Better World Club

Tuesday, April 14, 2009

Instead of Tossing More Money at the Detroit 3, the Government Should Help You Trade in that '94 Mercury Sable

They Might Also Want to do Something About that '90s Hairdo of Yours

We opined in last month's 'Kicking Asphalt' that instead of dumping truckloads of money on the doorsteps of the Detroit automakers, the government should use the money to guarantee auto warranties for US consumers.

When the Obama Administration included this idea in its effort to help the U.S. auto industry, Obama's political opposition caricatured the idea as putting the government in the auto business. This is silly. As we argued, its real purpose is to facilitate bankruptcy, likely the only answer for the industry.

Sure enough, GM just announced that it was preparing itself for bankruptcy.

OK, Obama Administration, as you appear to be listening, here's another idea: incent consumers to trade in their old, gas-guzzling cars for new, more fuel-efficient models*.

This is not a new idea, but Americans have been slow to consider this progressive automotive policy (a far too common occurrence in the US). Similar policies have been enacted or are being considered in Germany, Japan, France, Italy, and South Korea. The program in Germany caused new car sales to immediately jump 21 percent.

There are several versions of this plan being considered by Congress. Here's how one representative plan would work: consumers would receive vouchers for vehicles at least nine years old. In this scenario, the vouchers could well be worth more than the current value of their vehicles. The consumer could then use a voucher worth $4,000-$5,000 as a down payment on a new car for $20,000.

It is estimated that this proposal could sell an additional 2.5 million new cars if only 2 percent of eligible vehicles were traded in. This could go a long way toward preserving jobs and keeping the US auto industry in the black.

Reviving the auto industry is a critical goal of this proposal, but it should accomplish much more: greater oil independence and lower carbon emissions. Of course, this assumes that the voucher is only available for new cars that attain a certain level of fuel efficiency.

The faster we can adapt to new technology, the faster we can make progress. The most fuel inefficient, most polluting cars tend to be older - and we will only make limited progress in fighting global warming and oil dependence while these cars remain on the road.

So, how about it, President Obama? BWC is not against federal assistance to the auto industry in principle, but the assistance has to be shaped to be as publicly interested as possible. The right kind of vouchers to get older cars off the road should be included.

*This idea can also work in other areas, though we don't recommend using it to trade in your old, inefficient spouse.

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Saturday, April 11, 2009

Our Collective Addiction to Oil

By Jim Wilcox
Executive Director
BikeLane Coalition

Once again, sales of trucks and SUV's are out pacing car sales. Have we already forgotten $4 a gallon gas, plunging SUV values, and presidential warnings of oil addiction? Were last summer's gas prices a result of greedy foreign producers selling oil for whatever we would pay, or unscrupulous speculators after profit? No matter. Big vehicles are back. But are we driving down the road to renewed prosperity or further dependence?

In their forthcoming book, The End of the Road, authors Joseph McKinney, President of Oregon Roads Vehicle Leasing Sales, and co-author Amy Isler Gibson write that these price fluctuations reflect the challenge of adjusting to a long term trend of decreasing oil supply, global warming, and increased pollution from the unbridled rise of gas guzzlers. They also question the Obama administration, which seeks to fund vast transportation infrastructure projects encouraging continued dependence on the car and, as a result, strategic dependence on foreign oil.

The authors argue that instead we must redesign our roads for cleaner, more efficient, humane passage, with complete streets designed as walking, biking, and public transportation boulevards. Central to their argument is the need to dethrone the car and replace it with neighborhood electric vehicles in order to reclaim our urban core, currently dominated by the infernal combustion engine.

But why now when prices are so low? Because they aren't. In 1998 an International Center for Technology assessment pegged the true cost of gas between $5 and $15 a gallon. Such external costs as government subsidies for oil companies, pollution related health care, infrastructure needs not funded by gas taxes, military expenditures to maintain oil supplies, and environmental protection and clean up were costs borne by society but not factored into the price at the pump. Add inflation over ten years plus two new wars and the current cost of a gallon of gas is even greater.

Because the price of oil does not include external costs, it is priced as a subsidized commodity, lower than what the free market would determine, perpetuating our addiction. As T. Boone Pickens notes, this has led to the largest transfer of wealth in the history of the world. In 2007, Lane County residents paid out $637 million to countries like the United Arab Emirates, which is currently building the tallest structure in the world. While we baked in gas lines last summer, Dubai residents skied an indoor winter playground. Our energy bill paid their E Ticket.

President Obama agrees that we are oil addicts, claiming that "...admitting to oil addiction without following a real plan for energy independence is like admitting alcoholism and then skipping out on the twelve-step program." And just like an addict, we don't worry about the next fix as long as we have the drug.

That demand will slacken with higher gas prices was proved last summer when people drove less, making beneficial changes like walking, riding bikes, carpooling, and trip chaining. But even as the need for public transportation grew, service was ironically cut due to higher fuel costs.

I am an educator by training, but I don't have faith that education can thwart addictions. Like an addict, we'll do what we can to get our fix, even if it means turning food into bioethanol, raising the cost for ourselves and threatening sources of sustenance for those with marginal incomes.

Blame evolution for our predicament. Psychologists tell us that our brains are hard wired to respond to threats that are nearby in space and time. We don't immediately see our mileage cut in half or twice the pollution for short distance trips with a cold engine. We don't see the person with pollution-caused lung cancer. It's just one more trip, like one more cigarette or one more drink. The last one didn't kill us, why should this one?

In 1980, when oil imports accounted for about 30% of our demand, presidential candidate John Anderson called for a 50 cent a gallon gas tax. Had we adopted that tax then, the resulting decrease in consumption could have cut pollution related health care expenses and reduced taxes that support military spending (now half the world's total and most of which is dedicated to protecting Middle East oil supplies). Additionally, we would have raised about $100 billion per year to fund increased mass transit, additional bike routes, alternative energy, and improved roads and bridges. But our addiction spoke, we rejected Anderson's proposal as well as his candidacy, and we now import over 60% of our oil.

So, we are left with the ever present problem of how to raise the price of the drug to discourage the addict's use. This will take an intervention from the top of our government to reverse an addiction to oil that threatens our nation's health, wealth, and security. And it will take our collective will and some inconvenience as we make personal changes necessary to achieve energy independence. But without this leadership and our acceptance, the addict will not change his ways.

BikeLane Coalition is a 501(c)(3) that works with companies, government agencies and nonprofits to increase cycling for short distance inner city travel. Jim Wilcox is the Executive Director, and has been an for cyclists for over 30 years. He is newly appointed to the Lane County Roads Advisory Committee.

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