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He's learned his lesson about risky loans, but Obama wants to increase research grants

The auto industry isn't very happy with the federal government.  After two decades of inaction on the fuel economy, President George W. Bush (R) and his successor, current President Barack H. Obama (D) have pushed legislation through Congress to stiffen fuel economy rules.  Those rules have cost the industry billions.  But both Presidents tried to make up with automakers by pushing federal funding initiatives that help automakers with the cost of fuel economy research, on the taxpayer dollar.

I. After a Decade and a Half Stall, Bush Kick-Started MPG Progress

A debate of economics aside, the approach seems to be working.  In a report to be released today, the U.S. Environmental Protection Agency (EPA) is expected to announce that between 2007 and 2012 fuel economy rose 16 percent, while carbon dioxide emission decreased by 13 percent.

In a report last year called "One Decade of Innovation, Two Decades of Inaction", the Pew Institute points out that there was essentially no gain in fuel economy between 1985 and 2000, despite rising oil prices in the late 1990s.  The agency says that this was the result of so-called "Reagonomics", writing:

In the mid-1980s, however, Ford and General Motors lobbied the Reagan administration to lower the standard. NHTSA complied, setting a 26-mpg standard for 1986, prompting Chrysler Chairman Lee Iacocca to declare, “We are about to put up a tombstone: ‘Here lies America’s energy policy.’ ”

(Note: 26 mpg was actually a drop from the 1985 standard of 27.5 mpg for cars.)

Reagan v. Bush
This chart speaks for itself. [Image Source: Pew Institute; AP, White House]

But it was another Republican President -- George W. Bush -- who reversed that stall.  In his 2006 State of the Union speech he turned heads, commenting:
This Congress must act to encourage conservation, promote technology, build infrastructure.... so America is less dependent on foreign oil.

He would go on to sign into law the Energy Independence and Security Act of 2007 (EISA).  The EISA would bump fuel economy standards to 35 mpg by 2020.

EISA prompted automakers to invest in new fuel efficiency technology, such as direct injection/turbo-boosting engine technology.  At the same time, automakers were forced to discontinue some "gas guzzling" models to boost their average fuel economy.

II. Obama Follows up With Stricter Standards, but New Incentives

But for all the moaning and groaning among automakers with EISA, it was about to even stricter with President Obama.  President Obama struck down a Bush-era mandate that forbid states from enacting their own stricter standards, paving the way for some states like California to set much loftier targets.

The new President also rolled back the deadline for reaching 34.1 mpg to 2016 in a 2010 CAFE update.  Those updates are expected to cost the auto industry $52B USD to implement, while potentially raising vehicle prices slightly and limiting selection to an extent.


President Obama's "test drive" of a Chevrolet Volt back in 2010. [Image Source: AP]

President Obama has also proposed rules that would set a CAFE target of 54.5 mpg by 2025.  Automakers are upset about the proposal, which the National Highway Traffic Safety Administration (NHTSA) estimates will cost them $144-152B USD.

The EPA and NHTSA claim that the 2017-2025 push to 54.5 mpg will save $1.7T USD in fuel costs (although the price impact on vehicles is not mentioned; one report suggest vehicle prices may rise $10K USD by 2025).  They say that by 2025, America will have reduced its oil consumption by 2 million barrels per day.  They add that by cutting 2 billion metric tons of carbon dioxide emissions over the same period society will have "saved" $326-451B USD (operating on the controversial "carbon credits" model).

Some fear the new fuel economy standards may cost lives, as automakers often reduce frame integrity during weight cutting, and also tend to cut out features like extra airbags.  Automakers are at least relieved that the President backed of an earlier stricter target of 62 mpg, which they argued could "kill the auto industry".

III. Speech to Call for $2B USD in Research Grants

At a speech at Argonne National Laboratory, a top federally funded research institution in the President's home state, President Obama is today set to unveil a proposal to toss a carrot to the auto-industry, which has at times been less than happy with him.

The video below will go live at 2:30 p.m., along with a corresponding live chat on Facebook.



Located approximately 30 minutes west of Chicago, ANL conducts a great deal of battery, fuel cell, and biofuel research -- a seemingly appropriate setting for the President to unveil a new fuel efficiency proposal at.  Under the President's requested proposal for Congress "[$2B USD in] funds would be set aside from royalty revenues generated by oil and gas development in federal waters of the Outer Continental Shelf."

The proposed $2B USD trust may in reality see a far smaller funding total, particularly amid the rancorous federal budget debates.  In 2012 President Obama asked Congress for $650M USD for advanced vehicle research, but Congress only offfered up $330M USD.

Argonne National Lab
President Obama's call for vehicle research funding will be held at
Argonne National Lab. in Illinois. [Image Source: ANL]

While hybrids have sold well in recent years, EV sales have disappointed, even as automakers put their marketing might behind the green, yet expensive cars.  Critics say that it's good Congress isn't giving more funding, in that the technology appears to be failing.  Proponents, conversely argue that the lack of funding is slowing development, which in turns increases EV costs and reduces their performance.

But critics are at least relieved that the President has turned away from providing loans to individual automakers or alternative energy startups.  After the boondoggle of Solyndra LLC going under and taking $553M USD in federal loans with it, President Obama has carefully shifted funding requests towards research.  No loans have been granted in the last two years from a $25B USD fund Congress set aside for vehicle research.

The Obama Administration's energy policy is in the midst of an overhaul amid the departure of U.S. Department of Energy Secretary Steven Chu, a Nobel Prize winner.

IV. CNG Tax Credit Proposal Revived

Also on the President agenda Friday will be plugging natural gas for vehicles.  Compressed natural gas (CNG).  The U.S. produced 25.3 trillion cubic feet (25.3e12) of natural gas last year, according to the U.S. Energy Information Administration.  Low costs and domestic production make this fossil fuel an attractive alternative to petroleum; the President thinks it could play a small, yet important role in the automotive market.

The President wants a tax credit for CNG and EV truck buyers equal to half the incremental costs (50% of the premium over a similar model gas vehicle).

CNG Ford Truck
President Obama wants tax credits for CNG truck buyers. [Image Source: Truck Trend]

It appears the President has dropped a separate proposal dubbed "National Community Deployment Challenge", which called for $1B USD to fund 10-15 "green" EV-friendly communities (paying for public chargers, etc.).

To contrast these funding initiatives with past government transportation funding, recent reports estimated that the government has spent around $1T USD to date to develop the commercial airport system.

And not all EV firms have proven disappointments.  Tesla Motors Comp. (TSLA) recently announced a plan to repay its government loans early, amid strong sales.

Source: The Detroit News



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RE: Taxpayers money
By michael67 on 3/16/2013 7:26:46 PM , Rating: 2
quote:
What other choices should the Govt restrict, or penalize, in your world ? Size of the house ? Size of the HDTV ?

In a world ware my government looks out for my, and the generations behind me best interest in the long run.

As for other things like size of houses, thats up to the market, but even there are building regulations, like minimum isolation is a normal thing i would say.

And size of your TV thats up to your self what you can afford, but even there energy labels are a normal help fron your government to help you decide what TV you should pick.
http://www.sust-it.net/blog/wp-content/uploads/201...


RE: Taxpayers money
By Reclaimer77 on 3/16/2013 8:11:06 PM , Rating: 2
quote:
In a world ware my government looks out for my, and the generations behind me best interest in the long run.


Yeah you go on believing that's what they are doing..

You are scary. I'm scared.


RE: Taxpayers money
By michael67 on 3/16/2013 8:39:18 PM , Rating: 2
That you live in a country ware your government dose not give a shit about it citizens, but only listening to companies and the donations they give.

Ware the citizens have no trust in there politicians to do the right thing.

Man i feel for you, and i feel also sorry that you don't even see that the road the US is on, is one of self destruction.

And i mean that serenely, and not to troll you, or to inflame you.


RE: Taxpayers money
By M'n'M on 3/16/2013 10:53:43 PM , Rating: 2
quote:
In a world ware my government looks out for my, and the generations behind me best interest in the long run.

I find it hard to believe you're that naive but there you have it. Do you really believe it's the Govt's job to tell you what's best ? That, rather than advise, it's job is to force ? I'm just lost for words ATM.

quote:
As for other things like size of houses, thats up to the market, but even there are building regulations, like minimum isolation is a normal thing i would say.

But why shouldn't the Govt limit the size ? If Govt can act to effectively limit your car choice (for energy reasons), why can't ... shouldn't the same logic apply to housing ? Larger houses use more energy than smaller ones. Why shouldn't the Govt decide what size house you "need" ? Or size TV ? Or just about anything ? Do you "need" more than 2 rooms ? My cabin by the lake has a bathroom, bedroom and kitchen/living room in a 24' x 16' floor size. Why shouldn't Govt, to save energy, incentivize people to live smaller using the same methods used to incentivize small cars ? FWIW I think Govt should stop incentivizing people to have children. Instead of giving people a tax deduction for each child, they should be handing out a tax increase. But that's a whole different (though related) post.

You may not want to hear this but we can save all we want and the world in 50 years will look just the same as if you hadn't. You're angry that cheap oil is going to run out. That's going to happen no matter what we do ... or don't do. The only difference is when it happens. And the growing population and rise of the middle classes of China and India and others will so far outpace the oil savings such efficiency efforts bring forth that you're kidding yourself if you think that having everyone driving an Aygo (or Scion IQ here in the US) will make a difference of more than a few years.

Take heart though, the technology to make fuel exists. When the price of oil gets high enough (actually stays high for long enough) that technology will be economically viable. Pilot plants have opened and idled with the rising and falling oil prices. IIRC sustained oil prices over $120/BBL are the estimated breakeven point.


RE: Taxpayers money
By michael67 on 3/17/2013 1:21:21 AM , Rating: 1
quote:
I find it hard to believe you're that naive but there you have it.

I work as a maintenance and piping supervisor in the oil industry, managing between 40 fixed crew till 150 people on stops, and working whit people from all levels of society, from low level scaffolders till platform supervisors, but non of them have ever called me naive.

But hey maybe they all are to polite or scared to say it in my face. ^_^

quote:
Do you really believe it's the Govt's job to tell you what's best ?

Is not partly educating citizens whats best for them also a job of the government, and is it not our job to see if they take there advise and see whats important, and whats just government meddling.

I am not saying that everyone should take the word of the government as it written in stone, i even think some of the leaders are idiots, but that dose not mean i don't listen what they are saying, that would be just plain stupid.

quote:
But why shouldn't the Govt limit the size ?

Because we are running out of oil, thats not a theory, thats real hard facts, and i seen the latest figures one our oil reserves on internal documents, and demand is outpacing production, and it only getting worse, as Asia demand for energy is growing at a rate production cant keep up whit.
(what would actually be a good thing for me as i work in the oil)

So what don't you get in from the graph in the following article?
http://www.washingtonpost.com/blogs/wonkblog/wp/20...

By 2025 we will need 125 million barrels of oil a day from now 95 million, maximum peak production will be 130 million barrels by 2030, and will firs slowly till 2040 decline to 110 million by 2040, and faster and faster decline, making unaffordable.

The more we save now on oil consumption the longer we have to find alternatives, and the more money we have to develop them, like Thorium reactors, that shown to have great potential, as the cheap energy alternative of for Uranium.

quote:
why can't ... shouldn't the same logic apply to housing ?

It actually all ready dose, if you cant afford to heat your 5 bedroom house, you have to find a smaller one that you can heat.

But its a hell of a lot cheaper to heat up a house, then to drive your car, as a quarter gallon of petrol is enough to heat up a medium size apartment for a day.

quote:
Or size TV ?

Why do you keep on, on this, you buy what you can afford, i never said the government has any right meddling in what size TV you can buy, they only can show you by the mandatory labels, what your TV would cost you, when you have it on, and i for one find those energy labels actually pretty useful.

quote:
FWIW I think Govt should stop incentivizing people to have children. Instead of giving people a tax deduction for each child, they should be handing out a tax increase. But that's a whole different (though related) post.

Childbirth is declining, who will be working if all the baby boomer of the 50's and 60's, are retiring, and just living of there pension, don't you understand that you actually need people to work to have healthy economy.

Or should we just import more immigrants, as they are all so highly skilled. :~(

quote:
The only difference is when it happens.

It will be a huge difference, as the less your depended on foreign oil the better of everyone will be, as its money that is flowing out of the country for what you get nothing in return.

quote:
And the growing population and rise of the middle classes of China and India and others will so far outpace the oil savings such efficiency efforts bring forth that you're kidding yourself if you think that having everyone driving an Aygo (or Scion IQ here in the US) will make a difference of more than a few years.

Actually yes, as people in those countries also will drive those small cars.

quote:
Take heart though, the technology to make fuel exists. When the price of oil gets high enough (actually stays high for long enough) that technology will be economically viable. Pilot plants have opened and idled with the rising and falling oil prices. IIRC sustained oil prices over $120/BBL are the estimated breakeven point.

If all promises from the past came true, i would have now a 10GHz CPU in my computer, optical drives would have terabytes of space, and we all would have jet-packs to go around.

Till its a proven tech, on a real global scale, i first have to see it before i believe it.

Hows naive one now, thinking that scientist will wave a magic wand, and behold we have a alternative for oil. ^_^ LOL

Wind energy was also a promise that would reduce our need for coal and natural gas, and even do they deliverer energy, its not so mouths as promised, and that go's for every alternative for oil i have seen so far.

You may call me naive, i call you more ignorant, as you apparently have no real clue that the sooner you switch to smaller cars, the better of you are in the long run, when prices skyrocketed, and you real need to switch and you still drive all those big gas guzzlers.

As the EU will import 50% less oil for every driven km/mile, wonder how will be better of then.

ps. I live in Norway, have a almost twice average income, my wive makes reasonable close to what i get, we can afford to drive a new gas guzzler car, if we want to, we just hate to trow away money on transportation.

And on my days of i work on 120foot old cargo boot that i am converting to a living boot, ware we can travel the world on, including a moonpool for diving, and 8 spare bedrooms for if we get friends and family over, on our travels.

And for pension we also don't have to worry, as we live in one of three countries that instead of a debt, has a big surplus, and our pensions are guaranteed.
http://en.wikipedia.org/wiki/The_Government_Pensio...

So yeah i can say my government is looking out for me, but then i live in a small country with only 4.5 million people, here also corruption is a problem but not on the scale as in Washington.


RE: Taxpayers money
By JediJeb on 3/17/2013 1:40:08 PM , Rating: 2
quote:
ps. I live in Norway, have a almost twice average income, my wive makes reasonable close to what i get, we can afford to drive a new gas guzzler car, if we want to, we just hate to trow away money on transportation.


I respect your beliefs and do now wish to be negatively argumentative as some. What you and I both agree on is the last part there, now wanting to throw away money on transportation. For me though if I can purchase a car that uses more fuel, but the price of the car is low enough to offset the amount of extra fuel it will use, I am still saving money on transportation, just not at the fuel pump

As for saving oil I think we should also look to using renewable oil such as soybean oil for fuels and to make plastics and such instead of just crude oil. Many will complain that we are then using food for fuel, but we don't eat much of the soybean oil, it can be used as a fuel stock and the remainder of the soybean used for food. Corn, soybeans and many other plants along with algae can be multipurpose is the same way.

As for the government being what should force us to move to different vehicles, why should they? What is the government? The government is not some all knowing entity, it is simply people, people that are just as fallible and susceptible to mistakes and any other citizen. Government has a disadvantage over a normal citizen in that it is more of a target for the temptation that leads to corruption. Citizens should be allowed to rule themselves, but for that to be effective the citizens need to be well informed and educated on all facts. Of course well educated and informed citizens are the enemy of those few who lust for power and control, so when those people come into control they tend to suppress what truths the citizens are allowed to know, even the truth of exactly how much oil the planet has as a reserve and how long it can last. The same has happened with making nuclear a dominate power source, the truth has been withheld and the scare tactic beliefs of a few have been allowed to be the dominate false truth that has been propagated to the public.

Governments should exist to be the vehicle through which all citizens are enabled to rule themselves, not as a ruling entity made up of a few elites.


RE: Taxpayers money
By Reclaimer77 on 3/17/2013 1:51:25 PM , Rating: 1
You're wasting your time, he's been so inundated by Collectivist euro-style Socialist garbage, there's no soul inside.

People like him genuinely scare me. They are like soulless shells of former human beings. With all the good parts scooped out and thrown away, replaced by a hive-mind like consciousness.

Is he even a real person? More like a robot. Happy to live his life and let the Government "take care" of everything for him.... Sad, it's really sad.


RE: Taxpayers money
By michael67 on 3/17/2013 4:54:22 PM , Rating: 2
I get a lot voted down because i say things that are unpopular in the US.

You get voted down all the time because your just a hillbilly troll that knows shit about the world.


RE: Taxpayers money
By Reclaimer77 on 3/18/2013 5:30:01 PM , Rating: 1
Yeah yeah. Don't go away angry Michael, just go away.


RE: Taxpayers money
By michael67 on 3/18/2013 6:55:34 PM , Rating: 2
Your the one thats starts trolling and starts calling names, instead of even trying to see other peoples views, and even less to try to respect them.

So i can only see you as a close minded hillbilly troll, that only lives in his own realty distortion field.

And i can only feel sorry for you, that FOX is your only source of information, and because its on FOX it has to be true. ^_^


RE: Taxpayers money
By Reclaimer77 on 3/18/2013 8:34:23 PM , Rating: 2
You're so wrong, I DO see your point of view. It's just wrong.

How am I being close minded? If you said I should pour gas on myself and light a match, and it would be good for me, I'm not close minded if I refuse. Your opinions are the same way. Your ideas are terrible, they've been tried before and failed nearly everywhere. And in my own country I'm seeing those same 'awesome' ideas cause massive pain and suffering.

Look up the 20'th century, aka the utter failure of socialism to bring prosperity. The bigger the Government, the harder it's people fall.

And you can call me a troll all you want, but the fact is we're having this discussion because YOU repeatedly attacked my country for no reason. I was personally insulted, you're damned right I'm going to tell you to your face.


RE: Taxpayers money
By M'n'M on 3/18/2013 5:58:43 PM , Rating: 2
If I try to quote each point of yours I want to respond to it's going to be a longer post than anyone will want to read. So let me try to hit just the important points. (and it'll still be too long)

1) You can try to save your way to ensure that "cheap gas" for your kids cars will exist and you may think enforced draconian car economy is the way to do it but the growth of China and India's middle classes and the overall population growth dooms that idea. Not using to excess is a fine thing**, but let's not kid ourselves. Right now there's about 1 billion cars and trucks in the world, excluding China and India. For every 1000 people here in the US, there's about 800 cars and trucks. In Europe the number ranges from 500-600. Norway is about average @ 584. China (in 2012) is about 85/1000 and India about 18/1000. If just those 2 countries alone (forget about Africa and underdeveloped Indonesia {60/1000} or even South America{280/1000}) come up to European levels of car ownership, it will more than double the number of cars on the road drinking gas. Add in the population growth of 50% by 2050 and that perhaps 50% of a barrel of oil is used for gas and you'll need to increase the fleet average for the whole world by much more than 2x to have much of an effect. I agree with you that cheap oil (and gas) is limited. The answer to that isn't to save (it'll help but it's not the answer) but to find alternate ways to run your car.

2) To that end fuel for your car can come from various sources. Germany produced "synthetic" fuel during WWII. The process is well known and developed. More efficient (then used then) processes exist but, like getting oil from shale, they're more $$ than (present) pumping it from the ground. When those prices rise, and stay high enough, a variety of otherwise uneconomic sources of oil and fuel become available. Cheap gas may go away but gas itself won't for a while. Draconian taxation to force savings is not necessary, and in the long run (decades) won't do any real good. Now if you think that taxing gas is a good means to raise the $$s your Govt needs to run (vs other methods of getting those $$s) ... then fine. How Govt's fund themselves and how they spend that $$ is not my argument here.

3) You want to say that $$'s spent on importing oil to make gas is bad for the country. A fair point but I would also say Govt taking that much $$ out of the economy is also bad. And it's not like we don't get anything in the deal, we get "cheap gas". Govt spending tends to be a tad more hit and miss.

4) Govt here (and I suspect where you live as well) doesn't tax house size in anywhere the same level as it does gas (where you live). Here all the taxes perhaps make up 30% of the cost of a gallon of gas. When I was last in Ireland, it was reversed. The actual cost of the gas was perhaps 30% of the pump price, the rest was taxes. Imagine if they taxed the energy used to heat and cool (we have AC here) your house at those levels for the same reason they tax gas.

5) My point re: population is simple. We have 7 billion on the planet now and contend for resources. Adding 50% more by 2050 can't help. The question isn't that we need people to run the economy, it's that too many can't be supported in the lifestyle you have and adding more is a bad thing.

6) As for the US driving all those big gas guzzlers ... the US uses about 50% more oil than does the EuroZone countries (roughly equal populations and GDP). Oil consumption is down these last few years. Car size can, and is, dropping here as gas has stabilized above the $3/gallon. To me that says the US can and does react to the economics. There's no need to pre-emptively force the situation. And who knows, perhaps EV's or fuel cell cars will have a breakthough to make them economic (I won't hold my breath but still ...). The US, and world, will move to the economic choice(s). You may well be asking yourself "why did I pay all that extra for gas all these years ?".

I'd rather be able to make the choice, to spend those $$s, in the fashion I chose (and know is best for my particular situation). I might save (and/or invest) it all to augment my (also) guaranteed pension. And FWIW I, as a principal engineer for a Fortune 100 company for the last 30 years, make a taaaad more than 2x the average pay here in the US. My wife, before she passed away, did nearly as good. I could have a pretty nice Porsche sitting out back. I don't, even though I'm a car guy, because I have other things in life I choose to spend my $$s on. Like my cabin by the lake and my SeaDoo and my boat. Having said that ... I forsee a turbo'd BRX sometime in the future. **The supercharged Mini I drive presently is fun but just a bit too slow. I'll sacrifice the the 30 MPG for 25 MPG and be happy to have that choice. All the above being choices I would be hard pressed to be able to make if gas here were taxed like gas there.


RE: Taxpayers money
By michael67 on 3/18/2013 6:48:06 PM , Rating: 2
We defiantly disagree on how we do tings.

The point i try to make is, even do prizes are still low, they will go up one way or a other over time, when we really hit peak oil, and demand really outstrips supply.

So what we do in Europe and lots of other countries in the world, prepare our people on whats to come.

Also you have to pay tax one way or a other, why not on fuel, as its a good way to lower fuel consumption.
Its a pretty common accepted rule here in Europe, the polluter pay's. (or the one that uses more then average)

I think if the oil prizes really go up to 2~300 a barrel, then we are all already driving small cars, where the US is still having mainly guzzlers.

ps. higher prizes means more income for Norway, and better salary for me, and our state owned oil profits go strait in to my pension fund.

So for me one way or a other for my personal circumstances it dose not mater what ever happens, i will be well off anyway.

But in a world with less guzzlers everyone else is also a little better of.


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