Who killed GM - Big Oil?

[MonaroSS]

“Who killed GM…..”

I was thinking today; we all have seen the "who killed the electric car" discussions and I wondered if we could one day see similar discussions on who really killed GM and why. My guess is that the suggested culprit would be Big Oil, and by that I mean Really Big Oil, as in Sovereign Oil Companies who really own the oil industry.

But why would they want to kill GM? Could it be because the largest car company on the planet decided to bet the farm on the electrification of the automobile? And take away Really Big Oil’s largest customers, the American people?

Could Really Big Oil want GM so harmed financially that they could not deliver the Volt, or at least at affordable numbers and price so that the Volt fails?

Everyone knew that GM was going to subsidize the Volt by their profitable SUV’s and Trucks. GM bet the farm on this. If you were Really Big Oil and wanted to prevent GM being able to do that, what could you do to harm GM’s sale of those SUV’s and Trucks? Well some might say that the easiest way to kill GM’s profitability and thus its Volt would be to raise the price of gasoline. But Really Big Oil couldn’t raise the price of oil that much could they?

Anyone hearing the testimony to Congress on speculation in the oil markets knows that something funny is going on, but it’s not normal speculation. Because speculators can’t withhold oil from the markets and because there are just as many speculators shorting the price of oil, they should not be making the kinds of differences we see.

Others say that it’s simple supply and demand, that China and India are causing an imbalance. But China and India didn’t just spring to life economically, they have been pretty much consistently growing for ten to twenty years, and the same for their car markets in those countries. But the rise in oil price is more recent and now ahead of the rise in consumption in those countries too, while consumption is static or falling in the West.

Still others say that it’s the falling US dollar that is really affecting the price of oil, which is priced in dollars, and thus especially hurts the US more than anyone else. This is true that the falling dollar does harm the US price of gasoline more than in any other country, but then one has to look at why the dollar is falling.

Perhaps the dollar is falling because of the balance of trade, but that has been out of whack for decades. Perhaps it’s the sub-prime mortgage and credit crunch debacle that’s pushing the dollar lower, or the Fed’s lower interest rates. But the dollar didn’t fall precipitously when for years the Fed lowered interest rates after 911. And foreigners don’t buy many US domestic houses so fear of investing in that market would not make much difference, and up until now US corporate earnings and even the GDP has not even confirmed a recession in the US. Yet still the dollar falls.

But of course the easiest way for the dollar to fall would be if those who own large amounts of it were to sell it or simply stop buying it. And we all know that Really Big Oil, as in Sovereign Oil Companies, are among the largest holders of US dollars. So a very small shift in their buying and selling habits would make for a large effect on whether the US dollar goes up or down.

But would Really Big Oil use their clout on the currency markets, and their ability to secretly push the price of oil up, to raise the cost of gasoline in the US just to harm GM? A company that has done nothing to them except be the first and largest automaker to try to introduce a new technology that would finally free the American people, if they commute less than 40 mile per day, from ever having to buy gasoline from Really Big Oil ever again.

Why would anyone try to destroy a company like GM if they were about to take away Really Big Oil’s biggest customers for the last 50 years?

It will be interesting to see if such “Who killed GM” discussions and perhaps documentaries appear and also to see what they may have to say……..

[MonaroSS]

I'll just add that if the price of oil stays high from here for a decade then it would seem unlikely that Really Big Oil was manipulating prices to destroy the Volt, as ongoing high prices helps electric cars.

But anyone following the topic knows that battery costs and manufacturing volume restrictions over the next 3-5 years will limit electric cars. Beyond that only a fall in the price of oil will do them great harm.

So if the price of oil stays high and kills GM over the next 12 to 18 months by drying up all their cash from SUV’s and Trucks but then drops after that to make electric less viable, then suspicion may be justly cast.

It seems that right now GM's plans for funding their turnaround and the Volt have met up with the perfect storm. It just remains to be seen if that storm were also perfectly planned or not....

[2002 Caddy]

Big Oil did not kill GM...
If it did, why aren't Toyhonisan dying too?
At worse we can say that big oil has given Toyhonisan a bad head cold...
GM on the other hand seems to be bleeding out.

What/who killed GM?
1) Inability to quickly adapt
2) Inability to recognize the obvious
3) Inability to plan ahead
4) Inability to effectively diversify and the big one
5) A completely misdirected focus.

Might I add we aren't dead yet... I'm still hoping for a turnaround.

[plane]

Originally Posted by 2002 Caddy

Big Oil did not kill GM...
If it did, why aren't Toyhonisan dying too?
At worse we can say that big oil has given Toyhonisan a bad head cold...
GM on the other hand seems to be bleeding out.

What/who killed GM?
1) Inability to quickly adapt
2) Inability to recognize the obvious
3) Inability to plan ahead
4) Inability to effectively diversify and the big one
5) A completely misdirected focus.

Might I add we aren't dead yet... I'm still hoping for a turnaround.

I'm still hoping for a turnaround?
I'm still hoping for a turnaround?

After reading your scathing anti-GM post after post ad infinitum, I find that incredibly difficult to believe.

You're not taking lithium right now are you?

[Ttple]

GM never seemed to look ahead. They really haven't done anything worthwhile lately other then rely on Opel and Daewoo to bring them somewhat up to speed.

[logansowner]

Come on now.

Making ****ty cars that nobody wanted for the last 25 years is what killed GM. If you wanted a truck, you were doing great, but if you wanted a good car...move along, nothing to see here.

It's nobody's fault but their own. Relying on trend vehicles with no backup plan is what put them here. Every type of vehicle runs in trends. Trucks used to be used for, ya know- truck duty. The idea of using trucks to haul the kids to school? That was a trend. Only problem is that GM dumped all of their resources into this trend. And we all know, that a trend, is by definition, temporary. They made no previsions for when this trend ended.

[MonaroSS]

Originally Posted by 2002 Caddy

Big Oil did not kill GM...
If it did, why aren't Toyhonisan dying too?
At worse we can say that big oil has given Toyhonisan a bad head cold...
GM on the other hand seems to be bleeding out.

What/who killed GM?
1) Inability to quickly adapt
2) Inability to recognize the obvious
3) Inability to plan ahead
4) Inability to effectively diversify and the big one
5) A completely misdirected focus.

Might I add we aren't dead yet... I'm still hoping for a turnaround.

Really Big Oil has never worried about Toyota's PR toy the Prius; selling 100K per year. It is a trifle and still a gasoline car, no different than any European econo-car in terms of mileage, and Really Big Oil has never worried about them either. There are always going to be people who want economical cars. It is simply part of the Bell Curve of Really Big Oil customers. But the Volt is different.

The Volt is what is spurring other manufacturers to build plug-ins too, but they will give up if the Volt fails and then oil drops in price. The Volt could potentially cut the heart out of the Bell Curve of Really Big Oil customers.

GM has made terrible decisions in the past and that is why Toyota and others have far more cash reserves and less overheads. But GM did have a chance to make up for those past errors and fund a turnaround and subsidize the Volt. The GMT 900's, both offered that opportunity and put in place a weakness for GM.

But nothing else GM sold could have been renewed first and made the profit margins needed to fund the renewal of the rest of the entire GM range. Only the GMT 900's. And given even the rising fuel prices at the time continuing to rise as they were; that plan would have still worked and was working.

But something intervened, oil began rising at a rate experts today still can't explain.......

GM's weakness in its plan had been exposed. The makers of the Volt had a special vulnerability.

[mikmak]

Hell of a conspiracy theory, but perhaps GM isn't the biggest oil customer of the future. Knowing the increasing wealth of developing countries, it would be reasonably acceptable to want in on the profits. It is up to China and India to recognise how fast they want to grow and ensure that when they peak, they aren't reliant on Sovereign Oil. That's the problem with having too much free assets: in order to just get things done, you throw money at it. The downside for the US market is that they no longer have buckets of dollars to throw at resources anymore. Couple that with a higher standard of living and more workers rights and you have an economic headache that effects everyone globally.

Big Oil hasn't killed GM, economics has. Although some blame can be put on the shoulders of the company, expectations of something for nothing from consumers also plays a significant role. America was built on an industrial revolution. Part of that revolution was significantly impacted by inequities (blue collar vs. white) that made the manufacturing industry economically viable. Unfortunately, there has been no equilibrium. It is a challenge that has faced many countries before and it may well happen again.

[dindak]

Big Oil has zero control of oil prices.

GM is being hurt by:

1. A very fast change in the market (spured by a 30% rise in oil in 3 months)
2. Slow ability to change over to more cars
3. Poor financial position
4. Poor past management
5. High union wages / legacy costs
6. An American public that won't give GM a try again even thought they have some of the best most fuel efficient product on the market.

Pretty tuff slug.

[camaro_freak]

Originally Posted by dindak

Big Oil has zero control of oil prices.

GM is being hurt by:

1. A very fast change in the market (spured by a 30% rise in oil in 3 months)
2. Slow ability to change over to more cars
3. Poor financial position
4. Poor past management
5. High union wages / legacy costs
6. An American public that won't give GM a try again even thought they have some of the best most fuel efficient product on the market.

Pretty tuff slug.

#6 - why should Americans give GM another try? What is in it for them? Millions of Americans got screwed in the 70s and 80s. I've been burned by EVERY single GM car I've owned and I'm a GM fan but I kept buying. Why should anyone come back to the brand without some sort of incentive?

Until GM does that, #6 will never be completely erased with good product.

[TruckMan]

Well, if we're talking conspiracy theories, then I think Lee Harvey Oswald killed GM, with the help of the Democrats who want to get their president candidate elected. DUH!

[Hitman1970]

http://www.energybulletin.net/node/29925

US Military energy consumption.

All I know is the above information is certainly not helping the price of a gallon of gas.

[dindak]

Originally Posted by camaro_freak

#6 - why should Americans give GM another try? What is in it for them? Millions of Americans got screwed in the 70s and 80s. I've been burned by EVERY single GM car I've owned and I'm a GM fan but I kept buying. Why should anyone come back to the brand without some sort of incentive?

Until GM does that, #6 will never be completely erased with good product.

What's in it for Americans? The future of the American auto industry! If you don't support it, it will be gone and it's another step down in the decline of the US.

People need to realize this. Huge implications of killing all of your own industry and loss of control of your country's own destiny.

[windvale]

I can sum up the cause of GM's predicament in one word - "Inertia"

GM has so much inertia built up from 100 years of "management" and "corporate culture" that in order to turn the company around it's taking twice as long to strip away the patina of years of management gridlock and politics.

Auto manufacturers that started during the post-war era seem to be able to adapt quicker to market changes...perhaps because their corporate culture allows them too.

GM seems very slow to adapt to market changes, and has almost never really anticipated market changes. Despite the fact that the current GM leadership states that they are "turning the company around", they have clung to:
1) an outdated division structure that was conceived during the early 20th century
2) unrealistic labor agreements
3) a product mix that requires cheap gas to succeed, despite the fact that all indicators during the early 21st century (Iraq war, Iranian nuclear plans, ANWAR, etc.) have pointed to the price of oil only going up

At the end of the day, GM is responsible for where GM is...

[chevydlrmn]

there is a link to this on Det news