the Panamanian government when it started paying $25,000 per bus, to get clunker buses off the road? Fraud, maladministration, and confusion. Then the Panama Supreme Court stepped in and said it was a screwball idea that wasn’t legal in the first place.

Well, someone better get the word to the US Congress. It is expected to pass this week a bill that would give consumers cash vouchers of between $3,500 and $4,500 if they trade in their old cars for newer, more fuel-efficient vehicles. The $1 billion cash-for-guzzlers bill is modeled after successful programs in Germany and other European countries. A good idea? No.

First off, the bill would be a boon to Asian and European carmakers, while leaving product-starved Detroit automakers adrift in their sea of red ink. Secondly, small carmakers will push up the prices of their vehicles knowing they have an extra profit margin given to them by the U. S. government rebates so that buyers savings will be illusory. Finally, most consumers are worried about putting food on the table, afraid that their job will disappear, or that their pension will stop. Cash vouchers that will leave car buyers with an additional $10,000 to $15,000 debt are not what’s needed.

GAS PAINS. And you thought the banks and car companies were shysters; now it’s the turn of the oil companies. The world demand for oil is decreasing. Driving in the States, for example, is down five percent and everyone is buying small fuel-frugal cars. So you would expect gas prices to go down, right? Wrong.

American consumer advocates say the oil companies always keep prices high over the summer months because that’s when Americans do most of their driving. ACODECO the Panamanian government consumer agency that regularly checks oil prices has come up with similar findings. For example, forget about competition between gas stations: ACODECO’s latest study shows that diesel fuel prices vary only between $2.18 and $2.21 a gallon, no matter where you shop. Competition, my eye.

Oil analysts are surprised diesel fuel costs are so high, with another hike on the horizon. Analysts say this is surprising because diesel fuel sales have been dropping in Panama and this should have led to lower, not higher prices. For example, diesel sales in Panama were down 23% during the month of April, compared with last year. Diesel demand is also expected to stay down due to less need for diesel fuel by Panama’s hydroelecteric plants and the sending of big construction projects like La Cinta Costera. Usually, less demand means lower prices. But, that’s assuming there’s real competition out there.

As for comparing prices among local gasoline stations, stick with ACODECO’s independent weekly ratings. I tried www.masgasolina.net, a web site set up by local lawyer John Pardini , but that site didn’t work. John, where are you. Have the oil companies kidnapped you?

LESS LUXURY. OK, now’s the time to buy that luxury car you’ve lusted after, each time you drive down Calle 50. The dealers are hungry. Never have they seen it happen before. They are thinking of buying McDonald’s franchises. There’s near panic at the City Club.

Luxury car sales are down 37% for the first quarter of 2009. The models most affected: Audi, BMW, Cadillac, Hummer, Jaguar, Lexus, Maserati, Mercedes-Benz, and Porsche. Keep in mind that many people have soured on luxury cars due to the rotten economy, hard-to-get credit, poor reliability of certain models, Cadillac’s bankruptcy, Jaguar’s purchase by Tata Motors (India) and Hummer’s purchase by Chinese interests. If asked which of these models would be the better buy, I’d put my money on BMW and Lexus. They’re not as reliable as they pretend to be, but depreciation is so slow that you can drive for a couple of years and still have lots of equity left with your trade-in.