Excellent Letter Tom & Ray. Congress needs to ignore the greedy Auto Industry CEOs, who care nothing about the Iraqi Oil War, if US Soldiers are dying over oil, or if the ice caps are melting and the effects of global warming drown millions of people around the world. Americans are too lazy and need to be pushed into higher MPG cars. Europe has had them for decades, and they don’t die anymore than we do in car crashes. The so-called “free market” is not Free - it’s controlled by the big multinational corporations, the government and Big Oil. They certainly don’t care if you pay $4.00 a gallon for gas. They don’t care if you want a small fuel efficient car. They only care about their short term profits and how many millions in yearly bonuses they recieve!
Well, here is my answer. I have a 2007 Toyota Corolla and a 1994 Nissan Sentra (115,500 miles). My house is 2140 square feet, well insulated with a High Efficiency (96% seasonal) Carrier condensing gas furnace. The water is also heated by a Sears Energy Miser gas heater. The house is cooled by mother nature, with help of a couple of fans, since we live close to the Rocky Mountains. We use a battery operated lawnmower. We have over 35 fluorescent energy-saving bulbs in addition to all LED Christmas lighting. We walk daily with the dog. In the summer we mountain hike, and in winter we cross-country ski or snow shoe. When I need to go downtown I only drive to the train station and take the commuter train in. Most of my work is either from the home based office, or in other cities, since my work takes me all over.
Our total annual energy consumption is:
Elecricity 6800 kilowatt hours/year
Gas 142 million BTUs
Gasoline about 450 gallons for 2 cars
There’s also D) stay home as much as possible. That wouldn’t do the economy any good.
Why must people insist that the Iraq war is only about oil? I am no fan of the war, but when you oversimplify an issue of great importance, you don’t do justice to civilized debate. Besides, the USA hasn’t seen one drop of oil come out of Iraq and we are not likely to in the near future, yet warmonger Bush wants to continue the war. I am wholeheartedly against the Iraq war, and yes, if there wasn’t oil in Iraq, we might not have invaded. However, the issues regarding why the war was started won’t fit into a simple sound byte. The majority of Americans supported the invasion and even though public opinion has changed, the invasion of Iraq happened partly because of the will of the American people.
Disclaimer: Not all of us who are in favor of raising CAFE standards are raving lunatics.
Jeremy, in the final anlysis the decison will be more economic than environmental. The value of the US dollar is dropping due to the outflow of money for imports and the Iraq war. It is simply unsustainable. The next administration will do what Richard Nixon did during his econmic crisis; he imposed a 10% surcharge on all imports. At that time it was Japanese imports and oil imports. The situation is much worse today. The enormous trade deficit is fianced by, gues who; the Chinese who are buying up US debt. The last line of an old song, “Sixteen Tons” goes: “Saint Peter don’t you call me for I can’t go; I owe my soul to the company store”. Unfortunately, the company store is China.
Yea, we’ve heard all this before. It’s just another conspiracy theory. Right now I’d need ten acres of photovoltaics to power my little electric car but Exxon is stopping the production of the “new PVs”. We’re so tired of this line. It’s just pathetic. Go tell your all neighbors that all they need is a PV panel the size of their car roof and they wouldn’t have to buy gas again.
I guess we’ll all be eating our words next year! But not if Exxon gets their way. Right!!
I know it’s a shock, but you guys are bang on right! And I hate to show my age, but a big chunk of blame goes to Richard Nixon. In the 70’s Middle East politics heated up and we all stood in line to buy gas at over a whole dollar per gallon! At the same time we had layed off aerospace engineers scrambling for jobs flipping burgers. If he had just stepped up and said that the Arab countries can just keep their oil and we were going to find new solutions, not because it was easy but because it was hard, we could have weaned ourselves from foreign oil 3 decades ago! It was time then for an energy “space race” but it’s not too late now to do it.
You’re right, the market does dictate. Car makers build what we ask for. We are just embarrased by our choices and would rather blame Detroit or ask our government to. We won’t accept the blame. We obviously want luxury (which includes performance) above all else. Then we want safety. These features add much weight to the car and require much more energy. My 1990 Ford Festiva weighed 1800 lbs and got 42 mpg in the city using 1980s technology. (Yes, it had no luxury and was a death trap.) So the market is asking for superbly luxurious, high performance cars that are NASCAR safe and that may weigh 3800 lb. Then all we’re asking for on top of that is 35MPG. Any engineer knows that this is a problem. You want better milage? Give up 1000 lbs of luxury and performance. The car makers have tried to offer these and the cars sat on the dealers lots.
I sincerely hope you are right, but do you think that any of our Presidential candidates have the courage to raise taxes on fuel in today’s political climate? Also, you seem to be confusing the trade deficit and federal deficit spending. They are not the same thing. Yes, they are both linked to China because China is both selling us cheap goods and financing our federal government’s deficit spending, but keep in mind that they are separate issues and separate “deficits.”
Times have changed. It used to be that paying taxes was a part of our duty as citizens. Now “tax” is a dirty word and we willingly pass the burden of a federal deficit on to future generations rather than make sacrifices today.
Agree,it is the double whammy of the trade deficit AND the federal deficit that is driving down the value of the dollar, which is now worth less than the Canadian dollar. That has not happened since the late 50s and early sixties. One way or another both OPEC and China are the big buyers of US debt, a very uncomfortable situation.
A wise and philosophical friend of mine at a cocktail party offered a “Blue Sky” solution to part of the problem. He suggested taking 25% of the cost of the Iraq war ($1.3 trillion sofar) and giving it to PEMEX, the Mexican state oil company, on the condition they use it to find more oil.
PEMEX is very short of money since 60% of their revenue is siphoned of by their federal government, leaving no money for serious exporation and drilling. Mexico has vast reserves left both on-shore and in the Gulf of Mexico.
Mexico is a friendly country close by and would be happy to sell more of their high quality crude to the US. Since the Mexican constitution prohibits direct ownership of oil and gas by foreigners, some arms-length finacing would be needed.
Of course this is only a partial solution, but the very large US investments in the Canadian oil fields proves it is viable thing to do.
I find the endless government-vs-market ranting amusing, considering that only after our grandparents found a leader (FDR) who could combine the best of both did our economy take off after the depression. Of course, the war helped, but the New Deal helped to alleviate the misery of the market-driven loss of jobs while preparing us to finance and fight the war (without TVA we might not have been unable to complete the uranium enrichment for the bomb, for example). We need the “engine” of capitalism, but in the interest of humanitarian consideration we also need the “roll bars” that some have called socialism, to keep us both active and safe.
At any rate, the role of the market is limited in PREPARING for FUTURE economic conditions; any changes that require years of lead time and lots of R&D investment will NOT be done solely because of market driven considerations until they are TOO LATE to prevent lots of suffering while they are in progress. This is the case with the history of fuel economy research. For many decades scientists have been aware that petroleum is a LIMITED and non-renewable resource; exactly WHEN it would run out was, and remains, a matter of guesstimation, but everyone knew it WOULD (and everyone still knows it WILL) run out someday. So why weren’t high-mileage cars being developed, even as a backstop, all those decades BEFORE the Arab oil embargo of the 1970’s? Because there is NO SHORT TERM PROFIT in investing in R&D for a FUTURE market condition, until it becomse IMMINENT! All of a sudden, in 1973-74, we were unable to get all the oil we were accustomed to getting at ANY price, then after several months, at FIVE TIMES the original price (from 25 cents to $1.25 per gallon).
Unfortunately, oil (or energy generally) is not a commodity that people can simply “decide” to use more efficiently “starting now” because it requires HARDWARE to be designed for a certain level of efficiency. Starting in 1974, American car manufacturers were FORCED to BEGIN designing new engines and car bodies that would cost less to run; and consumers and business users were FORCED to begin LOOKING for more efficient cars (which were available from Europe and Japan, because of their PRIOR experience with gasoline taxes), AND THEN find a way to FINANCE them.
As it happens, the available credit was sucked up in (1) R&D by car companies and (2) new car sales to the most credit-worthy customers, just to STAY IN THE SAME PLACE economically as before, NOT to improve the economy. This, not “liberal tax and spend policies” was the reason for the apparent INFLATION (which classically goes along with boom conditions) and UNEMPLOYMENT (which classically is accompanied by deflation, as in the 1930’s) referred to at the time as “stagflation”. People who could not get the credit to buy more fuel efficient cars had to make do with less driving, thus spending less and putting other people out of work, who then had even less ability to buy a newer car, etc. The misery lasted until two things happened in sequence: first, American manufacturers brought new, more fuel-efficient cars to market, after taking the time to design them; and second, Americans were able to phase out the older cars and “replace the fleet” with newer cars. By that time, of course, we had gone from Nixon-Ford to Carter to Reagan, and so conservatives blamed Carter for the economic problems and praised Reagan for getting us out of them. Actually, it was just a matter of time (and BTW, somebody tell Rush that Carter could NOT HAVE CAUSED the oil crisis as he states, since it started TWO YEARS before Carter even RAN for President).
A truly “efficient” scenario for the ENTIRE country would have been for Government to tax the 12 cents a gallon gas in 1945 at $3 a gallon, thus reinforcing the war-mandated habits of frugality, and put the money into a program to replace petroleum by 1970. Relief for low-income wage-earning commuters could have prevented their being unable to break even on their jobs, as happened to many in the 1970’s. Such a program would have been possible then, and at a higher level of shared sacrifice, is still possible. Too bad we missed out on the head start, BECAUSE OF MARKET ECONOMICS, not because of government.
A conservative is someone who believes government cannot cause problems, rather it IS the problem; and when he/she achieves power IN the government, proves himself/herself right!
Some corrections to the previous post; fingers on keyboard got ahead of brain.
In the first paragraph, the parenthetical statement should be “without TVA we might not have been ABLE…” or “without TVA we might HAVE BEEN UNABLE …” whichever.
The sign off should be “a conservative is someone who believes government cannot SOLVE problems because it IS the problem; and when achieving power IN government, proves himself right.”
Anyway, I am basically a moderate, but have been forced to be a liberal for now, because conservatives have become so extreme. The point is we need both government regulation (remember Sinclair’s “The Jungle”?) and freedom to innovate in the market; either by itself is inclined to do evil.
Good post! Back in the sixties I worked for a Swedish company. When their executives visited North America, they were appalled at how much energy we wasted and the size of cars we drove. Even when oil sold for less than $2/barrel, gas in Sweden cost a high $0.85/gallon. Since Sweden has no oil or gas, oil imports were kept under control by taxing high horsepower cars as well as the gasoline. The result was efficient, locally made cars such as Saabs and Volvos. The high taxes raised paid partly for free university eduction and free health care. The car companies built cars that were sought after by foreign buyers. I don’t believe there has ever been a V8 car built in Sweden. Sweden currently runs a healthy balance of trade, and makes products the world wants. The Swedish government had to take a long term view as to what was good for the country, since private individuals and companies normally don’t.
The great majority of people are rational enough to understand the benefits of driving cars that are more fuel efficient. However, expecting Congress to solve the problem is patently the wrong approach. Historically, their actions exemplify the Law of Unintended Consequences.
In the past 50 years, Congress has addressed issues by adopting a pattern of punishing ?bad? behaviors. They do this with their most effective tool ? taxation. In the case of fuel economy, they tax corporations (auto makers) who fail to achieve minimum gas mileage levels. But, the simple fact is that corporations don?t really pay taxes. They pass the cost on to consumers, which relegates the auto maker to becoming a tax collector for the government.
The taxation model currently used by Congress is one that effectively punishes (taxes) success and achievement, and rewards (through ?entitlements?) non-achievers. Asking Congress to tackle the fuel efficiency problem is extremely likely to result in a dysfunctional tax scheme.
No one will argue (even Tom and Ray) that there are legitimate needs for different size vehicles. Power requirements will dictate engine sizes and MPG figures that ? taken in a purely passenger context ? are terrible. Taken in a ?working vehicle? context, they actually make good sense. This was demonstrated when Congress implemented their ?gas guzzler tax?. It was aimed at large and luxury cars (and of course, Congress exempted themselves from the luxury car taxes). Importantly, they dealt with trucks as a ?work? vehicle, including light trucks and SUVs. The Unintended Consequence? Those large vehicles were taxed less and consumers got more for their money. Sales of those vehicles did quite well.
The current state of taxation is that there are so many modifications and bandaids to existing taxes, that a large segment of our population of accountants and CPAs is devoted solely to keeping up with, and understanding the continually expanding volumes of tax codes. Keep in mind that in the end, it is always the consumer who pays the taxes ? not corporations.
People may or may not vote at the polls, but everyone, every day, votes with their wallets. For 20 years, people have voted to keep Tom and Ray on the radio with their contributions to NPR. Similarly, they deal with other costs in their lives. When something gets too expensive, they make changes by lowering their consumption. We saw this in the 70?s and early 80?s when people reacted to the rising cost of fuel by buying more fuel efficient foreign cars.
Enter Congress again. To protect our auto makers, what does Congress do? They create new taxes (it seems to be the one thing they know how to do). Rather than say ?taxes?, they call them Tariffs and Import Duties. Again, consumers are the ones who end up paying those taxes.
What just happened? Congress managed to punish the achievers (makers of fuel efficient cars) by adding taxes on them, and rewarding non-achievers (U.S. makers of inefficient cars), by protecting them from real free market forces. As a result, the U.S. auto makers were very, very slow to offer fuel efficient cars.
As Tom and Ray notes, there are technologies that exist today that can go a long way to reducing consumption and dependence on oil. But, rather than assume a posture of punishment, we ? as a nation ? need to create an environment that rewards achievement and good behaviors.
Maybe it?s time for our auto makers to honestly re-invent themselves. Or die. Once consumers are allowed to vote with wallets for products that stand on their own (without the burden of punitive taxes), the economics of fuel consumption will take care of itself. Lead and lag times will still take several years to be noticeable, but if we want to see real improvements, we need to keep Congress out of this.
Taking a different approach, but still reaching the same conclusion, it would be smart to re-visit what the role of the Federal Government is. James Madison, a major contributor to the Federalist Papers was one of a handful of absolutely brilliant men who crafted our Constitution. He and the others were steadfast in their determination to limit the power of the Federal Government, giving it only the powers expressly defined within the Constitution. All other powers were to be retained by the states. One can make a case that the only reason Congress would even be asked to consider getting involved now is that we have let Congress exercise unauthorized power long enough that we now accept it as proper. I suspect Madison and Jefferson would be dismayed if they could see their child now.
States do have power. California has long had more stringent auto standards than the rest of the country. Car makers respond to that. If we take the shackles off the backs of innovators, and reward the achievers in a truly open market, then Congress would have no need to meddle in, or attempt to direct the lives and behaviors of others. If one state adopts a ?punishing? attitude, the achievers and innovators will simply move to a more friendly state, instead of moving their jobs overseas.
While I concur that we, as a nation, need to be much better about energy consumption, and we even have the technology to do it, I say keep Congress out of it, and let consumers force the issue. Innovative car makers will readily rise to the challenge and the opportunity.
The great majority of people are rational enough to understand the benefits of driving cars that are more fuel efficient. However, expecting Congress to solve the problem is patently the wrong approach.
I’m sorry, but you’re wrong…History has PROVEN that. The auto industry is NOT a free market like anything else. It’s a CLOSED market that THEY control. People had wanted better gas mileage back in the 70’s LONG BEFORE the Cafe’ numbers. If we had a true free market then they would have done it on their own. They didn’t…There were virtually NO changes in gas mileage until the Cafe’ numbers were instituted…The ONLY time they’ve changed is when the Cafe’ numbers increased…Take a look at the Big-3’s numbers right now…They are within .1 mpg of what the Cafe’ numbers say they should be. And you’re telling me that people don’t want better gas mileage…
Maybe it?s time for our auto makers to honestly re-invent themselves. Or die. Once consumers are allowed to vote with wallets for products that stand on their own (without the burden of punitive taxes), the economics of fuel consumption will take care of itself. Lead and lag times will still take several years to be noticeable, but if we want to see real improvements, we need to keep Congress out of this.
You’re dreaming.
You make a nice argument. It is very well articulated. The only points that I would like to make are that:
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The limited role of government changed with the Great Depression. It was the Great Depression and the will of the people that changed government’s role. It isn’t like Congress took power in a coup d??tat. Also, we can’t just go back to the way things were back then without being willing to accept another depression in the future. Today’s Americans can barely stomach a mild recession without blaming the President. Our economy has transformed over the years from an agricultural economy, to an industrial economy, and then to a consumer based economy. So it isn’t realistic to think we can un-ring that bell.
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I think that your blame for Congress is misplaced. It is the people who elect and reelect Congress. Your examples of Congressional actions that don’t seem logical fall flat when you consider that the American people enabled these actions and even reelected most of the members of Congress after they did these things.
It’s interesting that the European Union (nearly all of Europe) does not have mileage standards. They have now gone for tailpipe emissions of CO2 at I believe 125 grams/km, which is the equivalent of CAFE standards, but much tougher. Prior to that each country relied on a high gas prices and gas guzzler taxes based on horsepower and engine size to control vehicle efficiency. That did a good job in keeping vehicle size and engine size down. The current emphasis is Global Warming and climate change, so the emphasis is now on tailpipe emisions of CO2. This will prodcue even more efficient vehicles.
“The marketplace should be the decision maker.”
I agree, but in this case the stakeholders are not just the manufacturers and the one purchasing the car. We all share the same air (and pollution, and the same fuel supplies. The decisions made by each of us affects others and there is no, or little economic feedback into the decision process. Without that economic feedback the marketplace is not a good decision maker.
The auto manufacturers and many auto buyers, for whatever reasons have year after year failed to make choices that would conserve fuel and reduce emissions. It is the duty of government to help out here.
I therefore believe that higher mileage standards and additional fuel tax (offset by other tax reductions or a pay down of national debt) is long overdue.
So, the automakers said CAFE standards would have us all driving in tin cans (many of us did; remember the Datsun B210?). And you say this is hogwash. The truth is somewhere in the middle. Cars did shrink after the mid-'70s, and people did die. See http://www.nationalcenter.org/NPA546CAFEStandards.html
for a credible discussion of the lethal effects of CAFE.
The solution is not Congress but us. The last two used cars I bought both have the smallest available engines. I wouldn’t even test-drive identical models with bigger engines. Imagine if everybody did that.
Steve
If I have created the impression that I believed the market is free, my apologies. The fault lies with me for not being more direct in stating that point. I agree the auto market (as several of our large industrial markets) is not free. In our case, Congress has been a major force in controlling our auto market.
Back in the 50?s the common axiom was that ?What?s good for GM is good for the country?. On the one hand, such statements created in the minds of auto makers that they could do as they pleased. Whatever they offered to us was, by that axiom, the right thing to buy. The mentality was ?bigger is better? and consumerism was encouraged. Along the way, auto makers created hundreds of thousands of jobs and importantly, hundreds of thousands of voters ? almost all of whom were affiliated with unions such as the UAW. Getting union endorsement (and money) was a plum for any serious candidate who hoped to be elected.
As one of my now retired senators candidly admitted to me one evening, the prime purpose of an elected official is to be reelected. That meant getting the favor of the voters. In this case, congress paid great attention to the auto unions and trying to win their endorsement and votes. Invariably, this led to passing protectionist legislation. When foreign cars began to gain noticeable market share, politicians moved to protect union jobs, usually by imposing import duties. Rather than encourage auto makers to take competition seriously, they acted to protect the status quo. That assured votes. Clearly, this is the antithesis of a free market economy, and you are right in saying our auto market is NOT free.
I do believe that most people understand the benefits of better fuel economy and lower emissions, etc. Still, we get back to personal economics. Knowing the right thing to do and doing it are two different things. Smoking and consuming large amounts of saturated fats are bad, but many people do them anyway. Likewise, actively achieving fuel economy may be understood, but not immediately practiced. Alcohol is bad also, but when Congress adopted Prohibition, the unintended consequence was illegal stills, gangs, organized crime, and even muscle cars ? highly prized by bootleggers who needed to outrun the police. That, in turn, gave rise to NASCAR today, and with it the continuing glorification of muscle cars.
It is interesting to note that in the mid 60?s through the mid 70?s, U.S. auto makers churned out cars of remarkably low quality and reliability (my new Chevy Vega started visibly rusting within 6 months of leaving the show room). Quality was dreadful and cars were hitting the junk heaps sometimes before they were completely paid for. Detroit didn?t care and even went to the point of producing cars with five digit odometers. Conversely, foreign makes were making great strides in improving quality and reliability. Honda and Toyota became models for reliable cars and U.S. consumers started buying them in large quantities.
Importantly, Congress did not mandate ?reliability and quality standards? on the auto industry. Consumers, with their dollars going to foreign competitors, got Detroit?s attention (slowly), and they turned to improving quality. Today, my 11 year old GM vehicle shows no rust, and has had no major repairs. My wife and daughter?s Hondas are running and looking great. Eventually, our auto industry does get the message if consumers demand it of them. However, while Congress can mandate changes in engineering, they are not able to mandate changes in attitude. That?s where change needs to be made.
A side note to quality improvement is that cars are now lasting much longer than they did. The result is that gas guzzlers that are on the road today are likely to remain on the road for many more years. Again, it?s personal economics. A driver of a five year old SUV may pay $150-$250 per month for gas, but that?s it. Buying a more fuel efficient car may cut his fuel bill in half (or more), but adding a monthly car payment of $350/month brings the cost per mile up sharply, including higher insurance premiums for the newer car. This is part of the reason I suggest it will take awhile for changes to become noticeable ? even if Congress enacts new laws.
That said, I still believe Congress is not the answer to all of our problems. Their approach is almost always punitive. By charter, making laws is what they do. And many elements of our lives are prefaced with the words ?under penalty of law?. Imposing laws often increases the number of lawbreakers. The better approach is to incentivize and reward good behaviors, not punish bad ones.
Lastly, your note about me dreaming?. Probably true. It seems to have become too easy to point a finger at someone else, to deny personal responsibility in our lives, and to find excuses for our own shortcomings. Will Congress take this issue and make laws? You bet. It?s what they do. And when these laws don?t produce the real desired effect, there will be another push for more laws (and of course more lawyers, which is what we REALLY need). OK, that last comment was a bit sarcastic, but education and open, thoughtful dialogs will help us arrive at a workable solution. Thanks for your feedback.