Bob Lutz

Bob Lutz.
 
What can you say about the Mr. Magic of General Motors, the tanned almost octogenarian that flies a MIG and know cars better than anyone. The guy that’s the tough and straight talker with the starched tab collar and the demeanor that makes journalists swoon.
 
Well, what you can say is that a whole lot of people aren’t buying what he’s selling.
 
It all has to do with E85.
 
And, I, for one, want to protest.
 
They shouldn’t be making Lutz spout the company line on this one.
 
He deserves better. Or, at least, his image deserves better.
 
Everyone at GM is still pretty much in awe of him, even though he’s been the product guy for a decade. He’s given a lot of credit by those who know, and they’ve got some talented people there. 
 
But now he’s shilling for GM’s latest idea.
 
You may have read that E85 is GM’s latest idea.
 
That’s not entirely accurate.
 
Their latest idea is that you should have E85 shoved down your throat, like it or not.
 
It’s the government’s job to do it, Lutz says.
 
Time and again, throughout the press preview days of the North American International Auto Show, the folks at GM were pushing government intervention to force the evil oil companies to “put in a pump” that would fuel E85.
 
Here’s the GM idea: 
 
Oil companies, you see, control the outlets that sell fuel. Oil companies are in the catbird seat, so they’d like to keep it that way. For that reason, they resist selling ethanol based E85. They decline to “put in the pump” necessary to fuel cars that can use E85. So, the federal government should make gas stations carry E85. In fairness, they should have a reasonable time, say two years, to comply.
 
So simple. Sorta like opposing shoplifting.
 
Except it’s not.
 
It’s a con job. 
 
Maximum Bob turns out to be just another government interventionist, the same kind that wants to make you eat your Brussels sprouts because they’re good for you.
 
There are a variety of reasons why you shouldn’t like that.
 
First, you’re not stupid and should resent being treated as stupid.
 
It’s not just “putting in the pump.” There’s the small matter of a tank. Underground tanks have to be constructed to a variety of government specifications, so that they don’t end up leaking the contents and contaminating the ground water. Putting an underground tank in at a gas station is not a small undertaking, nor is it inexpensive. 
 
Moreover, it isn’t the evil oil companies that end up picking up the tab for these installations. Most gas stations are still franchise operations. It’s the business that owns the franchise that’s gotta pay for it. If it were just “putting in the pump,” wouldn’t you think that the public spirited Mr. Lutz would have GM pick up the tab? Since when did GM not want to make money? (OK, so maybe that’s not the best argument I ever made, after all. But, still . . .) 
 
The old “evil oil companies” class warfare nonsense is beneath the dignity of sentient human beings. Getting it from Lutz is downright insulting.
 
Second, it’s not logical.
 
At NAIAS, GM CEO and Chairman Rick Wagoner proudly announced a joint venture that is expected to distill ethanol from garbage, at a price of about a buck a gallon for the base stock. That’d translate, according to Mr. Lutz, to a pump price of about $2.50 per gallon.
 
But that’s not enough of a price advantage. Given the lesser heat efficiency of ethanol, gasoline at $3.00 a gallon gives equivalent or better performance and mileage. Moreover, at that price, it’s worth the investment for oil companies to produce oil that was not economically worth the cost of recovery at lower prices.
 
So, Lutz is trying to sell a solution that doesn’t have a problem.
 
Why?
 
It’s not that GM figures there’s going to be an energy shortage and the price of gas will skyrocket upward. Were that the case, one would expect GM would be buying a big chunk of the ethanol distillery in the expectation that ethanol would end up enjoying a huge price advantage and it would end up be the Wal-Mart of fuels. But Wagoner says the company has no interest in being in the fuel business.
 
Meantime, the founder of the ethanol partner says he’s talking to the oil companies about distribution. Seems he figures there might be a buck in it for the both of them.
 
So, what’s up with GM?
 
They get a 1.2 mpg CAFE credit for every E85 car they produce.
 
Lutz says that’s trivial, but he’s not being candid.
 
Spread that over enough cars, and it starts to actually count.
 
It’s like the old Senate Minority Leader, Everett Dirksen, once said: “A billion here, a billion there, and pretty soon you’re talking real money.”
 
It’s the same deal. Making E85 cars makes economic sense for GM. But people won’t buy them because they don’t make economic sense for the customer.
 
So, Bob Lutz wants the government to do it. He wants to make the government force it upon you.
 
After all, with their new technology, they can make ethanol out of Brussels sprouts.