Has Obama saved Detroit from itself — or is that simply impossible?
You’re all gonna own a part of GM, so please, fellow owners, let me know what you think!
Readers of Climate Progress understand two inescapable realities that the overwhelming majority of policymakers, the status quo media, and the car companies (with one exception) do not:
- Peak oil is inevitably going to drive up gasoline prices to record levels within a few years, driving an inevitable switch to much more fuel-efficient vehicles and non-oil-based alternative fuels, of which by far the cheapest per mile is electricity.
- Avoiding catastrophic global warming requires sharp increases in fuel economy and a switch to low carbon fuels — of which there is only one available in quantity: electricity (as explained here).
Reality #1 is a more imminent day of reckoning for the car companies. After all, the only way to stop oil demand from outstripping the peaking of oil production is massive demand destruction, which is itself possible in only two ways. The first way, pursued by the Bush administration, albeit (mostly) unintentionally, is to destroy the global economy. Let’s call that the short-term “non-optimal” approach.
But in the medium and long term, for oil to be significantly below $200 a barrel and gasoline to be significantly below $5 a gallon in 2020 would take a miracle — or rather 6 miracles see “Science/IEA: World oil crunch looming? Not if we can find six Saudi Arabias!” and “IEA says oil will peak in 2020“). See also “Merrill: Non-OPEC production has likely peaked, oil output could fall by 30 million bpd by 2015,” which noted,
Steep falls in oil production means the world now needed to replace an amount of oil output equivalent to Saudi Arabia’s production every two years, Merrill Lynch said in a research report.
A March McKinsey report concluded, “the potential looms for liquids demand growth to outpace supply creating a new spike in oil prices as soon as 2010 to 2013, depending on the depth of the economic downturn.”
Heck we’ve hit $65 a barrel and we’re still in the middle of the worst global economic collapse since the Great Depression.
Detroit has not only willfully ignored the obvious oil and climate trends as evidenced by the cars they sell (or, rather, used to sell) — but they actually joined with conservatives in blocking every major attempt by progressives to help them develop cleaner cars and to require they build more fuel-efficient cars (see “Why bail out the car companies when they bailed out on us?“)
The Obama administration certainly understands that “the equivalent to Saudia Arabia’s production every two years” can’t be found underground.
It can only be found in our grotesquely inefficient oil consumption. Hence they have advanced the most aggressive increase in fuel economy standards proposed in decades — Obama to raise new car fuel efficiency standard to 39 mpg by 2016 — The biggest step the U.S. government has ever taken to cut CO2. Hence the massive push toward plug in hybrid electric vehicles (PHEVs) and pure EVs in the stimulus, the budget, and the climate bill.
Within a decade, the only growth segments in car business will be highly fuel-efficient cars, PHEVs, and EVs. Indeed, that isn’t true just of the United States, but also of the biggest new car market — China (see “China plans tougher fuel standards than U.S.” and “World’s first mass-market plug-in hybrid is from … China, for $22,000?“).
And by the 2020s, every major country will be engaged in a dire effort to avert catastrophic global warming, which by then will be painfully obvious to even the most blinkered conservative. And that in turn will drive enormous but difficult-to-forecast levels of behavior change in the purchase and use of major energy-consuming products — cars being perhaps the most obvious. Post-2030, after the global Ponzi scheme has collapsed for all to see, after our children are done cursing our myopic greed, gas guzzlers will be genuine dinosaurs.
So what the White House is doing is the only hope of saving Detroit — assuming that is possible. Chrysler is going to be taken over by a company known for making small cars. Ford put forward the most realistic bailout plan given oil and climate realities (see “Whose bailout plan is best“), and it is spending $550 million to retool SUV/truck factory to make small cars, electric vehicles.
And, of course, you’re going to own GM and will perhaps make better decisions than their executives. Indeed, it would be difficult for a group of children using a Ouija board and Magic Eight Ball to make worse decisions than GM over the past four decades — and still today. GM execs have decided to kill off the Saturn, which was better at making small cars than any other of their brands — I owned one for 10 years until I bought my Prius. But most of the company always wanted Saturn to fail, to prove that the only way to do things was the traditional GM way.
And that brings us to the very real possibility that General Motors simply can’t be saved from itself, no matter how much progressives desperately try one last time to preserve that one-time bastion of American manufacturing jobs.
What do you think? Should we have let Detroit fail? Is wading into GM like sending more troops to Afghanistan? Or has Obama chosen the lesser of two evils?