Judging by the media coverage regarding the current shortage of palladium, a material used in catalytic converters to reduce emissions, one might think assembly plants are on the verge of closing or the cost of vehicles is readying to jump by a couple hundred dollars.

But with sufficient stockpiles of the precious metal and little if any purchasing done on the commodities markets, automakers are safely navigating the turbulent palladium price fluctuations caused by bureaucratic nagging in top producer Russia over liscenses and export quotas.

"Everyone has sufficient stock of these materials, and materials they could draw upon if primary materials got tight or restricted," says Dave Andres, General Motors Corp.'s purchasing director-commodities. "We haven't dipped into ours yet."

A DaimlerChrysler Corp. spokeswoman says the exceptionally high prices for palladium haven't affected DCC "because it's such a small part of the ... exhaust system."

This is the fourth straight year that Russian instability has caused palladium shortages - though 2000 undoubtedly is the worse yet with national low-emission vehicle standards set to kick in by 2001 and prices for palladium hitting stratospheric proportions. Those factors have driven market trading to near lunacy. "The stakes are very high right now. It's very nerve wracking," says one dealer.

Futures markets got so out of control that price fluctuation limits were set at some exchanges in late February. When those measures took hold, palladium prices declined from some $825 an ounce to $700. As of mid-March, palladium was fetching about $680 an ounce, according to Kitco Minerals & Metals. That's well above the $120 an ounce it cost when automakers largely switched from using platinum to palladium in catalytic converters in the early 1990s.

But cost wasn't the only factor in the change. Palladium also is more effective at filtering hydrocarbons, a key to meeting tighter emissions requirements.

"To attain both durability and emissions standards, palladium became both a very viable, passive engineering approach to getting this done quickly," says Mr. Andres.

With palladium grabbing headlines, other emission options aren't receiving much attention. But automakers are studying how to reduce the amount of palladium used in catalytic converters in case prices remain high.

For example, Litex Inc.'s plasma assisted catalyst technology, called the Corona Discharge Device, alters the chemical composition of exhaust gases, enabling the converter to operate more efficiently. There also are efforts to decrease fuel sulfur levels, which diminish the efficiency of catalytic convertors.