Volt Birth Watch 96: Energy Independence
GM has a long history of offering second rate products that are “nearly as good” as the industry standard, and then telling people to buy them because they’re made in America. The CTS may not be the best RWD sedan on the market, but it’s made in America. The Aveo falls flat compared to say, the Fit, but dammit, you love your country, right? Needless to say, the Volt’s “made in America” badge is going to be a big selling point as GM searches for those willing to justify dropping $40k on the EREV. Well, the WaPo (a nest of America haters if ever there was one) reports that GM’s Rick Wagoner “refuses to promise” that Volt batteries would be built stateside. “As we sit here today I can’t give you a guarantee that it will be made in the U.S.,” Wagoner said. “If we want to get the Volt in the market, as we do by the end of 2010, we’ve got to make some relatively near-term decisions about how we are going to do all that.” But wait, isn’t the proposed bailout (which will certainly benefit Volt production) supposed to address America’s emerging dependence on foreign batteries? Didn’t Chrysler’s Jim Press frame the bailout in those very terms just a short week ago, saying “right now, the major sources of batteries are other countries. So are we trading our dependence on foreign oil, which is a natural resource, for a dependence on other countries to produce something in a factory? We need to stimulate that development here — here in Michigan.”? By putting the hype before the cars, Detroit is either damnably stupid or wickedly cunning. There’s no doubt that there’ll be some egg on GM’s face for increasing our dependence on foreign batteries, but once they actually build the cars (with help from Uncle Sam) they can bring back the battery independence talking point. Then it will be time for bailout round 2.
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Landcrusher: I was not suggesting a NAFTA oil only rule. I was pointing out that if we were unable to get oil from other sources for whatever reason, we could actually run our country just fine on NAFTA oil. If I misunderstood, then here is why: I don't see a difference between "NAFTA only oil rule" and "unable to get oil from other sources for whatever reason". I think it is safe to assume that Canada and Mexico would continue to sell us oil at the prevailing world price so long as they were producing it. In a normal, competitive, market the producer will sell to the consumer offering the higher price. If prices are, "for whatever reason" higher in the USA, then that's the price the USA will be be paying. Would the price of oil in the USA would remain the same as the rest of the world if ~5 Mbpd of its supply disappeared? Until demand came down to meet the supply, I don't think so.
Here is the difference, on one hand, the US could declare that we won't buy outside oil. In this event, it would be possible for prices in the US to go up substantially beyond the world price. There really isn't any other reason for that to happen. None. It doesn't matter whose supply dissappears, that supply comes out of the world market. Thus, the world price changes. Everyone who is am importer pays approximately the same price if they don't have some sort of contract agreed to in advance. Those contracts have ways of working in favor of the supplier though, so if they get too out of whack, they end up getting renegotiated by negotiators or generals.