Odds strongly favor the auto industry coming out on the losing end of any efforts to wean the nation off its oil dependency.
That’s because Washington is again looking to saddle all the risk-taking on the backs of auto makers, which will be made responsible for coercing the American public to drive less and do it in smaller, more fuel-efficient vehicles – and pay a steep price whether they do or they don’t.
This week, the Supreme Court ruled the Environmental Protection Agency must reconsider a proposal to curb vehicle carbon-dioxide emissions, a move that would force higher fuel economy requirements.
But Congress already was eying a dramatic increase in car mileage standards anyway. Proposals to raise the bogey from 27.5 mpg (8.5 L/100 km) today to 34 mpg (6.9 L/100 km) by 2016 have drawn support from both sides of the aisle, while the Bush Admin. is calling for an even stiffer 4% annual increase over 10 years.
Auto makers say that’s too big a technological hurdle and will cost dearly at a time when profits are tough to come by. The White House puts the Big Three’s tab at $85 billion to meet such targets, whilesays its expenditures, alone, would run $40 billion.
Too bad, critics say. The industry has been pumping out fuel-guzzling big SUVs and pickups far too long and should have been better prepared for last summer’s sudden jump in gasoline prices.
But the outlay for making lighter, smaller, more fuel-efficient vehicles is just the tip of the iceberg. The real roll of the dice comes in trying to convince the public to buy them.
If gasoline prices stay flat or continue fluctuating for whatever reason, a fair number of buyers will remain hooked on big trucks and the growing number of fullsize cross/utility vehicles that get better mileage than SUVs but still chug more gasoline than midsize cars.
That means auto makers will have to heavily discount small cars to meet the steadily escalating standards.
Forcing the industry to fall on this double-edged sword – doling out billions to develop the technology and then millions more to drive demand for it – is just fine with lawmakers, who won’t have to expend political capital to get the job done.
Increasing fuel economy isn’t a bad idea. But it needs to go hand-in-hand with either market forces (permanently higher oil prices) or policy (increased gasoline taxes).
In Europe, where higher gas taxes have herded customers toward smaller cars, the fleet averages 36 mpg (6.5 L/100 km), 50% higher than in the U.S.
“There’s no magic at work here,”President Tom LaSorda points out. “A gas-engine midsize car in Europe gets the same mileage as a gas-engine midsize car in the U.S. It’s just that customers demand a very different mix of vehicles in Europe.”
So far, Washington has been unwilling to chip in to make that happen here.
CEO Alan Mulally may have summed it up best in recent House testimony: “We need our government to be partners, not adversaries.”