Tuesday, May 19, 2009

Consumers to Choke on Obama's Emissions

So the Great Green Hope has finally come through for his liberal base, and has imposed emissions standards on automobiles that -while doing little to clean the air - will fiscally strangle both the consumer and quite possibly the car companies:

The rules, which will begin to take effect in 2012, will put in place a federal standard for fuel efficiency that is as tough as the California program, while imposing the first-ever limits on climate-altering gases from cars and trucks.
The effect will be a single new national standard that will create a car and light truck fleet in the United States that is almost 40 percent cleaner and more fuel-efficient by 2016 than it is today, with an average of 35.5 miles per gallon.

Making California - a broke, disfunctional state - the national standard based on ideology is a bit questionable as it is. But speaking of broke, let's look at two things - first this, again from the NYT:

The companies have declined so far to comment on the costs involved in meeting a fleet standard of 35 miles a gallon. For starters, the automakers will probably have to sharply reduce the number of low-mileage models, like pickup trucks and large sedans.

And this piece of honest accounting from the AP:

Consumers should expect to pay an extra $1,300 per vehicle by the time the plan is complete in 2016....

....Administration officials said consumers were going to pay an extra $700 for mileage standards that had already been approved. The comprehensive Obama plan would add another $600 to the price of a vehicle, a senior administration official said.

The extra miles would come at roughly a 5 percent increase each year. By the time the plan takes full effect, at the end of 2016, new vehicles would cost an extra $1,300.

That official said the cost would be recovered through savings at the pump for consumers who choose a standard 60-month car loan and if gas prices follow government projections.

SO - car companies will need to reduce the sales of their SUVs and pickups as a way to make their fleets "average out" at Obama's oppressive new fuel standards. So for those of us with large families or with businesses that require SUV's or pickups, we will undoubtly wind up paying a significantly higher price for a vehicle that will still be in great demand but in minimal production. I'd fully expect that, under this government-jiggered supply/demand chain, SUV and pickup prices will rise in price by a minimum of 50%. But of course, that's what Obama wants.

AND - on top of this, the average automobile will go up in price by at least $1300, and likely more. When has the government ever been honest about the cost of anything, anyway? Expect the increase to be closer to $2K on every vehicle sold by the time this fiasco goes live.

BUT WAIT! - you say. With the automakers facing bankruptcy and the government already pouring billions of dollars into their bank accounts to keep them solvent, how can they afford to take on a program that will cost, by their estimates, anywhere between $47 and $80 billion dollars?
THEY CAN'T. So the taxpayers will continue to pay for it, funnelling their ever-increasing tax burden towards the government controlled auto industry, which will then charge us an addtional $2000 to buy the products we have already financed. Nice racket. Unless, of course, there is a regime change and this scam is overturned. Then Big Auto goes to the Big Wrecking Yard, forever.

THE FINAL INSULT - is that line about the amount of dollars saved based on "government projections" of gasoline prices. What happens if they fall, and it takes ten years rather than 5-6 to recoup the extra dollars spent on a government vehicle? Will the government then raise gas prices re: a gas tax to justify the exorbitant rise in the prices of automobiles? One thing's for sure - forget about any offshore drilling or exploration; that might increase supply, which would bring prices down, which would make people question the premuims the government is forcing them to pay.

But I guess you can do all this in a one party-state which is in the process of taking over control of the private sector. Expect America's streets to look more like Cuba's: hordes of old American cars driving around due to the inability or lack of desire to purchase a new one.

What a great future our Dear Leader is showing us!

1 comment:

Anonymous said...

Well written as usual. THis is the product of government interference in the marketplace. I see a complete collapse of the industry as cars become unaffordabe. Unless, of course, we are forced to pruchase a new car every five years to prove our patriotism!