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Saturday, June 03, 2006

The American Way

There are some basic supply and demand concepts at play in both the auto and oil industries. If you have a product or substance that is in high demand and dwindling supply prices go up. The Arab oil-controlling nations walk a marketing tightrope. 1970's style gas lines can cause a backlash of public opinion, particularly in the west, that could eventually lead to alternative energy product development and a move away from an oil powered economy, so the oilmen must come up with reasons for artificial shortages, while maintaining constant control of production output to effectively walk that fine line between acceptable and whoreish profitability. The American auto industry has a similar challenge. Following decades of conspiring with the oil industry to avoid change and maintain the status quo, the auto industry in America is currently struggling. It is only now, prompted by consumers who have begun to look for alternative, moregas fuel efficient vehicles, that Detroit has made some small moves toward manufacturing more fuel economical cars. Ultimately, Detroit's ship may be turning too slowly and the sale of more fuel efficient Japanese cars is increasing as Detroit's SUV sales fall. U.S. politicians will try to make this an economic battle, not an environmental one and will paint proponents of change as tree-hugging liberals driving America to economic destruction, but isn't that what capitalism is all about? The better more efficient widget should succeed, new, creative solutions should be promoted not squashed. It's the American way.
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