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Obama Motors

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PostPosted: Mon May 25, 2009 6:06 pm    Post subject: Obama Motors Reply with quote


Obama to unveil most aggressive auto fuel standards

Average fuel standards for all new passenger vehicles -- cars and light trucks -- will rise to 35.5 miles per gallon between 2012-16 ($600 or $1,300 additional cost per vehicle).

CBO Study:

"The Congressional Budget Office (CBO) estimates that a 10 percent reduction in gasoline consumption could be achieved at a lower cost by an increase in the gasoline tax than by an increase in CAFE standards. Furthermore, an increase in the gasoline tax would reduce driving, leading to less traffic congestion and fewer accidents. This analysis stops short of estimating the value of less congestion and fewer accidents and, therefore, does not draw any conclusions about whether an increase in the gasoline tax would be warranted. However, CBO does find that, given current estimates of the value of decreasing dependence on oil and reducing carbon emissions, increasing CAFE standards would not pass a benefit-cost test. A gasoline tax is a good policy to compare with CAFE standards because it is the most direct way to reduce gasoline consumption. By raising the price of gasoline to consumers, a tax raises the cost of driving and encourages consumers to buy more-fuel-efficient vehicles."

The gas tax would provide greater immediate savings by encouraging vehicle owners (of both new and older vehicles) to drive less. In contrast, higher CAFE standards would give new-vehicle owners an incentive to drive moreóbecause higher fuel economy would decrease their gasoline cost per mileóand would not alter the driving incentives for owners of existing vehicles at all."

My comment:

It seems, most Americans get sheared like sheep and don't even know it till later.

U.S. automakers have never been competitive in the small car market. Under Obama Motors, U.S. auto producers either need to invest thousands of dollars per vehicle to become competitive with Asian and European small cars, or spend thousands of dollars per vehicle to turn large cars into hybrids. Either way, it's an expensive way to lose market share at a faster rate.


Unintended Consequences: CAFE Standards Will Cause More Pollution and Increase Highway Deaths

An economic phenomenon called "price elasticity of demand" is well established when it comes to automobile purchases. In other words, if you raise the price of new cars, people will buy fewer of them or, at a minimum, put off the purchase for a year or so while they drive the old clunker for a few thousand more miles. And fewer new cars means more pollution, which can cause significant health problems. Yet environmentalists and the press have ignored this issue, so as not to inject a note of complexity or doubt into the chorus of glee that greeted the president's attack on greenhouse-gas emissions.

The Obama fuel efficiency plan may also contribute to a significant increase in highway deaths as vehicles are required to quickly meet the new CAFE standard and will likely become lighter in weight as a result. According to a study completed in 2001 by the National Research Council (NRC), the last major increase in CAFE standards, mandated by the Energy Policy and Conservation Act of 1975, required about a 50% increase in fuel economy (to 27.5 mpg by model year 1985 from an average of 18 mpg in 1978). The NRC study concluded that the subsequent downsizing and down-weighting of vehicles, "while resulting in significant fuel savings, also resulted in a safety penalty." Specifically, the NRC estimated that in 1993 there were between 1,300 and 2,600 motor vehicle crash deaths that would not have occurred if cars were as heavy as they were in 1976.

The president now proposes a fuel economy increase of similar magnitude in an even quicker time frame -- to 39 mpg by model year 2016 from 27.5 mpg now. Given the time it takes for new technologies to be developed, tested and incorporated into new car models, it is likely that down-weighting of cars will be an important means of meeting the new standard. And one result again could be highway deaths that might otherwise not have occurred.

My comment:

Also, I may add, I heard, Obama is subverting the law by favoring unions/labor over investors/bondholders. Consequently, it may be harder to raise capital in the future.
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