Rep. John Dingell, who will be the new chair of the House Energy and Commerce Committee, says there’s no need to increase CAFE standards. Can you guess what state Dingell represents? Anybody? Yes, that’s right — Michigan. Our CAFE standards are an utter embarrassment, and should be vastly increased, maybe even doubled. It’s the only way that mileage on autos will improve and the first step towards reducing our reliance on foreign oil. I recently wrote that I’ll wait to see whether the new Democratic majority in Congress actually practices what they’ve preached. Dingell, in this regard, seems to be as in the pocket of big business as any Republican.
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I expect we will- if we don’t stop paying attention- see a lot more Dingells popping up among the Democrat’s in Congress as time goes on and they (the politicians) revert back to “business as usual.”
Dingell, in this regard, seems to be as in the pocket of big business as any Republican.
Not that it makes much difference, but I suspect that Congressman Dingell is more likely in the pocket of big labor, than that of big business. He’s worried about more auto industry layoffs.
Let’s see if the new majority has what it takes to stand up to him. He’s been around for a long while, having held that seat for 51 years, succeeding his father, and has lots of clout.
I’ll admit that I don’t follow the ins and outs of autos, labor, and gas mileage, but here’s what I don’t understand re: Harry’s comment:
How do higher gas mileage standards translate to employee layoffs? What connection is there between auto mileage and employment numbers? Is it just the expense to develop better technology – meaning less money for employee salaries and hiring? Wouldn’t manufacturers just pass on that cost? High prices don’t seem to have dampened the sales of vehicles like the Prius.
Olivia,
My economic skills leave much to be desired, but I’ll offer my observations, in hopes that others will correct and/or expand upon them:
U.S. auto manufacturers have their highest per-vehicle profit margins on their gas-guzzling SUVs. Higher CAFE standards would force them to to rely more upon production of fuel efficient vehicles, at less per-vehicle profit. Less profit means finding ways to increase productivity, which usually translates to layoffs.
In the long run, sure, better fuel efficiency will help the U.S. auto industry. But, Dingell’s concerned about how many more of his constituents will be jobless. In the long run, John Dingell will be dead and somebody else will sit in his seat in Congress.
Much as publicly-held businesses’ stock rises and falls by what’s happened in the most recent quarter, so does the electibility of members of Congress rise and fall with the unemployment rates in their district (except in the case of Virgil Goode). The question is whether the auto industry and the Congress is willing to take the short-term hit in order to advance the long-term good.
Harry, good call on the profit-per-vehicle, but I think what threatens the employment situation most in MI is straight-up global trade. The argument I’ve heard is that if CAFE standards are raised, American manufacturers will have to outsource the labor to overseas plants or simply buy engines that already meet the CAFE standard from foreign manufacturers. Supposedly such a move would throw tens of thousands of American auto and steel workers out of their jobs.
However, it seems to me that this is only part of the actual dollar picture. With increased CAFE standards, wouldn’t the price of oil decrease by reducing the demand for gasoline? If I’m right, then the cost of steel and auto production (another petroleum-heavy process) would go down, allowing the profit margin on American-made vehicles to stabilize instead of bottom out.
But, like Harry, I’m no expert — this is just blowing smoke rings.
Harry and TLP are right about profits, the automakers do need to turn a profit. That means making a car the public will buy.
Can the CAFE standards be raised without sacrificing performance?
The popular trend, until the recent spike in gasoline prices, was for cars that had good performance. Will the public demand cars that have better fuel economy at the cost of performance? Only time will tell.
Meanwhile Ford, Chrysler, and GM execs are meeting today with the President. They are looking for foreign exchange rate concessions and worker health care cost assistance.
“It’s been getting worse year after year,” [Alan]Mulally (Ford CEO) said. “The most important thing we can do is recognize our reality and deal with it.”
Yeah Alan, like you sell mostly gas-guzzlers. Why are Toyota, Honda, BMW and a bunch more making money?
http://www.nj.com/business/ledger/index.ssf?/base/business-4/1163396362129230.xml&coll=1
I KNEW IT! I was afraid that the Schmucks Who Rule would choose to further devalue of our currency in order to buy back allies now that the house has changed. After all, it worked so well for… oops, I mean “with” China.
Dingell is bought and owned by business interests. Remember the Tauzin-Dingell Bill (the let’s throw more money at regional phone companies so they can squeeze out the competition bill)?
At least he’s supporting Net Neutrality; but I am guessing that is only because the cat got out of the bag on the last tax payer gift to the RBOCs.
The real problem with the American auto industry is not higher CAFE standards, nor private medical insurance, nor corparate run pensions. The real problem is that American consumers want it all and for practically nothing. Consumers keep sending mixed signals. Whenever gas prices drop 10% the rush out and lease giant gass-guzzling-visual-obstructions (some call them SUVs, but they are neither sporty nor utilitarian so I refuse to); whenever gas prices climb by 10% they run out and lease hybrids and small cars. The mood of the car-buying public is shifting faster than American car maker management can keep up, so they are out of step with what the consumer wants (that fickle consumer), and other car companies are telling the consumer what they want, so they win.
I’m serious here. When’s the last time you saw GM or Ford or Daimler-Chrysler trying to sell consumers on the environment?
Toyota and Audi do. Of course they all try to sell with sex as well (as if sex had anything to do with vehicle ownership or operation), but that works all the time, everything sells better with sex. Toyota and the Korean car makers are selling consumers on the idea of the environment, so even when gas prices are down (like now) their cars continue to do well because aside from the cost of gas, cleaner is better (Toyota) and having more parts that can be recycled is better too (Audi).