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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 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.


"We basically took a look at this situation and said, this is bullshit." -- Newegg Chief Legal Officer Lee Cheng's take on patent troll Soverain














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