Un-frickin’-believable.

The latest example of idiocy on parade – the Anointed One (Barack Hussein Obama) and CAFE standards.

From the FOX News website:

President Obama is continuing his reversal of Bush-era policies, issuing two memoranda on Monday that promote his clean-energy policy while having a far-reaching impact on the ailing U.S. auto industry.

The first memorandum will order the Transportation Department to work out rules for automakers to improve fuel economy. It will call for the department to notify automakers by March 2009 to increase their fuel efficiency for 2011 model year cars and trucks.

The second memorandum will order the Environmental Protection Agency to reconsider California’s request for a waiver from the Clean Air Act — a move that would allow California, the nation’s most populous state, to set tougher tailpipe emission standards than apply nationally.

The president is expected to offer more details in the White House’s East Room at 10:30 a.m. ET.

The memoranda mark further reversals by Obama of policies set down by his predecessor, George W. Bush. Last week Obama used his executive power to reverse Bush’s policies on interrogation of suspected terrorists, the Guantanamo Bay detention center and funding for international groups that perform abortions or provide abortion information

The latest rule on California aims to reverse a 2007 decision by the Bush Environmental Protection Agency that touched off a storm of investigations and lawsuits from Democrats and environmental groups who contended the denial was based on political instead of scientific reasons.

California’s proposed restrictions would force automakers to cut greenhouse gas emissions by 30 percent in new cars and light trucks by 2016. U.S. automakers have opposed the waiver, claiming it would create two different emission standards and therefore complicate methods of manufacturing vehicles with different environmental standards.

Senior administrations officials told FOX News that Obama will not order the EPA to back California’s waiver — though they say that is the certain outcome. The state’s governor, Arnold Schwarzenegger, wrote to the president last week requesting that the waiver be granted.

Thirteen other states have already signaled they will follow California’s lead in reducing tailpipe pollution. Approval of California’s waiver would affect roughly half of all cars and light trucks sold nationwide. 

Obama is also expected to order new guidelines on fuel economy. The law requires that by 2020, new cars and trucks meet a standard of 35 miles per gallon, a 40 percent increase over the status quo. The Bush administration did not set regulations in support of that law.

The president on Monday is also expected to tout proposals that he says would boost clean energy supplies while also producing jobs in so-called “green” industries.

Rep. Edward J. Markey, D-Mass., who chairs key energy and global warming panels in the House and is a chief author of the new fuel economy standards being considered, said Obama is keeping his pledge to fight global warming and rebuild the economy.

“This is an energy triple play that will cut global warming pollution, increase innovation, and reduce our dependence on foreign oil. It shows what a visionary president is capable of doing, and the faith he has in the economic revival that America’s automotive and energy industries can produce,” he said.

Hey, yeah!  CAFE standards have done such WONDERFUL things for the domestic automakers as of late!

So now, instead of chasing around after one group of idiots who know nothing about little things like manufacturing, product development, research and development, basic physics, basic market economics, basic business principles, and auto development the domestic automakers will need to chase up to FIFTY-ONE!

Gosh, that’s just swell!

So, what will be the outcome?  Let’s take a look:

Lobbying

Lobbying by the auto industry is a defensive tactic that prevents the idiots I mentioned above (you know, the people who seem to think that regulation can overcome basic physics) from passing idiotic laws – which is what idiots do.  So now, instead of lobbyists focusing on one group of idiots, they now have to focus on up to FIFTY-ONE groups of idiots.  The cost of this lobbying, of course, gets factored into the price of a new automobile.  So you, the consumer, takes it in the shorts.

By the way, if you think the domestic automakers are the only one who use lobbying to keep idiots at bay, you’re in for a rude awakening.  Foreign automakers do the EXACT same thing.

Competition

This move has the potential to open up fifty new markets with fifty different demands.  As it stands right now, government regulations on automobiles have been so cost-prohibitive, that they’ve virtually killed the possibility of a new domestic automaker showing up and changing the game (so to speak).  Competition drives innovation, and lowers prices.  Now, with CAFE standards being opened up for state-wide restrictions, the potential exists that certain automakers will refuse to sell to states whose CAFE standards are derived from the Leftward Land of Looniness (read: California).  In time, and through attrition, this creates a de facto monopoly.  Once a company has a monopoly in any given state or states, it can charge whatever it wants for its vehicles.  Nine times out of ten, this translates to you spending more for a new car.  So, again, the consumer takes it in the shorts.

Cost of Regulations

Anyone who denies that CAFE standards cost consumers money is either lying, is ignorant, or is living in a land of delusion.  People who propose CAFE standards don’t even try to fight this argument.  Auto analysts and economists calculate how much each up-tic in MPG costs the average consumer.  This all has to do with the additional research and development that goes into squeezing what essentially is blood from a stone.  They have to lighten the car without diminishing safety standards, comfort, or performance.  This is no small feat, and takes years of development, testing, and calibration.  All of this gets factored into the cost of a vehicle.  Once more, you’re taking it in the shorts.

The flip-side to this is that the auto companies can simply defy CAFE standards, and pay penalties for not meeting the state requirements.  Since states go after the auto companies, and not drivers, the costs of these penalties will then be factored into every car sold (or sold in that state).  BMW, Mercedes, and Porsche ALL pay penalties for not meeting CAFE standards in this country, hence the higher price of their vehicles when compared to domestic automakers.  Since they usually sell their luxury lines in the US, and they have a certain luxury “mystique” attributed to their products, it is a business tactic that works for them.  This isn’t going to work for your average Ford F-150 or Chrysler “wherever”.  So, the person paying the additional costs is you, the consumer.

Business Implications

States with higher CAFE standards – assuming that domestic automakers decide to make two or more tiers of vehicles – will incur a higher cost per vehicle one way or another.  This will drive people out of their home state to purchase a vehicle, where they can get it at a reduced cost.  This means less revenue for businesses in the state with higher CAFE standards, which bubbles-up to less revenue for the state government.  One way or another – through increased taxation or crippled business climate – you’ll pay extra for the increased CAFE standards.

Furthermore, if the automakers are forced to make two or three versions of the same vehicle, it literally becomes a duplication of effort.  Duplication of effort means increased costs per vehicle.  Increased cost per vehicle equals you taking it in the shorts.

Or, if the automakers decide to make vehicles that meet ALL of the various loony CAFE requirements,  that means an increased cost per vehicle for everyone.  Once more, you’re taking it in the shorts.

And now since you’re dealing with up to fifty groups of delusional idiots, those CAFE standards have the potential to change YEARLY.  Again, costs go up, and you’re taking it in the shorts.

Bad Days for the Automakers

Last time I checked, the domestic automakers weren’t doing so swell.  GM and Chrysler had to go hat-in-hand to the government for a bail-out (much of this due to things like CAFE standards).  Increased financial pressures on the automakers will most likely drive them to seek more government assistance.  You pay for this in one way or another.  You, in your shorts, taking it BIG time!

Or, they will go running hat-in-hand to the state governments who dream up all this wacky crap, looking to be subsidized for all the extra work they have to do.  Again, people in that state (and others) are takin’ it in the shorts.

Or, people essentially stop looking to buy or lease new vehicles (which is currently happening now) because of the increased cost.  More people start switching to used vehicles, driving up demand in this sector, and thus increasing cost.  The auto companies either downsize, or become more reliant on government subsidies to get by.  Your shorts get a new hole burned in their backside.

Or, this is finally the straw that broke the camel’s back when it comes to the Big Three.  One or more of them go out of business.  Unemployment goes up.  Less competition in the auto market.  This goes hand-in-hand with the loss of a player in the light-, medium-, and heavy-truck markets (since the Big Three automakers are pretty much the only companies making these vehicles for the domestic auto market).  Prices and taxes all go up, and your shorts are essentially shredded.

 

As an aside, what you have currently with the oil industry is the same type of issue when it comes to different gasoline blends – also known as “boutique fuels”.  Basically, these are fuel blends created by government mandate for specific regions around the US.  The result?

Boutique fuels contribute to the tight supplies and price volatility so decried by consumers.  A classic example of the disadvantage of boutique fuels is in the Atlanta area, which has a one-of-a-kind gasoline blend in the summer.  Most gasoline on the major pipelines that service Atlanta cannot be used to address any supply shortage in that market.  Refiners and suppliers have made the refinery and distribution system investments to handle the Atlanta gasoline.  However, if a serious infrastructure problem occurs in the refineries, the pipeline, or the terminals that supply this area with gasoline, the boutique fuel involved could lead to serious supply disruptions.

While this may seem like an apples-to-oranges comparison – and to some extent it is – this is a PRIME example of what happens when you start fragmenting regulations by region.  This is EXACTLY what our Dear Leader, the Anointed Barack Hussein Obama has done.  In the aforementioned case it’s fuel disruptions, and in the case of CAFE standards, it’s the additional cost of dimwits engineering cars that people don’t want to buy.

One of the reasons for the boutique fuel blends?  Emissions.

As for domestic automakers making fuel-inefficient cars that no one wants to buy, that’s a crock too.  In 2008, at the peak of $4.00+ per gallon for gasoline, the two top-selling vehicles were the gas-guzzling Ford F150, and Chevy Silverado.  The Dodge Ram pickup came in at #9 on the list.

CAFE and emissions standards came into being in the 1970s, with that last socialist dimwit to occupy the Oval Office.  Since then the domestic auto industry has floundered.  With the implementation of CAFE, Chrysler has gone to the government for two separate bail-outs, GM has gone in for a bailout, and the demand for new or leased cars has dropped significantly over the last few years.  And it isn’t just the domestic automakers seeing this play out before their eyes.  Toyota and Honda have seen a DRASTIC drop in leases and new car sales over the last year – somewhere in the range of 30%.  It doesn’t take too much digging to figure out that this is partly related to the vehicle’s price-tag.

I’d be nice if that little socialist idiot in the White House, being the “genius” he is, could figure these simple little facts out.

I guess we’re asking too much from a guy with a Harvard education.  My bad.

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