FFBs Light the Way!

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One of the more interesting stories to emerge from the Hurricane Sandy disaster is out of Port Newark. It is yet more data on the usefulness of the oh-so-green hybrid vehicles.

Sixteen or so of the snooty Fisker Karma hybrids — which cost over $100,000 each! — were flooded by Sandy’s surge while they were parked, awaiting distribution. The amazingly well-made cars proceeded to explode and burn. It turns out that flooding apparently shorts out their electrical systems, which then set fire to their gasoline systems. It also turns out that this problem is nothing new — indeed, Fisker hybrids, so chock full of lithium-ion batteries, have quite a habit of shorting and burning. Who could have predicted that large numbers of batteries submerged in water could prove problematic?

Fisker has responded that while it doesn’t know what caused the fires, it has confidence in the Fisker Karma. Confidence.

Perhaps it would help future consumers to rename the brand “Fisker Fire Bombs.” That might alert future consumers to a potential problem.

Fisker, recall, was one of the “winners” that Obama selected to receive massive taxpayer support in The Great Green Cause. But The Cause just continues to bomb out.




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Distorting the Energy Market

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The government is hurting our ability to develop new sources of energy; and both the Republicans and Democrats are to blame.

In the most general terms, Republicans support continued tax breaks and subsidies for the oil and gas industry, and Democrats support grants, subsidies, and tax breaks for such new forms of energy as wind and solar. Neither party has a good energy policy. Both are blocking the path of innovation.

To create a fossil fuel alternative we must find an energy source that is cheaper, easier, and better than fossil fuel. But when government is picking which alternatives are worth pursuing, in addition to funding traditional energy sources, our view of what energy sources may work out becomes clouded. As long as government provides subsidies and tax loopholes to oil and gas

companies, they will hold an advantage in the market. Not only does government intervention in this manner make fossil fuels a highly lucrative industry, thus attracting many bright businesspeople, engineers, and scientists, but it makes the introduction of alternatives more difficult, since potential new competitors find working in an unbalanced market nearly impossible. Even if there were an energy alternative that consumers would want, the alternative would not be able to seize enough market share to turn a profit, because the coalition of government and big oil cannot be challenged by a newcomer.

With few exceptions, people agree we need to move away from burning fossil fuels if we want to meet future energy needs with as little disturbance to existing ecosystems as possible or beyond what we might consider desirable. And because oil and gas receive government benefits, the conventional thinking goes, so too should alternative energy exploration, in order to “level the playing field.” But what the best alternative might be is still unclear. One reason why it is unclear is that government involvement clouds the picture.

Think of ethanol. For years, because of Iowa's importance in the presidential nomination process, ethanol was highly subsidized by the government. Now we discover that it was not a workable, standalone alternative to fossil fuels. Consider all the resources that were misallocated because of this pursuit. Private resources, such as time and expertise, were focused on making ethanol work — in order to procure government money. If there had been no government money in ethanol research, engineers and scientists in the energy industry would have had a greater incentive to look elsewhere for a good alternative. But when the government creates a market there is no need to look elsewhere. The only problem is that the government lacks anything like a good record as a venture capitalist.

If it is true that necessity is the mother of invention, then the government is stripping us of that necessity. What is necessary for every company to operate is money, and if it doesn’t have a strong need for money, because government is supplying all it needs and then some, its incentive for invention is stripped away. If we want to find the best energy source, both long-term and short-term, the government needs to stop trying to control which sources come to market, or stay in the market.The government needs to divest itself of all financial interests in the energy industry.




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Government-Grown Lemons

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A flurry of recent reports brings us up to date on GM — now known as Government Motors, after its nationalization by the Regime. The news is less than inspiring.

First is the report that GM is recalling nearly 4,300 Chevrolet Sonics — because they may be missing their brake pads! The incredible news is that workers at the Orion Township, Michigan assembly plant left off inner or outer brake pads on many of the Sonics manufactured there.

The funny thing is that the same Regime Secretary of Transportation Ray LaHood who told Americans to avoid Toyotas in a bogus brake scare is totally silent about this real brake fiasco.

Then there's the news that came out on the “legendary” Chevy Volt — you know, the EV green machine car of our future. For one thing, it appears that the damn things are costing American taxpayers about $250,000 for every vehicle sold. This to subsidize a car purchased by people whose average income is $170,000 a year.

That’s the estimate provided by James Hohman, economist at the Mackinac Center for Public Policy. He analyzed the 18 government deals that were involved in setting up the Volt line — all the loan subsidies, taxpayer-funded rebates, tax credits, and government grants at the federal and state levels that were arranged for this car. The thing is indisputably green in one sense: it takes taxpayer dollars to keep it alive.

Hohman's estimate does not, by the way, include the bailout money that has been shoveled at GM as a company. Nor does it include municipal support.

The deals Hohman reviewed included $690 million of support by the state of Michigan and $2.3 billion in federal support. That’s a total of $3 billion in for the 6,000 Volts actually sold. As Hohman puts it, “This might be the most government-supported car since the Trabant” (the infamous piece of junk manufactured by East Germany).

Worse, it turns out that GM is calling back all Chevy Volts because of a fire hazard. Seeing several Volts catch fire after crash tests showed that electrical shorts in the battery can ignite the coolant, GM is going to try to fix the problem by strengthening the battery compartment. Just in time!

But the Volt isn’t the only EV that is prone to battery-induced fires. Fisker Automotive has announced that it is recalling its entire line of luxury plug-in hybrids (which sell for over $100,000 each!) because of fire hazards.

I mention the Fisker, because even though it builds its cars in Finland, it received $529 million in American taxpayer-backed loan guarantees. The Regime assured us that the American taxpayer would be paying to provide American jobs, but that was just another lie.




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EVs: Not So Green After All

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The Australian has reported the results of a fascinating British study. It turns out that electric cars (EVs), those holy icons of the Green religion, may actually produce more atmosphere-destroying emissions over their lifetimes than regular, gasoline fueled cars — when you do the commonsense thing and factor in the energy it takes to produce the necessary batteries.

To be precise, the study (which was funded by the Low Carbon Vehicle Partnership, a group that is, in turn, supported by both the British government and the British car industry) showed that the average EV would have to be driven over 80,000 miles for it to produce a net savings in carbon dioxide over the standard internal combustion engine. Considering that EVs have limited ranges (they average about 90 miles per charge), it is not clear that many EVs will last that long.

This study was the first to look at the whole lifecycle emissions of EVs, including their manufacturing, driving, and — please note — the tricky matter of disposal of their used batteries. These batteries are the culprits. They contain metals that are expensive to produce, and they have to be replaced every few years.

The study found that a mid-size EV produces about 23.1 tons of carbon dioxide during its lifetime, scarcely less than the 24 tons produced by a regular, gasoline powered car. This is in part because the emissions from manufacturing EVs are about 50% higher than those from manufacturing regular cars.

What the British Department for Transport will make of the report it called for is anyone’s guess. The Department is currently lavishing $7,700 grants on people who buy the damn things.




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Two Big Surprises

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Well, now, you can knock me over with a feather! Two stories just out are amazing in their a priori improbability. They tell us a lot about the growing awareness of our looming national financial crisis.

The first is the news that the U.S. Senate has voted to end federal subsidies for ethanol, which this year hit a high of $6 billion from taxpayer dollars.

This is surprising for a number of reasons. The ethanol lobby (i.e., the group of rentseekers who derive much of their income from this screwy subsidy) is powerful, consisting of many players in key political states. Moreover, it has been around for more than 30 years — an unhappy product of the Carter presidency. Also, it has been a darling of the environmentalist movement, which has consistently opposed fossil fuel and nuclear power, favoring instead so-called “renewable” sources of power (biofuels, wind power, and solar power).

Even more surprising is that the vote was bipartisan and wasn’t even close: 73 for, and only 27 against, with Dianne Feinstein (D-CA) joining Tom Coburn (R-OK) in sponsoring the bill. In the end, 33 Republicans and 40 Democrats joined to kill the subsidy program.

I suspect that a number of facts helped the Senate reach this epiphany. One is that despite over 30 years (and untold billions of taxpayer dollars) invested in research and development, the energy output that you get for the required input still keeps the fuel from being economically attractive — a point that even Mr. Green himself, Al Gore, mentioned when he came out against corn-based ethanol earlier this year. In part, the problem is that we are making ethanol out of corn, which is far less efficient than making it out of sugarcane — and this is why, besides giving the domestic producers of the stuff a hefty tax credit of 45 cents per gallon of ethanol blended with gasoline, the feds have had to impose a whopping 54 cents per gallon tax on ethanol imported from abroad (mainly Brazil).

Another senatorial eye-opener may have been the recent, massive discoveries in domestic sources for oil and natural gas that can be produced by new technology such as fracking. These discoveries make the case for subsidizing domestic ethanol even more dubious.

Besides, politicians are finally beginning to see the obvious, deleterious impact that diverting 40% of our corn crop to make ethanol (which, again, we could buy more cheaply from Brazil) has on food prices both here and abroad. The rapid inflation of food prices has caused riots abroad and is beginning to cause real discomfort here.

Finally, there is the sense that this subsidy program has just gone on too long. As Senator McCain put it, “Enough is enough. The industry has been collecting corporate welfare for far, far too long.” Exactly so. There is demand for ethanol, but the industry needs to supply it in the free market.

The ethanol industry has been angling to replace tariffs and subsidies with federal spending for special pumps and tanks to hold higher concentrations of ethanol. But the House just voted against that by a margin of 283-128.

So it may be that the governmental subsidies for ethanol will end soon.

Now, the second surprising story is that the AARP, the liberal advocacy group that purports to represent the elderly, and was so crucial in helping President Obama ram through Obamacare, has changed its position on reducing benefits for Social Security. John Rother, the AARP’s policy head, has said that the AARP now views change in Social Security’s benefits structure as inevitable, and wants to have an influence on the process. This is a big change from AARP’s earlier stance, which was that all we needed to do was increase payroll taxes to cover the deficits. As Rother put it, “The ship was sailing. I wanted to be at the wheel when that happens.” Of course, the question is, why would we want this toad and his leftist organization — who did all they could to block reform and increase the depth of the problem — to be “at the wheel” of reform?

It is all so richly ironic. The AARP was viciously instrumental in killing President Bush’s attempt to reform Social Security. It claimed that Bush was going to shortchange the elderly. Now the AARP itself will face the same charges.

Indeed, the AARP immediately aroused the antipathy of a coalition of leftist groups calling itself (in pure Alinsky style) “Strengthen Social Security.” It has already accused AARP of becoming elitists disconnected from their base.

The AARP is approaching this cautiously. It lost about 300,000 members by helping push through Obamacare. To cover its tail, it wants to make sure that the Social Security revision process is bipartisan. Its own polls match public polls that show the elderly deeply oppose changes to the program. One recent poll shows that 84% of all Americans 65 and older oppose any and all cuts in benefits.

But the AARP and members of Congress are finally coming to see the iceberg of fiscal insolvency toward which the economy is headed. Visions of Greece, currently in the throes of riots by dependents of the state and facing the prospect of defaulting on its debts, are concentrating minds wonderfully.

In fact, it is all rather like watching a Greek tragedy. The blind AARP finally has to face its fatal flaw — the mess it helped create and maintain.




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