We can't wait any more. We've delayed reform for too long anyway. So even though President Barack Obama's initiative to raise the fuel-economy standards of auto mobiles is unsurprisingly being met with resistance, we must push forward. While I appreciate his campaign message of cooperation with the opposition, in this one instance I hope it turns out to be little more than rhetoric. As costly as acting now will be, the cost of doing nothing will be even greater. By directing the Transportation Department to begin implementing of a 2007 law, which would require automakers to improve gas mileage by 40 percent by 2020, Obama is initiating the biggest change in fuel economy standards in almost 30 years. It's been a long time coming.
I'll grant that now may not seem like the optimum time to burden our already ailing automobile industry. But as The New York Times reported, former Rep. Ray LaHood (R-Ill.) said, "They knew it was coming." And really, how could they not? In the past few decades the industry succeeded in delaying significant changes to fuel economy standards, arguing that it was not a good time. So the companies lived on the fat of short-term benefits, all the while pushing off the inevitable restructuring to a later date. Well, the reckoning has come and it hurts more now than it would have then. But the decision to wait was theirs.
So, I'm sorry that right now the economy looks like it came out of the losing end in a fistfight, but that's too bad. The timing will never be "right." But the longer we wait the more painful the actual transition will be. The only way the auto industry will stay afloat is if it innovates. In fact, it is precisely its lack of innovation that has resulted in the current poor sales numbers. The American industry is being out-competed by better-quality, foreign producers. So what Obama is requiring will actually make our domestic industry more competitive. If he does nothing, if he lets automakers buy time, he'll only be allowing the industry to ensure its own doom. Foreign auto industries aren't waiting. We must keep up or give up. Now we must make the hard decision and endure the pain that we've been avoiding, so that in the future we have a chance to be competitive in the future.
Obama has promised to keep in mind the state of the auto industry as he proceeds. But, just as important, he must remember that the industry is the recipient of billions of dollars from the government and has been petitioning for more. The two issues should of course be tied. Industry leaders can't cry about stricter legislation while asking for a bailout. If there had been stricter legislation in the first place maybe we wouldn't be bailing them out now. We must not give the industry more aid until we can assure that it will be spent in careful and specific ways.
The other part of Obama's decision, to let California set stricter standards on automobile emissions, also has caused controversy. While the state has already been allowed to set its own standards on emissions that cause smog, those controls generally apply to factories. Cars, mobile by nature, present a problem. State boundaries won't stop the flow of traffic, so where do you draw the line? Furthermore, how does California intend to handle vehicles manufactured outside state lines?
I favor more stringent standards, but they need to be applied nationally, not on a state-by-state basis. California may create more trouble for itself by limiting the kinds of cars its residents can purchase. The only way this will work is if other states follow suit, thereby forcing auto manufacturers create all their cars based on those few states' stricter standards.
So far automakers have said if they must comply with stringent standards they will have to reduce the production of the larger vehicles, which have traditionally been more profitable. The industry fears that scaling back on these models would cut the little profits that exist. But the demand for these vehicles is going to fall anyway. While demand for some hybrid cars has fallen since gas prices dipped, that demand will return in force as soon as prices climb again, which they inevitably will. If we're looking for long-term success then we have to look at where gas prices will be in the future, not where they are now.
When gas prices return to being more than $4 per gallon, which, given the nature of nonrenewable resources, is inevitable, we will want more fuel-efficient cars. Furthermore, if the stricter standards do force the industry to cut back on the production and thus limit consumer choice, of course consumers won't tolerate this.
But this won't be a problem - it will be a beneficial impetus. Instead, consumer demand will force auto manufacturers to design new cars, which comply with the new standards. Rather than kill the industry as some have feared, this will ensure their long-term survival. If we fail to follow through now, all we're doing is prolonging the problem.
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