And So It Begins: Plan for $18.5b Detroit Hand-Out

Robert Farago
by Robert Farago
and so it begins plan for 18 5b detroit hand out

So, now that the feds are forking-out $30m of your hard-earned tax dollars to GM, Ford and Chrysler/GE for plug-in hybrid battery technology research, auto industry observers are asking the obvious question: what the Hell's that going to do? As reported previously, GM's paying $3b in a year interest on their loans. Ford's in hock up their logo (no, really). Chrysler's so hard-up for cash they're stiffing their suppliers. Our friends at Wired make the kvetch from deep left field. "What'd it do — scrounge change from couch cushions in the Pentagon? EV advocates were quick to thank Uncle Sam for the money but said it's going to take a whole lot more than that to wean us from oil — which, by the way, will collect $17 billion in tax breaks during the next decade." BTW? C'mon, you know what comes next (assuming you've read the headline). "David Sandalow, a senior fellow at the Brookings Institution and former Clinton Administration official, says we could transform the nation's vehicle fleet if we spent about $18.5 billion over the next decade." We're talking $5b for "retooling," $12b for plug-in hybrid buyer tax credits, $1b for 30k plug-in hybrids per year for 10 years for Uncle Sam's fleet and $500m to "underwrite warranties on lithium-ion batteries until the technology is proven." And if your business needs new investment to compete? Ha!

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  • John Horner John Horner on Jun 15, 2008

    "The SPR only holds two months’ worth of oil." My point is that if US demand were reduced 20% then the existing SPR supplies would ipso facto stretch further. Right now the US imports about 50% of it's oil requirements. A 20% demand reduction would imply that only 30% of the requirements would be filled by imports. The SPR is supposed to insulate against disruptions in imports, not against the same at home. Even so, the SPR was in fact tapped for a short time after Katrina to replace supplies lost when the certain gulf coast wells went out of production. Spending some of the supply over a period of time in such a way as to reduce demand is indeed something worth thinking about and discussion. It is no unpatriotic or foolish to consider and talk about the possibilities. The SPR was created by an act of congress and it's goals and management can be changed in the future in the same manner. Another fact is that the maximum withdraw rate from the SPR is reported to be about 4.5 million barrels a day, compared to the current consumption rate of about 20.7 million barrels per day, out of which about 12.4 million barrels are imported every day ( ). The SPR has somewhere over 700 million barrels right now which equates to about 68 days worth of imports. But, the maximum withdrawal rate is only 1/3rd of the import replacement requirement and thus at maximum withdraw rate the present supply would last for 159 days. All of which is to say that the exact amount of oil "needed" in the SPR is impossible to nail down, but certainly is reduced by any effort to reduce consumption. The SPR is supposed to induce a feeling of energy security, and in that regard it is an illusion. Said illusion helped prop up the burn as much as I damn well feel like era which is now drawing to a sudden close. Real energy security would mean only using what is produced within our economy and those of clearly friendly nations. Canada is the largest exporter of oil into the US and posses little security risk. Other suppliers like Venezuela and Russia pose more serious concerns. I have little patience for sacred cows, and the SPR has certainly earned sacred cow status. Funny how many "small government" advocates are also on the side of the government continuing to spend taxpayer money to fill big holes in the ground with oil.

  • Jurisb Jurisb on Jun 16, 2008

    Gm Precept, Ford Prodigy, Dodge ESX2- all of them were built under government alternative energy sources subsidies. Where are the production versions ? David Copperfield magic, here you see them , here you don`t.

  • Kevin Kevin on Jun 16, 2008
    why the fuss for Detroit and nothing for the other major bailouts in the recent past? Bear Sterns got bailed out over a weekend. What you call a bailout meant Bear Stearns no longer exists as an independent company and its owners lost a boatload of money as they were forced to sell the company at a fraction of its previous market value to a competitor. But yeah, I'm all for a similar bailout -- Toyota buys GM for $1 a share and takes over the Ren Center. Actually we'd all be better off. But there is a big difference. The failure of a major Wall Street firm could wreak havoc in world financial markets, hence the bailout. The failure or GM or Ford would just lead to job losses for the staff of TTAC, as there'd be nothing interesting to write about anymore.

  • Joeaverage Joeaverage on Jun 16, 2008

    Use less oil in America? I agree but we might as well start convincing our neighbors and relatives... None of mine want to give up a drop. Meanwhile my wife and I continue to use less so it impacts our budget as little as possible. As soon as oil gets cheap again - or should I say if - everyone I know will go right back to their old ways. And they aren't screaming for EVs or diesels or anything - they want cheap gasoline just like we had before... Detroit will suddenly make big technological advances once the import guys start bringing in cars that make the Volt look like a Model-T. I am convinced they either will not build the Volt in the end or they will restrict it's performance enough that nobody will want it quite like people do now. It is simply a distraction that will absorb our interest until high prices of gasoline ease a little or we get used to it. I hate paying the high prices but I am liking the side effects. One of these days Toyota or Honda or somebody else will see a value in building electric cars and suddenly everybody will be selling them too. They want to sell us what they've got as long as possible. FWIW GM (and how many others?) = big oil. Shareholders that hold auto manufacturer's stock also hold big oil stock and I think that is what hobbles innovation along with consumers with short attention spans.