Why Would Gas Companies Be So Strongly Against Making Flex Fuel Cars?

I've often wondered about this. I was shocked with the automakers came out with a unified stand, vehemently against the Open Fuel Standard Act. Robert Zubrin gives a plausible answer in an article in National Review Online entitled, "A Conspiracy in Restraint of Trade." Here it is:

2007 Chevy Cobalt

In a previous article for National Review Online, I reported on how easy it is to enable the flex-fuel capabilities in modern automobiles, allowing them to run equally well on methanol, ethanol, or gasoline, thereby giving the customer fuel choice and, with it, a substantial opportunity for savings. For example, at current gasoline and methanol prices, the miles per dollar achieved by running my 2007 Chevy Cobalt on methanol is 40 percent higher than that possible with gasoline. This is not new technology: As extensively documented by Ford’s former director of alternative-fuel vehicle research, Roberta Nichols, the Big Three produced tens of thousands of highly successful methanol-gasoline flex-fuel cars for the state of California more than 20 years ago.

At one time, adding flex-fuel capability to a car increased its production cost by about $100. That is no longer true. Currently, all new gasoline-powered cars sold in the U.S. are flex-fuel cars, but only about 5 percent are being sold as such. The rest are being marketed with their flex-fuel capability disabled by their manufacturers.

This is a very curious situation. One may well ask, why should an automaker choose to disable a useful feature that it has built into its cars? It seems to make no sense for any company to take measures to degrade its own product. Furthermore, given the fact that the auto industry has a fundamental interest in low fuel prices — consumers have only so much they can spend on transportation, and it either goes for cars or for gas — why should it choose to cripple a capability that otherwise could serve to erode prices at the pump? It seems like a very bizarre policy — until you look at who owns and controls the auto companies.

The problem is that the automobile companies are not independent entities capable of pursuing their own interests. Rather, they are owned and controlled by organizations that are much more heavily invested in oil.

The largest automobile company in the world is Volkswagen. Who owns it? The answer is the government of Qatar. That’s right, the sovereign wealth fund (SWF) of Qatar, an OPEC emirate, owns 17 percent of Volkswagen — potentially a controlling interest — as well as 10 percent of Volkswagen’s Porsche subsidiary. One of the Qatar SWF board members, Hussain Ali Al-Abdulla, accordingly sits on the supervisory board of Volkswagen AG. Elsewhere in Europe, the same story holds. For example, the Kuwait SWF owns 6.9 percent of Daimler/Mercedes, 20 percent of Spyker/Saab, and 100 percent of Aston Martin, which it acquired from Ford for $450 million. The Abu Dhabi Investment Authority, one of the sovereign wealth funds of the United Arab Emirates, owns 9.1 percent of Daimler/Mercedes and 40 percent of Mercedes-Benz Grand prix, and has a $2.7 billion investment in Chrysler. In addition, the Abu Dhabi Investment Authority has a major position in Fiat/Ferrari, on whose board it is represented by its managing director, Khaldoon Khalifa. The government of Libya also owns 2 percent of Fiat/Ferrari, which in turn owns 52 percent of Chrysler.

What about the two biggest American auto companies, GM and Ford? The dominant positions in these companies are held by major Wall Street firms whose collective energy holdings exceed $700 billion. Thus, while the $9 billion these funds have invested in GM and the $24 billion placed in Ford are of great weight to the auto companies, the funds themselves are far more concerned about protecting their investments in oil.

It is thus futile to hope that, left to their own devices, these companies will do anything to endanger the ability of OPEC to loot the world. Rather, they will continue to protect the monopoly the oil cartel holds on the world’s vehicle-fuel supply. If the auto companies were free agents, they would act to break the fuel monopoly that is so damaging to their own interests and those of their customers. But they are not, and so they won’t.

The situation is a case of a conspiracy in restraint of trade, with the national interest at stake. It is not just a matter of saving consumers gas money. High oil prices severely damage our economy. Furthermore, as current events concerning Iran make clear, it is essential that the U.S. have copious alternative sources of liquid fuel whose availability and price are not determined by events in the unstable Middle East. This imperative provides strong justification for government intervention.

Unfortunately, rather than move to break the hold of the oil cartel on the management of the auto companies, the Obama administration has acted to reinforce it. When GM went bankrupt, the president appointed Wall Street insider Steven Rattner as his auto czar, charged with reorganizing America’s leading automaker. However, instead of forcing GM to implement flex-fuel capability across the board, Rattner fired GM CEO Rick Wagoner, who was making tentative moves in that direction, and replaced him with Ed Whitacre, a director of Exxon. Subsequently, Rattner moved Whitacre up to be GM’s chairman of the board, giving the CEO position to Dan Akerson, a managing director of the Carlyle Group, a Saudi-funded business partnership. Under this new “friends of OPEC” management, Wagoner’s earlier commitment to have half of all GM cars be flex fuel by 2012 was, not surprisingly, shelved.

Unless Congress passes legislation to force the opening of the vehicle-fuel market to competition from non-petroleum fuels, this situation is not going to be rectified. It is for this reason that the Open Fuel Standards bill (H.R. 1687, S.B. 1603), which would require that most new cars sold within the United States offer fuel choice, has been introduced into the House and the Senate with bipartisan support.

To explain the necessity for this bill for American prosperity and national security, a special event has been scheduled for February 29, from 1 to 3 p.m. in the Gold Room of the Rayburn House Office Building. Those speaking include former NATO supreme commander General Wesley Clark, former CIA director James Woolsey, myself, and Center for Security Policy director Frank Gaffney. Everyone concerned with the need for America and her allies to diversify their liquid-fuel supplies should urge their congressional representatives to send staff or come themselves.

As Adam Smith, the founding thinker of free-enterprise economics, wrote in The Wealth of Nations: “To prohibit a great people . . . from making all that they can of every part of their own produce . . . is a manifest violation of the most sacred rights of mankind.” In restricting their vehicles to use only the fuel offered by the Islamist-led oil cartel, the automakers are preventing America from making use of her copious non-petroleum energy resources. Despite being bailed out — in some cases repeatedly — by the public purse, the automakers have shown little public spirit. Rather, they have acted in accord with the larger portfolios of the cartel-linked or conflicted organizations and individuals who have bought into or been placed into their management, to the great detriment of not only their own customers and retail stockholders, but the economy and vital national-security interests of the United States.

This is an unacceptable situation. Congress needs to act.

— Robert Zubrin is president of Pioneer Astronautics, a member of the Steering Committee of Americans for Energy, and the author of Energy Victory: Winning the War on Terror by Breaking Free of Oil. His next book, Merchants of Despair: Radical Environmentalists, Criminal Pseudoscientists, and the Fatal Cult of Antihumanism, will be published by Encounter Books on March 6.

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Automakers Ungrateful to Taxpayers for Bailing Them Out

Instead of doing something to help out the taxpayers — like making it possible to lower gas prices — automakers have chosen to lazily satisfy their own selfish wishes, and the American taxpayer be damned.

It would cost slightly more to make flex fuel cars. They already do it for Brazil, and they don't charge Brazilians one dime extra for their flex fuel cars. It costs car buyers nothing. But they don't want to do it for their own fellow countrymen because it might be slightly inconvenient. Yes, it could give us a break at the pump, cleaner air, energy independence, a healthy economy, and national security, but they would rather not spend $70 or less per car.

How many billions did we give them when they needed it?

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Automakers Want Americans to Pay $5 a Gallon for Gasoline

Last week, automakers decided to try to destroy the Open Fuel Standard Act. In other words, they chose to keep us relying on petroleum alone to fuel our cars, the price of which is determined by OPEC.

For many reasons — turmoil in OPEC nations, more difficulty finding and developing new oil deposits, greed, and a desire to bring the West to its knees — it is inevitable that gasoline will reach $5 a gallon. Goldman Sachs believes it will happen this summer. But it will go to $5 without a doubt, and much higher eventually.

This could be avoided if gasoline had any competition. The competition could be easily and cheaply allowed if the automakers were willing to spend the $70 or less per car to make them all flex fuel right now. Within three years, a significant enough number of pumps serving alternative fuels would be widely available and forever after protect us from the domination of OPEC's whims.

But automakers aren't having it. National security? Nah. Energy independence? No thanks. We'd just as soon keep doing what we're doing and to hell with America.

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American Automakers Continue to Sell Second Rate Gas-Only Cars That Keep Us Dependent on Foreign Oil

The following is a response to American automakers who recently voiced strong opposition to the Open Fuel Standard (which you can read about here).

American automakers could, with only minor upgrades, give us cars that would effectively end our country's dependence on foreign oil by giving the driver the option to buy American made alcohols in addition to gasoline.

We have hundreds of ways and thousands of ideas about how to make alcohol fuels out of everything from plant waste to industrial waste to all the stuff we throw in the trash. Every dollar paid for American alcohol fuel strengthens our economy: Every dollar to foreign oil weakens our economy. Wake up, Detroit! You could be leading the way to energy independence by adopting an Open Fuel Standard. You could be making cars that give drivers freedom of choice at the pump. You could give me a car that keeps more money in my pocket and the money I spend would go to American businesses, creating American jobs, and helping our economic recovery, not making the men of OPEC — who hate the West and our freedoms — stronger.

What's with these second rate, inferior gas lines that can't handle alcohols? You make flex fuel cars for Brazil. Why not for the USA? I want a first rate fuel system. I want to be able to use any alcohol fuel. It's good for me. It's good for our economy. It's good for the world's economy. So, ultimately it's even good for your sales.

Why continue to make cars that slow our economic recovery and threaten our national security by making a gas-only fuel system that makes us slaves to whatever price OPEC mandates. Gas-only cars are wonderful for Big Oil and OPEC who are making obscene profits while the rest of us do without.

Man up, Detroit. You could help save the free world. Give us cars that give us freedom at the pump. Give us cars that create competition in the fuel market place. Give us the best cars you can. It's the American way, remember? Act like American men, instead of good little boys doing what's best for Big Oil.

How can we become energy independent when our own American car companies keep making gas-only cars? Your gas only cars are draining our economy, draining our power, threatening our national security, because right now, if OPEC did another embargo, we'd be in danger of a recession/depression/chaos like the world has never seen. All these gas-only cars leave us too vulnerable.

OPEC is a group of economic terrorists. The first embargo was punishment for the USA for not doing what OPEC wanted. Yet the good old boys of American car makers keep making gas-only cars that keep us weak and dependent on a fuel controlled by foreign governments?! You've got to be kidding. Why in the world would you be doing that? American car manufacturers are destroying our way of life with every second rate fuel system they sell.

Ever since OPEC's first embargo, the oil companies' profits have taken more and more of our paychecks, resulting in a declining standard of living. For the first time, your children will have a harder time making a living than you did. We have always been able to give our children a better world. But since OPEC began draining the world economies, each decade that passes leaves us with less than we had before.

Economic growth is hard when any gains go to fuel costs. We're paying a dollar more a gallon than we were at this time just last year. During the worst worldwide recession, the price of oil has doubled in the span of two years. And you automakers keep building gas-only cars?! Are you crazy? Whose side are you on?

When fuel costs double, everything we buy goes up in price because everything has a fuel cost to get it to the store. Americans are paying more for everything because we have no choice but to buy oil, whatever the price, because our very own American car makers still build gas-only cars.

You fight the OFS bill because it mandates giving Americans cars as good as you give to Brazil. You object to a mandate, even though this simple, subsidy-free bill that would free the American people from OPEC's ability to mandate prices. Maybe that's the reason you drag your feet? Do you want the American taxpayers to give you even more money? What do you want? A thousand-dollar-a-car incentive for a $70 upgrade? Is your greed appropriate? Didn't we bail you out? We helped make your companies strong again: Shouldn't you be doing something to help our country grow strong again? Shouldn't you be doing everything you can to help our economy recover as quickly as possible?

What do you gain by dragging your feet instead of stepping up to the plate and doing what needs to be done? Your gas-only cars drain us so bad we soon will not be able to afford your cars! Your gas-only policy doesn't even work for you, much less our country!

Gas-only cars mean no choice at the pump which means today, in just one 24-hour period, billions of dollars left our American pockets for foreign lands. Tomorrow billions more will leave. We are hemorrhaging huge fortunes because we have to pay whatever OPEC dictates. Get a grip on our situation, Detroit. We now spend more on foreign oil than our entire military defense budget. You automakers need to man up to your responsibility in this. You make it all possible. We pay whatever OPEC mandates because you keep building gas only cars. You hold the system in place every day you delay upgrading your fuel systems. Every gas only car you make will continue to drain our economy for the next 18 years of use.

American cars are the foundation of OPEC's ability to drain us. You could help us keep those billions a day here in our economy instead of giving our hard-earned money to the men of the OPEC nations, a group of men who rule others through force, who are ruling us by force. Man up, Detroit! You can divert all that money back into American hands.

American automakers have an opportunity to be economic heroes. You could, quite literally, can help save the free world from economic ruin just by giving us cars that give us freedom to buy American fuels, not just of foreign oil.

Gas only cars make us dependent on foreign oil: Flex Fuel cars make us a free people again. Man up, Detroit, and give us a freedom we haven't had since Ford made the first Model T. Give us cars that make us free, not gas-only cars dependent on OPEC. Wake up, Detroit! America needs you. Cars made in America should be good for Americans, not OPEC, not Big Oil.

Cars made in America should be the best cars possible. Quit selling second-rate, gas-only cars. Make "made in the USA" mean something again.

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