Monday, December 8, 2008

How To Save Auto Industry

Instead of just loaning the Auto Industry money, the Congress should look to place a massive long term purchasing contract with the Big Three Auto Companies. The Federal Government owns tens of thousands of vehicles, the States and Municipalities own hundreds of thousands of vehicles. The Congress should sign a contract with the Auto makers to replace the entire Federal Fleet with fuel efficient hybrids and flex fuel cars with progressing standards to be met as the vehicles are delivered. A contract to replace all Federal Vehicles over five years with ever increasing energy efficiency as each year's vehicles are delivered.

As part of the Economic Stimulus Package for the States, the Congress should give out block grants for all States to replace their fleets with ever increasing energy efficient cars and have the States provide grants to the municipalities. There should be one agency to oversee the contracts and insure that the best price is obtained and that as each year's vehicles are produced and delivered they should met an ever increasing fuel efficiency standard with the ultimate goal of having all Federal, State and municipal vehicle fleets running on alternative fuels. The money provided by the Government for these purchases will keep the Auto Industry in orders for at least five years which will give them the time and the necessity to improve their products with innovative energy sources.

The Government at all levels purchase massive amount of vehicles, a contract that encompasses them all with a 20 - 30% down payment on the order and the balance paid upon delivery will insure the future of the Auto Industry while proving a needed service to the Government agencies. As the Government agencies start to use these cars with mandated efficiency standards their fuel consumption bills should decrease which will provide savings for all government budgets and in return keep the taxes needed to fund the Government entities at a stable rate because of the fuel savings that will be achieved by converting aging fleets to fleets of the future.

Most larger Government agencies fuel their vehicles at central fleet maintenance facilities that have their own gasoline storage and pumping facilities, as the new vehicles are delivered that do not use gasoline but use alternative fuels, the alternative fuel sources can be built at the central fleet maintenance facilities of each government agency which will provide more economic stimulation at the local level where these facilities will be upgraded with grant money from the Department of Energy.

Instead of just handing out another loan, bind the Auto Industry to a delivery contract that will require them to bring their production of vehicles into the future. As they retool plants and vehicle designs to meet the Government contracts all of their product will have to meet the same specifications. The vehicles that are sold to the consumer will have the same innovative energy sources as the Government contracted vehicles causing demand for alternative fueling stations. The implied demand for alternative fuel pumps should spur on the gasoline industry to meet the demand and install these fueling systems in their established stations. Fueling stations will become multi source fueling centers. Over a 10- 15 year period all vehicles will switch over as natural obsolescence comes into play. The gradual conversion over a decade will therefore not impact the livelihood of the existing service stations, yet will require capital infusions to modernize and convert. Long term capital improvements to these stations will benefit both the service stations, the drivers and the environment as the nation switches from a fossil fuel burning transportation nation to alternative fuel burning Nation.
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