Sunday, November 04, 2007
How big a bribe would Big Oil need?
One of my favorite things to do with conspiracy theories is figure out what it would take to implement them - that's a lot more fun than trying to turn up evidence that there isn't a systematic campaign of bribery. That sort of debunking would take too much actual research. Instead, I'll explore the question of how big a bribe Big Oil would need to perpetuate this conspiracy.
As a starting point, we'll look at some sample information about how much money some of the major players make. In 2006, GM's total sales were $207 billion, and they lost about $2 billion. Honda had $84 billion in sales, and $5 billion in net income. Exxon-Mobile had $365 billion in sales, and nearly $40 billion in net income.
We have to figure that this bribe, if it were to exist, would need to be big enough to make it worthwhile for the auto manufacturers to keep this off the market. An automaker that rolled out a 100 mpg car at a reasonable price could sell a lot of them - I don't think a million in the first year would be out of the question, and it seems reasonable that maybe they'd sell at least 250,000 a year equipped with such technology even after the hype dies down. And such a car would sell at a premium - let's say they could make an extra $1,000 per car on each car with this mileage technology. That doesn't sound unreasonable, does it? So you're looking at a $250 million extra profit from rolling out this technology, each year. So let's say that Big Oil has to pay double that to keep it off the market - half a billion.
Except that would be half a billion to just one company. Limiting this to Detroit would be incredibly shortsighted. You'd need to bribe every major automotive company out there - and just about any company with some level of volume production capacity would become a major automotive company overnight if they rolled out this hypothetical technology. You couldn't just stick to bribing US manufacturers; you'd need to bribe Japanese, Chinese, and European ones too. After all, US gas prices are pretty low - the other countries would have even more reason to want this technology. So figure you have to bribe Ford, GM, Chrysler, Mercedes, BMW, the VW-Audi Group, Fiat, Renault, Hyundai, Nissan, SsangYong, Toyota, Honda, Geely, Diahatsu, Subaru, Tata, and a couple others I can't remember. Figure you have to pay 25 companies a half billion each, that's $12.5 billion in bribes each year.
But that's not all. This secret would have to be something a fair number of executives, engineers, even some of the testing crew are aware of. And these employees become ex-employees eventually, not always on friendly terms. What's to prevent an ex-employee from deciding, "Oh, I'll go to a venture capitalist and sell that secret - it's got to be worth a couple million." The conspiracy theory answer would have to be more bribery - or at least some hit men and a cover-up, but either way, it'd cost money. Let's assume that there's 100 people per automotive company in any year that need to be dealt with, and it costs a million dollars a person. That's another $100 million per company, bringing our total up to $15 billion in bribe payouts.
However, it's not likely you would have to stop your bribery campaign there. If there really were a secret to an easy 100 mpg car, there's others who would be in a position to find it and promote it through the aftermarket industry. What's to stop Bruce Crower - a fellow smart enough to have invented a new type of engine cycle - from coming up with it? Or how about NASCAR - after all, if this could somehow be built according to NASCAR rules or sneaked on through, it would cut down the number of pit stops dramatically, and word could leak out from there. Government funded or private research institutes might pick up on the secret, too, and would need to be bribed. Another example of something that you might have to worry about would be if it were a tuning secret - suppose you had to keep an eye on things like every EFI 101 class to make sure Ben Strader's not disseminating your secret, or worse, have to bribe every dyno shop in the US not to use the secret calibration on customer's cars! More bribes to go around.
So the bribery would need to amount to $15 to $20 billion, with thousands of people who either take the bribe and don't blow the whistle. Although a company like Exxon does indeed have the ability to spend $20 billion on such a program, that's not chump change, even for Big Oil. Plus, that kind of spending isn't easy to hide; about the only place where it seems possible to hide that kind of money is Pentagon budgets. Worst of all, it also runs the risk that somebody out there would decide that they could make more money selling 100 mpg cars than they're making from bribes (or having a conscience attack and putting them into production anyway).
That seems to be the biggest weakness of the conspiracy theory - that with at least 25 CEOs who could potentially bring it down at any time, there isn't one who has decided to secretly tool up for production, get a big jump on the competition who would be caught with no tooling to build such a thing, and make money hand-over-fist for a couple of years selling 100 mpg cars before the competition can catch up. Sure, there could be some additional element to the conspiracy theory, that Big Oil's made some sort of threats for CEOs who don't take the bribe, but face it - as the head of a multibillion dollar corporation, in conspiracy world, an automotive exec should have the same level of access to hired thugs, bribed politicians, and black helicopters that an oil exec would have.
Then again, this sort of conspiracy theory doesn't have to make sense to be believed. It just has to have enough people wishing they could have a 100 mpg car without any downsides, and looking for something to blame besides the laws of physics.