What if Kerry became President?

What effect would it have on the automotive industry if Kerry became President. Every person -whether they were voting for Bush or Kerry – in each corporation I spoke with told me that they were ” policy neutral” . After questioning – off the record – they would say, ” We have to work with whomever is in office. Were not going to alienate anyone.According to The Kiplinger Letter Special Report, October 20,2004, A President has a say in naming 800 top federal executives to carry out his policies. It was said by an industry insider, a person voting for Bush, that ” I dont think Bush is a smart man. What I like about him is that he surrounds himself with smart people” . A look at some political appointments that Kerry could make in the critical jobs affecting the automobile industry is essential. According to Richard Sammon, Political Editor of The Kiplinger letter, Kerry might appoint one of these people for the following positions.

Secretary of Energy, currently Spencer Abraham, could be replaced by former EPA Carol Browner. Appointed by President Clinton in January 1993, Carol M. Browner was the longest serving Administrator in the history of the U.S. Another possibility could be the unpaid advisor to Clinton, John Northington. Doubtful, but worthy of note could be Senator John B. Breaux (D-Louisiana).

Environmental Protection Agency Administrator, currently Michael O. Leavitt, could be replaced by a number of folks,including 2-term incumbent Governor of NH, former NH State Senator Jeanne Shaheen, New Jersey Department of Environmental Protection Bradley M. Campbell, former New England Administrator of the U.S. Environmental Protection Agency John DeVillars, Robert Kennedy, Jr., Senior Counsel at the Natural Resources Defense Council and author of The Riverkeepers and Crimes against Nature or President of the League of Conservation Voters (LCV) Deb Callahan.

National Highway Traffic Safety Administration (NHTSA) Administrator, currently Dr. Jeffrey Runge, could be replaced by former FAA Administrator Jane Garvey or a lesser known Congressman Mike Honda (D-CA).

Office of Management and Budget (OMB)doesnt seem important to the auto industry, but OMB okays all regulations from government agencies. For example, before an EPA regulation can go through OMB has to look at the cost and benefit of the regulation and decide it’s worthiness. Currently the director of OMB is Joshua B. Bolten. Mr. Bolten could be replaced by former National Economic Adviser to President Clinton and head of the National Economic Council from 1996-2000 Gene B. Sperling, or U.S. Representative John Spratt. Spratt is a senior democrat (D-SC) on the House Budget Committee. Another possibility could be president of the Democratic Leadership Council (DLC), Bruce Reed. Mr. Reed served for eight years in the Clinton-Gore White House.
How the candidates differ

How does Kerrys position differ from Bushs and how do they affect the automotive industry? At first glance it appears that Bush and Kerry hold similar positions on many energy issues. There are some issues that are more contentious than others and that is where the boldest differences are seen.

Reducing dependence on foreign oil

It is not news to anyone that Bush is an oil man. John Kerry accuses Bush of “Unnecessarily filling the Strategic Oil Reserve, which takes oil off an already tight market.” Kerry also accused George W. Bush of braking his promise to force OPEC to “open the spigots”. Indeed, During the 2000 Presidential election campaign, Gov. George W. Bush promised to take on the OPEC cartel on behalf of American consumers. Bush said:“I think the president ought to get on the phone with the OPEC cartel and say, ˜We expect you to open your spigots. … The president of the United States must jawbone OPEC members to lower the price.”

[Financial Times, 2/2/00]

Bush did say Kerry sponsored a bill for a 50 cent increase. Kerry never sponsored or voted for a 50-cent increase in gas taxes. Sen. Charles Robb introduced legislation in 1993 that phased in a 50-cent increase. John Kerry did not vote for or co-sponsor this bill. (S. 1068, Introduced 5/28/93)

Kerry says he will “bring a renewed American position to work with OPEC to manage supply.” Kerry also says that he wants to “Set goals for increased fuel efficiency”. This sounds like the bill Kerry/McCain tried to push through to increase CAFE to 36mpg in March 2002. The bill did not pass, howe’ver, Bush was able to get a 1.5 mile increase – the largest increase in the last twenty years.

CAFE was passed in 1975, with standards to start on the 1978 model cars. The goal of CAFE was to decrease our dependence on foreign oil by requiring vehicles to get better gas mileage.

In my opinion:

Both these guys are posturing. All CAFE does is increase the miles a car can go on a gallon of gas. CAFE does not include all vehicles, there are credit’s for certain cars, credit’s for past years, blah, blah blah. CAFE is as convoluted as our tax system.Since 1978 Americans have increased the mpg by 5mpg/vehicle, we travel over 2,000 miles more per year per car than we did in 1978 and there are 300,000,000 vehicles on the road. The more economical fuel efficient cars have allowed us to live further from our work, commuting from the sprawl of suburbia into the cities. According to DOE, Americans were using 6.5 million barrels a day for transportation in 1978, today they use 9.08 million barrels a day for transportation.

If our government really wanted to decrease the dependence on foreign oil they would raise the price of gas. They dont because it would be political suicide. Make no mistake, this is not better for the consumer, all it does is make us use less gas, which is what CAFE was designed to accomplish.

Barring increasing the price, they should look to alternative fuels and advanced technology. Alternative fuels became popular back in the mid-70s after the oil crisis. Once the price of fuel went back down America went back to consuming it. Now we have another oil crisis, combined with environmental concerns.

Alternative Fuels and Advanced Technology

Alternative Fuels and Advanced Technology have the ability to do what CAFE should have done. If done correctly the United States could not only decrease it’s dependence on foreign oil, they could own the patents and infrastructure for hydrogen. Alternative Fuels are ethanol, bio-diesel and ultimately hydrogen. Advanced technology starts with powertrains that squeak out another mile or two. We are currently entering the hybrid age. A mild hybrid can add 2-4 mpg more, a

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mileage consumption

full hybrid can add 10-25 miles per gallon more. This advanced technology is not only a stop gap, it is a study in what technology the manufacturers can take from these stop gaps, whether it is a hybrid, a hydrogen internal combustion engine or a hydrogen vehicle. For instance, the hybrid uses a nickel metal hydride battery that most manufacturers are incorporating in their fuel cell vehicles.

How the candidates differ:

Kerry wants to “Invest $10 billion to convert auto plants to build more efficient vehicles.” Bush has no tax credit for auto manufacturers.

On the issue of hydrogen, Kerry wants to give “5 billion for Hydrogen Research with specific goals.”

According to Christopher Bordeaux, Senior Advisor Department of Energy Office of Policy and International Affairs, Bush appropriated 1.7 Billion dollars over a five year span for the hydrogen fuel initiative. Below is a breakdown for 2004 fiscal year of that 1.7 Billion budget.

The largest category, Weatherization and Intergovernmental for $369,460 is explained by Bordeaux as, ” an educated guess that includes DOE,DOD, EPA, and other Government agencies. Much of this money has matching private sector funds — sometimes up to 50% cost share. ” The U.S. government spends about $300 million annually on hydrogen and fuel cell programs, more than any other country in the world.”

“Some of the programs that have been set up since Secretary Spencer Abraham has been appointed are:

  • Internal Combustion Hydrogen Engine
  • Carbon Dioxide (CO2) sequestration leadership
  • GEN4 – nuclear powerplants
  • Future GEN – clean coalThe Climate Change Technology Program (CCTP) is the U.S. answer to the Kyoto Protocol. My concern is what will the predecessor do with the initiatives that are in place now.”

    Future GEN is part of Bushs program to clean up coal processing. In most states carbon dioxide, though not recognized by the clean air committee as a pollutant, is higher from transportation than industrial use. That is because we drive more and produce less energy. In the states where coal is mined and produced into energy carbon dioxide is much heavier. In 2000, the Environmental Protection Agency lists carbon dioxide industrial emissions in Pennsylvania at 128.73 million metric tons (MMT) vs. their CO2 emissions from transportation at 70.69. Conversely, California was only 99.17 mmt from industrial emissions and 216.78 from transportation.

    Bush supposedly committed to $1.2 Billion to clean up coal. Kerry wants to invest $10 Billion in clean coal. Can coal be cleaned up and CO2 sequestered? Yes, and it wont take the $10 Billion that Kerry is suggesting.

    Michael Blinderman, Director of Operations of Ergo Exergy Technologies is already in business in Canada and Australia. He uses a technique called Underground Coal Gasification (UCG), which sequesters CO2 underground. [For more information see https://www.drivingthenation.com/underground-coal-gasification/ – Underground Coal Gasification (UCG)]. Ergo Exergy has been in business for twenty years. According to Blinderman the only President that has been interested in alternative fuels was Jimmy Carter. Blinderman charges that Bush “says everything right, but does nothing. I had high hopes, but Bush set lower air pollution standards and allows old coal fired plants to stay in operation.”

    China is destroying their coking plants in Shanghai, China because of CO2 emissions. Coking plants burn coal to create coke which when combined with iron ore makes steel. Underground Coal Gasification has been studied by Lawrence Livermore Labs for twenty years. It is a viable option.

    In my opinion:

    Kerry loses on the $10 Billion to auto manufacturers. The automotive manufacturing insiders that I talked to dont believe the government should be giving auto manufacturers any money for retooling or research and development. I agree. The manufacturers already get tax credit’s for research and development and they will recoup their money when the product comes to market.Automotive manufacturers have each spent close to, if not eclipsing, 1 billion dollars or more on research and development. If the manufacturers sneeze the wrong way they will lose more than the $250,000,000 the government is distributing to the three auto companies. California is setting the standards for the way money ought to be invested.

    Back under the Gray Davis regime California Fuel Cell Partnership (CAFCP) was formed. [For more information see http://www.carlist.com/autonews/2004/autonews_18.html – 2004 California Cruisin Hydrogen road rally]This brought together never heard of before groups in a cohesive unit trying for the ultimate goal – a fuel cell vehicle with technology and patents. The group consists of auto manufacturers, government agencies and energy companies.

    The Hydrogen highway that was created by Governor Arnold Schwarzenegger completed the CAFCP. The Hydrogen Highway works in conjunction with CAFCP and incorporates the infrastructure issues. [For more information on UCG see https://www.drivingthenation.com/southern-california-fuel-cell-vehicle-road-rally/ – California Hydrogen Highway completes the California Fuel Cell Partnership]The Hydrogen highway has set codes and standards for all the companies involved. The companies provide their progress by time frame and technological advancement, so that the hydrogen highway can show the progress made at each meeting.

    There are industry insiders that agree with me that a better use of the money would be to go towards tax credit’s for consumers that purchase the advanced technology vehicles. A hybrid Ford Escape is going to cost $2,500 more than a regular Ford Escape.

    Kerry wins on proposing a $4,000 tax credit for advanced technology. The demand for hybrids is obvious. The supply to this point has not been enough to keep up demand. The emphasis should be kept on hybrids and it can be done by continuing the Clean-fuel vehicle tax deduction of $2,000 that was initiated under Clintons Partnership for a new generation. Even if the price of gasoline does go back down we want to replace all the less efficient cars we can. By adding a tax credit to adjust the price to compete with the non-hybrids it becomes a no-brainer for the consumer.

    One initiative that has passed by both candidates that I find humorous is the HOV lane. This initiative allows States to permit vehicles occupied by one person to use HOV, or carpool, lanes if a vehicle is a hybrid or runs totally on alternative fuel. The funny part about this is the reason hybrids are so great is that they have few emissions and burn little fuel when they are idling in a traffic congestion. Sometimes you just have to go, hmmmm.

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    Energy budget