So, now that the feds are forking-out $30m of your hard-earned tax dollars to GM, Ford and Chrysler/GE for plug-in hybrid battery technology research, auto industry observers are asking the obvious question: what the Hell's that going to do? As reported previously, GM's paying $3b in a year interest on their loans. Ford's in hock up their logo (no, really). Chrysler's so hard-up for cash they're stiffing their suppliers. Our friends at Wired make the kvetch from deep left field. "What'd it do — scrounge change from couch cushions in the Pentagon? EV advocates were quick to thank Uncle Sam for the money but said it's going to take a whole lot more than that to wean us from oil — which, by the way, will collect $17 billion in tax breaks during the next decade." BTW? C'mon, you know what comes next (assuming you've read the headline). "David Sandalow, a senior fellow at the Brookings Institution and former Clinton Administration official, says we could transform the nation's vehicle fleet if we spent about $18.5 billion over the next decade." We're talking $5b for "retooling," $12b for plug-in hybrid buyer tax credits, $1b for 30k plug-in hybrids per year for 10 years for Uncle Sam's fleet and $500m to "underwrite warranties on lithium-ion batteries until the technology is proven." And if your business needs new investment to compete? Ha!
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$18.5B/$1.5B = 12.33 … the number of days worth of US oil imports which would need to be displaced to come up with the cash. The US Strategic Petroleum Reserves hold just shy of $100 B worth of oil at the moment, so selling off about 19% of those reserves over time would pay the $18.5B. If oil consumption were reduced by 20% per day then we wouldn’t need as much oil in reserve to cover surprises.
The US spent about $13B in the initial phase of the Iraq war and is spending about $9B per month to stay there, according to the congressional budget office.
$13.5 Billion dollars is a huge amount of money, but put into context it is chump change for the country compared to the alternatives.
Does anyone think that if the US were not dependent on imports for 50% of it’s oil supplies we would be fighting wars in the Middle East?
John:
Does anyone think that if the US were not dependent on imports for 50% of it’s oil supplies we would be fighting wars in the Middle East?
Does anyone think that the D2.8 wouldn’t piss this money away? Like, I dunno, the LAST $18.5b?
Wait a minute. Didn’t the American taxpayer already get nicked for ~US$1B to fund Diesel Hybrid technology, et al.? Did I miss the 60mpg diesel hybrids somewhere?
EDIT – Make that +72MPG Diesel Hybrid
Partnership for a New Generation of Vehicles
I don’t want to get too political here, but America is a funny place. It seems there’s a great attempt by everyone go handpick the best parts of both socialism (redistribution of income)and capitalism (freedom) without any of the drawbacks of both socialism (concentration of power) and capitalism (the chance of failure). These big companies are the first to protest when governments mandate fuel economy or safety, paying tribute to the Dollar Almighty at the Altar of Capitalism, however, when it comes time to get on the dole, they do it without fail.
And yes, this money will all be pissed away. Why? Because as soon as the UAW finds out, they will strike and ask for rollbacks of concessions now that GM is “flush with cash”. And GM will crumble, because it always has. That’s perhaps the saddest part of this – in a way, even in success, any UAW-associated company is working towards failure. (And frankly, you can’t exactly blame the UAW when you see Rick The Great making $14 million and asking the average worker for concessions.)
Does anyone know how much the Detroit 3 was given by the Clinton administration for the “Supercar Initiative” which was meant to produce 80 MPG mid-sized sedans for production and sale?
The catch was, Washington pissed away – I mean gave away – our tax money to Detroit and never demanded that when the cars were designed, they were to be built. Idiots.
But then, we are talking about Washington politicians, here.
Of course, from what I read, the Chrysler “microturbine electric hybrid Supercar” was fakey-do; the little turbine whirred away as sound effects, only, while the few demonstration drives the car did were extremely short and on electric power only. Apparently, they never got the thing to work, as that would involve computer programming talent and actual hard work (kind of like Honda and Toyota pulled off). In some well publicized footage, with their “racecar” turbine electric hybrid, apparently the thing was actually being towed around the track by the camera car.
In the meanwhile, did I just see auto news stories a couple of weeks back where people were wailing and gnashing their teeth, calling out Toyota and the Japanese government for taxpayer subsidizing of the Hybrid Synergy Drive, which Toyota actually denied?
So, doesn’t this make we Americans look – um, what’s that word? – oh yeah, HYPOCRITICAL – to suddenly start having yet another round of taxpayer money going to Detroit for yet more money-burning – whoops I mean hybrid tech development?
I live in Michigan, but sometimes I think I’m surrounded by imbeciles. Certainly if I lived in Washington DC, I’d KNOW I was surrounded by sub-moronic imbeciles.
Jim Press supposedly said the Japanese govt funded the Prius. So let them fund the next generation too. Even if we hybridize every car, there’s still a lot of oil we’ll need. No doubt oil is a major reason why we’re in Iraq, but another reason is the policy of doing Israel’s bidding even if it’s against our interest. “Tracherous Alliance, The Secret Dealings of Israel, Iran and the US” by Trita Parsi is instructive. Iran is no more a threat to the US than Iraq was, but it is a threat to Israel’s hegemony so we ‘have’ to act.
“Does anyone think that the D2.8 wouldn’t piss this money away? Like, I dunno, the LAST $18.5b?”
Detroit is indeed good at pissing away money, but of the $18.5B proposed, most of it is earmarked against rebates for buyers. The last round of hybrid tax incentives did in fact do part of the job of getting the current hybrid market going. Sorry for the 2.8, Toyota made best use of those credits, Honda second best and Ford third.
Maybe the $5B retooling subsidies could be given to the transplants?
I read the article. Nowhere can I find anybody claiming that $18.5 billion would be going to Detroit. Did I miss something? The money quote appears to be this paragraph:
The government should also provide Detroit with the capital to develop such vehicles by paying automakers’ retiree health care costs and backing battery warranties. Consumers would receive tax credits of up to $8,000 for buying a plug-in hybrid. These proposals would cost $13.5 billion over 10 years; the health care plan would cost $500 million annually.
First of all, there’s no way in h-e-double-hockey-stix a plug-in hybrid tax credit would only apply to USA-built or designed models. Consumers would riot. Secondly, health care is a separate issue (yes, it’s part of the problem for the formerly Big 3, but it’s not something that should be packaged with energy fixes) and will be resolved in a different thread of legislation.
That said, Wired didn’t ask the “why do you support E85, when not a single study has demonstrated that it will (or, indeed, can) actually do what proponents say it will’ question. Shame.
And menno is right — there must be accountability in exchange for government cash. Something like: Executive compensation is tied to a specific set of goals to be met by specific dates. Fail to deliver, and you get minimum wage and no stock options. One may always hope. I suppose…
The Japanese government did not fund the Prius.
Their government didn’t even know Toyota was developing the first generation Prius. Jim Press is a liar moreover he is a car salesman.
The U.S. Government is gonna bail out the big 3 in one form or another. This is just step one of their bail out. Future bail outs will be determined by which political party gets in the White House. Either way the tax payer loses, big 3 executives are the real winners in this game. They will laugh all the way to the bank.
Mark Twain: “Suppose you were an Idiot; then suppose you were a Congressman….but I repeat myself.”
Its challenging for me to think of a one size fits all way of changing the situation. For one folks do not seem to ask for a balanced explanation with detailed causes and effects of the actions promoted. I think the public needs to educate itself. The public needs to know what a proposition entails.
Does anyone think that if the US were not dependent on imports for 50% of it’s oil supplies we would be fighting wars in the Middle East?
Yep. That’s a strategically important area of the world to control. And I wouldn’t call it dependent, I’d call it fortunate. I’m sure those in poorer countries would love to be able to cheaply acquire the enormous amounts of energy we have available to waste!
John Horner :
$18.5B/$1.5B = 12.33 … the number of days worth of US oil imports which would need to be displaced to come up with the cash. The US Strategic Petroleum Reserves hold just shy of $100 B worth of oil at the moment, so selling off about 19% of those reserves over time would pay the $18.5B. If oil consumption were reduced by 20% per day then we wouldn’t need as much oil in reserve to cover surprises.
The SPR only holds two months’ worth of oil. It’s irresponsible to even entertain the possibility of tapping it for any reason other than impending threat against the homeland, or severe supply interruption (like a nuclear event in the Mid-East).
$4.00 gasoline, $5.00 gasoline, or even $20.00 gasoline are NOT good reasons to begin even a “small” drawdown.
And remember, due to the gravitational nature of water displacement, the last 50% of it will take weeks to draw down (up…out of the reservoirs). It’s doubtful that any of it will be showing up at your local gas station.
And just where did the government get all this money that they want to give to their buddies. The government makes more profit on the sales of a car than the auto companies, and oil? What does the government make off oil? A buck a gallon on 150 billion gallons of gasoline sold in the USA evewry year? And that is just gas sales not counting diesel, royalties, and the other hundreds of taxes the government has thought up. Some subsidies. Give the government a few hundred billion in taxes and get a small percentage back. Lower all the taxes and cut government spending and all the economic problems will be as if by magic solved. Cut government spending?HA HA.
18.5 Billion is far less than a months proceeds that the US government taxes from the public. Now do you see where the problem really lies?
> Yep. That’s a strategically important area of the world to control. And I wouldn’t call it dependent, I’d call it fortunate. I’m sure those in poorer countries would love to be able to cheaply acquire the enormous amounts of energy we have available to waste!
It costs $720 million per day to “control” this area, and we still do get that much oil from Iraq. Maybe it’s cheaper just to buy the stuff and not worry about control.
I don’t think Detroit deserves any help, but I can’t get too worked up about the numbers – a drop in the bucket compared to the war in Iraq.
Can’t say that I favor a bailout of the Big 3, BUT, why the fuss for Detroit and nothing for the other major bailouts in the recent past? Bear Sterns got bailed out over a weekend. At least the loans for Chrysler in the 80’s paid some attention to the democratic process. As always follow the money trail…
Giving research money to Detroit is like giving cash to a bunch of drug addicts to investigate a cure for addictions. Better would be to form an independent skunk works consisting of knowledgeable, motivated, and resourceful people. They’re out there.
John
“The SPR only holds two months’ worth of oil.”
My point is that if US demand were reduced 20% then the existing SPR supplies would ipso facto stretch further. Right now the US imports about 50% of it’s oil requirements. A 20% demand reduction would imply that only 30% of the requirements would be filled by imports. The SPR is supposed to insulate against disruptions in imports, not against the same at home. Even so, the SPR was in fact tapped for a short time after Katrina to replace supplies lost when the certain gulf coast wells went out of production.
Spending some of the supply over a period of time in such a way as to reduce demand is indeed something worth thinking about and discussion. It is no unpatriotic or foolish to consider and talk about the possibilities. The SPR was created by an act of congress and it’s goals and management can be changed in the future in the same manner.
Another fact is that the maximum withdraw rate from the SPR is reported to be about 4.5 million barrels a day, compared to the current consumption rate of about 20.7 million barrels per day, out of which about 12.4 million barrels are imported every day ( http://www.eia.doe.gov/basics/quickoil.html ). The SPR has somewhere over 700 million barrels right now which equates to about 68 days worth of imports. But, the maximum withdrawal rate is only 1/3rd of the import replacement requirement and thus at maximum withdraw rate the present supply would last for 159 days. All of which is to say that the exact amount of oil “needed” in the SPR is impossible to nail down, but certainly is reduced by any effort to reduce consumption. The SPR is supposed to induce a feeling of energy security, and in that regard it is an illusion. Said illusion helped prop up the burn as much as I damn well feel like era which is now drawing to a sudden close. Real energy security would mean only using what is produced within our economy and those of clearly friendly nations. Canada is the largest exporter of oil into the US and posses little security risk. Other suppliers like Venezuela and Russia pose more serious concerns.
I have little patience for sacred cows, and the SPR has certainly earned sacred cow status. Funny how many “small government” advocates are also on the side of the government continuing to spend taxpayer money to fill big holes in the ground with oil.
Gm Precept, Ford Prodigy, Dodge ESX2- all of them were built under government alternative energy sources subsidies. Where are the production versions ? David Copperfield magic, here you see them , here you don`t.
why the fuss for Detroit and nothing for the other major bailouts in the recent past? Bear Sterns got bailed out over a weekend.
What you call a bailout meant Bear Stearns no longer exists as an independent company and its owners lost a boatload of money as they were forced to sell the company at a fraction of its previous market value to a competitor. But yeah, I’m all for a similar bailout — Toyota buys GM for $1 a share and takes over the Ren Center. Actually we’d all be better off.
But there is a big difference. The failure of a major Wall Street firm could wreak havoc in world financial markets, hence the bailout. The failure or GM or Ford would just lead to job losses for the staff of TTAC, as there’d be nothing interesting to write about anymore.
Use less oil in America? I agree but we might as well start convincing our neighbors and relatives… None of mine want to give up a drop. Meanwhile my wife and I continue to use less so it impacts our budget as little as possible. As soon as oil gets cheap again – or should I say if – everyone I know will go right back to their old ways. And they aren’t screaming for EVs or diesels or anything – they want cheap gasoline just like we had before…
Detroit will suddenly make big technological advances once the import guys start bringing in cars that make the Volt look like a Model-T. I am convinced they either will not build the Volt in the end or they will restrict it’s performance enough that nobody will want it quite like people do now. It is simply a distraction that will absorb our interest until high prices of gasoline ease a little or we get used to it.
I hate paying the high prices but I am liking the side effects.
One of these days Toyota or Honda or somebody else will see a value in building electric cars and suddenly everybody will be selling them too. They want to sell us what they’ve got as long as possible.
FWIW GM (and how many others?) = big oil. Shareholders that hold auto manufacturer’s stock also hold big oil stock and I think that is what hobbles innovation along with consumers with short attention spans.