American Elephants


Saving the Planet With Ideology, Rainbows and Taxpayers’ Billions by The Elephant's Child

Marita Noon, at the Energy Tribune, has located a speech that Obama made to the Detroit Economic Club in May 2007, when he was a mere Senator from Illinois, running for the presidency.  He rolled out his ‘Three Part Plan to Change the Cars we Drive and the Fuels we Use: in order to reduce our dependence on foreign oil and fight the cause of global warming.’

By 2020, he expected his plan to cut our oil consumption by 2.5 million barrels of oil per day; take 50 million cars’ worth of pollution off the road; save more than $50 billion at the gas pump; and help the auto industry save millions of jobs and regain its competitive footing in the world. His plan relied on three key components:  1. Fuel Economy Standards: he envisioned a 4% increase each year. This would save 1.3 million barrels of oil per day and 20 billion gallons of gasoline per year. 2.Help for Consumers Lots more tax credits for buying ultra-efficient vehicles. 3. Help for Manufacturers: Retiree health costs add $1500 to the cost of every car. Help with health care costs in return investing 50% of savings into technology for fuel-efficient cars + tax incentives for retooling. His very long speech contained the following:

We know what the dangers are here. We know that our oil addiction is jeopardizing our national security – that we fuel our energy needs by sending $800 million a day to countries that include some of the most despotic, volatile regimes in the world. We know that oil money funds everything from the madrassas that plant the seeds of terror in young minds to the Sunni insurgents that attack our troops in Iraq. It corrupts budding democracies, and gives dictators from Venezuela to Iran the power to freely defy and threaten the international community. It even presents a target for Osama bin Laden, who has told al Qaeda to, “focus your operations on oil, especially in Iraq and the Gulf area, since this will cause [the Americans] to die off on their own.”

We know that our oil dependency is jeopardizing our planet as well – that the fossil fuels we burn are setting off a chain of dangerous weather patterns that could condemn future generations to global catastrophe. We see the effects of global climate change in our communities and around the world in record

drought, famine, and forest fires. Hurricanes and typhoons are growing in intensity, and rapidly melting ice sheets in Antarctica and Greenland could raise global sea levels high enough to swallow up large portions of every coastal city and town.

Oops!

Well, he was invested in cap-and-trade then as well, and he went on at great lengths about biofuels, a National low-Carbon Fuel Standard, jeopardizing the planet, oil addiction, alternate fuels, green energy,  hurricanes and typhoons, those old rising sea-levels, etc. etc. He added “For the sake of our security, our economy, our jobs and our planet, the age of oil must end in our time.”

Sheesh, wasn’t anyone paying attention at the time? These were members of the Economic Club. No economists?

The Ideology got way ahead of Reality.  And so we got the Volt, the car nobody wants, even with hefty subsidy and battery packs that catch on fire.  At least the dealers don’t want it. They are turning down their allocations.  Many of the Volts that were sold went to governments. New York City bought 50, the city of DeLand, FL used part of a $1.2 million grant to buy 5. The President committed the federal government to buying more than 100.  And GE, who is making charging stations, will buy 3000 by 2015. That’s beyond crony capitalism into some kind of crony incest.

Citing statistics for the Nissan Leaf, Forbes Magazine counts the cost of an electric vehicle (EV): “At $0.11/KWH for electricity and $4.00/gallon for gasoline, you would have to drive the Leaf 164,000 miles to recover its additional purchase cost. Counting interest, the miles to payback is 197,000 miles. Because it is almost impossible to drive a Leaf more than 60 miles a day, the payback with interest would take more than nine years.” But, they state: “The cost is not the biggest problem.” “The biggest drawback is not range, but refueling time. A few minutes spent at a gas station will give a conventional car 300 to 400 miles of range. In contrast, it takes 20 hours to completely recharge a Nissan Leaf from 110V house current. An extra-cost 240V charger shortens this time to 8 hours. There are expensive 480V chargers that can cut this time to 4 hours, but Nissan cautions that using them very often will shorten the life of the car’s batteries.”

Obama gave billions to “green” energy companies, Solyndra is just one of the many failures.  Beacon Power Company filed for Bankruptcy — they had developed technology to provide energy storage for the intermittent solar and wind industries. EnerDel made lithium-ion batteries for electric cars, but there really wasn’t any demand and they went bankrupt, as did a number of other companies financed by the administration.

Never fear, President Obama plans to ride his rescue of General Motors and Chrysler to a re-election victory.  He made a surprise visit to the Detroit auto show, and AP reports that the auto bailout is a case study for his efforts to revive the economy and a potential point of contrast with Republican Mitt Romney — who opposed Obama’s decision to pour billions of dollars into the auto companies. The president’s campaign sees the auto storyline as a potent argument against Romney — who even though he is the son of a Detroit auto executive actually opposed the bailout.  That storyline requires a quite a bit of embroidering, and the public may just possibly not be as dumb as Obama thinks they are.

Well, Obama hasn’t got a record of accomplishments to run on, but he’s skilled at telling stories. Maybe it’ll work.



Should We Bail Out the Automobile Companies? by The Elephant's Child

Detroit cannot make cars at a price the market will bear.

The only question is whether we want to kick the problem down the road, or confront it now.  As long as they cannot make cars at a price that people will pay, they will not have a functional business.  Do we think they should go bankrupt now? Do we think they should go bankrupt later? How often do we intend to bail them out?



How Democrats are destroying the auto industry. by The Elephant's Child
November 8, 2008, 9:24 pm
Filed under: Domestic Policy, Economy, Liberalism | Tags: , ,

We have an interesting situation brewing.  Auto companies are requesting a larger bailout from congress. Congress is eager to provide, depending on what penalties they can extract from auto executives.  What has brought the automobile companies to this state?  Most recently the skyrocketing price of gas meant that car buyers suddenly were not so enamored with their SUVs once they found out how much it cost to fill up.

Americans had a love affair with the SUV. It held the whole family and the dog. You could go to Home Depot and actually get all the stuff into the car.  It was good in bad weather or in the mountains.  Suddenly, when gas topped $4.00 a gallon SUVs sat on the lot, unloved. Of course there was the credit crunch which left car companies increasingly struggling to raise money in the credit markets. But the auto companies had troubles long before  the price of gas went up.

We send our representatives to Congress, often because they were who was on the ticket and we didn’t have much choice, or because they looked better than the other guy. Or perhaps you had someone you could really be excited about.  Did he or she know anything whatsoever about building cars?  Did they have any understanding about running an automobile company or any company of any size, for that matter? Do they know anything about managing a group of hundreds of people or coping with union contracts with very powerful unions? Didn’t think so.

Congressional incentives come not from their constituents at home, but from the big groups that provide them with their financial support.  The UAW wants more power, more members and no free trade. Environmental groups want to ‘save the planet’ by eliminating fossil fuels and putting everyone in public transportation. Leftist groups want an end to big business or capitalism. Great recipe for automotive success.

Barney Frank, House Financial Services Chairman,  wants to create a “systemic-risk regulator” with unprecedented powers over a wide range of financial institutions with responsibility for protecting the soundness of the whole financial system, not just one sector. We’ve had lots of luck with regulatory czars.

Sen. Charles Schumer (D. NY) said Congress would try to redraw supervision of financial markets completely in the first six months.  According to Democratic aides, Congress is expected to tighten standards on executive compensation at firms receiving federal money.  I’m sure you can find the spot in the Constitution that allows Congress to set the pay of business executives.  The problem of course is that they usually make more than members of Congress do, and are far more respected.

Nancy Pelosi wants a faster roll-out of more fuel efficient vehicles. She wants to help automakers compete “in a green way”.  Sigh.

Investors Business Daily reports that:

Automotive chiefs are meeting with House Speaker Nancy Pelosi with their hands out.  At issue are vast pension obligations to 780,000 retired workers that already add $2,300 to the cost of every new car sold.  Credit-strapped consumers want value, not pension-inflated price tags.  So the bailout is in the works.

Bankruptcy is a better solution, but if a bailout can’t be stopped, taxpayers are owed a reckoning about how this industry got into a situation that a downturn could knock it over.  This ought to be a condition for the bailout.

Unions are at the center of every problem affecting industry competitiveness.  It’s not only the United Auto Workers’ lavish pensions, generous health care and leaden bureaucracies, its unions reflexive  hostility to free trade.  Yet if profits matter, new markets can return automotive companies to profitability — and rid the industry of the dead weight of those pensions….

Unions claim trade brings deficits, and that’s true in non-free-trade countries such as China.  But the U.S. has trade surpluses among the 14 free-trade partners — signaling that exports — and U.S. jobs, not outsourcing , are the basis for the trade.

Holman Jenkins Jr., in the Wall Street Journal, suggests a better idea, a “curse word seldom used in the debate over the automakers: deregulation.”

[Washington] would simply have to allow auto makers to meet the fuel economy standards with any mix of autos made in domestic or overseas factories.

Under the nonsensical “two fleet” rule that now applies, manufacturers meet the standards separately with their “domestically” and “nondomestically” produced fleets.  What does this have to do with making sure U.S. consumers get good mileage? Nothing.  It’s a naked handout to the UAW at the expense of the companies and their customers….

For 30 years, to make and sell the large vehicles that earn their profits, the Detroit Three have been effectively required to build small cars in high-wage, UAW factories, though it means losing money on every car. (That — not some perverse desire to make bad cars — is why they skimped for decades on styling, engineering and materials in their family sedans).

So as usual, we have Congress attempting to fix a problem that they were complicit in creating, without accepting any blame whatsoever. Of course that applies to the credit crisis too, which they now blame on “deregulation,” which should make everyone lie down and roll around on the floor consumed with laughter.

There are reasons why  the approval ratings for this Democrat Congress are the lowest ever recorded, and they may be aiming for something lower still.




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