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Detroit's Complacency

THIS SUMMER, with gasoline prices reaching $2 per gallon across America, Ford Motor Co. will begin selling the first gas-electric hybrid SUV. True, the concept of a fuel-efficient sport-utility vehicle is an odd one, and an oddly American one, like low-tar cigarettes or low-carb bread. But it represents a milestone of sorts for the U.S. automotive industry, which has hitherto shown little interest in improving fuel efficiency. Unfortunately, even this milestone comes with a catch: The hybrid technology inside the new Ford Escape was actually patented by Toyota Motor Corp. Although Ford says it bought the patents for the sake of convenience, there is no question that Japanese engineers were there first.

That is hardly surprising, because American manufacturers have long lagged behind their Japanese and European competitors in producing more efficient cars. Partly as a result, overall fuel efficiency has been dropping in this country since 1988. Yet numerous studies over the past several years have shown that small technological improvements, even ones that do not depend on fancy hybrid engines, could make big differences in fuel efficiency. The Union of Concerned Scientists produced a proposal for an SUV that would be safer and get up to 36 mpg (up from the current average of 21 mpg). It would cost more too, but with fuel at current prices, consumers would recoup the investment in 3 1/2 years. Environmental Defense has also designed a modified SUV that would get up to 35 mpg and would pay for itself in under three years. So why doesn't Detroit do it?

The answer appears to be a combination of the auto industry's belief in its own lobbying power -- its confidence that the federal government would never adopt higher fuel-efficiency or pollution standards, however dependent this country became on foreign oil -- and its assumption that U.S. consumers simply don't care about fuel efficiency. In making the first calculation, they were right. The Clinton administration launched a heavily publicized project to build a highly efficient "supercar," but it never imposed enough of a gas tax increase to persuade consumers to buy such cars, or regulations to force manufacturers to make them. During the debate last year over the energy bill, the Bush administration and Congress made clear their complete disdain for fuel economy regulation.

In making the second calculation, however, the carmakers may have been wrong: Gas prices are up, and so are sales of the mostly Japanese hybrids now on the market. Indeed, as we noted above, the politics of the Middle East and the rapid growth of gas consumption in China may drive prices even higher. Not for the first time, Detroit finds itself behind the curve, so blinded by its anti-environmental bias that it may have actually missed a business opportunity. Politicians and consumers bear responsibility too. But if a real fuel crunch comes, this country's automobile manufacturers will be among those suffering.

What do you think? Leave a comment below.

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