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Tuesday, March 20, 2007

U.S. automakers still don't get it

When I pulled into the Gulf station in Waco, Texas, that August afternoon of 1964 to begin my freshman year in college, I paid 18 cents per gallon to fill up my '54 Chevy.

Granted, Waco stations were in the midst of a stiff gas war. When normalcy returned, the per-gallon price shot up to 28 cents, but even at 17 miles per gallon, a dollar's worth of gas in those days would suffice for a driver on a tight budget.

Within a decade, the Organization of Petroleum Exporting Countries conspired to change the energy situation forevermore with the oil embargo. Long lines at gas stations nationwide and assorted rationing schemes revealed a vulnerability that grabbed the attention of American consumers as only rude necessity could.

Congress demanded that U.S. automobiles become far more energy-efficient. The average vehicle mileage required under the 1970s standards rose from the teens to the mid-20s -- and then sat there.

Thirty years later, after a spasm of gluttonous gorging of fuel to power SUVs and other muscle machines, the world's most profligate petroleum consumer has fallen back into vulnerability.

Rather than applying the basic lesson that those who eat too much should eat less, much of the American business mind has been dedicated to finding alternative fuels to sate the nation's ravenous energy appetite.

Last week, however, a bipartisan group of more than 40 members of the U.S. House -- including Virginia Republicans Tom Davis and Frank R. Wolfe -- took the initiative to pursue a novel, common-sense approach: consuming less.

Led by U.S. Reps. Edward Markey, D-Mass., and Todd Platts, R-Pa., the group co-sponsored a bill to increase the U.S. fleetwide average to 35 miles per gallon by model year 2018. After that, to the extent feasible and cost-effective, the standard would increase by 4 percent annually.

The National Academy of Sciences has reported that such standards are cost-effective and achievable without sacrificing safety or performance.

Yet that wailing and gnashing of teeth you hear in the distance is the resistance by General Motors chief Rick Wagoner against more disciplined mileage standards, preferring instead the use of biofuels and a spectrum of incentives to lower dependence on imported oil.

"Many of the recent legislative proposals to increase [fuel efficiency] requirements by 4 percent per year or more," Wagoner told a House committee last week, "would be extraordinarily expensive and technically challenging to implement."

That's roughly the same spiel spun by representatives of the U.S. auto industry back in 1975. They were wrong then, with those modest standards having reduced consumption by 2.8 million barrels of oil a day and lowered carbon dioxide emissions by 7 percent. As suggested by the National Academy of Sciences, the industry executives are just as wrong today.

No mystery shrouds the reason for the financial plight of GM, Ford and Chrysler: They engineered a business model that exploited once-cheap gasoline to attract customers to big, heavy, fuel-guzzling behemoths. They have been irresponsibly slow to abandon the business plan.

Walter McManus, a former GM market analyst who conducted research at the University of Michigan, reported recently that if the U.S. automakers increased their energy efficiency to accommodate increasingly conservation-minded customers, they could collectively increase profitability by $2 billion in model year 2010. Following their current plans, McManus concluded, they are projected to lose $3.6 billion that year.

The industry's preferred options call for conversion to biofuels, requiring them to make relatively low-investment modifications to existing technology, and macro solutions to climate perils that shift emphasis from auto emissions to major energy producers such as power plants and refineries.

In the local idiom, that's called dodging responsibility for the mess they're making. Besides, biofuels like ethanol are 20 percent to 30 percent less efficient than gasoline in mileage performance. Their refining process also consumes significantly more energy per unit to produce than gasoline, further diminishing their ultimate efficiency as a motor fuel.

Corporate agriculture and its influence on Capitol Hill may benefit financially, but the rest of the country should examine all rosy scenarios with clear-eyed skepticism.

The whole point, which the U.S. auto industry continues to evade, is to burn less fuel, not pass the buck.

Denton's column appears in the Sunday and Tuesday editions of The Roanoke Times.

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