On the very day General Motors announced that it would post a loss of $1 billion over the last six months, the price of crude oil hit a temporary all-time high of $56.60 a barrel on the New York Mercantile Exchange.
This is not coincidence. This is poetic justice.
General Motors is the outfit that introduced the Hummer to America’s driveways. It is a monstrosity that defies reason and logic, and thus could only come from an American carmaker. True industrial visionaries-you know, the people who made America great way back when-might have spent the 1990’s and early 00’s working on vehicles designed to wean us from Persian Gulf oil. But General Motors, being General Motors, decided on the opposite tact: After seeing what suckers Americans are for sport-utility vehicles, it upped the ante by producing and marketing a truck designed to carry troops to the nations that profit from our oil consumption.
The Hummer gets about 10 miles to the gallon in highway driving. (G.M. itself says 12 to 14; other studies give the lower number.) That figure is even lower in more congested areas-something to consider the next time you see this tank stuck in crosstown traffic. It’s probably fair to say that the Hummer has been G.M.’s signature product over the last few years, and that tells you all you need to know about the sort of people who run America’s auto industry.
Historians one day will have to grapple with a contradiction that we seem to take for granted: At the very moment when the nation’s dependence on Middle Eastern oil has become a danger to national security, companies like General Motors chose to market and sell gas guzzlers like the Hummer and its smaller cousins to a public oblivious to the connection between oil consumption and the funding of hostile regimes in the Middle East.
Worse, the federal government manipulated environmental and tax policy to exempt Hummers and S.U.V.’s from fuel-efficiency regulations and then to allow owners of these national-security risks on wheels to write off a huge portion of the purchase price. The jolly free-marketers who run Congress and the White House will argue that the Hummer and S.U.V. craze is an example of an unregulated market responding to demand.
In fact, as journalist Paul Mulshine of the Star Ledger in New Jersey has pointed out, Hummer and S.U.V. sales are the product of a rigged system in which Congress and the White House have, through tax and environmental policy, stacked the deck against the old-fashioned, sensible sedan-a vehicle, you may recall, that once defined the U.S. auto industry. Now it defines Japan’s, because the good people at General Motors saw S.U.V.’s and the Hummer as the quickest way into the wallets of foolhardy American consumers.
I suppose we’re supposed to weep for General Motors, a proud American icon that has fallen on hard times. Certainly the company’s hourly wage earners deserve our sympathy, for they will surely feel the effects of the company’s horrific losses. They will pay dearly for the idiocy carried out in the G.M. boardroom.
But even as G.M.’s stock declines-monitors like Standard and Poor’s and Moody’s Investors already have the “caution” flag out-the company shows no signs of questioning its dubious and downright unpatriotic marketing and production decisions of the last decade or so. In partial recognition of the fact that gasoline prices are heading north, G.M. this spring will unveil not a hot new hybrid-that would have required vision and planning-but, yes, a slightly smaller Hummer! A Hummer made for the age of $60-a-barrel crude!
That’s what passes for vision in the U.S. auto industry. Imitation is the sincerest form of inertia.
In the meantime, the hottest car in California comes to you from the Land of the Rising Sun. Somehow, the people who run Honda and Toyota have figured out-perhaps by, oh, reading the newspapers-that with gasoline prices skyrocketing, Americans might be interested in cars that use both electricity and gasoline. What a remarkable insight!
The Toyota hybrid is called the Prius, and people on the West Coast are waiting in line for one. Honda has a hybrid Civic, which I’ve driven, and will soon have a hybrid Accord. These vehicles get in excess of 40 miles to a gallon and, better yet, have the reliability and safety we associate with Japanese automaking. I don’t know much about business, but I’d wager that our trade deficit with the Japanese will soon reach unimaginable levels.
If so, we can thank the folks who populate the G.M. boardroom. At a time when the nation needed wisdom and vision from automakers, the industry chose to wallow instead in self-indulgence and greed.