Detroit Meets with President Bush, Again

Facing mounting pressure from both automakers and environmentalists, President George W. Bush met with leaders of Detroit ’s automakers Monday, reviewing an assortment of alternative-fuel vehicles and briefly discussing ways to wean American motorists away from oil.


The session provided a series of photo ops for both the president and industry leaders, and spurred Bush to suggest “that American automobile manufacturers recognize the reality of the world in which we live and are using new technologies to give the consumers different options.”


But there appeared to be little concrete coming out of the meeting, especially for the auto industry, where executives fear proposed increases in federal mileage standards might prove more difficult – and costly – than they can handle.


The president himself has been promoting the so-called “20-in-10” plan, which would reduce U.S. gasoline consumption by 20 percent over the next decade. In a joint appearance on the White House lawn, Ford Motor Co. CEO Alan Mulally tried to put a positive spin on the meeting, saying, “We at Ford absolutely are supportive of the President's goal, both for energy efficiency and independence.”


Meanwhile, Tom LaSorda, CEO of DaimlerChrysler’s Chrysler Group, underscored his company’s commitment to alternative fuels, such as ethanol. “We've committed,” LaSorda noted, “by 2012, to have 50 percent of our production not only in E85, but biodiesel.”


But GM CEO Rick Wagoner noted that there was no real, in-depth discussion of how the president hoped to achieve his proposed reduction in gasoline usage. “Fair to say he is not necessarily advocating regulatory approaches but what kind of market-based approaches can we use,” Wagoner told reporters. “We didn't get a lot more detail than that, but that was the tone of the conversation.” MORE--


At least the tone was pleasant, the trio of executives indicated, following the second industry meeting with the president in four months. Prior to that, the Big Three’s struggling executives had spent several years unsuccessfully pushing for a Detroit-Washington summit. Prior to last year’s Democratic victories at the polls, the president had sounded several sour notes, at one point, chiding the American-based automakers and suggesting that they needed to make more relevant products if they hoped to halt the erosion of their market share.


The 20-in-10 plan would require an annual fuel economy gain of about four percent, with the average U.S. automobile’s mileage expected to climb to 34 mpg by 2017. But the president’s proposal isn’t the only one worrying the industry – including many of the imports. Even more aggressive fuel economy proposals have been touted in Congress.


Current federal rules provide the manufacturers some significant bonuses for expanding production of alternative-fuel vehicles, like hybrids and those powered by ethanol or biodiesel. But that wouldn’t be enough to get the numbers up high enough, industry spokesmen assert. So that might force manufacturers to scale back on the production of large trucks, V-8s and other big engines, and invest heavily in the use of lightweight materials, such as aluminum and plastics.


The costs could push into the tens of billions of dollars, according to industry leaders, like Wagoner, and could have a particularly onerous impact on Detroit , which is especially dependent on the sale of full-size pickups and large SUVs.


But with evidence supporting the concept of global warming continuing to mount, support for the auto industry’s stance is weakening, even at the White House. The question is whether manufacturers might be able to work out a compromise. One of the most popular alternatives would accept the need to boost mileage, but would base increases on vehicle size and weight. So already fuel-efficient small cars would be required to post the largest gains. On a percentage basis, the mileage would increase the same amount for a pickup, but in raw numbers, the gains would be far smaller.


Meanwhile, the industry leaders were also hoping to see the White House put pressure on the oil industry to assist in the transition away from petroleum. They have pointed out to the president that while there are more than 170,000 gasoline pumps in the U.S. , there are currently only about 1100 serving up the gasoline/ethanol blend, E85.


In fact, lobbyists from the American Petroleum Institute have argued that such a switch might prove both costly and risky, and should be governed solely by market forces.


It remains unclear when auto industry leaders will again meet with the President.


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