Energy Department Awards Advanced Technology Loans

Secretary Chu of the Department of Energy has just announced a new $25 billion loan program for the automobile manufacturers. The loan program is designed to help automakers meet the new CAFE standards, which will increase the average fuel economy of new cars from 27.5 to 35 mpg by 2016. The only way to do that is to increase production of fuel efficient automobiles. and reduce production of gas guzzlers.

These are the companies and the amounts that have been announced so far!

• Ford $5.9 billion.....for will use the money to retool five plants, which will improve the mileage of two million cars produced annually.


• Nissan $1.6 billion....to modify its Tennessee plant to produce zero-emission electric vehicles and the lithium-ion battery packs. They estimate that production will eventually ramp up to 150,000 electric vehicles annually. Currently, Nissan manufacturers their full size pickup and SUV's at the plant.


• Tesla $465 million....which will be used to build the Model S plant in Hawthorne, California.

Additional funds will be allocated to both large and small manufacturers and part suppliers per Secretary of Energy Steven Chu. The Department of Energy has indicated that these upgrades should lead to fuel savings of more than 20 million gallons per year.

SUMMARY:

President Obama has set a new direction with fuel efficiency with the new CAFE standards. Now his backing up his new laws with something to help the beleaguered auto industry.

The U.S. has mismanaged it's energy policy for the last forty years....now that oil is getting expensive we are having to pay the piper....higher energy prices. Brazil has gone from a substantial importer of oil to an exporter of ethanol. They have managed their energy policies wisely!

The importation of substantial amounts of oil is depleting the U.S. of substantial amounts of cash....if this goes on for to long it will be the largest transfer of wealth in modern history. Translated that means that the U.S. will become a second rate country with the living style to match.

So, I support President Obama and Energy Secretary Chu in doing the right thing! We as a country need to find ways to improve our energy usage and eventually achieve energy Independence. This is such a major project that only the government involvement will allow it to happen.

This maybe the second step to the revitalization of the U.S. auto industry....and the possible resurgence of American automobile production.

Fuel Economy Efficiency Standards Raised

One of the major issues of the last six months has been the world wide economic problems. It is apparent that actions taken in the United States have material impacts to the rest of the world. U.S. Federal Reserve Chairman Ben Bernanke last week announced that the U.S. Federal Reserve was going to purchase U.S. Treasuries and toxic mortgages. That is great news for the banks!

Bernanke is well qualified for his position, graduating summa cum laude from Harvard with a bachelor of arts degreee. He received a PhD in economics from the Massachusetts Insitute of Technology in 1979. He has written a number of papers on the great depression and the methods for handling such an event. Basically, he is an intelligent well educated economist.

Apparently, Bernanke is prepared to throw everything at this crisis that he can! The net result over the long term will be that the dollar will go down in value versus other currencies. Inflation will be back, possibly even hyper inflation. That will also increase the price of oil since oil is purchased with dollars.

Meanwhile, the Obama administration plans to raise fuel economy standards for the new cars and trucks for the 2011 year. The increase is two miles per gallon which raises the standard to 27.3 mpg.

The new fuel efficiency standards should increase the average fuel economy for passenger cars to 30 mpg and 24 mpg for light trucks. The new standards will also cost the automakers an estimated $1.5 billion to implement.

China first implemented fuel efficiency standards in 2005, with more stringent standards in which started 2008. China is moving to control soaring oil consumption meanwhile requiring foreign automakers to share their latest fuel saving technologies.

The bottom line is that these actions in the long term will increase the price of fuel. So anyone purchasing a car should take into account that fuel prices will probably increase materially over the next several years.