Grant's Auto Rants: The State of the Big Three Address

The President's State of the Union Address last week leaves some unanswered questions about the future of our nation's energy policy and one can't help but wonder where that leaves the domestic automakers and their strategies.

At first glance, it seems that the Bush administration has made a classic Detroit U-turn on what can only be characterized as a major diss when he reluctantly met the heads of the Small, Medium, and Large Three back in November. It was obvious then (actually when the President first started blowing them off) that the perennial relationship with Bush (Big Oil) and Detroit was on the outs. The president has created enough of his own issues, the last thing he wants is to further draw attention to items like healthcare and global competitiveness for which it seems he has little to say. This, at a time when foreign automakers are building plants, investing in jobs and taking the environment spotlight.

The U-turn came in the form of an endorsement for E85 initiatives, for which really only the domestics have embraced with any significance. Now that global warming and the environment are the very short list of policies that matter, Bush wants to appear the savior. And while this may seem like tossing our domestic autom industry a bone, there are significant undercurrents that complicate the gesture considerably.

The E85 initiative in the US in not without controversy, for starters. Many cite the subsidies used to get this industry moving, the net energy savings the fuel offers, and the complexities and validity of devoting our agricultural resources to produce so much corn. It is well known that cellulose-derived Ethanol may offer a more efficient alternative.

Additionally, many viewers are highly critical of the current administration, in general, and claim to either not trust what the president says at all or see through his claims. Were I one of the Big Three, I am not certain I would want to associate with this administration in any capacity.

Finally, the most significant claim by the president in his address was the new "20% in 10" idea where he proposed that Ethanol will be at the center of his plan to reduce oil consumption by 20% in 10 years. While an environmental conscience would be a nice thing to see from this president, it somehow just doesn't fit coming from someone so deep in the Saudis' pocket. As a matter of fact, when you team this speech with the cold shoulder he gave Detroit and everything else that he has going on, it really is difficult to take seriously at all.

E85 aside, it is the Big Three (with the high concentration of SUV and truck products) that may actually suffer the greatest from the president's claims. They may have been given a short-term reprieve, but the fact of the matter is, the domestics have said flat out that the president's token fuel efficiency goals will be difficult to achieve on the heavy side of their fleets. Not that the current alternative is the knight in hybrid armour you might think it is. Though they have much better PR, a recent study from CNW Market Research illustrates how a Hummer may actually use less net energy over its life than some hybrids. It is also understood that even the hybrid technology has in part been used not as a way of increasing mileage, but as an increase in horsepower and performance ratings.

Were this a large automotive poker game, hybrid technology (and its limitations) would probably measure out to three 8's with E85 being a pair of 4's. Neither technology represents the full house we need, but at least the winds of change (quite literally) are strong enough to make a president with roots neck deep in crude, take seriously.

In the words fittingly used by environmental activist Bono, "Still haven't found what I'm looking for" applies well to the modern car driver, but at least we are actually searching.

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Grant's Auto Rants

The State of the Big Three Address

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