7 steps to fixing the auto industry

The Hindenburg burnsLike most things the government does, its approach to “fixing” the auto industry/energy/environment problem is broken. Badly broken. Wrong-headed. Misguided. Appallingly stupid. And sad. It always amazes me that when we have an industry more-or-less crippled by poorly thought out government regulation, the answer to fixing it is in more government regulation. What a concept.

Recent polls show that only 26% of Americans think the government’s plan to bail out GM is a good idea, and only 42% of GM car owners are even “somewhat likely” to buy GM again. Clearly, most of us don’t think we’re on the right track for fixing this mess. But there are things that can be done, and the industry can survive and progress without massive government meddling, spending, and regulation.

So here’s my 7-step plan for addressing the auto industry/environment/energy situation. Amazingly, there’s not one single step that requires new regulation or money for the auto industry.

1) Don’t try to “fix it now.” It can’t be fixed now, and everything done to make it better now just makes it worse. You can’t mandate this, that, or the other thing because no one knows at this stage what is going to work. And, as we may have finally learned with the bailouts, just throwing billions at something does not fix it.  The big pain associated with surging fuel prices is severely damaging, but it’s the only way we’re going to get people working hard on viable solutions to the energy/fuel problem. Trying to artificially raise fuel prices via taxes is unworkable, because it hurts people for no reason and no benefit when real prices are low, and it blows the lid off when real prices skyrocket (which they will again.)

2) Don’t try to fix it like Europe. This isn’t Europe. You can’t listen to people in countries the size of Connecticut telling you how things should be in the U.S. — where it takes four full days to get from one side to the other. The vast majority of Europeans are completely clueless about what needs to happen here, and so is anyone who proposes Euro-style taxes for us.

3) Create significant income tax incentives for individuals to purchase fuel efficient vehicles. By significant I mean $5,000 or more per year. DON’T tell them what kind of vehicle. DON’T tell them what technology. DON’T tell them what they can and can’t do. DON’T tell them anything, except it must have an EPA rating of more than XX mpg (or equivalent.) Give them the incentive every year they own the vehicle, not just for buying it. Make it a long-term benefit. Stop the incentive when they sell the car – it’s non-transferrable. Raise the MPG requirement every few years until we get it to 50-60 mpg. DO the same thing for businesses, but with lower standards for commercial vehicles that have to tow/haul stuff. Might have to have tiers for this, based on vehicle classification. DON’T give manufacturers a dime. DON’T make any law mandating they make vehicles with certain mileage. Just give people real incentive to buy such vehicles and I assure you the market will figure it out.

4) Create significant incentives for business to build out alternative fuel distribution infrastructure. DON’T tell them what kind of fuel. DON’T tell them what kind of distribution. DON’T pay them anything. DON’T give them any government money. But give them major tax breaks for money they spend to do this. Make all alternatives equal. Anything as long as it’s not gasoline. There is absolutely no sense in trying to ignore fossil fuels and focus on freaking solar cars or hydrogen or crap that’s 50-100 years in the future.

5) Stop assuming that everyone needs to drive a sardine-can econobox. It’s one thing to cram your family into a little econobox for a 30-minute jaunt to the train station or whatever. Entirely another to cram them in like sardines for a 6-hour trip to Grandma’s. You cannot start out with an assumption that consumers here can be coerced into acting like Europeans.

6) Do not try and tell people what to do. Do not start down the road of what is and is not a wasteful activity. What seems “unnecessary” to me may be extremely valuable to you. Whenever you setup judgments about what is and is not “right” to do in this situation you create the potential for enormous backlash and lots of energy wasted on not solving the problem. Just create incentives for what we want to achieve — high mileage vehicles and easy access to alternatives to gasoline. Leave everything else alone.

7) We should never have public-funded works projects, but since the Democrats can’t stop themselves (like drug addicts going to a crack house) at least put the work into alternative fuel distribution infrastructure. I don’t know how, but at least build pipelines or something. Lease them out until they are paid for then sell them.

We badly need a meaningful energy policy that addresses real world issues and not eco-freak bullshit. We need to address energy as a comprehensive whole, not just cars. For example: Hydrogen cars are dumb. I can’t believe this idea is even being discussed. There is no free hydrogen on earth, for pete’s sake, and hydrogen is just an energy carrier — it doesn’t create energy, it just carries it. You get free hydrogen by electrolysis — pumping electricity into water. You get exactly as much hydrogen out as you pump electricity in. You may as well be running your “clean” hydrogen car off a direct connection to coal-fired power plant. The overall efficiency of coal-to-steam-to-turbine-to-powerline-to-hydrogen generator-to-fueling station-to-car is about 20%. Pretty much the same (or worse) than gasoline. Same thing will all these electric cars. Geez.

In 75 years, when you can run your Hydro-car off a super-efficient wind or solar farm, things will be different. But not today.

Even though we should not mirror the Euros, there are a *few* lessons we can learn from them.

We have lousy infrastructure for alternative fuel distribution. In Europe, 50% of the consumer autos are diesel. Modern diesels are as clean (in some cases cleaner) than gasoline engines, produce more power, and get better mileage. A gallon of diesel contains 15% more energy than a gallon of gas, and cost less to refine. Diesels also run on more bio-alternatives than gasoline engines.

But diesels don’t sell in the US because you can’t get diesel on every corner, and the lack of distribution makes it more expensive than gas, even though it’s a lot cheaper to make. Also US manufacturers have, for the most part, built very poor quality diesels and consumers have reacted accordingly. Euros still don’t sell their modern diesels here because the market doesn’t support it.

Same situation with Compressed Natural Gas. CNG is not very efficient in terms of equivalent miles per gallon — it doesn’t carry much energy. But it’s very cheap, abundant, and clean. Again, there is no infrastructure. The market has delivered very poor alternatives for consumer use of CNG.

If we had decent infrastructure you can build efficient vehicles that combine these technologies. Just like the big three are building E85 hybrids (which has caused increasing food prices because farmers now grow crap corn for ethanol instead of food corn for food) you can have clean diesels with CNG or water/methanol that increase mpg of diesel by 5% to 20%. Imagine a “gas-guzzler” truck getting 20-30 mpg on a combination of diesel and CNG, with a lower carbon footprint than the Chevy Impala. Now that’s a viable alternative for the next 10-20 years.

And maybe there are other combinations that work better. But all this stuff has to be convenient and affordable. Give Average Joe a reason and the option to buy something different that is actually a functional equivalent to what he has now. He’s not going from his 4×4 SUV to some sardine can. But he will go from his 9mpg gas burner to a slightly smaller, comparable, version getting 20mpg-30mpg off a mix of alt fuels. As long as he doesn’t have to turn his life upside-down to get the fuels or pay three prices for the vehicle.

Of course, peak oil fanatics will cry about this, claiming “That won’t help! It just delays the inevitable!” Of course it helps. And of course it delays the inevitable. Until we have a realistic way of getting from the current point A to the end game Point G by folding space-time or somesuch we have to make some incremental steps. Better to have a plan that might actually work than one that is built on “hope”. Hope is not a strategy.