Obama & Cars

Obama today gave a speech revealing a new nationwide policy on gas mileage. Although automakers have some time to meet the requirements, the ultimate goal is for cars to get 39 miles per gallon and light trucks to get 30 miles per gallon. Interestingly, automakers are supposed to hit an average level of fuel efficiency so that large vehicles that get lousy mileage can be offset by vehicles that get excellent fuel economy. So, a company that wants to seel big SUVs will need to make sure that they sell enough high efficiency vehicles to meet the required average.

It might strike people as odd that representatives from the auto industry, the unions, and enviromental groups all backed this plan. However, they all had good reasons to do so. First, consumers are still more concerned about gas mileage than they have been in the past. While gas prices are relatively low, people seem to remember the $4 a gallon days and seem more inclined to want a vehicle that uses less fuel. Since th automakers want to sell cars, they need to take this into account.

Second, various enviromental groups apparently were bringing lawsuits against automakers. Apparently, these suits will be dropped in favor of the current plan. So, the environementalists get some of what they want and the automakers avoid having to fight a legal battle.

Third, having a unfied standard is, from the standpoint of automakers, better than having numerous regulations. California had planned to pass its own laws about mileage and several federal agencies were going to be involved in setting regulations. However, the current plan is to have one standard. This is much easier to deal with than numerous and possibly conflicting regulations. As such, the automakers seem willing to go along with this.

Fourth, increasing fuel efficiency has been presented as a way of reducing our dependence on foreign oil-much of which we get from countries we would (allegedly) otherwise rather not deal with. As such, this plan is supposed to help us deal with that problem.

Fifth, increasing fuel efficiency is also supposed to reduce CO2 emissions, thus enabling the plan to tap into concerns about the environment and global warming.

So, is this a good thing? On the downside, the average price of a new vehicle is supposed to be increased by about $1300 due to this and related plans. Further, companies will need to expend money for R&D in order to develop new technology. Since the economy is not doing so well now, these extra costs are matters of concern.

However, it has been pointed out that the increased fuel efficiency will offset this increased cost. Of course, this depends on how much a person drives and how expensive gas happens to be. The higher gas gets, the better it will be to have a vehicle that has more fuel efficiency.  Also, to come up with new cars to sell, companies have to do R&D anyway.

Given that the political influence of the Middle East largely arises from oil money, it seems like an excellent idea to try to reduce their income. Of course, this could lead to problems as well. For example, if the Middle Eastern economy were to suffer more, this could provide more motivation and recruits for radical groups.

Given that global warming seems to be a serious problem, reducing the emission of CO2 seems desirable. This, of course, assumes that people will not actually drive more because they get better gas mileage. It also merely serves to slow down the problem-while less CO2 would be generated, we would still be pouring out a considerable amount of CO2.