While commuting to work this morning, the Marketplace Morning Report spoke of bad times for the U.S. auto industry. Yesterday, stock analysts lowered the rating of General Motors’ stock to “junk” status (with even more room to plummet), and warned that Ford may quickly follow suit.

The reason? Soaring oil prices (approaching $60 a barrel) aren’t compatible with the gas-guzzling bread and butter of the U.S. auto companies. Staples like the American sports car (e.g. the Corvette, Camaro, Thunderbird and Mustang), the pickup truck, and the SUV (the Ford Explorer is one of the top sellers of the past 10 years) are losing sales to more practical and efficient cars (e.g. sedans and economy cars) that have two drawbacks for the automakers:

  1. The more fuel-efficient models have a much smaller profit margin; and
  2. The sedan and economy markets are ruled by non-U.S. auto companies (e.g. Toyota, Honda)

With recent studies showing that U.S. drivers consume 11 percent of the world’s petroleum supply, it’s no wonder that, as gas prices rise, people are looking to more fuel-efficient cars.

So why is it that the Bush administration is phasing out the tax credit for purchasing hybrid cars while leaving in the credit for purchasing, oh, a Hummer? Can we say “auto and oil industry lobbies?” Can we say “we still need justification to be the bully invaders of the Middle East?”

Hmmm….