Unless we outlaw the bigger cars that recent sales figures have shown Americans prefer any time gas prices fall below $4 per gallon, Detroit will need help marketing these small vehicles. As GM's Bob Lutz put it not long ago, "Very few people will want to change what has been their 'nationality given' right to drive big and bigger if the price of gas is $1.50 or $2 or even $2.50. Those prices will put the CAFE-mandated manufacturers at war with their customers."
All solutions to this problem flow from Washington. One would be to give substantial tax subsidies to buyers. Another would be to impose a federal gas tax to jack up the price of gasoline to $4 per gallon and keep it there. This is the solution that keeps Europeans driving small cars with tiny engines. High gasoline prices have become a political third rail in U.S. politics, and the Obama Administration insists it isn't interested in subsidies or taxes.
That puts the burden back on the beleaguered auto makers. The Detroit Three already sell small cars at a loss to meet the current 27.5 mpg fleet average. The car companies may hope that if the whole industry is forced to move up the fuel-economy ladder, consumers will have no choice other than to buy these cars. But experience suggests companies that have specialized in making smaller cars, such as the Japanese-owned auto makers, are more likely to be able to sell them at a profit.
....We wish these folks luck "working together" with the Obama auto-design team. One thing seems certain by 2016: Taxpayers will be paying Detroit to make the cars Americans don't want, and then they will pay again either through (trust us) a gas tax or with a purchase subsidy. Even the French must think we're nuts.
Banner ad
Wednesday, May 20, 2009
When the government runs the auto companies
We are now seeing what happens when the government runs the auto companies. The government just sets goals and imposes them on the auto companies which are forced to go along. Now Obama is telling the companies exactly which cars to make. As the WSJ writes,
Labels:
Auto Industry
Subscribe to:
Post Comments (Atom)
11 comments:
You know, for all the soft easy armchair patriotism that gets vented at this site, there are very few real patriots who understand that significantly reducing our dependence on foreign oil suppliers is highly patriotic.
But no - any suggestion of the government leading the way in that, causes knee jerk reactions from reactionaries.
If, say, Reagan had managed to take some steps to reduce oil dependence, maybe we wouldn't have had a reason for Bush to try his failed Iraq oil grab at all. Thnk about that for a minute.
OK, the minute's up. Are you now in favor of opening up drilling in the US again? Or how about the exploration for the abundant natural gas fields that we have? As long as people are convinced its how much fuel is used rather than the source we will still be reliant of foreign production simply because we will still not be drilling and producing our own.
"Iraq oil grab"?
Oh, brother. LOL
How long do you think American oil reserves will last, if we open them up now, Pat?
A few months? A year or two? Then what?
The issue is both amount of oil consumption, and the fact that we are funding both sides in the "War on Terror".
We need to drastically reduce vehicle gas consumption AND cut back on the amount we buy from Saudi and other Middle East proxy nations. A (long overdue) government regulation is the right way to bring America in line with the standards the rest of the world already meets.
Or perhaps you prefer to keep sending $$$ to the terrorists?
Actually we have the most proven reserves of natural gas of any country in the world. Our proven reserves of oil are only slightly less than Canada and Venezuela which would seem to indicate that it ok to buy their reserves but not use our own. And Saudia Arabia and Kuwait account for less than 20% of our crude and petroleum imports. I would think that any increase of drilling would be preferable to any more of that "Arab" oil coming into the country?
BTW, the rest of the world keeps usage down by taxing consumption not in creating artificial mpg goals. This demand for economical cars is one of the main reason that the US companies are in trouble because they, for a variety of reasons, have never been able to produce profitable small cars nor withstand market loss when fuel costs are low.
Pat Patterson,
You beat me to the natural gas fact in this thread though the discussion has been going on a long time elsewhere but still no action.
It boggles that this Administration, and to be fair, all of it's predecessors, have not been active in pushing for a switch to natural gas. Instead we waste time with under-performing hybrids that don't produce better MPG stats than many diesels and gasoline competitors.
The human cost of CAFE standards is a scandal. Ethanol is a sad joke that drives up food costs, fuel costs, and ultimately requires more expenditure of energy than it produces.
Biddle wants to blame Reagan for foreign oil dependence while refusing to develop domestic production and seems to forget that Clinton had eight years to do something but also found other priorities.
Leaving this issue to be settled by party partisans means nothing resembling progress will be seen anytime soon. Too bad Biddle's hot air can't be harnessed for good.
Natural gas is a viable solution.
Once I realized how much I could save by switching my Porsche to CNG I have been saving to do so, maybe. Loss of horsepower, the expense of the conversion, the current lack of pumps and the extra weight of the fuel cannisters are still really big drawbacks. But then at the rate I'm saving there is a good chance that some of the drawbacks have been solved.
But it simply boggles the mind to hear people rave about hybrids (BTW, Prius sales are off 61%) or all electric cars indicates to me the unseriousness of the issue if the opposition to drilling is drilling for any source of fuel. Even if it solves the reliance, pollution and supply problems.
BTW, boggles stuck in my mind so I used it as well, in homage of course.
Pat Patterson,
You may have already seen this review of Honda's latest entry in the uninspiring hybrid market:
http://www.timesonline.co.uk/tol/driving/jeremy_clarkson/article6294116.ece
It's a good laugh and it is all nicely wrapped up in a package that includes a well deserved slap at the Church of Global Warming.
That Honda has chosen to put this soon to be resident of the ash heap of automotive history on the market shows that undue and ill advised government acceptance of Global Warming hysteria is another reason to keep government as far away as possible from running the auto business.
If not, it is only time before we see a clean coal powered Trabant.
Will that be the DeLuxe or the Oxymoron model?
Just got to the Clarkson article. Saying the car is terrible means something coming from him as he once destroyed a Chrysler-Maserati on the air to keep some fool from buying it. 1.3 liters? I think a Vespa has a bigger engine than that and probably, except for the bugs, a lot more fun to drive.
Post a Comment