A Conspiracy in Restraint of Trade
Auto companies are largely controlled by oil interests.

Steven Rattner, President Obama’s former auto czar


Robert Zubrin

In a previous article for National Review Online, I reported on how easy it is to enable the flex-fuel capabilities in modern automobiles, allowing them to run equally well on methanol, ethanol, or gasoline, thereby giving the customer fuel choice and, with it, a substantial opportunity for savings. For example, at current gasoline and methanol prices, the miles per dollar achieved by running my 2007 Chevy Cobalt on methanol is 40 percent higher than that possible with gasoline. This is not new technology: As extensively documented by Ford’s former director of alternative-fuel vehicle research, Roberta Nichols, the Big Three produced tens of thousands of highly successful methanol-gasoline flex-fuel cars for the state of California more than 20 years ago.

At one time, adding flex-fuel capability to a car increased its production cost by about $100. That is no longer true. Currently, all new gasoline-powered cars sold in the U.S. are flex-fuel cars, but only about 5 percent are being sold as such. The rest are being marketed with their flex-fuel capability disabled by their manufacturers.

This is a very curious situation. One may well ask, why should an automaker choose to disable a useful feature that it has built into its cars? It seems to make no sense for any company to take measures to degrade its own product. Furthermore, given the fact that the auto industry has a fundamental interest in low fuel prices — consumers have only so much they can spend on transportation, and it either goes for cars or for gas — why should it choose to cripple a capability that otherwise could serve to erode prices at the pump? It seems like a very bizarre policy — until you look at who owns and controls the auto companies.

The problem is that the automobile companies are not independent entities capable of pursuing their own interests. Rather, they are owned and controlled by organizations that are much more heavily invested in oil.

The largest automobile company in the world is Volkswagen. Who owns it? The answer is the government of Qatar. That’s right, the sovereign wealth fund (SWF) of Qatar, an OPEC emirate, owns 17 percent of Volkswagen — potentially a controlling interest — as well as 10 percent of Volkswagen’s Porsche subsidiary. One of the Qatar SWF board members, Hussain Ali Al-Abdulla, accordingly sits on the supervisory board of Volkswagen AG. Elsewhere in Europe, the same story holds. For example, the Kuwait SWF owns 6.9 percent of Daimler/Mercedes, 20 percent of Spyker/Saab, and 100 percent of Aston Martin, which it acquired from Ford for $450 million. The Abu Dhabi Investment Authority, one of the sovereign wealth funds of the United Arab Emirates, owns 9.1 percent of Daimler/Mercedes and 40 percent of Mercedes-Benz Grand prix, and has a $2.7 billion investment in Chrysler. In addition, the Abu Dhabi Investment Authority has a major position in Fiat/Ferrari, on whose board it is represented by its managing director, Khaldoon Khalifa. The government of Libya also owns 2 percent of Fiat/Ferrari, which in turn owns 52 percent of Chrysler.

What about the two biggest American auto companies, GM and Ford? The dominant positions in these companies are held by major Wall Street firms whose collective energy holdings exceed $700 billion. Thus, while the $9 billion these funds have invested in GM and the $24 billion placed in Ford are of great weight to the auto companies, the funds themselves are far more concerned about protecting their investments in oil.

It is thus futile to hope that, left to their own devices, these companies will do anything to endanger the ability of OPEC to loot the world. Rather, they will continue to protect the monopoly the oil cartel holds on the world’s vehicle-fuel supply. If the auto companies were free agents, they would act to break the fuel monopoly that is so damaging to their own interests and those of their customers. But they are not, and so they won’t.