Who Benefits From Crappy Air?

Remember smog?

President bulls ahead with taking away California’s ability to set it’s own emissions standards, even though nobody including car companies seem to want that. So who does?

The President says it’s consumers who’ll benefit, with the average price of a car dropping by $3,000-$4,000 (he’s been bumping that number up: originally his administration projected a $2340 saving).

But that’s a load of BS. The reason the more polluting cars will be “substantially SAFER” is because with less fuel efficient cars, people will drive less, so they’ll get into fewer accidents, so they’ll pay less for insurance. That’s a big chunk of Trump’s “savings”.

So who really wants that? Not automakers because they’re going to have to make more fuel efficient cars anyway, to continue to compete on the global market. That’s why 4 major automakers already signed onto a deal with California (and a 5th, Mercedes, was apparently ready to join).

Not states: more than a dozen said they’d match California’s rules over Trump’s.

A bunch of people have been Tweeting today that it’s just Trump really hates California (where he’s traveling this week to do fund raisers) and where he’s also promised to solve the state’s homeless crisis (apparently by buying up and refurbishing unused warehouses and the like). But would homeless people be forced into those shelters? In order to protect “entrances to building” where residents want “prestige” as Trump told reporters? (Our guess is this “plan” will provide a lot of campaign fodder, including a stunt late last night to cite San Francisco because its homeless population is creating too much pollution), but never really get off the ground).

Hate it or not, we do believe that by the time the 2020 Presidential campaign is in full swing, what California is trying to do will be portrayed by the President as a “war against pickup trucks” perpetuated by the coastal elite. (Of course neglecting to mention the California Air Resources Board started half a century ago under then-Governor Ronald Reagan, and has since received waiver after waiver from the federal government).

We’ve written extensively on the topic of why automakers favor California’s plan over Trump’s (which isn’t really a plan at this point aside from telling California it can’t have a plan), so we won’t spend time rehashing it: you can read our earlier pieces by clicking here and here. In both those pieces we pointed out automakers will have to spend money on research and development for cleaner cars anyway in order to compete globally, and if they’re allowed to build dirtier cars only in the U.S., they’ll have to be protected in perpetuity from more fuel-efficient imports. (Trump may not see this as a problem: he can do tariffs, and he believes he has some control over domestic gas prices, or at least keeps bragging like he does. He doesn’t.)

No matter what, this is likely to end up before the Supreme Court. And there may be more than one case: not only California challenging Trump’s revoking its waivers, but also maybe the Justice Department coming after automakers for having the temerity to negotiate with California.

But let’s try to figure out who does want less fuel efficient cars, and who Trump is really doing this for.

  • Insurance companies? With people driving less because they can’t afford fuel for their gas-guzzling vehicles, accidents should go down, probably more than premiums will, so auto insurers could see a windfall. But it’ll be a different story for health insurers, who’ll get hit with increased costs for more cases of asthma and lung disease, etc. So for the industry as a whole, at best we think, it’s a wash.
  • Oil companies. At first, this seems to be a wash too: with less fuel efficient cars, people won’t be able to afford as much gas, so they’ll drive less and buy less of it. With more fuel efficient cars, they’d drive more, so volume would go up even though prices are lower. But, we’re leaving out a gigantic variable in coming years: electric cars. That’s where the entire industry is headed. It’s inevitable. Only question is how fast. (Although the electricity might be generated by coal fired power plants if Trump has his way). So the President’s only objective may be to keep Americans filling up their tanks for as long as possible, pushing into the future the day when they’ll be plugging their cars in instead.