President Barack Obama has announced that the EPA should go ahead and review California’s request to set national fuel economy standards. As reported here, California’s waiver would allow the state to legislate CO2 emissions, which would create a de facto fuel economy standard under the guise of keeping the planet cool. While environmentalists and the Pelosi wing of the Democratic Party view the Golden State hat tip as a seminal victory for Mother Earth, it’s actually a set up. It’s all part of the Obama administration’s plan to clean up the U.S. automobile industry by throwing GM and Chrysler into Chapter 11.
Once the EPA grants California’s request, the former republic and the thirteen states that follow its vehicular emissions requirements will dictate the kinds of cars all Americans will drive in the future. Never mind the Old School California-only models; there’s not a chance in Hell that any automobile manufacturer will make separate vehicles for The California 14 and then again for 36 other states. Lest we forget, California alone represents roughly one in every eight cars sold in the US.
Although automakers overwhelmingly oppose the EPA waiver– including Japanese and European manufacturers– their reticence flies in the face of logic.
Since the 70s, when California first confronted its smog problem, the federal government has issued waivers from federal emissions legislation to the California legislature. Of course, other states jumped on the California’s strictler, less gentle clean air bandwagon. And sure enough, all the manufacturers made their vehicles compliant with California regulations. For at least thirty years, California emissions standards have been the de facto standards for any vehicle sold in the U.S.
The MSM and even the Detroit papers have missed this call. All questioned whether the timing of Obama’s announcement couldn’t be worse– given Detroit’s dependence on trucks, which bring down fleet averages. And we know that Detroit doesn’t have a spare dime to develop the technology needed. Washington gives on one hand, and takes away on the other.
Yes and no. On one hand, it’s certainly true that neither GM nor Chrysler have the cash needed to retool to fully comply with California’s higher-than-the-feds fuel efficiency standards (never mind successfully compete with other automakers forced to do the same thing). Even split just three ways, the Department of Energy’s $25b retooling loans are, in automotive terms, a pittance.
The President of the United States knows that GM and Chrysler have to go bankrupt to survive. This is no secret. But his administration doesn’t want to be the author of that scenario– at least not without a “soft landing.” The California waiver is a sign that Obama has found a “hook” that will allow him to do what politicians have wanted to do since they signed the first check for GM and Chrysler: control the companies’ products.
So Washington will provide more money to help GM and Chrysler survive. But the rationale for doing so is undergoing a sea change. The bailouts are no longer about protecting American jobs. They’re about protecting American manufacturing by creating green jobs.
The green bankruptcy angle is also the perfect cover to avoid messy trade disputes with foreign countries. While Detroit has argued for years that Japan underhandedly supports their domestic car companies, little came of it as Japan Inc ate away at Detroit’s share of the pie. Americans bought their cars, subsidized or not, by the Japanese government. And we know that Detroit failed to respond on the product front.
Now the tables are turned on Japan. In bankruptcy, the Federal government can dictate the terms of financing which they will provide to Detroit. That means more fuel efficient cars that meet California’s requirements. It’s open and direct subsidy – but one that has to be given under the guise of rescuing a key industrial economy. So Detroit actually gets a “two fer”: money for reorganization and for new vehicles. Japan can moan and groan, but Detroit will come out ahead, subsidized by taxpayer dollars.
And here’s how it will go down…
For a start, the government’s car czar will dictate the merger (via shotgun) of GM and Chrysler. From there, it’s straight to bankruptcy for American Leyland. That makes for a clean slate in an expedited reorganization. Fewer car models, fewer dealers, little debt, and a competitive union contract. Decades of poor management decisions get wiped clean.
And then new government money – provided as Debtor in Possession – starts the rehabilitation process of the New GM. The money will go for cars which will meet California’s de facto national standard.
So in one swoop, President Obama will fully pacify the far left wing of his party and find the justification for government funds to get Detroit where it needs to be, politically speaking. One major question remains – what happens to Ford?
I’m sure it’s a controversial pic, but that shot of Obama endears me to him even more. He looks like Bogart – smoking is cool again, kids! Or not.
What were we talking about again?
Well, at least Mr. Obama knows how to do a bailout the right way. I guess that Ford will have a matched labor contract. But exactly how to void dealership contracts or bonds? It could be messy. Maybe Obama simply buys out all the Ford stocks shares (not much) and let Ford go C11 as well.
You don’t understand the system. The government will cripple the companies with regulation and then subsidize them for billions. Can’t see Obama let the UAW go through a bankruptcy after they gave those hundreds of millions to the Dem’s.
Ronald Reagan
“Government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.”
It has stopped moving.
Your final question came to mind independantly about 3 paragraphs from the bottom.
The fact that one of the Debt Three is able to take (hopefully) effective action is a point of embarassment to the other clods and, I think, the Gov’t.
One plus is that the resulting new corp (if it happens) will be much smaller. At some point market forces may get their say again.
BTW- I am proposing a renaming of General Motors to GimMe Corp.
Bunter
Sorry Ken I have to disagree on this one. I think this is a setup for exactly the opposite scenario, perpetual bailouts. The automaker’s, no bailout funds using, lobbyists are in Washington as we speak laying out all the billions its going to take to hybridize every vehicle they sell and to purchase small car platforms from Italy and Korea, just in time to make the “no pork” economic stimulus package.
Knowing how incompetent and out of touch politicians are, you really think this is the plan?
If so I am shocked this actually goes down.
I didn’t have the time to make this comment the first time the “California rules the world” article came about, so I wanted to put it here, even if it is slightly off topic.
First – I’m not greenie or Pelosi fan at all. If you check my previous posts, I’m all about credible peer-reviewed scientific results, not truthiness or policy.
But I can’t see why everyone is getting up in arms about this. It’s state’s rights, folks. And for some reason, the Democrats are going for state’s rights, which is weird. If California wants to change the rules (plus all the “me too” states) for cars, let them.
I know people say (including this article) say that because California is such a big market, they’ll dictate the rules for everyone. But in reality that won’t happen. If CA’s rules are too strict (which I think they are), then the manufacturers will sell them little smart-fortwo-sized cars, but still make high-profit (what ever that means in today’s economy) big cars and trucks for the rest of us. There will definitely be an opening in the market for someone to fill. Then we’ll have competition among the states and among the manufacturers.
I still watch old game shows (loves me some GSN), and the car prizes are often listed as “California Emissions”. We lived through that once, and if CA’s rules are too strict for profit, then I’m sure there will be at least some manufacturers who leave that market (or at least only sell a small subset of compliant cars in that market). I actually look forward to it. Competition among the states for different laws can only help us all out rather than Washington dictating asinine rules for us all.
(I live in a state where “if it rolls down the road, it’s legal” – so CAs rules don’t matter much to me)
Ken Elias:
“There’s not a chance in Hell that any automobile manufacturer will make separate vehicles for The California 14 and 36 other states.”
This whole “separate cars” thing is wrong, automakers already make separate cars through the availability of options.
California and the states that follow its emission standards will simply have less options.
The optional V6 or V8 will not be an option in California.
On some cars the hybrid option will be mandatory.
I mentioned it before, and I’ll mention it again. California’s waiver should not be granted because they no longer are pushing a local concern, but a global one.
If BO wants to push lower CO2 (or higher fuel economy) standards, he should push the NHTSA (CAFE) or the EPA (CO2) into stricter regulation, as this is a national issue. I mean, if he has enough influence to make the EPA backtrack on the waiver he can make them regulate CO2. Imagine that, a FEDERAL organization regulating emissions for the US public.
Oh but wait. If BO did that, the papers (and Sierra Club) would scream “Obama Follows Bush Environmental Policy”. And he’d look bad. He could take the high road and explain himself, but he won’t.
Change to believe in? More like politics as usual.
I have one factual quibble with this editorial.
For at least thirty years, California emissions standards hve been the only standards for any vehicle sold in the U.S.
Automakers have been making “California” versions of their cars for decades and the practice continues to this day.
The 2010 Mazda 3 comes with either a 148 hp engine (144 in California) or a 167 hp engine (165 hp in California)
I don’t think the California regulations will be that difficult to meet. The Ford Fusion Hybrid already meets them. So does the upcoming Honda Insight.
I don’t see any fundamental reason (other than shortage of capital) that other manufacturers can’t make similar platforms within 7 years.
There is no way the UAW will be expected to give up ANYTHING under Obama. That is the major flaw in this theory.
Your statements are speculation, especially when you get into imputing motives. But assuming you’re right that his intention, or at least the result of his action, will be to drive GM to BR, isn’t that what many here have said is the only way through this? They’ve run themselves into the ground on their own.
I certainly understand industry concern about a wide variety of regulatory requirements, but where would we, and especially California, be had they had to live under far more lax national standards? From comments I’ve read of California residents, the air is MUCH cleaner now than before their getting the authority to raise standards. The 2.8 have drug their feet on virtually every improvement proposed, and even today you can’t even order torso air bags on the large SUVs or trucks.
I agree with Mike Jackson’s comments about higher fuel taxes being the way to go for fuel economy, but it’s unlikely in the US. And it’s not the ‘government’s’ fault; the idiot electorate, goaded by so called conservatives, would raise hell about higher taxes, government intrusion, etc., etc. So GM will continue to try to sell the likes of the Aveo and keep hoping for a sustained return of high sales of trucks and SUVs while their market share dwindles to zilch.
I like it – a ‘Master Plan” from the cigarette-smoking Evil Genius, known to some as “BO”.
I hope Mr. Obama gets used to it – there’s a lot of pent-up vitriol in the Good Ol’ USofA.
The parts of the country not using California standards have 150 million people. This is still a huge market. If the rest of the country can convince Congress that the smallest vehicle allowed on the market should be an F350 dually, so be it.
I agree with miked. States rights cut both ways.
You are giving Obama and the rest of the government way more credit than they deserve. Yes, allowing CARB to effectively dictate fuel economy standards will bankrupt GM and Chrysler. But no, Obama, Pelosi, and their green fans don’t realize it.
They are still under the delusion that Detroit can just pull that 100 mpg carburetor off the lab shelf where they’ve been “hiding” it for the last 35 years, at the behest of big oil.
Never assign to malice that which can be adequately described by stupidity.
Is it states rights?
If there’s ever been an industry that is interstate commerce, it is the automotive industry. And regulation of that is the federal governments job, not the states. Any policy by one state that, because of that interstate nature, means the other 49 states have to comply with that one states policy is clearly beyond that states powers and is the federales business.
The whole justification for states rights is that each state is a little lab for determining what policies work; not that one state gets to grab the others by the balls and lead them around.
Makes me wonder if there is a way for the Big 2.8 to add 49cc scooters into their fleets.
But on the other hand, given how we’re handing out hundreds of billions to banks, it almost makes handing out tens of billions seem digestible.
Bluecon-
“Can’t see Obama let the UAW go through a bankruptcy after they gave those hundreds of millions to the Dem’s.”
Why not? After all, the other party had a long history of taking the money of anti-abortion supporters and, essentially, giving them squat. It’s what politicians do.
This President understands better than most, I think, that inflexible ldeological stands result in nothing being done which, in this climate, is a one-way ticket to de-election. That’s the risk that Republicans in Congress face. If Obama shows a willingness to be pragmatic about unions, it will be very hard for Republicans who oppose his policies to appear to be anything other than obstructionists.
Sorry Ken, I have to agree wholeheartedly with buzzliteyear, for the better part of 30 years, manufacturers have been making nothing but SPECIAL editions for California emissions laws. In the early days, they would just detune the engine further and maybe slap another catalytic converter on. Often it was only the base engine that was available in California, not the big engine options.
Lately, the manufacturers have been offering “PZEV” versions (a la Ford Focus), some of which are only available in California which sacrifice some HP and torque to better meet the standards (and often add additional emissions equipment to help).
@toxicroach – This is definately state’s rights. Cars aren’t registered federally, so if a state wants to make a law that you can’t register (or do business with )a car in the state unless it meets certain regulations, so be it. That’s their choice. I don’t think they can stop people from driving through their state with a car that doesn’t meet regs (that whole interstate commerce clause), but they can surely restrict registration. They might not be able to restrict “doing business” with the car (i.e., a truck fleet registers all of their trucks in Nevada and does all of their work in California), but I bet the lawyers can figure that one out.
California is already pretty bad, I can take my old Toyota and do a Chevy 350 swap and my state doesn’t care, my friend actually does need a new motor for his old truck, but since he’s in California, he needs to do a swap that meets CA regs, which means no 350 for him. Likewise, if I do the swap, I can’t ever bring (really register) that truck in the state if (god forbid) I ever move to CA.
There is no way the UAW will be expected to give up ANYTHING under Obama. That is the major flaw in this theory.
I don’t doubt that the UAW was, and is, a major contributor to the Democratic party, but their power is waning. What’s their threat? We’ll get you in the next election? By 2012 they may not even exist and even if they do the chits that they will be holding, Michigan and Ohio, may be depleted of a good chunk of their electoral votes. I know that the UAW to some is synonymous with the Democratic party but I think Obama and Democratic leadership can see the little ways into the future when the UAW is irrelevant.
I keep hearing about the “green economy” and how he’s going to create 4 million jobs. My question is 1) Do others see the “green economy” as just a way to make this cramming of extreme environmental policy go down our throats easier?
2) Does that 4 million new jobs not count the jobs lost due to these government moves? I’m starting to guess it most certainly is not a net number.
I too am worried about perpetual bailouts, gov subsidizing everything with so much money that instead of using little tax incentives, etc to gently guide certain behavior, that they instead will literally pick and choose which companies make it and which ones don’t just based on whatever political reason they feel like.
This is not America….
miked: “And for some reason, the Democrats are going for state’s rights, which is weird.”
You’ve forgotten your history!
As for the whole question of safety & emissions standards I’d like to see a completely level playing field. That is all of the G8, or whatever you want to call the first world these days (NA, EU, Japan, AUS/NZ, etc) settle on a single safety & emissions standard.
Balkanizing it into California-sized chunks is ludicrous, and restraint of trade, as well as being a hidden protectionist tariff.
–chuck
We can debate state’s rights until the cows come home, but the problem is that California can’t reduce CO2 just in their atmosphere no matter how low they go on emissions regulations. A recent show on Science Channel had a team of scientists/engineers create a big carbon scrubber to test if they could reduce CO2 levels with its use (which succeeded on a small scale). They didn’t set it up in Orange county but rather a high school football field in rural Canada – because CO2 levels are evenly distributed, more or less, across the globe. So even if you buy the whole AGW argument (look up Christopher Monckton if you do) this approach will not reduce CO2 levels in California more than anywhere else.
Where did you find that pic of The One smoking? I never knew suc a pic existed since they are so careful to protect his image.
I’m with jared on this one:
I think this is knee-jerk, ideology-driven policy. Exactly the kind of government a lot of people voted against. You give them way to much much credit for disguising diabolical genius with what looks like stupidity….
If your hear hoof-beats think horses, not zebras.
I agree with miked. Both posts.
Not that I’m a fan of CO2 emissions regs or anything, and certainly not of anything resembling CAFE (Basically a subsidy for huge, multiline conglomorates who can sell lots of subsidized small cars to make up for lack of innovation in big ones). But making such policies at the state, instead of federal level, at least brings some hope of diversity. And then states can learn what works for others, and what does not.
If the mileages get too strict, making CA trucks too expensive, just wait for CA businesses ‘needing’ them to start complaining about ‘unfair competition’, we need excemptions etc. Silly regs, when done at the state level, are a lot more self limiting than at the federal level.
If this scenarios is true, when faced with a choice between satisfying the green wing of the party and the UAW, he went with the greenies.
Should be an interesting next four years…
As for the “let the states experiment and find a solution that works” – not a good idea for products that are expected to be sold NATIONALLY and, indeed, MUST be sold nationally to be profitable. That is why the Founding Fathers put the Commerce Clause in the United States Constitution in the first place.
We want states to experiment on things like welfare, health care and urban planning. In other words, ideas that can be implemented locally and then copied by other states if they desire. If the state fails, the failure is confined to one state. It doesn’t wreck an entire industry, or disrupt an entire market.
The Big 2.5 oppose everything. They always have, it is what they do. They opposed seat belts, they opposed collapsible steering columns, airbags, pollution laws, all of it.
Then, when they are on the skids, they come out with scions of their ineptitude like the Charger and Camaro, designs thought up by geriatrics.
They have to go bust. It is the only way. There is not once scintilla of sense in pumping money into these dinosaurs to continue business as usual. America is being held hostage by religious fanatics who wish its destruction and America PAYS THEM TO DO IT! Is there anything wrong with this picture?
The Big 2.5 have been going down the toilet since 1973. They have been “reinventing” themselves every time gas got expensive and then repeating their mistakes. There is absolutely no sense in pumping more tax dollars into Ram 3500 Hemis and Camaros.
But maybe this makes to much sense?
This is a great plan to jump-start auto sales. The year before these regulations kick in, auto sales will be huge!
Good. Detroit has been fighting the increased mileage, emissions, and safety initiatives for nearly 3 decades. Somehow, amazingly, Toyota et al can meet new regulations each and every time with barely a whimper.
Chrysler is dead, they just don’t know it. They need to get parted out. GM needs to C11 and get down to fighting size. If this quickens their propped-up demise (and ultimately costs less to the taxpayers by cutting off the welfare flow to them), so be it.
Chrysler is dead, they just don’t know it
I think they know it. Cerebus has been quietly sell off assets in Mexico like the hemi and PT plants.
Really, the corporate welfare has to end and a new era start. The Bush years showed the staus quo ain’t working.
Dave M.: Toyota has been fighting the California carbon dioxide regulations, too.
And not every regulation is a good one…
I think it bears repeating here since it just seems some folks have forgotten…
There will be no states’ competition on various vehicle emissions regulations. It’s either CARB or EPA. States have the choice to align with either group, but the EPA is the baseline and CARB can only exceed the EPA’s requirements. California is the only state that can write emissions regulations because they beat the feds to it. Once the feds started doing it every other state has to just go along.
That said, I think that once the Feds recognizes the supposed need for such regulations and applied them to the whole country anyway they should have told CARB to go auto fornicate because their services were no longer required.
I agree that there should be some harmonization between at the very least NHTSA and NCAP on the safety side and between the EPA and EU on emissions requirements, but as long as CARB continually gets “waivers” you’ve got a loose cannon that will ultimately wreck the whole harmonization thing.
not a good idea for products that are expected to be sold NATIONALLY and, indeed, MUST be sold nationally to be profitable.
This is a load of crap. The U.S. is a ginormous market. Half that market is larger than many many other countries put together. California itself has the eighth largest economy in the world. If you cannot make money selling to half the U.S. market then you are doing something wrong, no matter what your product is.
The Dems will throw your money at D2.451 forever…There will be no UAW sacrifice.
The last thing the Ford family wants is the government owning them…They will not be able to survive though.
General Motors, which has not made a profit on auto sales since 2004, including the go-go years of 2005 and 2006, wants us to believe Red Ink Rick is on the cusp of profitability in a real down market?
GM, with a net negative capitalization in the neighborhood of $60 Billion wants us to believe they are not bankrupt?
It appears somebody may be executing a plan to shove them into bankruptcy to stop this madness.
I shudder to ask this next question: Is everyone on board with getting rid of the current Board of Directors and the top three layers of executive management?
The Dems will throw your money at D2.451 forever
I suppose it is better to throw money at Wagoner and Lutz.
Nice theory, but I don’t buy it. No way he can get away with throwing the UAW to the wolves, and no way can the UAW make any concessions to GM-Chrysler without doing the same for Ford.
The UAW is still a real question mark.
On one hand, Union executives are positively salivating at the prospect of getting BILLIONS of autoworker healthcare dollars in their pockets hands treasury.
There is also that bit of legislation working its way along making it much easier to shove a union down the worker’s throat allow non-union shops to invite in a union.
I would guess they will give up everything else and battle to the death anything getting in the way of getting those BILLIONS of dollars.
Qwerty: This is a load of crap.
Nonsense. You need to take that up with the Founding Fathers, who put the Commerce Clause in the Constitution. I’m inclined to believe that they put it there for a reason.
This was specifically put in the Constitution, and one reason was to create NATIONAL markets for various products. That is why the federal government is given authority over interstate commerce.
Qwerty: The U.S. is a ginormous market. Half that market is larger than many many other countries put together. California itself has the eighth largest economy in the world. If you cannot make money selling to half the U.S. market then you are doing something wrong, no matter what your product is.
Automakers have smaller slices to this market, which gives them a smaller production base over which to spread costs. To blithely state that automakers should make money selling half of the total American market – when no one automaker controls anywhere near that share on even a national scale – is not an informed argument. You apparently missed the recent stories showing that many auto makers – and not just the domestics – are not making money in the U.S. TODAY.
Canucknucklehead: I suppose it is better to throw money at Wagoner and Lutz.
Is there really any difference? Last time I checked, GM got its government “loan” and Wagoner and Lutz were still in their same positions at GM…
What you are all forgetting is that thanks to Mr. Bush and the Republican folly (with generous help from the equally corrupt Democrats) the USA is technically bankrupt itself. Rendering all other musings on the financial health of GM, Chrysler, Ford etc. moot. The founding fathers are turning over in their graves.
The California waiver is a sign that Obama has found a “hook” that will allow him to do what politicians have wanted to do since they signed the first check for GM and Chrysler: control the companies’ products.
And that’s what’s scaring me. With the stroke of a pen, the eco-fascists can order the death of the Camaro, Corvette, Challenger and Viper by a thousand cuts because they don’t get 250 MPG’s or something like that.
God, I hope Ford stays away from the bailout bucks so they can keep producing Mustangs, Greenpeace be damned.
If this waiver gets approved, God forbid, maybe they could calculate the fuel economy in the convoluted way of the new CAFE standards. In real life, a Camry Hybrid gets about 33mpg overall, but gets 46.5mpg under the new CAFE, exceeding the nearly impossible California standards. But what I’m wondering is, if farmers, construction workers, etc. need a new vehicle, what are their options? I doubt even a JDM Kei truck, with an engine displacing less than 2/3 of a liter, could get real-world economy of 43.3mpg, especially on the highway. You can’t tow with a Prius or a Civic Hybrid, so people who need a truck will be forced to buy commercial pickups with worse mileage than pickups on the market today. Why do they have no separate standards for trucks? Unless a Jetta TDI can tow a horse trailer, I’m surprised that California thinks trucks are completely unnecessary. Maybe being in the HOV lane in their hybrids, they never noticed the multitude of semis in the other lanes. Perhaps because the hold their head so high above other people that they close their mouth when it rains so they don’t drown.
What we are seeing is a threat to people’s lifestyles. Sure, 9 mpg Ford F-350s are funding America’s enemies but if a government tries to do anything about it, listening to the screaming that goes on. Most people don’t tow anything with a truck; they are used as cars. Have a look at the freeway and see how many 6 litre V-8 trucks are hauling anything but their driver.
But you know, a small truck is just as much fun if anyone would be willing to try one.
@ Ken Elias
Errr… Makes sense… If anything with a Dollar Sign attached can in the USA at the moment.
@ Rev Junkie
In real life, a Camry Hybrid gets about 33mpg overall, but gets 46.5mpg under the new CAFE, exceeding the nearly impossible California standards.
We’re getting 41mpg in/around Chicago with Camry Hybrids.
Unless a Jetta TDI can tow a horse trailer
With respect, why do people react with extremes like this? I don’t believe anyone is suggesting the beloved (but mostly unjustifiable) full size pickup will disappear for those that really, really, really need one.
Yes, maybe they’ll end up with a torquey I6 turbo diesel at a bit higher price point, but if you need it for the purpose designed, well, no problems and surely there will be a CA loop-hole for those work vehicles.
You’re right that meeting the California CO2 standards will be used to justify further funding to the domestics, but the bankruptcy angle feels more like TTAC fantasyland.
And speaking of fantasy, if Detroit really wanted to return to profitability, they’d ignore California and the thirteen dwarfs completely and become Red State Motors. The automakers formerly known as the Big 3 don’t sell any cars here anymore anyway. While Honda and Toyota will be forced to cobble together a 35 mpg national
fleet or risk losing their bi-coastal constituency, GM, Ford and Chrysler could corner the still considerable market for mondo-mega-transport in the febrile 36.
I know this thread is getting old and this is probably a useless comment, but I just thought of another thing: The Detroit 3 (and really just about anyone else) should be pushing CA to make up their own silly rules, not be against it. Why? Arbitrage. Think about this: How much does a home in CA cost versus some super depressed rural area (say Arkansas). Why? Location, Location, Location. The home in AR isn’t transferable to CA. But what about a car? I bet there’s no more than $1000 difference between identical cars (neglecting taxes) in CA and AR? Why? Well if it was significantly cheaper to buy a car in AR, all the Californians would just pay someone to buy it there and drive it out.
But if the CARB cars were different than the non-CARB cars, well then you have what every seller wants: segmented markets! Now a car from AR couldn’t be imported into CA, so the manufacturer could charge significantly more for the car without the fear of arbitrage evening out the prices.
I bet after a few iterations the cost difference between making a CARB car and a non-CARB car would be significantly different than the price difference that could be achieved in the segmented markets.
so, what will keep the entrepreneur car dealer from titling big cars and SUVs in an EPA state, then reselling them as used into the pent up demand of the CARB states? Makes me want to buy a car dealer in Reno
Captain: the same laws that already exist that don’t allow someone to live in California yet have their non smog compliant car registered in Nevada. You can only live a short amount of time in a state (legally) before you have to register the car in that state.
Ken: “President Obama will fully pacify the far left wing of his party…”
I get that polemicists find advantage in marginalizing their adversaries, but your case would be stronger if you’d stick to a close approximation of the truth.
There is, in fact, fairly broad, bipartisan support for California’s standards across the west coast. For example, you consider Arnold a “far left” Democrat? Actually, he’s pretty reflective of a long tradition of moderate-to-liberal Republican state leadership on environmental issues. Indeed, the entire west coast has a more moderate, bipartisan approach to environmental policy making than in other parts of the country.
Alas, such nuance gets in the way of a good partisan broadside, no?
Well if it was significantly cheaper to buy a car in AR, all the Californians would just pay someone to buy it there and drive it out.
Doesn’t work like that. People tried this back when we first required catalytic converters. In order to register your non-Calif car, you will have to pay fines that far exceed the savings of going to AR to buy it.
I appreciate that you started your story with “President Obama.” I have an idea that when one wants to disagree with, or complain about, the President, then you should respectfully refer to him as “President Obama.”
Why? Because he earned it. I disagree with almost all his proposed policies, but I don’t want to have his name become a curse word like our last President’s (or most the others). It’s not good for the country. The costs of that disrespect are too high to count, and even President Obama will still be paying for it when he leaves office.
So, when not taking a stand against the man, it’s still okay to say “Obama”. And certainly, headlines are okay, but I just think there are limits, and we should do better than we have done for a long time.
As for your prediction, I don’t see it. One way or the other, the government influence should be gone by 2015. GM will resond by simply starving the dealers in the affected states, while dealers in the neighboring states get to make all the money. Then the ball will be back in the states’ courts. (Pun intended)
Canucknucklehead :
January 28th, 2009 at 7:31 pm
What we are seeing is a threat to people’s lifestyles.
Bingo!
People don’t like changing their ways, especially Americans. Most folks are not very far sighted in that respect. They will change their behaviour only reactively, once they encounter some disaster. It’s like the heart disease patient who ignores his doctor’s advice on healthy eating and exercise but is then completely willing to submit himself to triple-bypass surgery after a bad heart attack. The problem is that such surgery can be fatal.
If fuel standards are not improved, some of the following will happen:
– peak oil will hit resulting in sharp decrease of oil supply as people scramble over it, causing economic collapse (scenario a la Cuba 1992 after collapse of USSR and end of oil imports)
– the price of oil will become so high due to demand from emerging economies once the recession ends that this will cripple the US economy and make it less competitive compared to more efficient economies
– the effects of global warming will become plainly apparent
– the government will go bankrupt spending billions on oil wars.
Because of things like oil companies and OPEC countries being not quite truthful about their reserves, the unpredictibility of the weather, the craziness of market speculation, various freak accident-type events, subsidies for oil companies, and controlled gasoline prices in many countries (i.e. China), the change can be sudden with the market not having time to adapt (the market in this case does not have complete information!).
That is why some forward looking government planning is required in this respect…
Hazard,
You are ignoring the fact that over the past year fuel consumption across the country has DECLINED.
Your scenario regarding what will happen if fuel economy standards are not improved doesn’t reflect what has been happening in the real world.
What’s amusing about these standards is that “boutique” manufacturers are exempt. So Hollywood stars, film studio moguls and Silicon Valley Whiz Kids can still buy their Ferraris and Bentleys. Nothing like shared sacrifice there…heaven forbid, however, that Joe Sixpack drive an F-150 to work.
Of course, if present trends continue in California, within 20 years the only people left will be the rich who drove those exotics, or the poor immigrants who use mass transit and work as their nannies, gardeners, butlers, etc.
Hey, hazard, wouldn’t all of the “oil wars” end because a Democrat is president? If you believe the Iraq war was over oil, which is ridiculous considering the huge spike in oil prices AFTER WE INVADED IRAQ, then you believe Republicans are the root of all evil, drown polar bears in oil, and go up to the Ice Caps every month in their corporate jets just to get the melting a kick-start. And plus, a higher gas tax makes more sense than improved fuel standards. But then again your delusions about blood for oil and climate change mean you don’t live in a world where logic is present.
Two questions:
1. I thought car makers don’t offer diesel cars in the US because California regulations are extremely hard to meet. If that’s so, wouldn’t it tend to also work that way with gasoline engines?
2. Federally-recognized American Indian tribes (or nations, as in Cherokee Nation) have (in some respects) the status of sovereign governments. If you’re a Cherokee, for example, and have a passport from the Cherokee Nation, you don’t need a US passport. If your car has a license plate from the tribe, you don’t need one from Oklahoma. Does this mean that a Cherokee in California wouldn’t need to obtain a California car registration? And would that mean his/her car would be exempt from stricter California emission limits. Gee, maybe there’s some business opportunity there.
“the government will go bankrupt spending billions on oil wars.” The government IS bankrupt.
Thank you bluecon, for quoting Ronald Reagan:
“Government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.”
It has stopped moving.
I just had to repeat that comment, for all to read AGAIN. That’s your homework for the weekend.
I heard that every single passenger on an Amtrak train is subsidized to the tune of over $200. Not $200 per year, or $200 per month. $200 per RIDE.
Subsidies don’t work. Reagan was and still is right.