The ironically named Kevin Drum takes on once and former oil man T. Boone Pickens' plan for American energy independence. After CBS' Drum has his wicked way with Pickens' not-so-well publicized personal financial interests in the matter, there's hardly a shred of credibility left upon which the Texan can wipe his ass. So to speak. "So T. Boone Pickens has an energy plan he wants to sell us. The basic idea is simple: Build a bunch of windmills in Texas to generate electricity, and then use the electricity to power electric cars. Voila! Energy independence! No, wait. That's not it at all. What Pickens actually wants to do is use the windmills to replace the electricity from existing power plants that run on natural gas. Then we can use the natural gas to run our cars." Hmmm. "Along with being the country's biggest wind power developer, Pickens owns Clean Energy Fuels Corp., a natural gas fueling station company that is the sole backer of the stealthy Proposition 10 on California's November ballot…. But a closer read finds a laundry list of cash grabs — from $200 million for a liquefied natural gas terminal to $2.5 billion for rebates of up to $50,000 for each natural gas vehicle. Much of the measure's billions could benefit Pickens' company to the exclusion of almost all other clean-vehicle fuels and technology." Is that why GM was talking up CNG cars recently? Hang on; one conspiracy at a time, please. 

The Detroit News reports that Senator Barack Obama wants to help Michigan et al. help him become president of the United States (surprise!). To that end, Barack will gladly use your tax money to encourage Detroit to, as my 14-year-old puts it, party like a Barack star. Speaking at the Lansing Center, "Obama proposed $4 billion in federal loans and loan guarantees to help the automakers meet his goal [of 1m hybrids by 2015]– a figure he first mentioned last month in a letter to United Auto Workers leaders — and a $7,000 tax credit to drivers who buy plug-in hybrids." That is, it has to be said, small beer. So Detroit's lackeys said it. "U.S. Rep. John Dingell, D-Dearborn, one of the auto industry's staunchest supporters in Washington, said the domestic companies could require $30 billion or more to meet the goal for their initiatives." Of course, if the real goal was more hybrids, why not let Toyota in on the action? Or the feds could just let the free market do its thing. Anyway… Obama also "modified" his position on domestic drilling (hey, sure, why not?), and proposed selling some oil from the U.S. strategic reserve [just before the election]. In case you were wondering… 

When it comes to public policy, I don't often agree with the automotive industry in general and Motown in specific. That's because the car biz is ready, willing and lobbying to suck on the federal tit whenever and wherever they can. But when it comes to federal Corporate Fuel Economy (CAFE) regulations, I agree: the system is absurd. As the otherwise deeply misguided GM Car Czar Bob Lutz said, it's like trying to get people to lose weight by forcing manufacturers to sell smaller shirts. Anyway, none of the automakers or their camp followers have the balls to simply call for CAFE's abolition. Instead, they continually work to game, undermine and otherwise manipulate the system to appear to support it. You know; in principle. And now The Wall Street Journal reports that even that's in jeopardy. At a National Highway Traffic Safety Administration (NHTSA) hearing on a new CAFE draft statement, "The auto industry said federal regulators are pushing too far, too fast in their effort to raise fuel-mileage rules [to 35mpg by 2020]. The complaints from the industry, which had previously voiced support for tougher standards, underscore how economic hardship is affecting a major policy debate.they reversing their former support by claiming hardship." It gets worse. According to Automotive News [sub], "The Alliance of Automobile Manufacturers questioned whether the statement was necessary, calling on NHTSA to reserve its right to not draft a statement at all." In other words, can we please torpedo this thing in private, like always? So, anyway, I sent an email to NHTSA.

When the new energy bill mandating higher CAFE ratings came out last December, it didn't offer automakers any kind of financial assistance to meet those goals. Since then, we've been treated to a parade of industry types wailing that with times so bleak, CAFE will kill Detroit unless the government bribes assists the domestics with following the law developing more efficient cars. Perhaps sensing John McCain's weakness with the industry, Senate Democrats are rushing to position their party to take advantage of the now free-floating "bailout vote." The Detroit News reports that Democrat leadership has agreed to support $6b in loan guarantees to domestic automakers, and is considering a further industry stimulus for plant retooling. All told, the package will total some $25b in loan guarantees that would cost taxpayers $3.75b. Tellingly, $300m of the initial $6b is earmarked for advanced battery development. If that sounds familiar, that's because it's a pretty handy preemption of John McCain's "Project Lexington." And since McCain seems happy to stick to his Nancy Reagan (just say no!) on bailouts, Obama and the Dems are going to go after the weird industry-worker alliance that wants bailout. It's populist, it's patriotic, and (post-Bear, Fannie and Freddie) it's principled. Best of all, it only costs the taxpayers a few billion. Game on!

Oil prices go up. Gas prices go up. American consumers switch en masse to the kind of vehicles promoted by CAFE (Corporate Average Fuel Economy) regs since 1975. They also help reduce American oil imports (and pollution) by driving 3.7 percent less over the first five months of '08. The reduced demand lowers the price of gas (OK, in theory). Everyone happy? Of course not. The same feds who want us to reduce our dependence on foreign oil are hit with a drop in federal gas tax revenue (currently 18 cents a gallon). And so the "acting head" of the Federal Highways Agency declares [via The Detroit News] that "without a doubt, our federal approach to transportation is broken." No, REALLY. "No amount of tweaking, adjusting or adding new layers on top will make things better." And he drops the other shoe. "Ray [that's MR. May sonny] said the Bush administration was in favor of a 'more progressive direct user fee' similar to a system that is currently being tested in Oregon. Under that pilot program, cars were equipped with on-board mileage counting equipment that was read by pumps equipped with mileage reader devices." Can you drop a third shoe? Sure! May also wants to "encourage" private companies to lease federal highways and maintain them through tolls. With ideas like that, what's the bet that the acting head is shuffled off-stage, and soon?

In the rush to get a blog post ready, I often skim the end of an article, after digesting the headline. At the very tail of The Detroit News' piece on the Chevy Volt non-reveal reveal of its maybe-not-so-sexy after all design, I caught this little gem: "In a related matter, GM won tax breaks in Ohio this week to build the Cruze, which will get 45 miles per gallon, at its Lordstown assembly plant." (Nice bit of cheerleading, that hat tip on the Cruze's mpgs.) So, here's the bottom line: "The automaker won a 15-year, 75 percent state tax credit worth $77.7 million. It also won a $4.4 million tax credit to create at least 200 jobs at the plant." "Won." I like that. Anyway, while state tax breaks are de rigeur for all domestic car manufacturers these days, from Ohio-built sedans to Bubba-built Bama Benzs, how is this write-off "a related matter" to the piug-in electric – gas hybrid Volt? Will they look similarly anodyne? Should we expect state AND federal tax breaks for GM's plug-in Hail Mary? You bet we should. But that's the subject of an other story. Well, at least for us. 

Even though diesel fuel costs more than gasoline, even though diesel engines cost more than their gasoline equivalents, VW plans to sell TDI versions of the Jetta and Sportwagon stateside in 2009. To get the party started, VeeDub's announced that TDI buyers will be eligible for a $1.3k Federal Income Tax Credit. Yup, your tax money in their pocket, under the Advanced Lean Burn Technology Motor Vehicle credit program. The EPA has certified the TDI at 29 mpg city, 41 mpg highway. BUT VW cites test results from "leading third-party certifier, AMCI" (paid by VW of course) claiming the models get 38 mpg in the city and 44 on the highway. And while they work that one out, Toyota can't build enough their gas – electric Priora fast enough, even with a $500 price hike. [Source: VW]

When it comes to government-mandated corporate average fuel economy (CAFE) regs, I'm with GM Car Czar Bob Lutz. It's like forcing a clothing maker to sell smaller shirts to get people to lose weight. If you want to reduce obesity, just raise the price of food. [My add; even MB knows you can't threaten to starve people for their own good.] In any case, no matter what MB and his employer's representatives say, they have a consistent record of gaming the system. Flex-fuel credits anyone? The U.S. "light truck" CAFE exemption is/was The Mother of All Loopholes. (Who says there's no such thing as karma?) And now GM's playing the angles in Europe. The Times reports that UK PM Gordon Brown's entourage arrived at the London Auto show in some Indian sedans and SUVs and dangled £90m of UK taxpayer money for electric automobile development. Over five years. Available to someone. Depending on something. To which GM Europe Prez Carl-Peter Forster responded fuck that shit [paraphrasing]. GM's wants a national sponsor for a "super credit" scheme that would allow ultra-low carbon-dioxide vehicles (below 50g/km) to offset larger and more polluting models. "If Britain was prepared to champion this idea within the EU, GM would consider making its electric vehicles at the Ellesmere Port plant on Merseyside." Sweet.

The mayor of Warren, MI has the answer to The Big 2.8's woes. The MacComb Daily reports that in a letter to the Michigan Congressional delegation, Mayor James Fouts called for the reinstatement of the federal income tax deduction for interest on auto loans. "More new vehicle sales means more jobs, less unemployment and lower government costs to assist the unemployed," Hizzoner reasoned. Representative Candice Miller thinks "the mayor's idea is very creative." What neither of them seem to realize is that all of the Detroit manufacturers have offered 0% interest rates– and these promotions haven't exactly set sales records. Deducting the interest wouldn't have any effect on payments, and that's what floats buyers' boats. Also, Mayor Fouts better be careful what he asks for. The resulting legislation would be  industry-wide. It would likely hurt the American manufacturers more than it would help them.

Thanks to politicians [bought and paid-for], The Big 2.8 are looking at a nice little earner courtesy of, well, you. The Detroit News provides the gory details. "The U.S. House passed a housing bill 272-152 late Wednesday that includes a provision allowing unprofitable companies to get credit for up to $30 million in capital investments. An earlier stimulus bill gave profitable companies $45 billion in depreciation credits for investments made during the year. Instead of the depreciation credits, unprofitable companies [that's Ford, GM and Chrysler] could accelerate R&D tax credits or alternative minimum credits in lieu of the depreciation provisions." In non-accountantant speak, The Big 2.8 get a $30m free ride for investing in their own biz, but not Toyondissan 'cause they're well-run companies. Meanwhile., Newstalk 1310 says Wisconsin is looking to claw some money BACK from The General, re: their Janesville Assembly Plant. "State leaders want to recoup about $8 million dollars of the grants given to GM a few years ago. They say the company is not maintaining required employment numbers. GM has eliminated hundreds of jobs in recent months. It plans to close the Janesville plant altogether by the end of 2010." 

It's no secret that when strapped for cash the Detroit automakers often turn to Uncle Sam. Typically, these efforts involve a bailout, loan guarantees or tax breaks. But the Detroit News reports that Ford is trying a new method of squeezing cash from the feds: suing for overtaxation. Last Thursday, FoMoCo filed suit against the IRS seeking over $445m in interest on taxes it overpaid between 1983 and 1989, and between 1992 and 1994. There's no dispute from the IRS that Ford overpaid its taxes in those years, but… "We believe the IRS failed to pay the correct amount of interest," said Ford spokeswoman Marcey Evans. "We tried to resolve it at the administrative level without success. Because of the size of the amount and the dispute, we had no choice but to file." And having backed away from its promise to restore profitability by 2009, Ford could sure use a few hundred mil right about now. If Ford wins this lawsuit, it could cement its status as the best-positioned American automaker during the next several years. Then again, when that distinction is being earned by lawsuit, you have a good sense of how screwed American automakers really are.

The average U.S. consumer is done with SUVs and full-size pickups. Although the shift may have had something to do with safety concerns, political correctness and environmental awareness, probably not. The simple truth is that rising gas prices killed the genre faster than Old Sparky took out Pedro Medina. Of course, that hasn't stopped the left – right debates surrounding the private ownership of gas guzzlers, or, indeed, cars. We've been chronicling the UK's anti-car jihad for some time; recently highlighting their oppressive, CO2-based tax regimes (which even have the left up in arms). The Huffington Post's Sean-Paul Kelley provides us with a U.S. equivalent of the UK hard-core anti-car elite, penning a dietribe against personal transportation. "To me a car is like a prison sentence," Kelley opines, before totting-up the cost of running a car. "Wouldn't you rather save $8,000 a year and only pay $2,000 a year in infrastructure taxes to ride the subway? Or an excellent bus system? And improve our national rail network? As a part of the bargain you would walk more, get exercise, be healthier and as another bonus spend more time in closer quarters with your fellow Americans, building communities, making new friends, the chance meetings of people reading the same book on the metro or bus?" Kelley cuts non-urban dwellers a bit of slack, but not much. Look for more of this in the days, weeks and years to come…

Hey, why not create a national network of electric vehicle [EV] re-charge stations? OK, this video kinda exaggerates the all-important re-charge time. And if those mats recharge your EV in ten seconds, why do you need a car wash-style battery swap stations? These are not churlish questions (which is why we continue to ask Tesla about their Roadster's range and recharge times). They speak to the commercial viability of the entire project. Anyway, go for it Shai! What's that? You want MY tax dollars to pay for all this? AutoblogGreen tells the tale. "Speaking to the House of Representatives Select Committee on Energy Independence and Global Warming (we have one of those?), Agassi said, 'For the price of two months worth of oil, some $100 billion, we can put in place the infrastructure needed to power the nation's cars and end this oil dependence.' Ambitious, no? He then threw in the 'American jobs' angle with, 'Of that $100 billion, moreover, some $80 billion will go into jobs that, by their nature, can only be performed in the US – the construction of the infrastructure itself.'" Other than remarking on Agassi's chutzpah. AutoblogGreen lets the wisdom of federal tit-sucking go unchallenged. We call boondoggle. If it's such a good idea, let the electric companies pay for it. 

Today marks Canada's 141st anniversary. CTV reports that British Columbia's motorists can now look forward to higher motoring costs. That's right, Premier Gordon Campbell's "carbon plan" goes into effect today, costing motorists an extra $0.024/L per fuel in carbon tax. According to Campbell, the plan is "revenue neutral;" any extra revenue will be offset by income tax cuts. The aim, of course, is to tax consumption rather than income, thereby providing an incentive to reduce fuel consumption. Obviously, some of the highest gas prices in the ten provinces (as B.C. has) were not enough. Despite assurance from Campbell, many British Columbians are weary. How can its provisions be enforced without earmarking funds and major transparency?

Whatever else you can say about White House hopeful John McCain– and you're going to say lots– the guy's got a set. Followers of our E85 coverage will recall that McCain was the only candidate to come out against ethanol-related subsidies for corn farmers before the Iowa primary. While in Iowa. Yesterday, the Arizona senator toured Lordstown (home of "high mileage Chevrolet Cobalt and Pontiac G5 economy cars"), and then came out against a federal 911 for any of Detroit's ailing automakers. Speaking at a town hall meeting, McCain was all about putting government dollars into "research" into alt propulsion (a $300m prize for anyone who can guess how much money he'd send Motown's way). But a bailout? Automotive News [sub] provides the money shot: "A bailout, I don't think works." In fact, The Detroit News quotes McCain's antipathy to bailouts in general. "Frankly I just don't see a scenario where the federal government would come in and bail out any industry in America today." Over to you, Barack.