Archive for the ‘Energy’ Category


ObamaCar Replacement Batteries Cost $34,000 According to GM Dealers

March 9, 2014

Here’s the good news about the ObamaCar known as the Chevy Volt: There haven’t been any reported fires connected with the ObamaCar since the company recalled 8,000 of the electric vehicles—that’s one in six vehicles.

That is no fires, if you don’t count the people who’ve been “fired” from the Volt production line as sales continue to make Obama’s “one million” electric car promise just another broken dream in a crooked scheme.

Obama promised that by the time he finished as president, he’d put a million electric cars on the road.

Thankfully, he won’t quite make it.  No telling how much it would cost to put a million on the road after calculating the costs of putting 60,000 on the road.

So far the GM has manufactured only about 62,000 cars, if you count sales of the European model the Ampera.

“Sales of the Volt meanwhile fell 25.6 percent from February 2013 to 1,210 units last month,” says the GM Authority blog. “And while the Volt still holds on to the overall sales lead over the Leaf, Volt sales appear to be slowing in 2014. In January, Chevrolet moved 918 units of the Volt, down from 1,140 in January 2013 and 2,392 in December 2013.”

And despite slashing the price by $5,000, 2013 saw fewer Volt sales than 2012.

“The Volt saw a boost upwards from a November slump and sold 2,392 units in December,” says AutoblogGreen. “That puts the plug-in hybrid’s annual total at 23,094, just down from the 23,461 sold in 2012.”

If Ralph Nader contended that the Corvair was “unsafe at any speed,” then I contend that the ObamaCar demand has reached it’s apex and is “unwanted at any price.”

That might be because no one can actually tell buyers what it might cost to replace the batteries in the car.

Continues the AutoblogGreen:

We called up Keyes Chevrolet in Los Angeles and were quoted a broad price range of between $3,400 and $34,000 to replace a “drive motor replacement battery” in a 2012 Volt. Tellingly, perhaps, the dealer we spoke with was not sure what replacing a ‘drive motor replacement battery’ (and the ‘Grade B’ version, at that) entails, and told us we’d have to bring a Volt in to see what’s wrong with the pack to get a real estimate. We got the same confusion and numbers to replace the battery from Berger Chevrolet in Grand Rapids, Michigan. We asked GM to clarify what this $34,000 charge includes, but that information was not forthcoming.

GM’s hilarious official response to this was a non denial denial: “The high end of what you provided is not consistent with what we would expect the customer to pay,” says Kevin Kelly, manager of electrification technology communications for General Motors.

And that’s the ObamaCar problem.

GM actually has manager responsible for “electrification technology communications”?

So THAT’s where the $11 billion…and more… went in the auto bailout that taxpayers got stuck for.

Divide by two, carry the one and… for only $215,696 per battery taxpayers could provide FREE batteries to every Chevy Volt owner.

That is if they could rely on a plant to manufacture the things.   Because here’s where it gets really silly.

GM expected sales of the Chevy Volt to be so robust that they got the government to “invest” $150 million in a third party manufacturing plant owned by Korean company LG Chem that can produce 50,000 to 600,000 batteries per year.

For a car that’s selling only 25,000 per year? And supposedly has batteries that last 8 years or 100,000 miles?

And still they can’t quite nail down how much it will cost to replace the batteries in the Chevy Volt.

And that’s the great telltale: We know, despite denials from the White House and GM, that the Chevy Volt really is an ObamaCarm designed by the softest minds in the federal hierarchy.

And its problem isn’t its power source.  No.  Its problem is the same that all great, signature ObamaProducts have.  Its problem is simple math.  It doesn’t add up.


The “Dirty Little Secret Behind the Chevy Volt”…. The Rest of the Story

May 20, 2011

The “Dirty Little Secret Behind the Chevy Volt”…. The Rest of the Story

Patrick Michaels is a senior fellow in Environmental Studies at the Cato Institute and the editor of the forthcoming Climate Coup: Global Warming’s Invasion of our Government and our Lives, as well as the author of several other books on global warming.

His Forbes column on the Chevy Volt is a case study in the nexus between big government corruption and big business rent-seeking.

Michaels briefly recaps the well-known consumer fraud in which GM has touted the Volt as an all-electric mass production vehicle on the supposed basis of which its sales receive a $7, 500 taxpayer subsidy, which still renders it overpriced and unmarketable.

Michaels notes that “sales are anemic: 326 in December, 321 in January, and 281 in February.”

There seems to be a trend here.

Michaels adds that GM has announced a production run of 100,000 in the first two years and asks what appears to be a rhetorical question: “Who is going to buy all these cars?”

But wait! Keep hope alive! There is a positive answer to the question.

Jeffrey Immelt’s GE will buy a boatload of those uneconomic GM cars. Here the case study opens onto the inevitable political angle: Recently, President Obama selected General Electric CEO Jeffrey Immelt to chair his Economic Advisory Board.

GE is also awash in windmills waiting to be subsidized so they can provide unreliable, expensive power. Consequently, and soon after his appointment, Immelt announced that GE will buy 50,000 Volts in the next two years, or half the total produced.

Assuming the corporation qualifies for the same tax credit, we (you and me) just shelled out $375, 000, 000 to a company to buy cars that no one else wants, so that GM will not tank and produce even more cars that no one wants. And this guy is the chair of Obama’s Economic Advisory Board?

But of course. Michaels includes this hilarious detail in his case study:

In a telling attempt to preserve battery power, the heater is exceedingly weak. Consumer Reports their tests averaged a paltry 25 miles of electric-only running, in part because it was testing in cold Connecticut. (The [GM] engineer at the Auto Show said cold weather would have little effect.) It will be interesting to see what the range is on a hot, traffic-jammed summer day, when the air conditioner will really tax the batteries. When the gas engine came on, Consumer Reports got about 30 miles to the gallon of premium fuel; which, in terms of additional cost of high-test gas, drives the effective mileage closer to 27 mpg. A conventional Honda Accord, which seats 5 (instead of the Volt’s 4), gets 34 mpg on the highway, and costs less than half of what CR paid, even with the tax break.

The story of the GM Volt deserves a place in the Harvard Business School curriculum….but of course, it won’t. It’s a classic tale of the GOVERNMENT deciding what the public needs, not the marketplace.

Freedom is lost gradually by an uninterested, uninformed, and uninvolved people.


More Oil Supply

April 29, 2011

By Michael J. Economides
Posted on Apr. 28, 2011

It is unfortunate that on the day when President Barack Obama said perhaps one of the most noteworthy things during his entire Administration, the ridiculous birther issue hijacked the news. On that day he was quoted: “”We are in a lot of conversations with the major oil producers like Saudi Arabia to let them know that it’s not going to be good for them if our economy is hobbled because of high oil prices.” He certainly would like more oil to get into the market.

After oil topped $110 per barrel, after gasoline prices have been flirting with $4 per gallon and after a relentless climb which lasted for weeks, the President felt compelled to do or, at least say, something. Obama can be the subject of criticism for a lot of things but as a campaigner he is almost impeccable. He is campaigning officially and he knows too well that virtually nothing removes votes from an American candidate better than higher gasoline prices.

Of course, it is hard to be the President of wind mills and solar panels and now try to implore foreign countries, raking it in from higher oil prices, to commit financial sacrifice. They are asked to increase the supply of the commodity, which has been labeled by Obama as the “energy source of the past”, and against which his Administration has gleefully declared war in both words and action from the time of the previous presidential campaign to today. One would think that higher oil prices would force people to use solar and wind to drive their cars. Yes, I know this is not possible and it is sarcastic but many of the President’s supporters, behind the public consumption headlines of feeling the consumers’ pain, think that what is happening is good for the energy future they would like to see.

The President, like many of his predecessors of both parties, is missing the opportunity to level with the American people: There are no alternatives to hydrocarbon (oil, gas and coal) energy sources in the foreseeable future. The entire twenty first century will still be dominated by them. Solar and wind are unrealistic today, they are thermodynamically deficient, and they will most likely never amount for much more than one percent of the world energy mix without massive government subsidies.

Ideological environmentalism has trumped economic development and has thwarted economic freedom, which was, ostensibly, the motive of the Cold War which America won but certainly does not act like it did. Al Gore, a precursor to Obama even before the Nobel Prize for the “Inconvenient Truth” wrote that the “internal combustion engine is the biggest threat to humankind.”

Tell that to the Chinese who are buying at least 40,000 new cars per day.

Breaking even the lowest standards of credulity on the same day of the President’s Saudi plea, Lisa Jackson, the EPA administrator said rising gasoline prices were not her agency’s fault. Upward pressure on gas prices was “not coming from any environmental or health regulation.” Really? This from an agency that even its more ardent supporters think as the most intrusive and recalcitrant, ever, an agency that has attempted to regulate by government edict rather than legislative fiat.

Make no mistake: global climate change rhetoric — fully espoused by the Obama Administration — is a frontal attack on the US and the lifestyle that emanates from its economy and system. The Europeans who adopted it in the first place are not averse to admit that they are jealous of America. The Chinese, who are all too aware of the ramifications of mandatory carbon restrictions on both the world and, in particular, their economy, simply will not play along. They are, at best, bemused. Does anybody really believe there would be economically extractable hydrocarbons in this world that would not be produced because we pass legislation in the US? Isn’t the atmosphere the same for all?

To crown a day that surely even Don Quixote would question the credibility of Obama’s adversaries, a third jewel was added to the news menu. Senator Harry Reid said the “Senate will turn as early as next week to Obama’s proposal to repeal tax breaks for the oil and gas industry.” This is the answer. Let’s turn on Big Oil. That will solve the problem.

What are we really talking about? The “subsidies” amount to just $4 billion per year. It may sound a lot of money but here is a quick calculation. The United States is using about 400 million gallons of gasoline per day. At $4 per gallon this translates to $1.6 billion per day, which means that the yearly subsidies to the dreaded oil companies account for less than three days of just the US gasoline bill. The US total oil bill at today’s prices is about $2.3 billion per day. Using a modest multiplier in economic activity, that would make the US oil industry, not counting natural gas, a $10 billion per day economic activity. The “subsidies” trumpeted by the government headlines amount to a few hours of the industry’s size.

Last year the Chinese spanned the globe and spent $200 billion in buying oil properties. I am often in China and my colleagues there are actually bewildered. After a few drinks and when words become looser and in some ways, more lucid, they have two questions: “What is the energy policy of the United States? and “If you are not going to produce your own oil and gas why are you letting us have a free ride in accessing oil supplies everywhere in the world with no resistance and no competition?” I have no answer to either but I do know that the Chinese understand that energy means power and better economics. We no longer seem to get it.


Debunking Five Myths About Gas Prices

April 7, 2011

By Robert Rapier

Posted on Apr. 06, 2011


Ed. note: This piece was first published on Robert Rapier’s R-Squared Energy Blog.

This past week I had an article published in the Washington Post called Five Myths about Gas Prices.

I will discuss each particular myth in detail below, but the five myths I addressed were:

Fighting in Libya is sending gas prices higher.
Tapping the Strategic Petroleum Reserve is a smart way to reduce gas prices.
Oil companies produce less in the spring to make gas prices increase.
The Obama administration is driving up gas prices.
Americans can’t live without cheap gas.
Because such articles go through an editing process and must conform to limits on the length of the article, some topics couldn’t be addressed in sufficient detail. Sometimes during the editing process there is a disagreement over what is and is not a pertinent piece of information. This can result in some misunderstanding of the information I am trying to convey.

The article received 153 comments in just a couple of days, after which commenting was closed. Some of the common complaints were that I didn’t sufficiently explain an issue, or that I omitted certain issues. For instance, one person stated that the issue of seasonal blends is more complex than I stated. That’s true, which is why I have written entire articles on the subject. Some people complained that I left out the role of speculators. Actually, I didn’t, and ironically this was one of the myths that I had been asked to look into. My response was that it wasn’t a myth; that speculation does play a role in oil prices.

Some people believe strongly in myths, and when one is busting their cherished myths they can get angry and view you as a liar and a purveyor of misinformation. I suppose for them that justifies the nastiness that sometimes shows up in the comments. Many people seem to need a culprit to blame for high gas prices, but the issue is more complicated than that.

Needless to say, some of the responses were amusing. On speculation, some people suggested that due to my role in the oil industry, of course I was happy to deflect attention away from price gougers and speculators. After all, I am a typical George Bush conservative, and a former oil industry employee who is blind to the dangers of our fossil fuel dependence. On the other hand, some said that since I presently work on renewable energy, of course I am against expanded drilling because that benefits my company. After all, I am a typical Al Gore liberal who knows nothing about the oil industry and believes biomass can replace our current levels of oil consumption. Some people apparently felt that these ad hominem arguments excused them from having to argue the actual points of the article.

So I decided to reproduce the article, but fill in some of the gaps that opened up during the editing process and led to some of the comments. Ultimately, some people will still view this through filters that place most of the blame for high gas prices on ExxonMobil, speculators, or misguided environmentalists. For those people, this expanded article isn’t going to help much. For the people who understand that this is a complex issue, you may find some utility in the expanded version below. As appropriate, I will add commentary that seeks to address some of the common complaints/questions about the article in italics as RR: Comment…

Five Myths about Gas Prices – The Unabridged Version

Gasoline prices have been steadily climbing for several months, and Americans are feeling the pain at the pump. The possible culprits (from greedy oil execs to Mideast turmoil) are as plentiful as the proposed solutions (more offshore drilling, green energy or government reserves). But what is really driving prices up? And what, if anything, can be done about it? Let’s take a moment to fill up on information about our fuel.

1. Fighting in Libya is sending gas prices higher.

Libya is not a big enough global oil supplier for the battles there to have a meaningful effect on gas prices. In the 1970s and early 1980s, Libya was a major U.S. supplier, selling us around 700,000 barrels of oil per day. But today, we import less than 50,000 barrels per day from Libya — a tiny fraction of the 9.2 million barrels per day the United States imported in 2010. Worldwide, the story is no different: Of the 86 million barrels consumed globally each day, less than 2 percent come from Moammar Gaddafi’s regime.

So why are gas prices up? Though Gaddafi’s fate is largely irrelevant to the oil market, unrest throughout the greater Middle East is not. The Persian Gulf region produces almost 24 million barrels of oil per day, more than 25 percent of global oil consumption. The Arab spring that has brought protests to Egypt, Saudi Arabia, Bahrain and Yemen makes markets nervous, and when markets fret over a possible disruption to oil supplies, gas prices rise — whether the disruption materializes or not.

RR: However, as I explained in a radio interview that I did with KSL news-radio in Salt Lake City, there isn’t a lot of excess global capacity relative to a decade ago. Therefore, the ramifications of taking even 2% off the world market will be disproportionate when there aren’t a number of suppliers who can step up and fill that void with increased production. We are drawing down our oil reserves even as demand is increasing, and that more than any other factor explains the rise in fuel prices over the past decade.

Further, many people complained that I didn’t address speculators at all in the essay. If you understand what speculation is, then you can see that I did address it under this first myth. The fact that oil prices would spike on the basis of what is happening in Libya is based on speculation around several themes. This has also been referred to as a -fear premium- because it is based on the fear that the outage will be extensive, that other producers won’t be able to fill the supply gap, and/or that the unrest spreads across this important oil-producing region. But a price increase based on fear is one based on speculation-which also isn’t to say that the speculation won’t materialize.

2. Tapping the Strategic Petroleum Reserve is a smart way to reduce gas prices.

The U.S. government maintains a 727 million-barrel oil reserve — 38 days’ worth at current levels of consumption — to protect against potential supply disruptions. But just about every time prices rise, politicians want to access the oil in the reserve to increase supply and bring prices back down. Sen. Charles Schumer (D-N.Y.), for instance, has been calling for oil releases from the SPR for more than a decade. In a letter to President Bill Clinton in 1999, he requested the release of several hundred thousand barrels a day from the SPR because oil prices had made a “meteoric ascent to nearly $25 per barrel.” He even introduced legislation to make it easier for the Administration to tap into the SPR in order to combat rising prices.

Had Clinton dipped into the reserve then, as Schumer requested, we almost certainly would have gotten a raw deal as prices continued to climb over the next decade. What if that $25-per-barrel oil could be replenished only at $75 per barrel? Tapping the SPR makes the government an oil speculator, and any nation running record deficits that becomes a commodity trader is playing a dangerous game.

The SPR exists to buy time in a true supply emergency. If we use it as a political tool to keep voters happy by attempting to stem rising gas prices, we may be forced to buy back oil at even higher prices, or we may be left with an insufficient supply in a real crisis.

RR: Elsewhere, and again on the radio interview with KSL news-radio, I explained the difference between high gas prices and a true emergency. Before my radio interview, I had filled up my car at a gas station in Hawaii. I paid $4.67 per gallon of gasoline. While prices like that will cause additional financial hardship for many, at least the gasoline was available for purchase. We take this for granted; there is always gasoline at the service station when we need it. When you pull into the gas station and there is no gasoline at any price, then that could start to qualify as an emergency.

Fuel shortages have happened in the U.S. before, and could happen again for a variety of reasons. If a major source of U.S. oil imports was cut off, shortages could quickly develop. The SPR could then be tapped to ease those shortages, and if it appeared that they would be extensive it would buy time to implement emergency measures such as rationing. So the SPR is an insurance policy, and if that insurance is used up just because politicians are hoping to influence the price of oil, we may find ourselves lacking insurance in a time of crisis.

3. Oil companies produce less in the spring to make gas prices increase.

Almost every year, gasoline prices rise in the spring. This is usually preceded by falling gasoline inventories and reduced refinery outputs, leading many to believe that oil companies are constraining supplies to drive prices higher.

But there is a valid reason this happens; indeed it is written into the law. In the spring refiners have to switch from winter blends of gasoline to summer blends. This is based on EPA regulations designed to reduce air pollution in the summer.

Butane plays the biggest role. Butane is a cheap ingredient relative to most components in gasoline, but it boils at low temperatures. In winter, this isn’t a big problem so refiners are able to put more butane into the gasoline. But in summer, butane evaporates from gas, polluting the air while leaving us with less fuel in the tank than we paid for. As temperatures rise, refineries replace butane with more costly ingredients and draw down winter inventories just as beach season begins. So summer gasoline blends cost more to make, and supplies are more constrained since butane is off limits.

An additional factor is that during this seasonal gasoline transition, refineries often do annual maintenance. The timing is driven by a combination of improving weather and moderate demand prior to the start of summer driving season. So the production of gasoline generally falls in the months before summer, leading many to incorrectly conclude that there is a corporate conspiracy at work.

But the same thing takes place in the fall. During the transition to winter gasoline, maintenance takes place and inventories are drawn down. The differences are that this is leading into a season of lower demand, and cheaper butane is coming back into the gasoline blends. So the fall transition doesn’t have the same impact on prices.

RR: For more details on seasonal gasoline changes see my essays Refining 101: Winter Gasoline and Why Summer Gasoline Means Higher Prices.

4. The Obama administration is driving up gas prices.

Sen. Mitch McConnell (R-Ky.) says EPA regulations are a “back-door national energy tax” that pushes prices up. Former Alaska governor Sarah Palin says the White House drilling moratorium shows President Obama’s “culpability in the high gas prices hurting Americans.”

Blaming the president for rising gas prices is nothing new, and it’s a bipartisan tactic. In 2004, Sen. John Kerry (D-Mass.) blamed President George W. Bush for higher gas prices because he continued to fill the Strategic Petroleum Reserve as oil prices climbed.

Just one problem: Even if more domestic access is suddenly granted, it won’t do much to control current prices. The U.S. government has estimated that there are 18 billion barrels of oil in the outer continental shelf of the lower 48 states that are off limits to development. That may sound like a lot, but it is only about 2.5 years of supply for the United States, and it would take several years to allocate leases and drill exploratory wells. Even if the estimated 10 billion barrels of oil in the Arctic National Wildlife Refuge were available for development, today’s policy decisions would have no impact on gasoline supplies for as much as a decade. Obama can’t dictate what you’ll pay for premium tomorrow.

RR: This one elicited a number of hostile responses, many from people who apparently think we can in fact drill our way to energy independence if not for the meddling of environmentalists who work to keep domestic supplies off limits to development. The premise of this point is straightforward, but it apparently strained the comprehension abilities of some. At issue is whether Obama’s policies are impacting gasoline prices. My point is that estimates indicate that there isn’t all that much oil there in the first place relative to our consumption, and even if it is all opened up for development today the supplies won’t hit the market for several years. So what Obama does or doesn’t do today with respect to development isn’t impacting gas prices today.

The single biggest misconception on this point involved readers adding their own additional interpretations to what I said. Since I am pointing out that it would take years to develop and thus won’t impact today’s gasoline prices (which I did write) then I am saying we shouldn’t develop our resources at all (which of course I didn’t write). The latter misinterpretation was often accompanied by a few liberal insults about my inability to think about the future, or about ulterior motives for not developing our resources.

5. Americans can’t live without cheap gas.

Yes, Americans love to drive, and Americans love cheap gas. But across an ocean, there’s a continent filled with people a lot like us who’ve lived with high gas prices for years. They’re called Europeans.

While U.S. gasoline heads toward $4 per gallon, Europeans have been paying much higher prices for years because of high taxes on fuel. This month in Britain, gas hit 6 pounds, or about $9.76, per gallon. Because gas is so dear, Europe’s per capita energy use is half that of the United States, leaving Europe less vulnerable to oil price shocks yet not undermining its citizens’ standard of living.

The United States, built on cheap oil, is much less densely populated than the Old World, with more wide-open spaces to traverse. But that doesn’t mean we can’t embrace some of the things that have helped Europeans keep their gasoline bills down — such as high-speed rail, public transportation and green energy.

In fact, Americans have shown that they can adjust their behavior when faced with sticker shock at the pump. As gas prices rose from $2.31 per gallon in 2005 to $3.30 per gallon in 2008, sales of the Toyota Prius eclipsed those of the Ford Explorer, and public transit use reached a 50-year high. When it costs $30 to fill up a Geo Metro with regular, all options are on the table.

RR: This one also elicited strong responses, mostly along the lines of “I don’t care what Europeans do. We are Americans.” One person pointed out “yeah, but what you don’t say is that European prices are high because of high taxes.”; I concluded that this person couldn’t read. Other responses were that Europeans had transportation options that we don’t have here in the U.S., apparently never stopping to wonder why they have some of these options.

I believe that when you are faced with a complex problem, one of the first things you want to do is to see how others have approached the problem. You may decide that their solution isn’t applicable to your situation, but you may find that it is at least partially applicable. In the case of European gas prices, their solution is at a minimum partially applicable. After all, what kinds of cars do you see on European roads? Almost no pickups, very few SUVs, and very few gas guzzlers period. They are behaving exactly as we would in the U.S. after a sustained period of high gas prices. So the most significant thing you can do personally to limit the impact of high gas prices on your budget is to do as the Europeans do: Get fuel efficient.

Conclusions (not in the original article)

It is always an adventure to see my writing exposed to a broad cross-section, many of whom don’t know the first thing about me. The ratio of uninformed comment and just generally insulting comments runs much higher than when I write in familiar locales. Too many people dismiss factual statements on the basis of ad hominem arguments, and I never cease to be amazed at the number of people who will extrapolate what I write, and then attack that extrapolation.

A large number of people also believed that I had ulterior motives for writing this article. At the end of the day, what I am trying to do has nothing to do with any personal financial agenda. Some will believe that, some won’t, but I want to state it clearly in any case. What I want to do is to bring a higher level of understanding to our energy issues so we can make more informed energy decisions. Based on some of the comments, we still have a steep hill to climb, and until more people climb that hill we will continue to have politicians trying to use the SPR as a political tool to appease angry, but uninformed voters.


Obama’s Green-Jobs Fantasies

March 10, 2011

(For some reason WordPress kills the text formatting on some of my posts and the software refuses to register my edits; the result the following “smashed together” post.  My apologies)

By John Stossel


Anyone who understands basic economics already knows that President Obama’s $2.3 billion green-jobs initiative was snake oil. Now, thanks to Kenneth P. Green, we have statistics as well as theory to prove it.
In a new article, “The Myth of Green Energy Jobs: The European Experience,” the environmental scientist and a resident scholar at the American Enterprise Institute writes, “Green programs in Spain destroyed 2.2 jobs for every green job created, while the capital needed for one green job in Italy could create almost five jobs in the general economy.”
Ironically, Obama boasts his initiative “will help close the clean-energy gap between America and other nations.” But Green says, “(C)ountries are cutting these programs because they realize they aren’t sustainable and they are obscenely expensive.”
Obama claims that if we “invest” more, “the transition to clean energy has the potential to grow our economy and create millions of jobs — but only if we accelerate that transition.”
What could make more sense? A little push from the smart politicians and — voila! — we can have an abundance of new good-paying jobs and a cleaner, sustainable environment. It’s the ultimate twofer.
Except it’s an illusion, as economic logic demonstrates.
“It is well understood, among economists, that governments do not ‘create’ jobs,” Green writes. “The willingness of entrepreneurs to invest their capital, paired with consumer demand for goods and services, does that. All the government can do is subsidize some industries while jacking up costs for others. In the green case, it is destroying jobs in the conventional energy sector — and most likely in other industrial sectors — through taxes and subsidies to new green companies that will use taxpayer dollars to undercut the competition. The subsidized jobs ‘created’ are, by definition, less efficient uses of capital than market-created jobs.”
Green is using good, solid economic thinking. Many years ago, Henry Hazlitt wrote in his bestseller, “Economics in One Lesson,” “The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.”
In judging any government initiative, such as Obama’s green-jobs plan, you can’t look just at the credit side of ledger because the government is unable to give without first taking away.
Worse than that: Inevitably, more is taken away — destroyed — than is given because the government substitutes force and taxation for consent and free exchange. Instead of a process driven by consumer preferences, we get one imposed by politicians’ grand social designs. It’s what F.A. Hayek called “the fatal conceit.”
So we shouldn’t be surprised that green-jobs programs make energy more expensive. “(F)orcing green energy on the market (is) much, much more expensive,” Green said. “Using Spain as a model, when you do the math, you realize that creating 3 million new green jobs could cost $2.25 trillion.”
Of course, many people who push “green jobs” want the price of energy to rise so we’ll use less. If the environmental lobby wants Americans to be poorer, it ought to come clean about that.
The advocates of such programs don’t just misunderstand economics. They have lapsed into a pre-economic mentality. Rulers once believed they could do whatever they wanted, subject only to the physical laws of nature. If things didn’t work out as planned, it was because the people had failed to cooperate. But as economist Ludwig von Mises wrote, once economics emerged as an intellectual discipline, “it was learned that in the social realm too there is something operative which power and force are unable to alter and to which they must adjust themselves if they hope to achieve success … .”
That “something” is inescapable economic forces like the law of supply and demand.
Green is right when he says, “Central planners in the United States trying to promote green industry will fare no better (than Europe) at creating jobs or stimulating the economy.”
John Stossel
John Stossel is host of “Stossel” on the Fox Business Network. He’s the author of “Give Me a Break” and of “Myth, Lies, and Downright Stupidity.” To find out more about John Stossel, visit his site at


Hybrids vs. Nonhybrids: The 5-Year Equation

February 24, 2011

Here is a very good quick read into the main issue that I believe exists with hybrid cars as replacements for non-hybrids.  The underlying fact is that hybrid cars (and trucks)  are more expensive to purchase than for non-hybrids; often by several thousands of dollars.  To recoup the additional cost, gasoline (and diesel) fuel costs would have to be significantly higher that any projected short-term future price (say…within the next 10 years).  Some might refer to the federal (and sometimes state) tax breaks given to first time purchasers that can make this price difference less of an issue, but what really is happening with these “incentives” is taking money (taxes) from one person and giving it(a gift) to another to make what is really a bad deal look better.   I don’t think that most Americans believe that it is a good thing to give their hard earned money to help support what is essentially a product that would be produced at a loss.  When looked at at the rate of replacement (called market penetration) of non-hybrid  with hybrids, the Toyota Prius – the most successful and longest marketed hybrid has taken 10 years to put 1 million cars in the US market (US car/truck ownership exceeds 200 million) . There is no doubt that these hybrids are, and will remain for the foreseeable future, essentially a “boutique” item, purchased mostly for that “hybrid” badge, by well-to-do folks that the additional cost is justified in the prestige of owning these expensive cars.  Like those people that spend $100s on a Louis Vuitton handbag that is actually a cheap $25  plastic bag; its all in the appearance, having the right label. This type of “keeping up with the Jones” doesn’t make sound economic thinking and, unfortunately, will only lead to more subsidies (and tax money squandered) for a market that cannot be supported.

By MATTHEW L. WALD –  NYT -February 23, 2011, 7:45 AM

A car buyer who lays out an extra $6,200 extra to buy the hybrid version of the Lexus RX will get the money back in gas savings within five years, according to Consumer Reports magazine, but only if gasoline averages $8.77 a gallon. Otherwise, the nonhybrid RX 350 is a better buy than the Hybrid 450h, the magazine says. The hybrid gets 26 miles per gallon, and the nonhybrid, 21, in the magazine’s calculation.

The magazine’s annual New Car Buying Guide includes a table that compares several hybrid cars with their nonhybrid versions, or, in the case of cars that come only in hybrid models, to similar cars by the same manufacturer that are not hybrids.

For example, the Honda Insight comes only in a hybrid version, so it was compared with the nonhybrid Honda Fit; gasoline would have to rise to $10.08 to even out the extra expense, Consumer Reports said. The Insight sells for $22,010 and the Fit for $16,260.

The researchers use a five-year payback period because that is a typical duration for car ownership. It assumed that the driver would log 12,000 miles a year and pay $2.80 a gallon, a price that now looks a bit on the low side.

The Toyota Prius, the most popular hybrid, did far better in the magazine’s comparison. Consumer Reports paired it with the Toyota Corolla LE, comparing the hybrid’s 44 miles per gallon and purchase price of $22,950 with the Corolla’s $17,950 list price and 32 miles per gallon. The Prius will cost less over a five-year period as long as the price of gasoline averages only 80 cents a gallon, the magazine calculated.

For some models, the choice is close to neutral from a financial point of view. The Ford Escape hybrid would cost $500 more over five years, but would break even if gasoline prices averaged $3.60. The Toyota Camry hybrid would save $500 over five years by comparison with the Camry LE 4-cylinder and remains a better deal if the price of gasoline averages just $1.92.

The magazine also compared diesel and gasoline versions of some models. The Mercedes-Benz GL350 BlueTec diesel, at $66,925 and 19 miles per gallon, will save $8,000 over five years compared with the gasoline GL450 version, which sells for $69,035 and gets 15 miles per gallon. It is cheaper than gasoline at any price, the magazine said.

Some people who bought last year will see different economics because of tax breaks that were still in place then. And some states offer access to HOV lanes, special parking or other perks for hybrids.

But of course, money might not be the major motivator when it comes to hybrids, said Jonathan D. Linkov, the managing editor of the magazine’s auto section. There’s also “that green feeling,” he said.


The Ethanol Idiocy that Will Not Die

February 9, 2011

Thank you oh  “Great Hot-Air One” (read Al Gore).  What an idiot! Thank God he is fading (a little too slowly, in my opinion) .

Rich Lowry: National Review Online, 14 December 2010

When Al Gore drops an environmental fad, it has truly reached its expiration date.
In his wisdom, the Goracle recently acknowledged what almost all disinterested observers concluded long ago: Ethanol is a fraud. It has no environmental benefits, and harmful side effects. The subsidies that support its use are an object lesson in the incorrigibility of Washington’s gross special-interest politics. It is the monster that ate America’s corn crop.
“It is not good policy to have these massive subsidies for first-generation ethanol,” the former vice president and Nobel Peace Prize recipient said, referring to corn-based ethanol. He called the fuel “a mistake,” and confessed one reason he fell so hard for it is that he “had a certain fondness for the farmers in the state of Iowa.” These farmers vote in the First in the Nation caucuses and practically insist that their favored presidential candidates drink ethanol at breakfast and hail it as the nectar of the gods.
Al Gore’s ethanol apostasy is a symptom of a left-right coalition that has arisen to expose the former wonder fuel. (The Gore of old insisted that “the more we can make this home-grown fuel a successful, widely used product, the better off our farmers and our environment will be.”) But common sense, even cross-ideological, bipartisan common sense with all the evidence on its side, is no match for Congress’s boundless appetite for expensive favors for powerful lobbies and constituent groups.
Tom Harkin and Chuck Grassley, the Democratic and Republican senators from Iowa respectively, stand at the doors of Congress declaring: Ethanol now, ethanol forever. They have graced the Obama-McConnell tax bargain with an extension of a tax credit for ethanol that costs about $6 billion a year, and with an extension of a tariff on ethanol imports. Ethanol is so uneconomical that Congress supports it three different ways — with a mandate for its use, a tax credit to subsidize it, and a tariff to keep out competitors. Rarely are so many levers of government used to prop up one woeful product.
During the past decade, ethanol enjoyed a good run as a notional part of the solution to global warming. Then, environmentalists began to realize it may actually increase greenhouse emissions. Ethanol releases less carbon dioxide per gallon than gasoline. Once the emissions necessary to convert land to corn production and then grow and process it are taken into account, though, ethanol doesn’t look so green anymore.
So much corn — about 40 percent of the U.S. crop — is feeding into the maw of government-created demand for the fuel, that it could be increasing worldwide food prices. In short, in exchange for not reducing greenhouse emissions, ethanol reduces the availability of food to the poor.
The multiple layers of subsidization have their own perversity. Since there’s already a mandate to blend ethanol into gasoline, the tax credit is giving away money for something that would happen anyway. Environmental groups say this pads the bottom line of Big Oil. Harry de Gorter of the free-market Cato Institute has a more complicated take — the subsidy decreases the cost and therefore the price of gasoline, effectively subsidizing its consumption. Your Congress at work.
But who cares about the facts? Once we have fired up a vast machine that from cornfield to distilleries produces 38 million gallons of ethanol a day, it will be nearly impossible to turn it off. Too many people will have a vested interest in continuing the scam, and its supporters — like Harkin and Grassley now — will always argue that any change is too disruptive. We’ll still be mandating ethanol long after the internal-combustion engine is obsolete.
The ethanol experience should counsel against blithely creating new government-supported industries on the basis of dubious promises of cost-free environmental benefits. Judging by the tax bargain, festooned with all manner of other green subsidies and credits, it’s a lesson ignored.

In Washington, the boondoggles may lose their luster, but they never die.