Last week, US automakers went to Congress with their hat in hand. The auto executives were all smiles, as was Nancy Pelosi and others. As a US taxpayer, I can tell you that I was not smiling, and I resented their happy demeanor. The automakers' insistence on building non-competitive SUVs and Hummers and the like hurt the US in two major ways: first, it helped increase our reliance on foreign oil. Second, it allowed Toyota (NYSE:TM) and Honda (NYSE:HMC) to eat their lunch.
Of course Congress is to blame as well by not raising the CAFE standards, legislating tax-breaks to encourage business purchases of SUVs (?), and by caving to automotive lobbyists on every possible occasion. Net-net, the US imports 70% of its oil, many jobs have been lost, and the economy has suffered as a result. So, now the middle class taxpayer has yet another sector to bailout. Since no one is going to bail me out, I want to insist that Congress get something out of these auto executives for my money:
- Each of the big three must make a natural gas powered truck and car to sell in the US
- *Every* vehicle they make must get over 40 mpg
- Every vehicle they make must be natural gas, hybrid, or electric
In addition, each US automaker must make a home appliance for fueling a natural gas car in their garage. Currently, not only do we have only one natural gas vehicle on sale in the US, but only one maker of this appliance (the "Phill" by Fuelmaker). It is time for Congress to demand competition in this market to bring down the high cost of natural gas solutions and wean us off foreign oil. See my previous articles on natural gas powered transportation:
Please contact your state senators and congressional representatives and tell them what you want for YOUR tax-payers money!
Meanwhile, look at what is happening in the oil patch as a result of the current economic crisis. Investment in the Canadian oil sands is declining as projects get put on hold or are cancelled. Drilling in the lower 48 is trending down. Projects such as the joint Saudi/ConocoPhillips Yanbu refinery are being delayed. All this means the next oil spike will make this year's old spike look tame. Current low oil prices are terrible news for the long-term US economy.
In fact, I would go so far as to advise the US government to raise federal gasoline taxes to help pay for all the deficit spending our government is currently spraying into the economy. Major oil companies are on sale at current prices. I continue to advice snapping up companies such as Exxon Mobil (NYSE:XOM), British Petroleum (NYSE:BP), ConocoPhillips (NYSE:COP), and Chevron (NYSE:CVX). These companies all pay healthy dividends (except XOM's, which is pathetic), and they are safe. These companies will continue to make money as they all have low-cost oil production sources and they can cut their E&P budgets if they need to. Long term, these companies are going to skyrocket when the economy comes back in the future.
Disclosure: The author owns all of the stocks recommended in this article.