Tuesday, August 16, 2005

Reasons Like These Are Why I Need To Become President (Part I)

In recent weeks, the Bush Administration has been tossing around a proposal to extend and increase fuel economy regulations across the entire automobile industry.

In their original proposal, they considered extending these fuel economy regulations to huge SUVs, like Hummers and Excursions, the huge pickup trucks, and super mini-vans (if they're so big, shouldn't we just call them, "vans" instead of "mini-vans?") which, currently, are exempt from regulations. Regulations would make the automobile manufacturers release more fuel-efficienct trucks that are a bit more friendly to the gasoline pump. Sounds good right? I mean, who wouldn't want a Hummer that gets 18-20 MPG instead of 10?

And then, came the US automobile lobbyist with deep pockets.

Now, suddenly, the Bush Administration is abandoning the proposal. Their reasoning? Developing fuel-efficient trucks cuts into American automobile profits and places the Big Three (Ford, Chrysler, and GM) at a disadvantage to the Asian giants. Let's face it, if it weren't for the SUV, the American car companies wouldn't be here anymore. Companies like Honda and Toyota, however, don't depend on SUVs for sales, so, their profits wouldn't be as affected by the new regulations.

So, Bush, backed off the proposal in order to score 1 for Team America. Woo hoo. And the stockholders rejoice and the environmentalists weep.

But, see, there's a slight problem with that change of heart...and I'm not just talking in terms of the environment.

I'm talking good ol' fashioned "economics." See, if anyone has been paying attention to recent automobile market trends, sales of SUVs have been declining, overall. Especially the big ones like Hummers and Excursions. Why, you ask? It's quite simple...OIL PRICES!!!! People across the country are trading in their big gas-guzzlers and are buying regular cars instead. While it's hard to track that trend over the short-term, in the long term, this trend will be readily apparent. SUVs, which are responsible for 40% of the nation's oil consumption, are, by and large, the only reason why people buy American cars in the first place. Everyone else who wants a regular-sized car usually goes to the Japanese car makers for their goods.

So, when SUV sales drop because gas is too expensive, and Asian car companies reap the profits, who's going to be left in the dust?

You guessed it. The Big Three.

What they need to do is stop thinking "short-term" and start investing in the future. Making fuel-efficient SUVs should be THE priority for carmakers, if they want to keep making moola. By not going forward with the original proposal, the Bush Administration is actually doing the Big Three a disservice, but unfortunately, they're too shortsighted to see it.


Blogger Veronica said...

I love me my Japanese car. :) Hah... Wouldn't trade it in for anything in the world, except maybe a nicer little Honda. :)

1:59 PM  
Blogger Robert said...

Why mess with the free market if it's working anyway? Higher gas prices reduce demand for both new and used trucks & SUVs. Emissions standards (which I agree should be the same unless you have a commercial license) will only affect new vehicle sales.

I didn't buy an SUV because they're too damned expensive overall (sticker, gas, etc). Plus, down here, they're prime targets for theft especially with the border being so close. I'd rather blow my money on a nice motorcycle.

President Bush's choice of Hydrogen cars is a real good one. Most cars can be converted and the exhaust is mostly water vapor. There's already one gas station here that sells hydrogen; 13 in California over all. Their only real downside is a 20% loss of power.

2:27 AM  
Blogger djkibblesnbits said...

Well, see, Robert, that's exactly my point. With low emissions standards, there really isn't a "free market." Low emissions standards don't do anyone a favor except in the case of the Big Three. By keeping standards low for SUVs, the government is artificially giving the Big Three a short-term lifeline. In the long run, sure, the free-market will take over, but, if you read into Bush's agenda, gas prices should have come down, according to the government's estimates of oil reserves in Alaska. So, in other words, there is no real incentive to change, and years from now, we'll still have an SUV guzzling problem. (Assuming, of course, Alaska has enough oil to solve our problems, which by all estimates, it really doesn't).

And yes, Bush's hydrogen plan sounds good on paper, but once again, there is no incentive for companies to invest in the technology immediately. None whatsoever. His "plan" is nothing but fluff and has no real teeth to it. I'm telling you, the first hydrogen car will not come from the Big Three, that's for sure, but instead, will come from a Japanese manufacturer, where they take advantage of a Japanese government that gives plenty of incentive to develop environmentally-riendly vehicles.

2:47 AM  

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