Bloomberg Anywhere Remote Login Bloomberg Terminal Demo Request


Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.


Financial Products

Enterprise Products


Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000


Industry Products

Media Services

Follow Us


More Miles to the Gallon, Please: Why Detroit Should Worry

At the Chicago Auto Show on Feb. 6, General Motors (GM) exec Gary L. Cowger was defending the fuel economy of GM cars and trucks to reporters, saying his company was adding technology to make conventional cars more fuel-efficient. But Cowger was cut off by Vice-Chairman Robert A. Lutz, who argued that the only way to make Americans buy fuel-efficient cars was to tax gasoline until it reached European price levels--$3 to $4 per gallon. The Corporate Average Fuel Economy (CAFE) program doesn't work, he said. "What we're doing is analogous to fighting national obesity by forcing clothing manufacturers to make only small sizes," Lutz snapped.

Lutz's blunt talk reflects the complex political equation facing the Administration as it tries to move forward with the first increase in fuel-efficiency standards in a generation. The President was strongly backed by the auto industry in 2000, and he's trying to curry favor with auto workers in key states such as Michigan, Ohio, Pennsylvania, and Tennessee. White House political strategists, however, would like to use the upcoming CAFE debate to burnish the President's credentials as a nonpartisan steward of the environment.

By distancing himself from corporate interests, Bush might be able to neutralize some of the flak he took for having developed an energy plan in concert with industry leaders, especially officials of Enron. And he could claim he's helping the country escape its dependence on Mideast oil.

No one better reflects the Administration's split on CAFE than Transportation Secretary Norman Y. Mineta. As a Democratic representative from California in the early '90s, he championed higher fuel-economy standards. Now, serving a GOP President, Mineta is urging Congress not to set specific miles-per-gallon targets in law. Instead, he wants Capitol Hill to give his agency the authority to "reform" fuel-economy levels administratively.

Key lawmakers aren't convinced. Senators John F. Kerry (D-Mass.) and John McCain (R-Ariz.), Bush's sometime nemesis, want Congress to mandate big changes. Kerry would boost the standard for cars and light trucks to 35 mpg by 2013. McCain favors a 36-mpg level by 2016. Currently, carmakers must sell a fleet of vehicles that has an average fuel economy of 20.7 mpg for trucks and 27.5 mpg for cars. Kerry and McCain will prod Bush to take tougher action.

So will the environmentalists, who accuse the White House of hiding a pro-industry bias behind a thin veneer of talk about raising CAFE standards through the time-consuming use of "sound science." Gripes one enviro lobbyist: "They know what to do on [drilling in the Arctic National Wildlife Refuge], but they need time to study CAFE."

Meanwhile, the auto industry is pulling out all the stops to prevent Congress from raising CAFE, according to an internal memo obtained by BusinessWeek. The memo, from Lutz and Cowger, urges members of GM's product-development team to make phone calls and send letters to their senators complaining about higher CAFE standards, which the executives say would have a "devastating effect on GM's competitive position and the health of the entire domestic auto industry."

Detroit has held the trump card for two decades as many Dems tried to stay in the industry's good graces. But now, with Bush eager to be seen as kinder and gentler on environmental issues and Congress set to take up CAFE standards in late February, carmakers could be headed for a wall. Ronald Reagan has plummeted in the annual President's Day poll asking Americans to choose their greatest leader. The reason: GOP partisans who have been behind the Gipper have switched to George W. Bush. The Prez rocketed from 0% to 13%, just behind second-place finisher John F. Kennedy, according to an ABC poll. Reagan slid from 18% to 8%, tying for fourth with two chiefs Republicans love to loathe, Franklin Roosevelt and Bill Clinton. Landslide favorite: Lincoln. Rescue workers who risked their lives at the World Trade Center have had their images plastered on products from T-shirts to posters. Now they're getting political. The Sierra Club recently began airing radio ads that feature Portland fireman Ed Hall, who helped at Ground Zero, arguing against drilling in the Arctic National Wildlife Refuge. Hall was one of five firefighters who welcomed Bush to Oregon in January. Hall says he told Bush: "Mr. President, it really is an honor to meet you, but you don't have to drill for oil in the Arctic." To win a one-vote House victory for fast track trade authority last December, Bush agreed to demands from textile-state Republicans to restrict Caribbean and African imports. But in Washington, you give with one hand and take with the other. Bush is raising the quota for clothing from Pakistan by $476 million over three years. Reason: A thank-you to President Pervez Musharraf for his support.

blog comments powered by Disqus