Deep inside the research centers of General Motors Corp., Ford Motor Co. and Chrysler LLC, the companies are spending billions to develop plug-in electric cars at a time when gasoline has dropped below $2 per gallon.What can be done to protect automakers from the ups and downs of a free economy? Prop up gasoline prices -- through taxes or price floors -- to guarantee demand for alternatives!
If their fears come true, gas prices will be so low when they start rolling out the cars next year that people won’t buy them and all the high-priced research will have gone to waste.At GM and Chrysler, which have nearly run out of cash and are surviving on government loans, the companies can’t afford to make mistakes in spending limited research and development dollars, but they can’t predict the future, either.
Detroit would love for Washington policymakers to take their inspiration from Europe.
In case you're wondering if the incoming Obama administration would look on such proposals favorably, consider that at least one of Obama's two top energy-related appointees think absurdly-high gasoline prices would be wonderful -- not for Detroit's sake, but for ideological reasons, as the Ben Lieberman of The Heritage Foundation writes January 6:Jim Queen, GM’s global engineering head, said the Obama administration may be open to gas taxes or policies imposed by many European countries that reduce oil consumption and make it easier for manufacturers to match their products to demand.“My personal opinion is we’d be better served in the U.S. if we could somehow establish a comparable floor that you see in Europe,” Queen said. “And I think with the new administration we may have a shot under the umbrella of an energy policy to start talking about these things.”
Earlier in the year, then-candidate Obama and leading Democrats in Congress had opposed this expansion of domestic oil drilling. However, both relented in the face of the summer’s public outrage over $4-a-gallon gas, as well as polls showing 2-to-1 support for more drilling. But, as they say, that was then. Since the election, both the incoming administration and Congress have signaled that they might reverse position and undo this policy. And two key Obama appointments might want to go further.The ideologues in Washington win. The executives in Detroit win. We lose.
Sen. Ken Salazar, D-Colo., Obama’s nominee for secretary of the interior, was on record as opposing lifting the offshore moratorium even if gasoline were to reach $10 a gallon. The Department of the Interior runs the federal energy-leasing programs. As secretary, Salazar would have the power to slow such leasing to a crawl, with or without the help of Congress.
In fairness, Salazar strongly opposed offshore drilling but never said he actually wanted the price of gas to skyrocket. The same cannot be said of secretary of energy nominee Steven Chu.
Last September, he told The Wall Street Journal that "somehow we have to figure out how to boost the price of gasoline to the levels in Europe."
European gas taxes are much higher than in the United States and are designed to force people to drive less or not at all. At the time of Chu’s comment, the "levels in Europe" were above $8 a gallon.