Page 625 - Business Principles and Management

Case Study

NEW PRODUCTS AND INCENTIVES COUNTER RISING GAS PRICES

Rising gas prices have spurred the production of hybrid cars and of
ethanol, a plant-based alcohol fuel that may help reduce U.S. depen-
dence on foreign oil. In 2005, President Bush signed an energy bill that
encourages greater use of ethanol as an ecologically sound fuel additive.
Government incentives along with high gas prices have led to a mini-
boom in ethanol plant construction in major corn-growing states like
Iowa and Nebraska. Thirty-three ethanol plants were under construc-
tion a year after the president signed the bill, and 8 of the 95 plants in
operation were being expanded. The ethanol supply is expected to double
to 9.8 billion gallons by 2015.
Ethanol makers received a boost not only from the energy bill but
from Detroit automakers who are promoting vehicles that can burn E85,
a blend of 85 percent ethanol and 15 percent gasoline. The more com-
mon gasohol consists of 10 percent ethanol.
Several well-known corporations are supporting the move toward
more fuel-efficient cars. Driving a hybrid already means free parking at
meters in one Connecticut city and reserved parking spots near the front
door of a New Hampshire company. Bank of America is offering incentives
to individuals who buy hybrid vehicles. Some Bank of America employees
receive $3,000 cash if they buy a fuel-efficient vehicle. The company of-
fered its incentive program to 21,000 employees in Boston, Los Angeles,
and Charlotte, joining other companies and communities nationwide in
pushing the hybrids. Bank of America offers a rebate to any employee
who buys a hybrid vehicle and lives within 90 miles of the three cities.
Google, the Internet giant based in Mountain View, California, offers
$5,000 cash to individuals who purchase low-emission cars that get at
least 45 miles per gallon and $2,500 to those who lease them.

THINK CRITICALLY
1. Give two examples of public relations benefits achieved by the Bank
of America incentive program.
2. What two products have benefited from higher fuel costs?
3. Why would farmers be interested in the trends covered in this article?
4. Why is it wise for automakers in Detroit to get involved in this
special project?

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