"When will the [economic] pain go away?" That's what Newsweek asked their "Business Roundtable Experts," including GM Car Czar Bob Lutz. Maximum Bob begins by affixing blame: it's big oil's fault. Rising oil prices affect the price of everything because oil "goes into making virtually everything." Fair enough. And then Maximum Bob's off, talking about the "short-term disruption in [GM's] growth caused by rising oil prices." Growth? Seems Bob's suffering from half-zeimer's, conveniently overlooking the fact the GM started losing market share and sales long before oil prices rocketed upwards. Anyway… "Fortunately… we are a global producer, and we're well positioned in the rapidly growing economies of China, Russia, India and Latin America." Yes, despite GM's cash flow problems and mounting debt, "we're going to increase our R&D spending to expand alternative fuel solutions and advanced technology solutions to lessen and ultimately eliminate everyone's dependence on petroleum." [emphasis added] Of course, Mr. Lutz doesn't mention where they'll get the energy to generate all of the electricity or produce all the hydrogen and ethanol for these "alternative fuel solutions." But at least these remarks put him at the front of the pack for next year's Bob Lutz Award.
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I think maxi-Bob has paid too much attention to congressional hearings of late. Naybe GM doctors should examine him for early dementia signs.
OMG, Lutz really can’t believe the things he’s saying. Seriously, can he?
Lutz has a point, a good one mostly overlooked by the pundits. The oil industry gets off clear and easy, while all of the public blame for high transportation costs goes to auto manufacturers. Oil companies are not forced to innovate, explore for more supply, build more refineries, lobby for more SEC oversight of hedge fund commodity speculation, or make major investments in alternatives.
Why? Because oil is virtually a monopoly — although there are many different companies, none of them have an incentive to beat the competition. Nope they are sitting back making billions every quarter, complaining how the previous low profit margins did not generate enough income for more exploratory work or investments in upgrading. The auto industry is fast-moving and exists in a extremely competitive environment — oil does not.
Congressional committee hearings on the issue are laughable political stunts.
The oil lobby has a stranglehold on this administration. In addition, relatively low taxes, massive subsidization, and lack of mandated investments in alternative power benefits them FAR more than any handouts given to the U.S. auto industry.
This is a dear issue for those whose neighbors, friends, and economy depend on automobiles. While we constantly criticize american and foreign companies for not “recognizing and responding” to imminent global threats of gas price increases, the same are not made about the oil industry.
Maybe there should be a TTAO.
Lutz’s secret is to make such outrageous claims with no clear path or timeframe to meet them that he cannot be held responsible and he gets his press time in between golf outings with Rick and the Bystanders, and his minions.
“short term disruption in GM’s growth”?? “short term”?? “growth”?? This guy lives in an alternate universe.
How about a dependence on a spelling dictionary for the headline writer?
Bob Lutz… Bob Chutzpah.
The only thing I can think after reading these (and all the other) remarks by Bob “Maximum Tourette’s” Lutz is that he must be Andy Kauffman in disguise and the last couple of years are some really huge, absurdist performance piece.
Has he offered to wrestle Carlos Gohsn and Bill Ford on live TV yet?
Maybe in addition to two or three types of hybrids, flex-fuel engines, diesels, and fuel cells, GM is also working on Mr. Fusion.
I fail to see how GM is breaking the strangle hold that big oil holds on us…
They MIGHT be building the Volt – I’ll believe it when I see it – but they aren’t doing much to make more efficient vehicles out of cars they already sell. Okay – there is the Cobalt HF or whatever they call it.
Why not an advanced engine in the Aveo that is as good as Honda’s or Toyota’s? Surely that would push the miserable mileage for its class up another 5 mpg. Maybe low rolling resistance tires. The tech is there b/c there were cars in the early 90s that had great gas mileage.
How do Opels in Europe measure up agains the competition? Are they the bottom of the mpg charts there too? If not why isn’t GM using some of their European engines here?
Sure GM has a few half-baked hybrids with fancy alternators but I’m not convinced. If I’m going to pay the hybrid premium I want mileage as good as the rest of the industry offers and they might as well drop the honking big SUV hybrids. I mean c’mon – that’s just greenwashing.
Take an existing hatchback compact and give me an EV1 drivetrain! Make an electric Astra or Aveo or Vibe. Existing tech, existing chassis, conventional styling.
Oh I just remembered – the proven battery tech was sold by GM to Chevron who is holding tight on those patents and won’t let anybody license them… Never mind. Guess I’ll have to go buy a Prius instead…
I want GM to succeed but they don’t do much to convince me that they are any different than when they were crushing EV-1s.
Now if they were to begin responding to criticisms about their EV-1 choices instead of acting like either it was a pinnacle of technology without willing customers or that it never really existed I might think they are an evolving company.
Instead they keep feeding us a pipe-dream like multi-million dollar hydrogen fueled cars that no normal person could ever hope to own, fueled by an infrastructure that is limited to a few locations in southern California or GM proving grounds, powered by an energy carrier supplied by Big Oil.
Or they show us a half-dozen concept cars which shows they have some great ideas but which never seem to make it to production. Go back to the car mags of the 80s and 90s and look at what is supposed to be in production now. Never happened. Advanced tech still not -generally speaking- on the road. More of the same – extra gears in the transmissions, but their cars still wear out at 150K miles or less with an average owner. Still big and heavy. Still not many class leaders unless we buy their halo cars like Caddy or Corvette or a 3/4 ton 4WD pickup truck.
They still hold the same quality stats relative to the rest of the market. Still talking about the future and seldom delivering the goods.
Like I said, I want them to succeed but I’m glad I don’t own any of their stock. And to be fair they aren’t the only car maker doing this but they are the one that I notice do it the most. Maybe that is b/c I am paying closer attention to them (ever hopeful that an Opel will end up in my driveway someday) – I don’t know.
My advice to them would be quit building halo cars, rein in the concept cars, and start putting real content on the road or start talking more plain about what they are doing. This is an Hydrogen test vehicle. We are hoping that we can get the durability of the vehicle up to snuff, make it go a reasonable distance per tank, and though we are using an SUV right now, we hope to offer this in a compact chassis as well b/c we understand not all of our customers want an SUV. We are also testing these electric cars. We’d like to bring in some diesels from our Opel division in Europe but unfortunately with the high cost of diesel we are not sure that enough of our customers want diesels to make them cost effective for GM.
In short either I’m not paying attention or their PR people along with the GM leadership seems to be stuck in the Motorama mode of the 1950s. Dreamy chrome covered yachts with fancy girls doing silly dances around the cars. I don’t want to be “talked up” – I want to here about reality from them. Nuts and bolts. Why their product is better and how it better suits my needs than the Asian competitors. Let’s talk about value in MY terms – not the suburbanite looking for a trophy to show off to his friends.
Of course I’ll admit I’m not the typical customer they are trying to sell to b/c I don’t have a stainless steel $900 grill or a 42″ LCD/plasma TV either nor do I aspire to. I do want to pay off my mortgage though – earlier than the terms of the mortgage require.
I guess from a certain perspective that GM is a product of their customers too. Can’t sell what the customer won’t buy but then GM, Ford and Chrysler don’t want to build what some of us import buyers want to buy either. Its a vicious circle.
Back to work…
detroit1701,
That’s not particularly accurate. Exploration and development is proportional to the price of oil and the estimated risk. At low prices, low investment. At high prices, high investment.
And there are a fair number of players, so it behaves similar enough to a free market. OPEC has a hard time holding the line on production quotas.
There’s some delay to get things moving, a spot price of $10 higher than the usual price gets no one excited. And it isn’t like you buy a straw at the convenience store, stick it in a new hole and begin to suck oil out, exploration takes time and some of the equipment to do it takes time to build.
The big problem is that there’s less and less oil that’s easy to find and pump. This raises the production cost and the required investment and makes the investment look more risky. The price of recovering oil from sands and shale is starting to look attractive (but these might be environmental nightmares, too).
—
What I find ludicrous is that Lutz was invited to the Newsweek panel. He bears about as much responsibility as anyone else for GM’s unwanted gas guzzling product line and massive losses. Why would anyone think his opinion was useful?
The oil industry gets off clear and easy, while all of the public blame for high transportation costs goes to auto manufacturers. Oil companies are not forced to innovate, explore for more supply, build more refineries, lobby for more SEC oversight of hedge fund commodity speculation, or make major investments in alternatives.
You can’t be serious? Are you referring to the US or some other country ?
@ KixStart
The public and Congress seem to accept the oil company’s excuses that it just was not making enough money back in the day to justify increased investment or exploration. However, this is as big of an excuse as those who claim that “how could the automakers NOT anticipate oil prices tripling in five years?” Hooey. It reminds me of the old “put a frog in boiling water” analogy. Automakers and consumers can cope when prices increase gradually, thus accustomating everyone at an ordered pace. Consumers cut back, automakers make incremental improvements.
First of all, the premise that the rapid price increase is due to demand is not supported by the facts. OPEC and oil companies are blaming unregulated hedge fund commodity speculation on increasing oil futures prices. This has caused havoc everywhere. For example, most traditional air carriers (except for Southwest, which locked in oil at $51/barrel years ago), are being creamed. Automakers, who need at least three years to get products to market, are forced to crash develop engines and chasses at incredible expenses. Truckers are not making money on runs. And so on. And to blame this on passenger cars not being efficient enough, as opposed to oil policy? Ridiculous.
Just as the tech boom could not last because market value exceeded the companies’ net worth by extreme multiples, current futures contracts are not supported by demand. Worldwide demand is up maybe a few percentage points over the past several years, not 200%.
Automakers, OPEC, and the oil industry are screaming that there is no real (rather than perceived) supply and demand issue. On the other hand, hedge fund managers and institutional investors are pumping up the “supply and demand” issue to induce more investment, thus inflating profits.
Whom are you going to believe?
Well I feel relieved.
Bob will rescue us.
Yippie!!!!!!!!!!!!!!!!!!!
Bunter
Why not, they’ve already ended my dependence on American made cars…
I’ve already told my wife, that if I ever become really delusional & stupid, please buy a gun and do away with me.
It looks like Bob Nutz is way overdue for a bullet. This delusion he’s having must be about being a spokesman for Toyota or Honda.
Poor Bob. I hope his family isn’t suffering too much.
jjdaddyo: Lutz…must be Andy Kauffman in disguise
Comment of the day!
The supply-and-demand equation is not as simple as “there’s enough oil, so it should be cheaper”. Part of the problem is that there isn’t enough CHEAP oil to be had. There may be enough oil still left on earth, but we have to go get it. For supply to meet demand, the world is now going after oil that is very expensive to get out of the ground/ocean floor. An oil field discovered off the coast of Brazil supposedly contains 8 billion barrels of crude, but it’s under two miles of ocean, three miles of sand/salt/silt, and two more miles of solid rock. It will cost an estimated $250 Billion to develop the technology and infrastructure to get the oil out. That means that roughly the first 2 billion barrels they pump at current prices will be profitless, with the proceeds going to pay off the principal on the loans to cover the cost of the R&D and infrastructure. That doesn’t even address the interest on the loans. If oil were $45 a barrel, it would make no financial sense to go after this oil. But at $135 a barrel, it will be worth it. So it will add to supply, but at a high cost.
Bob Lutz reminds me of a mad grandfather type who spouts gibberish and in trying to show their respect everyone just nods their head.
He certainly has a penchant for rewriting history, that’s for sure!
Maybe the final, and most painful ignominy for GM will be to have Toyota write and publish their history, mistake by sordid mistake. It would make for fascinating reading.
Glad he pointed out oil does go into everything, especially GM’s pla-tastic interiors. Eliminate everyone’s dependence on petroleum? Aside from alternative fuels, I’ll welcome the day GM gets back into interiors made from wood and leather… but I ain’t holding my breath.
What’s Lutz going to fuel his fighter jets with? Bio-kerosene?
@Detroit
You can’t really believe what you’re writing, I hope. It’s not as if the oil companies haven’t been trying – they’ve spent billions on exploration and search, billions and billions. Chevron spent 18 billion in one year.
The problem comes back to how we’ve been using that oil – and we should be ashamed. I’ve owned three 4.0l Cherokees, so I really should give it a thought.
Lutz, however, has been inordinately clueless to what was happening, and now sounds silly because he clearly doesn’t believe in what he’s saying. It’s just propaganda disconnected from reality.
GM has it pegged its future squarely on ethanol.
They have bought into 2 companies looking to produce from non food crop sources.
Coskata actually is building a plant and should have it online next year.
There is a good article on it here:
http://www.biomassmagazine.com/article.jsp?article_id=1736
It is a demonstration plant to prove their concept, so it will only be producing 40,000-gallon-per-year there, but they contend it will work on a larger scale and produce $1 a gallon ethanol. They are just looking for partners to pay for the cost of a larger plant.
They have also invested in Mascoma ( not sure of their status).
Lutz obviously believes in these investments and has put his mouth where GM’s money is