$836 Million Could Lure Energy Companies to Old GM Sites

The Obama administration has proposed setting up an $836 million trust fund to lure companies that build energy-efficient technology to abandoned GM plants.

Using no new government money, the trust would be used for environmental cleanup at old GM sites in 14 states. The sites would be cleaned up, demolished or returned to the local communities. States and municipalities would be relieved of a major financial burden and could recruit new companies to the unused plants. The money would ease the concerns of companies worried about environmental liabilities.

Michigan Gov. Jennifer Granholm said the sites could be used not only for tech startups but also major firms, such as General Electric.

Fifty-seven of the 89 sites are in Michigan, including well-known operations at places like Willow Run, Ypsilanti and Buick City in Flint (pictured above). The state would get $161 million of the trust. President Barack Obama announced the plan from the Rust Belt city of Youngstown, Ohio, which has been hard hit by the auto industry’s troubles.

The plan must first be approved by the U.S. Bankruptcy Court, which oversees Motors Liquidation (better known as “Old GM”). The money will come from the $1.2 billion fund the U.S. Treasury allocated for wind-down costs following GM’s 2009 bankruptcy.

Granholm has cautioned, however, that cleaning up some of the sites may take years to complete.

Old GM Plants May Lure Energy Companies (Detroit Free Press)

Are You Less Likely to Fill Up at BP?

We have a simple question for you: After the BP oil spill, which is quickly becoming one of the worst environmental catastrophes in U.S. history, are you less likely to fill your tank at a BP gas station?

Recent evidence suggests that BP is taking a public relations thrashing from the oil leak in the Gulf of Mexico. Consumer research company YouGov scores companies on a “buzz” index, interviewing 5,000 Americans every weekday to ask basic questions like, “If you’ve heard anything about the brand in the last two weeks, was it positive or negative?”

Obviously, BP is not doing so hot on this question. On a scale of 100 to negative 100, BP is hovering somewhere around negative 60, which puts it below even the most maligned, troubled company on the “buzz” radar: Yep, that would be Toyota.

Check out the month-to-month graph of Toyota versus BP after the jump, then let us know if you plan to stop at a BP station anyway by taking our poll or leaving a comment.

Chart of the Day: BP’s ‘Buzz’ Rating Plummets Below Even Toyota’s (Talking Points Memo)

Last 8 Presidents Have Promised Independence from Foreign Oil

Promises, promises.

Prepare to become thoroughly despondent about the United States’ energy future. Opening the global conference on “America’s Energy Future,” financier Michael Milken outlines in a capsule summary statements and policy positions from the last eight U.S. presidents on our country’s reliance on foreign oil.

The trend in the following bullet points is all too clear. Even as our leaders talk a good game, the U.S. continues to grow ever more reliant on oil from foreign sources, going from 36% imported oil in 1974 when Richard Nixon promised energy independence by 1980 to 66% reliance by the beginning of Barack Obama’s presidency in 2009.

Neatly summarized by BoingBoing, check out these presidential statements matched to the percentage of foreign oil we import after the jump.

Cash for Clunkers Haunts Car Dealers Turned Candidates

Running for office has always had some overwrought theatrics, and a small group of car dealers running for U.S. Congress in the 2010 midterm elections has stumbled upon a political landmine that’s created opportunities for grandstanding and double talk.

Four car dealers now running for public office as Republicans are coming under attack by opponents (both Republican primary challengers and Democrats) for opposing “taxpayer bailouts” while benefiting from last year’s $3 billion Cash for Clunkers program.

For instance, Jim Renacci, running in Ohio, sold 39 cars under the CARS program, while another Ohio candidate, Tom Ganley, owns a number of dealerships that sold 876 cars through Cash for Clunkers.

After being hammered by opponents, both candidates have gone with the “I-had-no-choice” defense. Spokesmen for both Ganley and Renacci claim their candidates opposed the Clunkers program and would have voted against it. Pennsylvania candidate Mike Kelly, who previously said that Cash for Clunkers benefited his dealership, now says that it was little more than a “short-term boost.”

Running in Virginia, car dealer and candidate Scott Rigell has been hammered by fellow Republican Ben Loyola for the 138 cars Rigell sold under the Clunkers program. And in an all-too-easy bit of irony, what does Loyola do for a living? He works as a Department of Defense contractor.

Dealers-Turned-Candidates Run into Trouble (USA Today)

With New Mandates Being Questioned, Ethanol Lobby Points to Gulf Oil Disaster

With the ethanol blend in gasoline about to rise from 10% to 15% under federal mandate and the corn ethanol lobby touting the Gulf oil disaster as a reason to incorporate the fuel source even more, the controversy surrounding the biofuel is back with a vengeance.

Most importantly, automakers are using new test data to persuade the EPA to delay the increase in the ethanol blend in gas. Automakers have always opposed the new standard, but now they say they have tests that show the new blend will damage engines and lead to more pollution. GM says roughly half the engines it has tested have experienced problems. Other critics say the ethanol industry has grown so fast that it has simply run out of gasoline with which to blend and now needs a higher standard so its output has somewhere to go.

The problem is that the higher ethanol blend can cause engines to run hot and damage the catalytic converters of many vehicles, leading to expensive repairs or more emissions of nitrogen oxide, a smog ingredient.

Meanwhile, ethanol lobbying groups including the Nebraska Corn Growers Association have been tweeting up a storm with posts like, “There is a fuel option that doesn’t result in oil spills in the ocean. It’s known as #ethanol.”

Analyst Dan Mitchell of The Big Money says such activity amounts to exploiting a tragedy. Furthermore, the Gulf of Mexico is subject every summer to a hypoxic dead zone the size of New Jersey, as Grist.com notes. The National Academy of Sciences linked this dead zone directly to nitrogen leaching from the fertilized cornfields farther up the Mississippi River — corn production that will increase the nitrogen flow to the Gulf by 10% to 34% in the next 12 years as ethanol mandates kick in. Corn is the primary ingredient in ethanol.

Automakers Seek to Delay Blending Raise (New York Times)

Congress Seeks National Standards for Teen Drivers

Following New Jersey’s move to force teenage drivers to display a special decal on their license plates, three Democratic U.S. senators are seeking a national graduated driver licensing law (GDL) to replace the varying state-to-state systems.

Currently, every state but North Dakota has a three-phase GDL program that allows teenagers to get their driver’s licenses in steps that are supposed to make them safer drivers. The evidence overwhelmingly shows that a good GDL program can improve highway safety. States that have imposed tough restrictions on licensing have had crash reductions ranging from 10% to 30%, according to the Insurance Institute for Highway Safety.

Massachusetts beefed up its rules three years ago and has seen the fatalities for drivers younger than 18 plummet 75% and injury crashes fall 38%. Those are truly impressive reductions.

Strong programs that limit nighttime driving and the number of passengers allowed in a car as well as set a minimum age of 16 for getting a learner’s permit serve as the model for the U.S. Senate’s legislation. Although 42 states allow teens to get learner’s permits before age 16, the legislation would tie federal highway funds to raising the minimum age to 16.

This is controversial. As opponents point out, there are rural states where children learn to drive as young as ages 12 and 13 in the course of living on a farm. Like many top-down federal standards, many state officials don’t like the idea of being told when they can issue driver’s licenses to their citizens.

IIHS estimates that raising the minimum age for a learner’s permit would reduce crash fatalities of 15- to 17-year-olds by roughly 13%.

In addition, the Safe Teen and Novice Driver Uniform Protection bill (aka “Stand Up”) would establish a three-phase process that includes a learner’s permit and an intermediate stage before the driver receives an unrestricted license. It also would prohibit non-emergency cell phone use and unsupervised nighttime driving in the first two stages.

National Standards Sought for Teen Drivers (USA Today)

Will the Gulf Oil Spill Lead to Higher Gas Prices?

The catastrophic BP oil spill in the Gulf of Mexico may soon prove to be one of the worst environmental disasters in U.S. history, but from a practical, cold-blooded perspective, it’s worth asking if it will affect gas prices in the near or long term.

The average price for a gallon of gas has crept up 5 cents in the past week since news of the leak’s severity hit. We’ve already said that this summer could be pricey at the pump, so it would be hard to determine how much the disaster would contribute to a price spike that would have likely happened anyway in the lead-up to Memorial Day weekend.

The blunt math of the situation tells us that the Gulf leak, while devastating for local wildlife and tourism, is not enough to affect the flow of crude. Only two actual platforms are down, which in the grand scheme of U.S. oil consumption is almost nothing. However, the spill could slow down production, shipping and refining of oil in Mississippi, Alabama and Louisiana, which account for 19% of the U.S. refining capacity.

Analyst Ben Brockwell of Oil Price Information Service sees a psychological factor that could contribute to “upward momentum” for prices. This momentum was happening anyway, he told Daily Finance, but the oil spill could exacerbate it.

Much depends on the mending economy and how improved conditions could affect demand. If unemployment remains high, it could have a dampening effect on gas prices.

Gas Prices Creep Up After the Spill, Despite Weak Demand (Daily Finance)

Among Many Changes, New Safety Bill Calls for $9 Fee on New Cars

Lawmakers want to use a proposed $9 fee on new cars to pay for increased oversight and resources for auto safety agencies. The fee would be part of a new-car safety bill introduced in the U.S. House of Representatives in the wake of the Toyota recalls.

The draft, released by House Energy and Commerce Committee Chairman Henry Waxman (D-Calif.) and Rep. Bobby Rush (D-Ill.), would also require brake-override systems and event data recorders in all cars within just two years. The fee would start at $3 and raise an estimated $30 million to $45 million a year for the National Highway Traffic Safety Administration. It would rise to $6 in the second year, then $9 in the third year before being matched to inflation.

A similar U.S. Senate bill would also put auto executives on the hook, adding criminal penalties for those who submit misleading information to NHTSA. It would ban former NHTSA employees from working for automakers for three years, create whistleblower protections and give the safety organization authority to initiate a recall much more quickly if it deems a particular defect a threat to public safety.

Both bills would create civil fines of up to $250 million for auto executives who make false statements.

Finally — and most importantly if you’re an automaker thinking of delaying a recall — the legislation eliminates the maximum civil penalty for automakers. If this legislation had been law, Toyota could have been on the hook for $13.8 billion without a cap, rather than being assessed the maximum fine of $16.4 million.

Car Fees Proposed to Fund Safety Law (Detroit News)

New Bill Could Impose New-Car Fee to Raise Money for Oversight

The recent Toyota recalls have spurred Congress to draft new legislation to address federal oversight of auto safety, which could include a fee on new-car sales to pay for additional resources at oversight agencies.

The main aims of the bill — although separate versions are being drafted in the Senate and House — are to require automakers to install brake override systems, stop-start technology and black boxes. Lawmakers are also considering to impose a “small fee” on new-car sales that would provide additional funding to the National Highway Traffic Safety Administration.

Proponents of the bill point out that in 1980, NHTSA had 119 people working on enforcement, but due to budget cuts in the ensuing years, the agency now has roughly half that number. California Democratic Rep. Henry Waxman, the author of the House version of the bill, said the recent recalls show that NHTSA needs the proper “resources, expertise and authority” to oversee consumer safety.

The legislation also aims to raise the maximum fine for automaker misdeeds from the current $16.4 million, which is what Toyota will pay for its delay in ordering the recall of 2.3 million vehicles for sticking accelerator pedals. NHTSA chief David Strickland said he’d like to raise the maximum fine to more than $100 million.

Recalls Spur Congress to Act on Auto Safety (Detroit News)

How Did GM Pay Off the Loans Early?

Following GM’s announcement today that it has repaid the $5.8 billion in U.S. and Canadian loans months ahead of schedule, you may be wondering how exactly the automaker managed this. The answer is a $16.4 billion escrow account set up by the Obama administration during GM’s bankruptcy. Those funds are in exchange for the GM shares that make up part of the government’s stake in the company.

The Treasury Department had to figure out how much of a cushion the company would need after emerging from bankruptcy. The escrow account was set up when the government bought a 61% stake in the company, but there was a string attached: GM had to get the Treasury Department’s OK before spending the money.

Thus far, it used the fund to pay out $2.7 billion for the Delphi bankruptcy resolution and previous loan repayments. Rules required any money left in the account by June 30 to be used for loan repayment. With the loans fully repaid, restrictions on the escrow fund will be lifted and GM will be allowed add the remaining $5.5 billion to its reserves.

So what’s the bottom line?

Essentially, GM no longer needs emergency government aid to stay afloat. While the taxpayer still has a sizable investment wrapped up in the automaker, GM has returned to decent health for the time being.

Q&A: GM Will Add Up to $5.5B in Cash to Coffers (Detroit Free Press)