Ethanol production

Now that GM seems ready to consume Chrysler which is being "disposed of" by Daimler and Ford has mortgaged every single piece of property that it owes for a nearly 20 billion line of credit, things may be finally ready for a shake up in Michigan.

With the Big 3 down on the mat, it may be time to extract some concessions from them that are painful in the short term and beneficial in the long term.

I know that they will never give up on those big gas hogs but it might be time for the government to do a little deal making to boost alternative fuel development in America. The government is going to have to rescue these companies at some point (they cannot pay all of their legacy costs currently and things are getting worse as these companies prove incapable of making cars that people want to drive) and instead of waiting for the self-inflicted implosion - the government can barter with these companies to produce a fleet of E85 cheap vehicles that can also run on gas. These companies already make these types of cars for Brazil, so it is not like we are asking them to reinvent the wheel - rather to transfer some of those production lines into North America. These platforms would generate cars that are small sedans and coupes which are light and efficient and can run on E85. This would be perfect for city drivers and commuters - most of whom drive less than 80 miles a day anyways. This supply will drive the creation of E85 pumps in the city (we need demand in order to increase the supply) and the compact arrangement of cities makes it easy for delivery of E85. Note: ethanol cannot be run through a standard pipeline as the ethanol dissolves the O-rings in the pipeline joints. Once gas begins its upward climb in price (and it will) then E85 will become a very clear winner based upon economics. This would allow the market to begin its transition into sources of fuel that are cleaner and politically more favorable.

In exchange for this platform development, the government will give a yearly subsidy for each of the big 3 to use as they see fit. But they only get the subsidy if they stick to the goals of platform development, otherwise they will get nothing.

To many conservatives, this may seem like a horrible idea. But for many of us who live in the city and have to breathe polluted air (making us the equivalent of a smoker) and the political considerations that are built into foreign purchasing of oil, this bribe by the government to spark development is worthwhile. Plus these companies have been running according to market principles and are utterly incapable of making good long-term decisions. Should we watch domestically produced Toyotas backrupt some of our largest companies? Someone has to help these companies break through with a new market (they only make money on large SUV and trucks - effectively every sedan made is a neutral or losing endeavor).