Auto industry and Big Oil trading blows
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It would seem that if there are two parties who really shouldn't be playing the blame game regarding the world's energy problems: oil companies and auto manufacturers. That certainly hasn't stopped either from taking shots at each other in the media, however. Late last year, ExxonMobil apparently started running print ads that took automakers to task for a lack of fuel efficiency improvements in the past twenty years. In response, Chrysler VP of communications Jason Vines decided to strike back with a post on the company's blog.
We're not quite sure what to make of this fight so far, but it seems like both sides are waging a war in an attempt to win public sympathy that simply doesn't exist. It seems rather strange that ExxonMobil is upset that it has turned record profits recently largely on the back of the automotive industry, and indeed, it would be hard to argue that Big Oil has been proactive in bringing new energy solutions to the market. Of course, some critics would charge that carmakers haven't exactly been aggressive in their development of fuel-efficient vehicles. In both cases, the consumer has ultimately been in charge of the decision-making, but blaming customers has never been a successful marketing tactic.
If you'd like to take a side, feel free to do so in the comments. As for us, we'd rather see cooperation between automakers and energy suppliers to improve the situation.
[Source: The Detroit News; image from Frank Galasso]
Reader Comments (Page 1 of 2)
RossL 10:18AM (4/12/2006)
I can't believe the VP Communications of a major corporation would write that. He's accusing oil industry execs of pocketing exorbitant salaries? What do auto industry execs take home - $60K a year and the use of a company car???? As for developing alternative fuels - if there's so much money in that, why doesn't DCX get into the business? The answer is painfully obvious. Besides, they're too busy selling gas-guzzling SUVs and monster V8-powered cars. Yes sirree, a veritable bunch of tree huggers... Bleh.
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JZeke 10:33AM (4/12/2006)
It is pointless to take sides in this particular battle, the consumer doesnt benefit from either industry... if anything we're enslaved to them. We dont have alternatives.
Where have all the trains gone? How long til we have clean energy? Are there ever going to be pleasant alternatives to buses that address how suburban Americans live and work?
Oil will forever be an evil empire until we find a better way to make energy. And the auto industry will always be a profit-driven industry irregardless of how many cool sports cars they give us.
But im not holding my breath for any cooperation between the two.
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doug 10:37AM (4/12/2006)
It's like blaming McDonald's for you being fat. What I question is the level of profits at the oil companies. If the price of oil goes up, it costs them more to buy, then they charge us more for gas. Shouldn't their profit margin be about the same, considering that the oil companies buy most of the oil they refine? Or are all those profits coming from the increased value of the oil they refine from the wells that the companies own?
in my opinion, this is just the government using "market forces" to up the price of gas to encourage conservation, since gov't doesn't have the guts to just hike gas taxes. We'll either get used to the higher prices or conserve.
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mj 10:40AM (4/12/2006)
You're all clueless, and the train comment is the worst.
We're electing people specifically to keep our taxes low, especially gas taxes - which in other countries is used to fund trains. Public transportation never pays for itself - the airline industry was de-regulated, but is still helped along in big ways, which we've never given to Amtrak (which has a gov't created monopoly, alone in the transportation world of the US!).
The US consumer and voter are to blame, not industries. We're buying their cars, duh. And we're voting for lower taxes. There's no evil empire here, just convenience, and the economist's rule of supply and demand... And democracy. That's why the founding fathers wanted a true Republic (not true democracy) - because most voters vote for short-term reasons, not long-term reasons.
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Marc Ricks 10:43AM (4/12/2006)
It is impossible for me to believe that ExxonMobil would want to start blaming the auto industry for poor fuel efficiency when they cleared $8 billion in profit last quarter!! They blame the Iranian situation for the rise in the fuel prices but we don't buy oil from Iran!! We are the only nation on this earth that boycott's Iranian oil. When hurricane's Katrina and Rita hit, the BigOil could have said, "For the sake of the country and for those most impacted by these natural disasters, we'll cut our profit margins by 20%." They didn't, and that's okay. Just don't start throwing rocks in a glass house.
Now, the automakers are at fault as well. The technology exists to make vehicles get exponentially better fuel economy. Toyota has proven this with the 3rd generation Prius coming in 2008 (nearly 100 mpg, with improved acceleration). This technology is not hard to come by.
You know, it hasn't been in my lifetime but I've heard that there was a time when taking personal responsibility for the sake of your character/integrity (and not blaming someone else for all your problems) was as important as the air you breath. It must have been nice.
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David 10:44AM (4/12/2006)
Consider this with regard to automotive fuel economy: those of us who are old enough or who are auto buffs with an interest in automotive history use to think of the 60's as the golden age of muscle cars and big horsepower. Yet, inspite of three major spikes in oil prices since the '60's (1973, 1979 and today), and inspite of three major wars in the Persian Gulf (Iran/Irag, Gulf War, the current war), the heaviest and most powerful cars in automotive history are being built and sold now. It is as if there is no connection between the fragility of the oil supply and the use of oil. What makes this worse is that the vast majority of people who drive heavy, powerful vehicles, or for that matter powerful, lighter vehicles, rarely use the towing capacity those vehicles have, their off-road capability , nor do they use much of the performance envelope. In the 1963, if you wanted a car that accelerated to 60 mph in under 6 seconds, you bought a fuel injected Corvette. Today, the Subaru Forester (!!!) is quicker than that Vette.
As for the customers demanding this; look; people need to drive and they'll drive what the automakers build. They did that in high horsepower eras and low horsepower eras like the 70's. It's a lot like television. Peole will watch. They'll watch some shows more than others but they'll watch. It's not as if higher mileage, lower power vehicles won't sell. I mean, what's the alternative to driving for most of us, walking to work from the suburbs?
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Kowell 10:54AM (4/12/2006)
Can't we just blame BOTH the Auto industry and Oil Producers? seing as auto makers make more and more big SUV and oil producers keep boosting the price bacause they "have to" yet keep building themselves the most extravagants of constructions.
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Dana 11:11AM (4/12/2006)
Who is to Blame?
Automobiles.... choices,many.
Energy costs....Choices,NONE!
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UH2L 11:19AM (4/12/2006)
#4 MJ is right on. Unfortunately, we collectively don't vote for what's best for our country or planet in the long term because it involves sacrifice on our part. So the politicians that want to make us face reality don't get elected because they don't make us feel good.
The oil producers and auto companies could have done more to create less energy usage, but so can the government to some degree for not increasing fuel economy standards for so many years. I think it's great that it's coming back to bite the party that opposes regulating business. Now they're paying for it, (and so are we, at the pump).
All I can say to consumers is "Drive efficiently". You probably don't need a gas guzzler and perhaps we could all just drive less.
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small-wee-wee 11:26AM (4/12/2006)
http://www.exposeexxon.com
Businesses have an obligation to themselves to make a profit but they also have an obligation to do no harm to the public.
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Doogs 11:34AM (4/12/2006)
Without getting into the argument (yeah, I think the oil companies could be doing a bit more to be good corporate citizens), I wanted to provide some context to ExxonMobil's "obscene" profit.
In 2005, Exxon's profits were $36 billion out of a total revenue of $360 billion. Profits = 10% of total earnings.
In 2005, Apple's profits were $565 million out of a total revenue of $5.75 billion. Profits = 9.8% of total earnings.
In 2005, General Electric's profits were $18.3 billion out of a total revenue of $150 billion. Profits = 12.2% of total earnings.
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Frankenstein Black 12:01PM (4/12/2006)
Oil Corps are scumbags plain and simple (record profits while gouging consumers and publicly claim woes), but the US Auto industry seemed to have forgotten there place. They let their Oil Pals fool them into thinking they were part of the club of greedy monopolists, all the while forgetting that there is actual competition in the auto industry (i.e. Japan, Europe, etc.).
And when I hear things like GM is partially banking their turnaround on vehicles like the 2007 Yukon Denali (60 Minutes), I dont know whether to curse at the a-holes running the company or cry for those poor folks that will loose their jobs. Yea, keep letting your Oil Pals talk you into making gas guzzlers, while Toyota continues to eat your lunch. Stop dicking around. Make that Turbo Ethanol, E100/Electric hybrid motor. And guess what? You could put variations of it in any vehicle that you want to, right?
NO ONE GIVES TWO FUXS IF YOU SOLD DENALIS FOR EVEN 10K! WHY? BECAUSE YOUR OIL PALS ARE FIXING TO GIVE IT TO US GOOD THIS SUMMER ($4, $5, $6+ Per Gallon) AND 9MPG JUST DONT CUT IT!
PEANUTS IN A BRIEF CASE IS, WELL, PEANUTS, IF YOU GET MY DRIFT. FACE IT, YOUR OIL BUDDIES DONT LOVE YOU HOS!
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Ian Lewis 12:04PM (4/12/2006)
MJ, I am not sure what you are referring to with: Public transportation never pays for itself.
Transportation in America was mostly free of gov't involvement until the "Good Roads" movement in the early 20th century. With that and the huge Highway bill Eisenhower passed in 1956 helped to destroy the railroads.
But, up until then, they were dynamic and growing...offering more trains to more places with better service decade after decade (starting in the 1850's).
The same thing could be said for the Street Cars or Trolleys in most cities. More Cars (i.e. trolleys) to more places with better service as time went on.
Again, same thing with the airlines.
Obviously the story is more complicated than that. Land Grants to the trans-continental railroads, gov't air mail contracts handed out in sweet-heart deals to certain airlines, etc.
But, by and large, transportation was at it's most dynamic when the gov't was least involved.
Ian
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Ian Lewis 12:06PM (4/12/2006)
MJ, I am not sure what you are referring to with: Public transportation never pays for itself.
Transportation in America was mostly free of gov't involvement until the "Good Roads" movement in the early 20th century. With that and the huge Highway bill Eisenhower passed in 1956 helped to destroy the railroads.
But, up until then, they were dynamic and growing...offering more trains to more places with better service decade after decade (starting in the 1850's).
The same thing could be said for the Street Cars or Trolleys in most cities. More Cars (i.e. trolleys) to more places with better service as time went on.
Again, same thing with the airlines.
Obviously the story is more complicated than that. Land Grants to the trans-continental railroads, gov't air mail contracts handed out in sweet-heart deals to certain airlines, etc.
But, by and large, transportation was at it's most dynamic when the gov't was least involved.
Ian
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Ian Lewis 12:06PM (4/12/2006)
MJ, I am not sure what you are referring to with: Public transportation never pays for itself.
Transportation in America was mostly free of gov't involvement until the "Good Roads" movement in the early 20th century. With that and the huge Highway bill Eisenhower passed in 1956 helped to destroy the railroads.
But, up until then, they were dynamic and growing...offering more trains to more places with better service decade after decade (starting in the 1850's).
The same thing could be said for the Street Cars or Trolleys in most cities. More Cars (i.e. trolleys) to more places with better service as time went on.
Again, same thing with the airlines.
Obviously the story is more complicated than that. Land Grants to the trans-continental railroads, gov't air mail contracts handed out in sweet-heart deals to certain airlines, etc.
But, by and large, transportation was at it's most dynamic when the gov't was least involved.
Ian
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Kowell 12:10PM (4/12/2006)
Just bring me an AFFORDABLE electric car and I'll buy it ANYTIME.... But I won't buy a hybrid civic, that almost twice the cost, for only a very basic fuel economy.... I'll make more profit just buying a less expensive car that uses a little more gas. Beside they say hybrid cars usually take 7 years to get back on your initial investment, but after 7 years, you gotta changes the batteries..wich cost a couple thousands..... oh yeah that's definitly a better solution.
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klaatu 12:24PM (4/12/2006)
A pox on both of their houses. Car companies have convinced Americans that they NEED these huge fat-assed SUVs to 'be safe'. Oldest marketing lie in the book, especially a hook for women and feminized men (but here we're touching on the cultural castration of men and the homosexualization of America). This of course played right in to the oil companies hands and they obviously did not discourage the huge vehicles.
Big oil? Time for comuppance. Maybe the Democratic party will sweep into power in 2006 and 2008. Then, the leftist commies will nationalize the oil industry and guess what will happen? Prices will DOUBLE to pay off some of the debt, we'll be told. But people like Gore don't think we "peons" deserve cars, not even Prius's.
Kind of like the Politburo of the Soviet Union - you know, 'everyone is equal' - just some were more equal than others and had Zil limousines while the average Russian (if he was lucky) paid 10 years wages in advance (cash) for a Lada, then waited 5 years for delivery - no choice of color - too bad if the technology was rehashed 1967. No pollution controls, air bags, no ABS, no power windows, no A/C, no power steering.
The tree huggers will get their wish with $8 a gallon gas if the Democrats come to power. They want to drive us out of our cars. Except there is no infrastructure in place to replace cars....
General Motors, Firestone Tire and Standard Oil colluded from the 1920's through the 1950's to buy up many of the light railways, inturbans and trolly lines in the United States, pull up the tracks, buy GMC inner city diesel busses with Firestone tires (of course), sell the business and then move to the next operation. This was proven in a court case in Chicago mid last century where the fine was levied at, I believe it was, $1 for each corporation. Of course, Chicago is where you can vote even when dead - as long as you vote Democrat. So it just might be that there was a little bit of corruption going on even in that trial... but the guilty verdict DID come in from the Jury. It was the judge who levied the penalties, of course.
Lady Justice is blindfolded, though, right?
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Kowell 12:37PM (4/12/2006)
Morale of the story... unless somebody here is hiding a working gas free car in his basement and is ready to comercialise it cheap.... we're screwed folks
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Puff Chippy 12:55PM (4/12/2006)
Amen #4, someone finally gets it. We vote for a dimwit who says he'll lower taxes then wonder why there's no money for schools, roads or healthcare. We buy SUV's at record numbers then bitch about pollution and how much we have to pay for gas. We shop every day at Walmart and then bitch about US corps shipping jobs overseas. The funny thing about free markets is that they tend to give you what you want so don't complain, you're getting exactly what you've asked for.
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Frankenstein Black 1:04PM (4/12/2006)
Yea - klaatu - its all of those no power having unics in the Democratic Partys fault. Dont you know that SWILL like that doesnt work anymore? People are waking up from their Pink Goop slumber and seeing todays reality for what it really is!
http://www.cbsnews.com/images/2005/04/25/image690875x.jpg
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