My local "drug" dealer, also known as Sonny's Sunoco, as regular readers may recall, likes to play roulette with prices. It's not unusual for me to see the numbers on his display board switch three or four times a day, apparently depending upon how his personal trading is going on the spot market.

So I was surprised to see the figures hold steady, this weekend, at $3.79 a gallon of regular, more than 40 cents below the peak price he was demanding of us petrol junkies just a month before. All across the country, the AAA reports, prices are falling, and are now averaging barely $4 a gallon.

(Of course, who would have thought we'd breathe a collective sigh of relief when fuel prices were "only" $4?)

Why the sudden dip? No, it's not because the Saudis are suddenly feeling guilty, nor is it the result of a sudden sense of social responsibility in the ExxonMobil boardroom. It's apparently nothing more than a sign that Adam Smith was right. The invisible hand of the market seems to be working.

As fuel prices soared, in recent months, Americans began cutting back on their driving, whether by carpooling, cutting out unnecessary trips, switching to more fuel-efficient vehicles, or canceling their cross-country vacations. Whatever the reason, the nation sucked down 2.4 percent less fuel during the previous four weeks than it did during the same period in 2007. And that's helped drive down the price of crude by more than $20 a barrel since its July 3 peak of $145.31 - to a Friday close of $123.26.

Of course, that seemingly direct link between fuel consumption and fuel prices could work against us, if motorists wind up driving more now that fuel is, ahem, affordable again. Relatively, anyway. What was $72, on average, in 2007, is still expected to be $127 a barrel in 2008, and $133 next year, according to the energy Information Administration.

But unlike years past, when the laws of supply and demand were pretty much directly impacted by what happens on U.S. shores, the situation has changed dramatically in recent years, as more and more of the emerging world discovers the automobile.

China has become the world's third-largest motor vehicle market, behind only Japan and the U.S., and with millions more cars and trucks taking to the road each year, its appetite for petroleum has soared. The same thing is happening in India, Russia, and, well, much of the world. But while usage is soaring, supply has held relatively steady.

The situation is compounded, warns an article in today's New York Times, by the fact that consumers in many of these emerging markets aren't actually feeling the real pain of petroleum's record run-up. Indonesia, for example, is spending 4 percent of its entire economic output in the form of fuel subsidies, helping maintain gasoline prices of around $2.30 a gallon. In Malaysia, the subsidies amount to 7.5 percent of economic output.

China is spending about $40 billion to subsidize fuel costs, though it did allow gasoline prices to rise significantly on June 21. As the Times notes, that immediately drove down world oil prices by a whopping $4 a barrel. There's the possibility of still further increases in Chinese gasoline prices after the upcoming Olympics. Observers expect the government to wait rather than risk protests that could be picked up by the world's media, descending on Beijing.

While subsidies might ease the burden on third-world consumers, the problem is that low prices do the same thing, in places like China and India, that cheap gas did in America, it encourages consumption and limits the viability of conservation. And with little growth in global petroleum supplies, the fast-rising demand from these markets will continue to push up the cost of crude, even if Americans maintain their newfound focus on fuel efficiency.

Blink your eyes and you might not even notice when you pass through Pleasant Ridge, Michigan. The sign on Woodward Avenue says both "hello" and "goodbye." But next month, it will serve as ground zero in the green car revolution, helping transform the annual Woodward Dream Cruise from a past-tense retrospective into a glimpse of the future.

Tomorrow morning, I'll be serving as master of ceremonies at a news conference announcing the first annual NextCruise. The event itself will take place on August 15 and 16, in Pleasant Ridge, one of the cities that lines the route of the Woodward Dream Cruise, the largest automotive spectator event in the world.

Each year, the Dream Cruise brings out tens of thousands of muscle cars, hot rods, and other classics. NextCruise adds a new dimension, bringing together nine of the world's largest automakers: GM, Ford, Chrysler, Toyota, Nissan, Audi, VW, Mercedes-Benz, and BMW (next year, Honda?), each of whom will display up to three of their greenest vehicles for a static display of high-mileage and environmentally friendly automotive technology. That includes hybrids, plug-ins, diesels, fuel cell and hydrogen power, and other green machines.

That alone makes NextCruise a first-of-its-kind event. But even more compelling, each of the makers will be providing up to two vehicles for a public ride-and-drive. Getting "butts in seats" is always a challenge for automakers, and no more so than with today's new green machines. Sure, lots of folks talk about environmentally friendly automobiles, but most folks still think this means small stone ponies that cost a lot and don't offer much in the way of creature comfort.

Think again. The newest models are proving to be lean, mean, and green. The Toyota Prius is surprisingly roomy and affordable. The Lexus GS 450h is quick. Cadillac's Escalade Hybrid has plenty of towing power and even more bling. And Mercedes' new BlueTec diesels deliver performance and mileage in a single package.

Along with the nine automakers, NextCruise will feature the latest in green motor sports technology, sponsored by the Detroit Grand Prix. Participants include the ethanol-powered IndyCar Series and American Le Mans Series, which will launch the new Green Car Challenge this year. A two-seat Indy car will be on-site, along with several Indy driving simulators.

NextCruise will be open to the public, starting at 6 a.m. to 9 p.m., on Friday, August 15, and then all day during the Woodward Dream Cruise, on Saturday, August 16. There's no charge, though licensed motorists will have to sign up for a ride in one of the green machines.

(Full disclosure: I serve as chairman of the volunteer NextCruise Committee. The project is not in any way supported by or connected to TheCarConnection.com.)

You've undoubtedly been hearing a lot about the "hydrogen economy" in recent years, as automakers ramp up efforts to develop fuel-cell vehicles and other technologies capable of running on the ultra-clean fuel, hydrogen.

Technical challenges abound, though the obstacles are starting to fall. The latest fuel cell "stacks" are more powerful, lighter, and more affordable than ever, and progress is taking place at a rate that even computer chip manufacturers might envy. Next-generation hydrogen storage systems are still lacking, but improvements are clearly coming. And energy companies know how to produce the gas in volume when the time comes.

Here's the problem, however: Putting everything in place, from the factories to produce fuel-cell vehicles, or FCVs, to the hydrogen refineries to the fueling stations the nation will need by the tens of thousands, the total cost will come to about $200 billion by 2023, according to a new report by the National Academies of Science.

The bulk of that will need to come from the auto and energy industries, though the NAS estimates government contributions will come to around $55 billion.

Even then, the rollout of hydrogen-powered vehicles will be slow, noted the 256-page report. Hydrogen technology is "not likely to be cost competitive until 2020," and it sees FCVs accounting for a maximum 2 percent of the nation's motor vehicle fleet by 2023. But then, hydrogen power "could grow rapidly," with such vehicles reaching 80 percent of the market by 2050.

Hydrogen power emerged as a serious technology a decade ago, as manufacturers came under pressure to produce "zero-emission vehicles," or ZEVs. Only two technologies currently qualify: the battery car and the fuel-cell vehicle. The former technology is plagued with problems, such as limited range, long charging times, and high cost. Today's FCVs also are costly, though manufacturers believe they will eventually become cost-competitive with internal combustion technology. And fuel cells, sometimes called "refillable batteries," don't have range limitations, as long as there's a network of filling stations available.

While hydrogen is often seen as the darling of environmentalists, some have begun to question its long-term advantage. Used in a fuel-cell stack, the gas creates nothing more than water vapor in its exhaust. (Burned as a substitute for gasoline in an internal combustion engine, trace amounts of smog-causing NOx are produced.) But the question is where to get the gas.

To some, hydrogen is an "energy carrier," rather than a fuel, like petroleum-derived gasoline. It may be the most abundant element in the universe, but you can't pump it from the ground, like oil, or dig it up, like coal. It must be produced by breaking down a more complex compound. That can be water, made up of two parts hydrogen, one part oxygen, or from coal, natural gas, and a variety of other substances. Doing so takes energy, however, lots of it. And if that comes from dirty sources, such as coal-fired electric plants, the switch to hydrogen would have minimal impact on the environment overall.

So, the battle to build the hydrogen economy will be about more than just finding enough money.

General Motors' Saturn division plans to drop its Green Line badge, come the 2009 model year. Well, sort of. The Green Line has been Saturn's way of identifying its hybrid-electric vehicles, or HEVs, since it introduced its Vue hybrid crossover, two years ago.

Environmentalists and those looking for fuel efficiency needn't panic, however. The marque's move is meant to simplify badging. It's simply going to offer models like the Vue 2 Mode Hybrid starting next year, rather than the Saturn Vue Green Line 2 Mode Hybrid.

Actually, things may still be confusing for consumers, as Saturn plans to offer an array of different hybrid technologies going forward, sometimes on the very same platform. So by around decade's end, you'll see a Saturn Vue Hybrid using so-called "mild" technology, which keeps costs down, but limits the boost in mileage. There'll also be that full two-mode hybrid version of the Vue. And Saturn plans to offer a plug-in Vue hybrid (a prototype shown above) using next-generation lithium-ion batteries that can be charged from a standard electric socket. That variation should allow owners to handle much of the typical day's commute solely on battery power.

Barely a month after announcing massive cuts, notably on the truck side of the business, General Motors today revealed a new plan aimed at coping with the "dramatic" rise in fuel prices and the steady downturn in the American auto market.

The numerous steps outlined by GM CEO Rick Wagoner at the ailing automaker's Detroit headquarters include further cuts in light truck production, a 20 percent reduction in white-collar costs - which will lead to the elimination of thousands of salaried jobs - the elimination of health care coverage for retirees over the age of 65, and other steps meant to save $10 billion by the end of 2009.

GM will meanwhile attempt to line up additional capital worth about $5 billion, though that may require borrowing against real estate and other assets, including stock in its generally more profitable overseas subsidiaries.

On the positive side, Wagoner and other senior GM managers insisted that they have "protected" the company's product program. That doesn't mean it will be business as usual in GM's design and engineering studios, however. After years of building up its portfolio of pickups, SUVs, and other light trucks, GM will put the focus on small cars, crossovers, and "green" technology so that the company's lineup, said "car czar" Bob Lutz, will soon look "more European...than ever before in our history."

But for now, GM has to make sure it has a history, and Wagoner told GM employees that, "Our goal is not just to change GM's bottom line from red to black, but to change GM for the long-haul."

The hastily announced news conference reflects the speed at which things in the auto industry have been changing. Barely a month ago, GM felt that the previous cuts it had announced would hold things over. But last month, the automaker suffered a sharp downturn in overall sales - as did virtually all manufacturers, including Asian giant Toyota. From an annual peak of more than 17 million vehicles earlier this decade, the annualized rate of sales in June tumbled to just 13.6 million. While most observers expect some rebound, GM's latest planning is based on the likelihood that oil will remain in the $150-a-barrel range and that U.S. car sales will linger around 14 million through the end of 2009.

Most of that decline has come in the light truck column. If anything, noted Wagoner's second-in-command, Fritz Henderson, there's actually a shortage of the smaller, fuel-efficient passenger cars that are suddenly in vogue.

A significant element in the latest turnaround plan is the elimination of another 150,000 units of light truck capacity. On top of that, GM will speed up the elimination of 150,000 units of truck capacity originally announced in June.

Such cuts will likely lead to further job losses on the hourly side of the GM workforce, though company officials declined to go into specifics. They've already completed nearly 20,000 union buyouts since the beginning of the year.

What's also unclear is precisely how many salaried jobs will be lost, though the ultimate figure is likely to reflect the planned, 20 percent reduction in white-collar costs. That's even more severe than the 15 percent cut announced earlier this year by Ford Motor Co. Wagoner said he believes that "most" or all the latest cuts can be achieved through voluntary buyouts.

Many of these announcements had been anticipated, but one of the big surprises came with news GM would phase out health care for retirees over 65, who would be eligible for government medical coverage. The septuagenarian Lutz noted that GM will increase salaried worker pension payments to help offset some of the added medical costs, though it is clear retirees will have to reach into their own pockets for some new costs.

Several other questions remained unanswered during the Tuesday news conference. GM officials declined to update what will happen with the moribund Hummer brand, an icon of the automaker's long focus on big, fuel-guzzling trucks. Last month, the company said it would consist options including the sale or closure of Hummer, but while Wagoner noted there has been "a lot of interest," he declined to offer any other news.

Hoping to put a more positive spin on the Tuesday morning news, GM officials gave reporters a taste of some future product programs, starting with the Chevrolet Cruze, which will replace the division's current compact sedan, the Cobalt, starting in 2010. According to Lutz, Cruze will be offered with a new, turbocharged I-4 engine that will boost its mileage by as much as 9 mpg. That, the company hopes, will make it, by far, the most fuel-efficient nonhybrid model in its class.

The automaker also showed the CTS Sportwagon, a Euro-styled version of the popular Cadillac CTS sedan. And it announced formal approval of the sporty CTS Coupe, which will reach market by the summer of 2009.

There has been some speculation that the U.S. market should revert back to a more truck-based model, should gasoline prices drop much below $4 a gallon. But Henderson said that the shift to small cars and downsized crossover vehicles should be seen as "being permanent."

Lutz stressed that a critical goal of the latest turnaround plan is to "safeguard" GM's product development program. Without new models, he emphasized, there's no way to recover. But the products of the future will be markedly different from what customers have come to expect. Significantly, 11 of 13 new products launching this year will be either passenger cars or crossovers, with those higher-mileage designs accounting for 18 of 19 products coming next year.

Skeptics have raised concerns about this paradigm shift. Over the years, General Motors has struggled to make money on passenger cars, especially going up against the likes of Toyota and Honda, who dominate the sedan market these days.

But there have been positive signs, including the strong demand for the Cadillac CTS and the sold-out Chevrolet Malibu. Notably, the average transaction price - what customers actually pay, as opposed to sticker price - has gone up $4,000 on the Chevy, this year, and $8,000 for the Caddy sedan.

Consumers are willing to pay significantly more for desirable small cars, in Europe, noted Lutz, as there's less of a link between size and price. As the American market evolves to a more European model here, GM is betting the same shift in pricing will take place.

Looking at the harsh cuts he'd approved, CEO Wagoner insisted, "Our plan is not a plan to survive. It is a plan to win." The question is whether consumers and investors will prove anywhere near as optimistic.

GM stock, which had fallen to another low on Monday, began the day with a modest rebound, but then started to slip once more. But Lutz downplayed the ongoing rumors of a GM bankruptcy. Noting he has survived numerous such rumors during a more than 50-year industry career, he suggested that analysts forget that "car companies don't die that fast."

As for consumers, their views will become visible as industry observers tally sales numbers for July and the months to come.