Fuel policy is foolish
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"It's terrible. Biblically terrible. Possibly the worst new car money can buy. It's the first car I've ever considered crashing into a tree, on purpose, so I wouldn't have to drive it any more."
That's how Jeremy Clarkson, who reviews automobiles for Britain's Sunday Times, described the Honda Insight hybrid last week.
"The Honda's petrol engine is a much-shaved, built for economy, low-friction 1.3 that, at full chat, makes a noise worse than someone else's baby crying on an airliner," Mr. Clarkson said. "So you're sitting there with the engine screaming its head off, and your ears bleeding, and you're only doing 23 mph because that's about the top speed, and you're thinking things can't get any worse, and then they do because you run over a small piece of grit."
I couldn't help but think of Mr. Clarkson's hilarious review when President Barack Obama announced Tuesday he would require U.S. auto manufacturers to build cars with an average mileage of 35.5 miles per gallon by 2016, up from the current 27.5 mpg CAFE standard (which stands for Corporate Average Fuel Economy). That's because -- barring a technological breakthrough that is not yet on the horizon -- the only way for Detroit to meet those standards is to build cars like the Insight, or worse. To get mileage up, you have to make the car lighter, the engine less powerful.
So the new cars will be smaller, slower, less comfortable and more dangerous if you should have an accident (existing fuel-economy standards contribute to about 2,000 highway deaths a year, the National Research Council says).
They'll also be more expensive. The president's new rules will add about $1,300 to the cost of each new car, according to the administration, which claims the extra cost would be recovered within three years through fuel savings. Other analysts think the additional upfront cost per vehicle could be as much as $8,000.
Essentially what the president has done is to take California's more stringent auto standards and apply them nationwide. Only a liberal could consider California a role model. The state is bankrupt and suffers periodic brownouts because of the zany restrictions on energy development the politicians have imposed. Its voters are in open revolt against a profligate political establishment.
The auto manufacturers went along, despite the fact that the National Highway Transportation Administration has estimated that a plan like the president's could trigger the loss of nearly 50,000 auto manufacturing jobs over five years because it would further suppress car sales.
This is mostly because General Motors and Chrysler are now controlled by the government, and have no choice. But the auto manufacturers also see a benefit in one uniform national standard -- even if an onerous and unrealistic one -- than in having to meet a hodgepodge of state regulations.
GM and Chrysler are, as we know, bankrupt. Requiring them to build cars Americans don't want to buy at prices they can't afford is not likely to restore them to economic health.
"The real killing aspect of CAFE is that it will mean the summary execution of perhaps one third to one half of all the vehicles in GM, Ford and Chrysler's product lineups -- including the best selling and most profitable models," said automotive writer Eric Peters.
As the auto industry stops building the kinds of cars Americans like, more will hang onto the cars they have longer, further depressing sales of new cars. (They'll have to pry the keys for my 2004 Saab 93 from my cold, dead fingers.)
Reuters reported Tuesday the administration plans to convert most of the $15.4 billion in bailout funds loaned to GM into a gift. We can expect taxpayer subsidies, in ever increasing amounts, to continue for as long as Barack Obama is president.
But direct subsidies to automakers are just the tip of the financial iceberg. Most of the new cars will be hybrids, which are so much more expensive than conventionally powered cars that a substantial tax break will be required to get consumers to buy them. Even then, hybrids are uneconomical at the current price of gasoline. Expect Mr. Obama to do whatever he can to raise it.
First Published May 24, 2009 12:00 am