Thinking About Energy Policy

Every day we experience the problem of dependence of foreign energy. Energy politics and competition over a scarce resource drive us to extremes, whether this means supporting brutal regimes abroad, or invading them. Once reason for this is that while demand is ever increasing, supply is every decreasing. This problem manifests itself as a simple problem balanced out by higher prices. Of course, higher prices bring a whole host of issues most of which we simply don't face.

I try to keep abreast of the latest thinking on the topic but I have a simple idea that might help alleviate the problem.

I want the Federal government to step up to the plate and do something selfless for the American people. The Federal government needs to announce a plan to cease purchasing of generic internal combustion-powered vehicles in favor of a mix of gas-electric hybrids and hydrogen-powered vehicles.

Simply stated by shifting Federal purchases to these types of vehicles, the Federal government will create legitimate demand for them and generate the steady and predictable need for increased production that should motivate automobile manufacturers to produce better vehicles sooner.

Don't get me wrong, it won't happen overnight. But if 10% of the total Federal spend shifted each year, it would make a difference. This means that on year 1, the government allocates 10% of its fleet purchases this way, and in year 2, the government allocates 20% toward hybrids and hydrogen vehicles. Over a decade, the government can completely shift its buying habits.

I'm not suggesting that tanks, jet fighters, heavy equipment and other "application-specific" vehicles be purchased this way. Just the plain vanilla fleet.

The biggest issue that I see is that the American auto industry will get crushed by the Japanese and Germans. This may be actually be necessary. Further consolidation of these industry will make for more economies of scale and encourage investment in competitive technologies. There is no reason that GM and Ford cannot compete with the Japanese and the Germans, but probably they will just buy some politicians and try to raise trade barriers.

Either way, sooner or later, the Chinese will make a quality car and then it's game over for the U.S. industry, unless they have dramatically enhanced the value proposition and attractiveness of their offering, as they will not be able to compete on price.

I need to pull together more facts on the government auto spend to see what this looks like. I did find a site run by The Government Purchasing Project that discusses the overall scale of Federal purchasing.

Some unverified facts from a report available at their site at http://www.gpp.org/gpp.pdf details this:

"Federal, state and local government purchasing accounts for nearly 20 percent of the U.S. Gross Domestic Product. The federal government spends more than $200 billion a year and state and local governments spend more than $1 trillion a year on products and services. Government officials can use this enormous purchasing power to stimulate the market for environmentally preferable products and spark innovation that creates new markets, offering producers early economies of scales, lower unit costs and lower risks.

The government has had success using its purchasing power to stimulate new markets. In the 1970s, automobile manufacturers failed to offer cars equipped with air bags, despite the fact that the technology to do so already existed. In 1984, the General Services Administration- the federal government's central purchasing agency-ordered 5,300 airbag-equipped automobiles. After it had filled the order, Ford began offering air bags in several models and other companies soon followed. Air bags are now standard in all automobiles."

It's possible and has been done before, but nobody is talking about doing it again. All those tax dollars thrown down the drain on pork projects and inefficiency, why not have the government do something for the people?

I'll keep looking for more info on this issue. In the meantime, engage both braincells and think about it.