Cheap energy: America’s favorite poison

Washington has a new mantra: Detroit must prove it can be viable globally to get more federal loans.

We hear it again and again. Foes of U.S. loans to domestic automakers say Detroit doesnít deserve help until it shows it can be competitive on a global scale.

Itís a lovely sound bite. Itís short, snappy and has that sense of reasonableness to it that starts your head nodding in agreement. Alas, itís not true.

Detroitís problems are not international. General Motors and Ford are competitive and growing outside North America (Chrysler is all North America after Daimler sold off Chryslerís global equity partners before dumping the U.S. arm).

The Detroit 3ís immediate problem is U.S. competitiveness.

There are lots of reasons for the disparity. Any staff-prepared Senator will rattle off a long list of whatís wrong with Detroit at a momentís notice. Detroit can fix most of them.

Except one. Detroit automakers and all their suppliers, investors and dealers canít solve this one with sweat, moral fiber and noble sacrifice.

Want a hint? Why do carmakers in most auto-manufacturing countries focus on smaller, fuel-efficient vehicles that can sell in all markets while U.S. automakers design one set of vehicles for home and another for the rest of the world?

Yes, itís Americaís cheap-energy policy. Itís easy to miss because Congress and the White House donít mention it much. Musta slipped their minds.

Excuse me. I forgot weíre discussing vast, complex policy in sound bites. Ahem.

Washington: you want a global competitive auto industry, use international rules.

While other developed countries see energy as a strategic security issue and slap heavy taxes on fuels to restrict usage, the U.S. has not. We got used to cheap fuel early and decided we liked it. We demanded more, and our elected politicians obliged. For many Americans, cheap fuel is a birthright.

Thatís why Washington finds it easier to lecture Detroit on how it should sacrifice than reform energy policy.

If Detroit automakers, dealers, suppliers, and all remaining employees sacrifice, and Detroit 3 investors take a haircut, how much would it hurt Congress and the White House to tackle energy policy?

Actually, the politicians have a pretty good idea. They havenít taken a serious look in decades. Just as Congressmen donít call for big cuts in Social Security benefits, they donít advocate tripling the federal gas tax.

But if Congress wants to keep talking about equality of sacrifice, maybe it should join the party.

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