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The other day, I talked about the new gas mileage law, which will require car manufacturers to increase the fuel economy their fleets obtain by 2016.  For the environment, this is a step forward, leading to decreased overall carbon emissions and better mpg’s in cars.  Naturally, this will also increase new car costs as car makers dump resources in R and D to create more efficient vehicles.  But this bill might provide an unexpected injury to another part of the auto market: the luxury car industry.

James Bond Aston Martin

Will James Bond have to give up his trademark Aston Martin?

Remember that car manufacturers must have a fleet average of about 35.5 miles per gallon.  For large companies like GM and Ford, this is pretty feasible, considering the high number of models these firms produce.  Even lower-end luxury brands like BMW should be all right meeting these standards, especially considering the high mileage makes already coming out.  But what about the really high-end performance cars like Porsches and Aston Martins?

If the makers of the fast cars are large manufacturers, these regulations should be pretty easy to overcome.  Consider Ferrari, which just released the fastest road car in the company’s history, the 599 GTO.  Ferrari is owned by Fiat SpA, which luckily is already selling fuel efficient vehicles in the US.  But brands that don’t sell cars besides luxury autos in the US are scrambling for ways to meet this regulation, like developing smaller, more fuel efficient cars (both Aston Martin and Jaguar are trying that route).  Tiny (fewer than 5,000 vehicles sold per year) manufacturers are hoping that the EPA makes special allowances for them since the government agency has said these companies will get their own rules.  Larger car makers (50-400k cars) are allowed to have 25,000 cars per year exceed mileage targets without being penalized.

Ferrari 599 GTO

The fastest Ferrari road car ever made...

And let’s not forget that fuel efficiency and carbon emissions regulations are not unique to America.  Most developed countries in the world have to adhere to standards which get more strict all the time.  In fact, the US is lagging behind in the regulations game.

So what exactly does this mean?  Will our favorite high performance car makers be able to punch out a few efficient models to keep the sportiest vehicles on the road?  I’ve said this before – I love fast cars, even if I may never own one.  But can they remain on our highways indefinitely?  Or will there come a time when they’re chained to closed tracks?

Maybe others agonized over a similar decision decades ago when horses were replaced by horsepower.  Maybe carriage drivers were sad to put their high-stepping ponies in the barn and resigned themselves to riding and driving them for sport instead of transportation.  Will luxury cars as we know it be kept merely for hobby instead of a way of getting around?  I know that most Aston Martin drivers aren’t slogging through their daily commutes like James Bond, but these new regulations may dramatically change the fast cars we all love.  The divide between transportation and sport might keep growing.

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Last week I saw some big (and possibly surprising) news from President Obama: plans to open the Atlantic coastline, the Eastern Gulf of Mexico, and Northern Alaska to oil and natural gas drilling.

“The answer is not drilling everywhere all the time,” Obama said.  “But the answer is not, also, for us to ignore the fact that we are going to need vital energy sources to maintain our economic growth and our security.”

The move appears to be an attempt to placate Republicans, who have historically pushed for an increase in American oil exploration and drilling (drill, baby, drill anyone?).  However, it is unclear whether this goodwill gesture will be enough to satisfy Conservatives.

Not surprisingly, the expansion plan has angered many who are concerned about the effects of drilling on the environment.  Obama tried to address this in his speech.

Bird

Let's hope offshore drilling doesn't result in more of these poor critters...

“There will be those who strongly disagree with this decision,” Obama said, “including those who say we should not open any new areas to drilling. But what I want to emphasize is that this announcement is part of a broader strategy that will move us from an economy that runs on fossil fuels and foreign oil to one that relies more on homegrown fuels and clean energy.”

The guy has a point.  Like I talked about a few weeks ago, Americans are less concerned about the environment than ever in the presence of high unemployment rates and an unstable economy.  And this theory behind the decision makes sense: the less money we use to import oil, the more money we have for other things, like investing in renewable energy or creating green jobs.  However, it doesn’t seem very likely that offshore drilling will affect oil prices anytime soon.

It’s been rough going against climate skeptics and legislators who seem determined to fight anything with Obama’s stamp on it.  This action might make the road ahead a little easier.

To soften the blow, President Obama also announced strict fuel economy regulations that will take effect in coming years.  By 2016, the average miles per gallon achieved by carmaker’s fleets must be 34.1, although some expect that to increase to 35.  This means that small trucks will likely average about 29 mpg while cars will get about 38 mpg.  The new regulations will cost new car buyers an average of $926 in six years, although they can expect to save over $3,000 in gas money during their vehicle’s lives.

President Obama appears to be trying to please everyone.  Maybe we can get some measure of his success during the upcoming climate talks in the Senate.

Who Killed the Electric Car?

A look at the movie, Haley style: a running commentary as I watched it.

Opening scene – funeral, presumably for the car.  A little cheesy, but makes a good point.  There were more electric cars than gasoline cars on the road a hundred years ago.  Who would’ve thought?  Apparently these cars were like sitting inside huge lamps.  I feel like it would be very hot inside a lamp…

Ick!  Now we’ve got some pictures of lovely smog….“the black cloud of death.”  I’m glad I don’t live in California!  One gallon of gas burned=19 pounds of carbon dioxide into the atmosphere.  That seems like a ton.

All right.  Onto the Sun Racer!  Take a look at this little car – solar-powered, goofy-looking, pretty neat!  So GM challenges these guys to make an electric car.  The GM CEO even says that these cars will be the perfect commuting vehicles.  GM wants their marketers to develop a strong desire in the market for an electric vehicle, especially in Cali, where smog still reigns supreme. California’s in on the game, passing a zero emissions mandate in 1990.  And then, the Saturn EV1 is born.

EV1

The EV1 in all its glory...

And everyone loved it!  So other car companies joined in on the action, creating conversion (gas/electric) cars.  People are amazed by the lack of pollution, and Tom Hanks makes lots of appearances extolling their virtues.  Mel Gibson even pops his scarily-bearded head in.

Now, the skeptics show up.  Is the car big enough?  Strong enough?  Manly enough?

First the skeptics, then big oil (which funded most of the anti-electric movement).  Are electric vehicles really more environmentally-friendly?  (Which is why we need to be working to create clean electric energy – wind, solar, all that good stuff, but that’s neither here nor there.)  Are they only for rich people?

There seems to be some sort of poem going on now.  Or was that a car commercial?  I guess so.  The lady speaking sounds a bit too gravelly to be sexy.  And in America, cars are supposed to be sexy (ever watch Cadillac’s spokeswoman Kate Walsh?  Take a look at this). This begs the question: is GM really trying to market the cars earnestly?  And GM starts withdrawing its EV reach…laying off employees, closing factories, and moving backwards.

Headline: White House Joins Fight Against Electric Cars.  It looks like the government is leaning towards hydrogen fuel cell vehicles.  Again, Cali is all over it, with Arnold lauding their virtues and driving around a hydrogen-fueled Hummer.

We go to a meeting with the California EPA (at least that’s what it looks like to me), cause automakers sued the state because of the emissions law.  Eighty people showed up to support the electric car, and two showed up to support the automakers who didn’t want to comply with the zero emissions mandate.  Yet, in April of 2003, CA killed the mandate.

And then they took the cars off the road altogether!  How wild is that?  Ahh, protests…EV supporters showed up in CA to garner support for their cause.

Which brings us back to the funeral.  One of the GM marketers even cries…pretty touching, not going to lie. And GM has all the cars back…

And the crush them!  Oh my god.  They take them out to this racetrack in the desert and literally destroy them.  That is truly sad. Other electric vehicles are being taken off the road, too.  Some of these actually get shredded.  Just wild.

The activists think it’s wild, too.  They offer $1.8 million to GM to buy back the last 78 surviving cars.  GM never gets back to them.

California Air Resources Board, Alan Lloyd, GM, big oil, American consumers, batteries – all suspects in the killing of the EV.  GM says there was no demand, no profit (how on earth does Toyota do it?  Well, have done it, at least). Some people say Americans were too dumb to understand that EVs worked just as well as gas cars.  A very cute older couple (the Ovshinkskys) had already sold a long-lasting battery to GM, which then in turn sold it to Texaco.  Nice. Now we’ve got a tax break for people buying Hummers – I’m sure that is super helpful. Hydrogen cars.

“The average vehicle on the roadways today is less efficient than it was 20 years ago.”  Another sad fact.

Carter tries to eliminate dependence on oil, Reagen deregulates everything, Clinton tries to promote hybrids, and Bush…well, Bush is Bush. Here’s a good point: it took laws to get everything standardized with cars (think seatbelts, catalytic converters, airbags).

The verdict: I think we all killed the electric car.  Good news?  We’re bringing it back!  Tesla’s already done it, and Chevy (GM-owned is bringing out the Chevy Volt next year).

Drilling for oil

Our future or our past?

I would love to know everything about oil subsidies in America.  Maybe not because I think they’re the most exciting thing in the world (although they account for billions and billions of dollars), but because I like to know things.  As such, some people call me the KGB.  I am indeed not Russian, but I am curious.  Although I am learning that it’s much more productive to satiate my curiosity with journalistic findings rather than interrogating my loved ones – what can I say, I’m a slow learning.  So today, we’re delving into: the oil subsidy!

First things first: what is a government subsidy?  Simply put, a subsidy is a stipend or some financial assistance the government gives to an industry to prevent its decline.  There are many different kinds to accomplish different things, but that’s the general idea.

Keeping that in mind, it doesn’t necessarily make sense that oil companies (or Big Oil, as some call them) receive billions of dollars every year in government subsidies.  Especially when you take into consideration that Exxon Mobil set the record for highest profits earned by a US company EVER in 2008 to the tune of a cool $45.2 billion.

Exxon Mobil logo

No more government help?

Granted, Exxon and others have seen decreased earnings in the past year due to fewer Americans on the roadways, but overall, they seem to be sitting pretty.

But they might not be able to rely on their government help for very long.

President Obama recently announced his 2011 budget and it’s not business as usual for Big Oil (unless you’re Michael Scott from The Office, and then you have absolutely no idea what that means anyways, so your opinion probably doesn’t matter anyways).  He cut out a bunch of subsidies for fossil fuels (hopefully putting about $36 billion in America’s piggy bank in the next few years) and put in around $6 billion in green energy development.

Here is a good overview of these budget plans from solveclimate.com.  This article brings up a good point – will these proposals make it through the legislative branch?  Similar moves have been shot down by Congress and there hasn’t been a lot of compromising there lately.  Conservatives have already started launching commercial attacks against Democrats in preparation for election year.  Will both parties reach across the aisle and agree to work for the people they represent when looking at the budget?

Time will tell.

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