The leaders of the three US based automakers along with the CEO of Toyota's North American operations and the president of the United Auto Workers union faced off in an occasionally contentious hearing with a House Energy and Commerce subcommittee. The auto industry leaders acknowledged that fossil fuel consumption definitely needs to be reduced. The five also agreed to support regulation of tailpipe emissions of greenhouse gases. The fundamental disagreement is over the means to achieve these ends.

As might be expected, the car-makers don't want the entire burden put on them by simply jacking up the fuel economy standards. Realistically, any new regulations should also address the issue of boosting demand for more efficient vehicles. Therein lies the rub. The two means to achieve that would be tax credits for purchasing more efficient vehicles, or increased taxes on petroleum fuels. The former would be very complicated to implement and easily gamed, to make it ineffective. With Democrats currently in control of congress, the latter is also problematic, because any such move will surely be used beat up on them in the 2008 elections, and no politician wants to be seen as raising taxes, no matter how necessary it may be.

The biggest problem is that politicians like to try and find what appear to be simple solutions to complex problems. The most positive thing that came out of the hearing for the auto industry representatives was that Rep. Rick Boucher, D-Va acknowledged that new regulations would not likely be in place by July of this year. Both sides agreed that a much faster path to at least reducing foreign oil consumption, is dramatically increasing the availability of alternative fuels like ethanol. A lot of flex-fuel vehicles are already being sold, but few ever get anything but gasoline in the tanks due to the difficulty of finding E85. Hopefully, both sides were listening yesterday and will come to a more comprehensive plan to address the issues that we face.

[Source: Detroit News]

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