Getting high on gas: C'mon $5!

$5.00 gas: America's downfall?

I'm not a big fan of the new CAFE rules put forth by the Obama administration. First, I'm not quite sure that US automakers are capable of profitability in achieving these new rules. Second, I don't think this CAFE rewrite goes far enough.

For years I've asked numerous major auto executives from the Big 3, especially GM, why aren't there more hybrid cars from US automakers? Why can't US automakers sell such vehicles as foreign oil dependency fighters?

Cheap gas and lack of profits has always been the answer.

So, what's changed? Will UAW concessions really make these vehicles suddenly much more profitable? Will CAFE force Americans to accept higher prices for achieving better fuel economy, especially if gas prices don't rise significantly?

I don't know, but I'd place my bets on a much smaller US auto industry struggling for profitability for many, many years. And, that's my optimistic scenario. I mean, what happens if gas spikes significantly in the next couple of years? They'll have nothing to sell that offers any profitability.

And, over the last few weeks, and especially the last few days, oil has again become a very interesting story. Whether its geopolitical worries, such as new Nigerian rebel action against oil interests, growing Chinese demand, or even something as simple as a US oil refinery fire, the volatility around oil prices is explosive.

Yet, most of the world is in recession. Even without an economic recovery in much of the world's economic powers, including the US, drastically rising oil prices are still a threat.

Thus, America's economic recovery is almost certain to coincide with a significant increase in energy prices, especially gas prices. The sooner gas prices force automakers, and American auto consumers, to realize that Obama's CAFE rules should be viewed as child's play - which is not Obama's fault and he should be commended for his leadership - the sooner US automakers will realize that meeting CAFE won't be enough.

If America's automakers are to lead the world into the future, they better blow these new CAFE rules away as soon as possible. Otherwise, let's stop assisting the US auto industry in any way and retrain these workers to build wind mills and solar panels.