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196con-EV(Bush pro OIL/Auto, Automakers seething about EPA, JP hybrid tax)-long

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  • Bruce EVangel Parmenter
    Mar 3, 2001
      con-EV(Bush pro OIL/Auto, Automakers seething about EPA, JP hybrid
      [The Internet Electric Vehicle List News. For Public EV informational
      purposes. Contact publication for reprint rights.]
      --- {EVangel}
      The Auto Prez?(Brief Article) James Cole 02/01/2001 Automotive
      Industries 67 Copyright 2001 Gale Group Inc. All rights reserved.
      COPYRIGHT 2001 Cahners Publishing Company

      George W. Bush will cater to the auto industry as he launches his new
      administration. He may even be an activist on certain issues.

      Auto industry executives supported George W. Bush for president by a
      nine-to-one margin over Al Gore. Their prayers were answered a few
      weeks ago when Bush was sworn into office. No longer will the fear of
      a Gore Presidency, with its environmental heavy hand and nightmares of
      80 mpg SUVs, cause them to lose more sleep than they normally would
      amidst a declining sales year.

      Bush's auto industry supporters truly believe they have a new ally in
      the White House. But now the pressure's on him to deliver on the many
      promises he made to reduce the regulatory burden on auto
      manufacturers. He's assembling his team just as domestic economic
      confidence is beginning to erode, the U.S. trade deficits with Japan
      and China are at their highest level in recent history and the former
      Big 3 domestic automakers' last bastions of uncontested profits -- the
      SUV and fullsize truck segments -- are under assault by strong new

      The new president will face many challenges over the next four years,
      including a Congress that's almost as equally divided as the nation.
      The auto industry's watching closely. Based on Bush's election
      platform, his Cabinet appointments and other recent developments,
      Automotive Industries offers the following prediction on how he'll
      drive the nation on auto issues.

      Fuel Prices
      Bush surprised many by nominating Michigan Senator Spencer Abraham to
      head the Department of Energy This was a relatively low-profile
      position in past administrations, but that's no longer the case. Last
      summer's skyrocketing gasoline costs, the 100 percent jump in home
      heating oil and natural gas, and the recent power crisis in California
      have made the energy department and its new boss lightning rods for
      public criticism.

      Abraham will take the lead in expanding oil and gas production. This
      was one of Bush's platform points. Abraham's background in automotive
      issues will play an important role in developing U.S. energy policy.
      Bush needs to build a strong coalition of Midwestern and Eastern
      legislators to tackle the environmental issues they will raise before
      they allow drilling in sensitive areas such as Alaska. The price
      increase will provide a basis for getting their political support.

      Look for Bush to expand tax credits for domestic oil exploration and
      develop a plan to explore a variety of domestic opportunities. Also
      expect him to increase pressure on America's allies to increase
      production in order to reduce fuel costs.

      OPEC already has discussions under way to set a higher price target in
      the spring. For U.S. drivers, this will mean a gasoline pump-price of
      $1.80 to $2.00 per gallon. The higher prices will put pressure on
      automakers to raise the fuel efficiency of full-size SUVs and expand
      production of clean-diesel vehicles -- a challenge, given the daunting
      Federal Tier 2 and California LEV2 emission regulations.

      CAFE Standards
      Lower fuel consumption has never been a high priority of most
      Americans. And Bush believes that government should not interfere with
      consumer choices in the market economy. That includes regulating the
      size or type of vehicle.

      During the last eight years, preventing stiffer Corporate Average Fuel
      Economy (CAFE) standards was a bi-partisan effort in Congress. Many
      legislators took a political hit from a vocal minority who want a
      higher CAFE. As fuel prices creep up, however, there will be
      tremendous political pressure to increase CAFE standards, particularly
      on light trucks.

      Bush supporters will contend that fuel price increases are a product
      of environmental restrictions on the type of fuels that can be sold.
      They'll seek to eliminate these restrictions. It would be very
      unlikely that he would support large CAFE increases. Bush knows that
      price increases could be moderated by decreasing consumption. Auto
      industry executives have promoted the adoption of a tax credit for
      highly fuel-efficient, mainly hybrid-electric vehicles. Look for Bush
      to support that measure and attempt to eliminate state-by-state
      programs that mandate the sale of pure electric vehicles (EVs). The
      added benefit would be to garner him political support on both the
      East and West coasts.

      Tax Cuts and Interest Rates
      Vehicle Safety
      The auto industry is facing the strictest rules ever on automotive
      safety. The rollover rule will have a dramatic impact on consumer
      perception of the safety of their highly profitable SUVs. The new rear
      impact rule will force auto companies to redesign most vehicles and
      reengineer fuel tank location and design. The Transportation Recall
      Enhancement, Accountability and Documentation (TREAD) Act will force
      an increased number of voluntary recalls to be conducted at an earlier
      time. Automakers will not risk violating the act to avoid the public
      relations meltdown that occurred last summer.

      Bush will not take an active role in eliminating these new regulations
      and amending any of the legislation. The auto industry played an
      active role in promoting the TREAD Act and it will be forced to comply
      with the standards set in the legislation.

      Bush may take an active role in shaping the regulations as they are
      written. His choice in the head of NHTSA and DOT will determine their
      direction. He has nominated Norm Mineta to head up DOT. Mineta was the
      head of the transportation committee in the House of Representatives.
      He is a consummate professional who has had to balance the need for a
      national transportation system, while at the same time promoting urban
      public transportation systems such as subways and buses.

      Look for Bush to slow down implementation of new safety regulations,
      as the auto industry struggles to meet new regulatory demands in a
      weaker economy.

      The U.S. and Japan will be entering into new negotiations to restrict
      the importation of Japanese vehicles into the U.S. The director of
      JAMA, the Japanese automakers' trade group, has stated that consumer
      demand for safer vehicles which pollute less should override any
      concerns about setting arbitrary sales targets. He wants the pact to
      expire without any new restrictions.

      In reality, the Japanese auto industry has gotten around the mandates
      by moving production facilities to North America. Bush could get the
      attention of the former Big 3 by taking a firm stand on imports. The
      monthly trade deficit is now $33 billion, the largest ever. Most of it
      is in automotive parts and vehicles.

      Bush says he believes in free-but-fair trade. In the campaign, he
      emphasized that all nations would be better off if they reduced trade
      barriers. Look for his administration to force concessions to increase
      the sale of automobiles, auto parts and agricultural goods in Japan.
      He will demand the elimination of trade restrictions. Negotiations
      will be intense, but Bush could carve out a victory that will win the
      support of autoworkers and farmers.

      Bush is also promoting a move toward a weaker dollar, thereby making
      U.S. goods cheaper to sell overseas.

      The Environment
      The auto industry faces a shootout on environmental issues almost
      every day. California is pushing ahead with its electric vehicle
      mandate and even proposing doubling the standard in the next decade.
      The state will allow hybrid vehicles to substitute for EVs and General
      Motors Corp., Ford Motor Co. and Daimer-Chrysler are rushing their
      hybrids into production.

      Automakers are also seething about an EPA proposal to rate the
      environmental performance of vehicles. Many environmentalists are
      pushing to include their fuel economy, mobile emissions level,
      recycled content and continued emission performance over the life of
      the car. Each vehicle would receive up to a 5-star rating. With the
      prospect of consumers seeing an environmental rating and crash rating
      on a new vehicle's sticker, auto executives are seeing stars over this

      Bush campaigned against over-regulating business, but he also adopted
      a surprising number of pro-environment policies, including supporting
      the Tier 2 standards, and continued research into global climate
      change. He opposes the Kyoto protocol, which exempts SO percent of
      the developing world from new restrictions.

      Many of his strongest supporters have already developed an agenda to
      change the way environmental rules are written, including requiring a
      strict cost-benefit analysis which would in essence prevent over 80
      percent of the rules from being adopted and add three to seven years
      to the time required to complete a rule.

      Bush's nominee to head the EPA is Christina Todd Whitman. Although her
      record as New Jersey governor was heavily criticized early on by
      environmentalists, her standing improved as she worked through many
      difficult waste cleanup problems. Whitman's appointment is now seen as
      moderate, given her progressive environmental record in New Jersey.

      Most of the new standards are required to be developed by law, so the
      Administration could slow their implementation. Look for the oil
      industry to support the elimination of lower sulfur-content standards
      for diesel fuel. It may settle for slowing down their implementation.

      Environmental groups, however, were very successful at bringing the
      Clinton administration to task for falling to meet statutory
      deadlines. Do not look for a major change in environmental policy.
      When Al Gore ran as the environmental president, Bush tried to
      demonize him in the auto industry states and on the East and West
      coasts. Bush lost all of these states. He will take moderate
      positions, which will improve his environmental standing.

      The Not-So-Wild Card
      GM Vice-President Andrew Card, the former head of the AAMA, organized
      Bush's convention and is now working as his chief of staff. This gives
      the auto industry a direct connection in the White House. Card's
      experience as a legislator in Massachusetts, and as head of the auto
      industry's lobbying group, will give President Bush a great deal of
      insight into automotive issues.

      Bush will cater to the concerns of automotive states as he works to
      expand the support he received in the election. He will take
      aggressive positions on tax cuts, expanding the oil supply and
      reducing government red tape. Also look for him to adopt a regulatory
      moratorium for the first 90 days.

      The auto industry is well positioned to communicate with the
      executive, regulatory and legislative members of the new government.
      It will need Bush's help -- and get it -- in the difficult economy

      James Cole is CEO of Cole & Associates, an automotive and regulatory
      issues management firm with offices in Washington, D.C., and Detroit.
      He is not affiliated with any political party.
      Cahners Publishing Company
      Bruce {EVangel} Parmenter http://members.aol.com/brucedp
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