Why Doesn't the Oil Industry Bail-Out the Auto Industry?

I read this commentary and it brings up some good points ... $25 billion isn't that much for the oil industry considering they make a *snip* ton off of the U.S. ... plus they would eventually get their money back plus interest since they would just be loans.

Here's some data. According to the Bureau of Transportation Statistics (pdf), Americans drove about three trillion miles last year. To fuel all of that shuttling around, according to the Energy Information Administration, we purchased about 142 billion gallons of gasoline from retailers. A little bit of quick division and we find that, in 2007, the average vehicle mile was travelled with a fuel efficiency of 21 miles per gallon. Kind of pathetic.

At the same time, in 2007, the average gallon of gasoline ran about $2.80 – which is to say that Americans spent something like $400bn on gasoline last year alone. The EIA further reports that, in 2007, "distribution, marketing and retail dealer costs and profits in 2007 were 10% of the gasoline price". Just for fun, let's guess that "profits" accounted for 62.5% of that 10%. Well then: $400bn x .1 x .625 = (drumroll) $25bn! Let's see ...where have I heard that number before?

Overall, the oil industry collected $155bn in profits in 2007. That's in no small part (about 16% if this math is right) thanks to a decades-long lobbying effort to keep vehicle fuel standards as low as possible, which, as collateral damage, has made the American fleet uncompetitive in an era of high oil prices. That, in turn, is one (a big one) of the many reasons the auto industry is sitting on the precipice of a major collapse. And if it needs $25bn to stay alive, I can think of one place where they can find that kind of money.

But, of course, Detroit hasn't (and won't) ask Big Oil to bail them out. They've asked taxpayers – or, more specifically, the interest-group-beholden men and women in the US Congress who supposedly represent the taxpayers. They're the ones who will decide on the terms of an aid package. As they devise one, they should keep in mind the oil industry's role in the auto industry's woes

Source

Hmmm wow at first glance I gotta say it makes sense.

I will investigate the article some more.

reply to post by jjkenobi


yeah that's what i thought ... if the oil industry would do this it would a lot more $$ in their pockets .... and i'm sure they're "hurting" for it since oil is so low

as per the topic, that would just make too much sense, now wouldn't it?



[edit on 20-11-2008 by warrenb]

how about putting a $0.05 tax per $1.00 on every $1.00 sent to Mexico via western union or other means






www.diggersrealm.com...

Sounds like it would be a smart move.

Another question or two.

People arent buying these vehicles anymore mainly because the price of oil and gas was so much right?

Why not allow for more drilling? That would keep the price of oil and gas down and more people would be more inclined to buy these vehicles.

or

We could bail them out only if the government says that they have to produce fuel efficent cars. If they don't do this within 5 years then all CEOs who accepted the money will be sent to jail for treason. That would incude all CEOs within that 5 year time frame.

Starred and flagged .just for making sense!

Although it makes complete and udder sense... What orginization wold have the stroke to pt it in motion?

Big oil's been putting so much money in everyone elses pocket but you know... they forgot mine

Supply and Demand. The auto companies Are working with Big Oil. If the Saudis and the other oil producing nations wanted to drive the price of gasoline back up, they would cut supply. They've mentioned it in past articles. It could be extremely low so the public buys the gas guzzlers that the Big 3 produces. That's where they lost the battle right there the large SUVs and Trucks that have been targeted and viticms of slander and high fuel prices. Just a thought.. If the gasoline prices soar again after this BIG 3 BK TERROR TERROR 911 TERROR FAIL BANK FAIL BIG 3 TERROR # is over maybe maybe.

Maybe that might give the impression that the US auto industry has been churning out gas guzzling clunkers for all these years, in cahoots with the oil industry.

One thing I have noticed over the years though is that cars we have over here in Europe, are often available over in the US too but with bigger engines with considerably higher CO2 outputs and lower mpg figures. Surely, if the technology is available for mass produced cleaner and more efficient engines here, they should be an option there too?

Perhaps to justify cuts in Research & Development? Thereby further stalling non-petroleum based vehicles? At least it sounds like a good conspiratorial excuse, off the top of my head. Though after watching Who Killed the Electric Car?, I realize they don't need an excuse.

reply to post by TravelerintheDark


i see the point you're trying to make about the possible conspiracies that would come out and ya they don't really need an excuse ... but you have to admit it makes complete sense for the oil companies at least and it also saves taxpayers from paying more taxes to finance another bailout ... idk it just seems like it would benefit both the car and oil industry

reply to post by baseball101


My own sense of fairness and logic agrees with you completely.

I tossed the previous idea out there, really, because it crossed my mind, not out of need to be negative. And there's another, perhaps far more plausible, reason why the oil companies don't, or need to, care. They don't need new cars on the road to sell their product. They'll make just as much, perhaps more in the long run, having folks driving the same car longer.

But...

This also just crossed my mind: How about a lawsuit claiming taxation without representation? We are being taxed to support private corporations, in which we are not represented.

Anyone think this could work?

The reason this won't happen is because it would finally expose a commonly held (and touted as being fact) misconception that it is John Q. American and his love of automobiles that's using up all the oil and, in turn, poluting the environment. In reality, it is the manufacturing & energy sectors that use the majority of the oil imported into this country. Notice that the early days of this recession, when it was primarily affecting the public and their family budgets, the price of oil was still climbing. It wasn't until mid summer when the manufacturers started slowing down production and the energy companies weren't using as much fuel because there was no heating demand that the prices of oil began to decline. In truth, the fact that oil continues to plummet even while energy demand for home heating is ramping up for the winter indicates just how miserable the manufacturing sector currently is. Their decreasing demand is more than offsetting both the demand for gasoline AND the increasing demand for energy production and home heating needs. If that fact was made public and discussed right now, I believe that we'd see an even worse CHristmas shopping season because it would frighten the hell out of anyone with half a brain.

I believe that we're seeing a concentrated effort right now to tenuously hold things together as much as possible leading into the holiday shopping season. By mid to late December (after the brunt of the Christmas shopping has been done), we very well might be allowed to see the true nature of this recession and it just might be even worse than even the most pessimistic among us are predicting.

I read an interesting story to my children the other night before bedtime. It was Dr. Seuss' "The Sneetches," about a group of creatures called (you guessed it) Sneetches. Some Sneetches had stars on their bellies, some did not. A traveling snake oil salesman appeared one day with a machine that could put stars on all the Sneetches' bellies. He goaded the ones without the stars to pay him to put "stars upon thars" because the Sneetches with stars always looked down their noses at and thought they were better than those without the stars. After he had talked all the starless Sneetches into paying him to give them stars, he went over to the Sneetches that originally had stars. He goaded them into paying him to use the machine to remove their stars so they once again could be better than the SNeetches who didn't originally have stars. Wash, rinse, repeat. He did this several times, going back and forth adding and removing stars, doubling the price each time until all the Sneetches not only couldn't remember if they originally had stars or not, but also were completely broke having paid him all of their money... and then he disappeared from their midst with all their money and was never seen from again. I feel like a Sneetch right now. As soon as we pay out the nose to save a little money up, we're then goaded into spending it "for the good of the nation" (and I'm talking broadly here, refering to our government using our money to do this), and then they turn right around and chastise US for not being prepared all while the corporations stand there with their hands out to the government for our money AND another hand out to us for our voluntary money to be handed over so we can "keep up with the Joneses."

I will say this much, if nothing else my eyes have been opened to the brilliance and absolutely stunning social and political commentary that was Dr. Seuss. Call me crazy, but The Sneetches aren't the only Seuss "children's" story from which I have gained a great deal of enlightenment and pause for thought.

Big oil doesn't care if their profits come from American, Korean, Japanese, German or any other car manufacturer. Once GM, Ford or Chrysler fail and the public feels confident to buy cars again the void will be filled by another car maker and the profits will roll in again. Big oil doesn't need to bail out Detroit. Detroit needs to bailout Detroit but its too late

bye bye

Look its a bit decieving to say that the auto industry in general is in a rut.

Its just the big 3 US makers who are in the mire. That has come about because of militant unionization strategies that saw some floor workers earning in excess of 100,000 USD a year.

Why should the oil makers bother bailing out a failed, waste of time and futureless triad of companies (Ford, GM, Chrysler).

People will still own cars. People will still buy cars... maybe the new cars will even be able to handle corner

Toyotas and Hondas will replace American made cars; the companies will still sell gasoline.

Let's make the assumption that big oil is just sitting on the money they make and have no overhead or expenses.

There is a big difference between anyone's money and taxpayer money. An industry giving money to another industry, just as a bank making a loan; expects to be repaid. Taxpayer money, on the other hand, is given away freely. Anyone who really thinks we will see any bailout money back, HEY, I got a bridge for sale.

reply to post by baseball101


I love you reasoning. Common sense though won't slay the giant dragon of the international bankers and their millitaries.
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