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America needs a realistic energy plan

September 16, 2011
By Jim Smail, AIADA Chairman
For decades there has been a concerted effort in Washington, D.C. to reduce Americans’ fuel consumption by requiring automakers to improve their fleet-wide fuel efficiency. Today, we are currently awaiting President Obama’s proposal for 60+ mpg by 2025. And recently, some members of the House of Representatives offered H.R. 1687, the “Open Fuel Standard Act of 2011.”
The act would effectively require that 95 percent of gasoline-powered light-duty vehicles be tri-fuel vehicles capable of running on gasoline, 85 percent ethanol (E85), and 85 percent methanol (M85), or any combination of the three fuels beginning in model year 2017.
Reducing our dependence on oil is undoubtedly a good thing. So why did the AIADA join with the NADA, the Association of Global Automakers, the Alliance of Automobile Manufacturers, and several other groups to condemn the bill in a letter sent to Capitol Hill?
There are a few reasons. First, H.R. 1687 and other, similar legislation puts the responsibility of solving America’s energy challenges squarely on automakers. It absolves the government of any responsibility, and ignores the fact that a comprehensive and lasting energy policy can only be implemented if private industries and the government work as partners and not adversaries.
By removing themselves from the conversation, Washington insiders are working to maintain their popularity among voters while saying to carmakers: “These are the cars you need to build. It doesn’t matter how costly they are to build, or how unpopular they are among consumers, just do it.”
As a dealer, I can guarantee that such a plan will backfire – big time. Remember, more than 8 million flex fuel vehicles are already on the road (I’ve sold some of them!) but most use less than a single tankful of E85 a year. Consumers won’t be willing to pay the increased cost associated with reconfiguring entire fleets – estimated at more than $1 billion – for cars that use an “alternative” fuel few have access to.
Especially not when gas is still relatively cheap! It is staggeringly hypocritical for members of Congress to push bills like H.R. 1687 even as the Obama administration releases 60 million barrels of oil from the strategic petroleum reserve in order to lower gas prices.
Finally, the AIADA signed that letter because we firmly believe that it is not the responsibility of the United States government to pick winners and losers in the market place. By choosing ethanol and methanol as the “preferred” fuel alternatives in H.R. 1687, they award a huge boon to the manufacturers of those products, and hurt other industries – like battery manufacturers.
True innovation in America has always been driven by the market. If our government genuinely wants to see America’s dependence on oil reduced, they must allow the market to decide what will sell. I may not have a crystal ball, but I can pretty confidently predict that as long as gas is cheap, big comfortable trucks and SUVs will continue to fly off lots.
As gas prices go up, so will sales of fuel-sippers and hybrids. Our legislators must stop trying to win votes by keeping gas prices artificially low while at the same time scratching their head over why no one wants to use their (heavily tax payer subsidized) ethanol/methanol option.
The issue of fuel consumption in America is a complicated one. There is no simple solution, and there will be no resolution until the government and automakers can work together to create a coherent, realistic energy plan that makes sense to consumers.