My wife and I were watching a movie on television recently, about Ford Motor Company sending a representative to England to convince politicians there that if women were paid equally to men, the company could not afford to keep building cars in Great Britain. It would have to close it’s factory and that would affect workers in support industries, putting about 40,000 Britons out of work.
“That’s when you know you’ve got them,” I said. “When they tell you if they have to pay you they can’t afford to stay in business, you know either they’re lying or they were only making money from taxpayer support.”
The Obama administration has proposed new fuel standards for the U.S. automobile fleet. By 2025, the fleet would get 54.5 miles per gallon. That doesn’t mean all vehicles would get 54.5 miles per gallon. Pickup trucks that now get about 21 mpg may get 30 in 12 years. Those scale model (by 1960 standards) cars that burn 40 mpg now may get as much as 65 mpg.
“If you increase the price of a car, fewer people are going to be able to qualify for a loan. It’s a simple as that,” National Automobile Dealers Association spokesman Bailey Wood was quoted in the online news magazine, The Hill, this week.
He suggested there would be fewer drivers because a large number of current drivers would not be able to qualify for financing on the higher mileage, presumably higher cost, vehicles. One might expect banks to suffer debilitating losses from the interest they would not earn from the money consumers would not borrow.
Let’s follow this out.
Fewer drivers means less wear and tear on our highways. That cannot be good for highway construction companies, which would not buy new trucks to haul asphalt and paint those pretty yellow and white lines. Asphalt makers would go out of business, as would paint producers.
A multitude of surveying companies would cease to exist which previously had marked the boundaries of highway construction jobs.
Paving equipment operators and concrete handlers would be laid off, as would the folks who stand at each end of a construction zone telling us it is our turn to drive on the single open lane.
Which would be OK because there would be no money to pay them. State and federal highway funds would evaporate as fewer drivers buy, and pay less taxes on, fewer gallons of gasoline.
All because President Obama wants, as has every president since at least Jimmy Carter, to make the air cleaner and make the nation energy independent.
A few years ago, when car gasoline mileage began to significantly increase, people who bought them did buy less gas, and government and trade surveys showed they drove more miles on the fuel they did purchase. Unfortunately, when gas hit $4 a gallon, even they stopped driving and, sure enough, state and federal highway funds suffered.
The Consumer Federation of America this week published a survey indicating consumers think the higher mileage standard would be good for them.
CFA reports the difference between increased car payments and reduced gasoline costs would save drivers about $3,000 over the five-year life of the average new car loan. The standards would affect all vehicles, so drivers would have a selection of vehicles relatively similar to what they have now. In fact, they may have more choices as manufacturers develop better batteries for electric cars and improve efficiency of vehicles powered by natural gas, hydrogen fuel cells – and gasoline and diesel.
People who can afford to buy new cars would not be hindered by the price increases that would be spread over the next 12-15 years; those who could not afford a new car would, when they have to, provide a market for the used cars turned in by new car buyers – just like now.
We have heard the cry before. Businesses often claim they cannot afford to operate if this regulation or that is put in place, if this tax break or that one is not rendered. Even Walmart, one of the wealthiest businesses on the planet, often says it cannot afford to build a store if its proposed municipality cannot promise it free sewer and water, new roads and several years tax exoneration.
In the car industry, the cost of adding seatbelts were going to make cars unaffordable in 1968, and a mandate for bumpers that would withstand a 5 mph supermarket parking lot crash was projected to kill the industry in 1979.
Neither catastrophe occurred.
Instead, the past decade has proven that if gas mileage is 20 mpg, people would drive. Increase it to 30 and they’ll drive more. But increase the price to $4 a gallon and they’ll stop virtually all discretionary spending.
Increasing gas mileage to 54.5 mpg would not hurt the car industry. It probably would help, given our population seems ready to give up the gas-hog muscle cars – the GTO and Barracuda, for instance – that were the desire of nearly every red-blooded lad of my high school years.
But the new standards might make breathing easier, and allow us to take longer vacation trips.
Photo by aldenjewell
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