One does not need to be a Brookings Institute scholar— specializing in “oil dependence, electric vehicles, and climate change” — to see why no one will willingly purchase an all-electric car, much less the one million that President Obama wants on the nation’s highways in five years. FULL ARTICLE by Patrick Barron
Source link: http://archive.mises.org/14036/a-132-year-payback-on-the-all-electric-car/
A 132-Year Payback on the All-Electric Car
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My company offered an employee benefit with one of our suppliers that would install solar pannels to generate electricity and heat water to make an all electric house. The government has a subsidy for this kind of work, and our company was providing a subsidy, and the company supplying the sytem was cutting the price for us. The typical payback for what they considered an average home was about 32 years. Looking at their numbers for an average home my energy costs were about half. When I did the numbers my payback was near 75 years and could go as high as 100 years. I am not stupid. I am not going to invest in a system that will give me most of the payback after I am dead.
The government is beyond belief. They take our money then loan it back to us to pay for things the don’t give benefit until after we are dead. Why not let me spend my money now and even Keynes would say that would help the economy recover. But I am not a Keynesian so I know that if I spend that money on producing things in the here-and-now life would be even better.
I can remember when the gave a tax credit for installing solar panels. People in Beverly Hills installed solar panels to heat their swimming pools. Now I’m sure the well off in Beverly Hills will take advantage of the taxpayer subsidy to buy an electric car. A nice redistribution of wealth.
Nice analysis. But we know the price of gasoline isn’t going to be constant, and thus, the $3/gallon price figure seems a little on the low-ball side.
So is giving the Prius a mileage of 20 mpg and not factoring in the cost of a replacement battery.
He also doesn’t factor in interest, which will probably outpace gasoline price inflation. Along with the 20 mpg conservative estimate, I’d say the author erred on the side of caution at every step. The payback is likely in the 3-4 century range.
1) The economic realities could change drastically. Your analysis is a should be considered for a range of prices and costs.
2) If the guy lives 5 miles away, he should take his bike to be a real environmentalist.
However the great thing about the market is that it is flexible. If prices rise substantially, then the market can adjust and deliver us electric vehicles and hybrid add-ons easily. So I guess it does make sense to use current prices. Since we can only speculate about the future (which an unfettered market does allow for speculation) it makes sense to me to use current prices.
Really though, with interest rate costs associated with this endeavor, the chances of it ever showing a profit is zero. Even if the payback time is 30 years.
oh the irony..
now just imagine we are in 1807. the first internal combustion powered automobile was just build.. hm.. i can imagine the exact same discussion as now and how eveybody said that this new technology is stupid and will never be profitable and has absolutly no use..
than in 1885 Daimler was the first to build a car that would become a financial success.
I guess it wont take that long with the electric cars and a lot of people here will have to eat their words in 10, 15 or maybe even 20 years.. but fact is that electric cars are here to stay, maybe only for 30, 40 years until we have something even better.
Chris,
Thanks for illustrating our point. 1807. Automobile becomes widespread…. ~1910. One Hundred year gap. Now, to adopt the internal combustion engine in 1807 would have been stupid right? The tech was not ready
This isn’t condemnation of the idea overall, just right now it sucks…
In 2 years it might be entirely different.
The analysis gets far worse for electric-car payback if you were to add the $.50/gal average fuel tax to the $.75 gallon-equivalent price of electricity. After all, this tax is ostensibly a user fee that pays for the roads and their operation that have the same approximate cost if populated with electric cars or Corollas. In fact, a case can be made that low-mileage vehicles subsidize road use costs for the Prius right now.
What is so special about “electric” cars? Electricity doesn’t come from thin air. Most people still burn stuff like coal or oil or atoms to get it.
a engine in the car is less efficent than a power plant (a cars uses only around 25%.. a average coal power plant has over 30% good ones 40%.. gas power plant over 55%.. and so on.
What is the efficiency of storing energy in batteries? I can assume there is a lot of loss from the power plant > house > car battery > car electric engine.
The energy loss from burning gasoline is far greater than the energy loss of producing electricity in a fission-based nuclear plant and stored in a battery for an electric car to use. Gasoline and diesel powered engines lose a significant amount of energy as heat waste, exhaust, and the friction of the engines being highly complex. Electric engines basically only have one moving part and produce very little heat waste. Further, electric engines are lighter than gas or diesel engines, meaning less energy is required to move the car as it is now lighter. This is on top of the electric engine having superior torque (on top of it being constant unlike gasoline engines) and horsepower.
Again, the real limiting factor is energy storage. Gasoline is simply more convenient for use, storage, and transportation than batteries.
You forgot energy loss over transmission lines.
You are also forgetting the refuel time. Even for those cool Tesla electric vehicles (0 – 60 in 3.7 sec., 125 mph top speed), the max range is 300 miles. So if you wanted to take a road trip, you would have to stop for six hours every 300 miles to refuel instead of 5 minutes. And please remember that the Tesla Roadster costs $100k. Tesla’s luxury sedan will cost $50,000 and have a range of a couple hundred miles.
A regular luxury sedan from BMW or Mercedes costs $50,000.
The high voltage transmission lines were considered, and even with them, the energy loss by burning a gallon of gasoline is still vastly worse.
As for distance, I’ve built a mini-model of the best way to pull this off. Electromagnets under the roadways that alternate positive and negative poles. These poles spin the alternator to power the engine. That’s all electricity generation is, spinning a magnet in a coil. To save electricity, the magnets aren’t activated unless a pressure plate is depressed as the car passes over. The cars would still have internal batteries for trips off the transmission line, such as your neighborhood.
This works well in the model. The only difficulty I have is that building and operating a private roadway using this system is effectively illegal. The State has a monopoly on the roads.
Wouldn’t the spinning-magnet roads cause everything in the car that’s magnetic to be affected as well? Not just the alternator?
I’m not use electric cars are all-powerful. Then again steam engines are extremely efficient and don’t require any gears.
Isn’t the Nuc industry heavily subidized? In fact aren’t all forms of power generation heavily subsidized? There’s no arguement that both oil/gas industries are. I wonder if anyone has done a feasiliby study without the indusry subsidies?As for weight? Eh..it’s a wash as the batteries themselves add a lot of weight back into the car. Some manufacturers are playing around with carbon fiber frames (BMW for example) to help offset the weight of the batteries.Electric motors of course have instant torque and are extremely durable (problem for re-occuring sales as these things just don’t wear out).
True, all energy forms are subsidized today, but from what I’ve read, only the nuclear industry’s subsidies fail to overcome the cost of excessive regulation. Basically, only nuclear is on-net more expensive because of government intervention. It would appear that the production and operation of a nuclear facility, especially using the most modern reactor designs, in a free market environment would cost less to construct and be far cheaper to maintain and fuel than coal, oil, or gas plants. And especially cheaper than wind or solar.
common..how long do we have electric cars compared to gasoline fueled engines..
if the electric cars from today are not for you that is totally fine and i would say that they only make sense as 2. or even a third car in family with a house (and garage).
but just wait 10 years and electric cars will have improved a lot.. but there isnt that much room to improve gasoline cars (certainly in the usa.. but here in germany or europe it is common that a car gets 40mpg.. 30 or even 20 are considered really bad).
so dive what works for you today.. but i bet that in 10-15 years it will be a no brainer to drive electric because it is cheaper than gas : )
I don’t know about MH or Lithium (they are bound to be Lithium), but I remember that NiCaD’s and Lead were at about 140% charge efficiency. I mean, for each 1.4 joule you put in, you’d get 1 joule out. (Rest goes to heat, of course.)
Too lazy to look anything up, but last I looked:
transmission losses: Usually below 5%, but sometimes higher
Nukes: about 33% thermal efficiency
good coal: high 40′s in %
Turbine (coal?): up in the 60% range, but not many of them
nat gas: dunno
Well. but you dont take into account that we don´t pay the true price for oil. Natural disasters and lost jobs (fisher in the gulf) are not compensated by the oil companies. Same with nuclear energy.. it is heavy subsidized by the government if that would stop alternative energies would become profitable too!
We don’t pay the “true price” for anything. And there are fewer steps from oil to motive power than from energy generation (from whatever source) to four car batteries full of heavy metals to motive power, so that’s what the market has settled on. If oil becomes more scarce, the market will go in another direction.
Also, I would say nuclear energy is as much heavily ‘bureaucratized’ by the government viz. subsidized. Wind and solar are highly diffuse energy sources compared to coal and uranium so it’s hard to see them being able to compete without the government’s cap and trade schemes.
Essentially, Mr Barron & co are saying oil derivates have no fungible alternatives. Any “alternative” car create opportunity losses elsewhere. Ethanol cars competes with food. Electric cars compete with electric appliances. The good old petrol car instead complemented food and appliances and, if any, helped make modern life affordable. Hence when Peak Oil arrives and the cost of running the petrol car makes even a small 4-cylinder a luxury item then the standard of living will have to drop. Then again in World War 2 plenty of horses and donkeys were still in use for transportation.
The cars that Tesla Motors produces already get 250 miles per charge.
I personally like the idea of an electric car. Electric motors are orders of magnitude more powerful and efficient than a gasoline or diesel engine. They are simpler, quiet, and more reliable. The downside is the fueling problem.
But, like how automobiles were waging an uphill battle against horses because gas stations didn’t exist outside major cities, the infastructure will come, but only if government gets out of the way and lets the market develop these things.
Electric cars are the future, just not the near future. All the money in the world won’t speed up time.
I agree J. Unless you take a road trip, the electric car is superior in most ways. As to the battery problem, patent law keeps some of the best batteries off the market. Texaco bought GM’s battery production company in 2000, and stopped production which effectively killed the NiMH battery for electric cars.
Yeah, and the oil companies bought the 100 mpg carburettor and kept that one off the market as well. They did that in 1970, doncha know.
Patents (as rotten as the system is) do not work like that.
NiMH batteries are not as effective or as economic as the lithium types. Compare specifications and compare costs (including life cycle costs) and you’ll soon find the reason NiMH has fallen from favour.
And the electric car is far from superior to the internal combustion engine car at all. They are inferior. I’ll comment on a separate post later.
Sione
Didn’t Tesla himself have an idea for wireless energy transfer? That electricity itself, not just an EM signal, but actual power, could be transmitted and received?
That would solve the battery problem, or at least mitigate it.
Nikola Tesla actually had it functional. Unfortunately, his laboratory fire wiped out all the research on wireless energy transfer. That fire in his lab was the modern-day equivelent of the burning of the Great Library of Alexandria and the Mongol sacking of the Library of Baghdad combined. It was also said Tesla figured out the unified theory of thermodynamics. And I’m not surprised, this is the man that was playing with radio-controlled cars a decade before Marconi used the patent system to claim he invented the radio.
I would be rather more critical of those sorts of claims. It is rather easier to say you solved the mysteries of the universe than it is to actually solve them, particularly with a convenient lab fire to cover your tracks…
The power transfer technology is pretty well understood. Serious power can definitely be transmitted. Efficiency could be questionable, but that would be weighed against the present existence of a huge infrastructure of power distribution. All modern electronics would have to be shielded from the electromagnetic radiation.
The main problem in my opinion is: the transmitted power would be available to anyone who put up an antenna, there would be no centralized control.
Why would non-centralized control be a bad thing?
Well, for one thing, the government would want to charge everyone an energy tax of some kind to pay for it. This would be considered one of those externalities issues, although I think it would be a positive externality. I’m sure a free market could deal with it, but too many other people probably would think of it as another market failure issue.
Here’s why your conclusions, in my view, are wrong:
It is unfair (I hate using this word…the older I get the less I believe in fairness) because the car you compare the electrical against is already subsidized. In a free market, governments would not own the underground, the oil. Land would belong to private owners who would charge for the environmental damage caused by oil exploration. Who pays for the disaster in the oil sands? Nobody! Who pays for the disasters in offshore exploration? Nobody. BP only paid after the fact. If there had not been any spillover, nothing would have been paid. Yet, the oceans are getting all contaminated. Who pays for the damage in the Artic? In Patagonia? In northern Africa? In the Arabic Peninsula?
Who pays for the air pollution in the cities? Who pays for the roads? The government. Who pays for railroads? Private companies. There you have another subsidy.
So, the relative price, which is what counts here is absolutely distorted. Absolutely. You want to discover what that ratio should be? Privatize all fiscal land. Give citizens the right to sue those who pollute the air. Take all bailout money back from the auto sector. Privatize all roads and have car companies compete with railways. Railways would immediately acquire real estate development companies and develop land adjacent to train stations and the economies of scale would be so big that car companies would be completely wiped out.
My two cents…
Several people have said it already, but you Mises guys like numbers so let me add my “vote” on the topic: gasoline-based cars are HEAVILY government-subsidized. The entire Iraq war was to give the US control over a large oil stockpile. Divide the cost of JUST the Iraq war among all the gasoline-powered cars sold in the US and your whole argument goes out the window.
Mises.org: We rail against government subsidies … unless they’re on things like war and oil.
“Mises.org: We rail against government subsidies … unless they’re on things like war and oil.”
You must be new to this site. That’s the only excuse you can have for this statement.
Also, the article does comprise “the argument” which Austrians make against the government subsidies of electric cars. It is merely one aspect (cost-benefit analysis) in support of one facet (pragmatism and/or utilitarianism) of that argument. Ultimately, the real argument to be made is a moral one.
Thank you. Try again.
Ah, butterfingers. That should say “the article does NOT comprise ‘the argument’” and so on.
JKillz: I argue against prevaricating posters… but the typo doesn’t help.
Are you saying the petrol was never really affordable either? That the automobile really had no place outside of rich people with a need for speed?
Hi, Jeremy. I’m sorry, the parties you are looking to criticize aren’t here. Maybe you were looking for those couple of nutty Objectivists that spoke out in favor of the war in Iraq? Go down the hall and make a left. If you come back this way, try searching “Iraq War” and see how many articles you can find that support your accusation.
US oil sources:
http://www.eia.doe.gov/pub/oil_gas/petroleum/data_publications/company_level_imports/current/import.html
Iraq is barely a mouse fart in the whole scheme of things.
Killjoy. You are destroying their fantasy. Their minds are made up – please don’t confuse them with facts.
So I expected some criticism of my argument, but … wow. Let’s take the responses one at a time
>> You must be new to this site.
Not really; I’ve been reading at least the RSS summary of every article for close to a year now, and reading the actual articles some much smaller fraction of the time (1 in 10 or 1 in 15 maybe). Not the best record certainly, but … they have some damn long articles on here! It’s hard to really read the whole site religiously, so I just do my best.
>>the article does comprise “the argument” which Austrians make against the government subsidies of electric cars.
Right … while completely ignoring all the subsidies of non-electric cars. Nothing hypocritical about that at all …
>> Are you saying the petrol was never really affordable either?
Not at all! What I’m saying is the consumer sees a fraction of the true cost of their automobile (so “petrol” has appeared more affordable than it really is). Even ignoring all the obvious subsidies (and there are and have always been lots, long before the most recent bailout of Detroit), you really have to consider all the wars (and other CIA/military endeavors) for oil. If you don’t, you’re simply not factoring in all the actual costs.
When you factor in those costs, would a lot of poor people be unable to afford cars? Sure. Just like when you start factoring the real costs of home ownership in to the equation, suddenly a lot of poor people can’t afford homes (see the recent housing crisis). But that doesn’t just mean you should keep tricking poor people in to buying things they can’t afford!So all I’m saying is, don’t make a false argument by comparing government subsidies of electric cars to … absolutely nothing for gasoline cars (when in fact there is A LOT more subsidization going on with gasoline cars).
>>If you come back this way, try searching “Iraq War”
I wouldn’t expect to find many (but I’m too lazy to actually search). But you’re making a straw man here; I didn’t say “Mises … they support the Iraq war”, I said “[Mises ignores] things like war and oil”. And I stand by that statement: things *like* war and oil are often left out of the equations when the authors here make seemingly nice neat and tidy arguments. But if you pull on the strings of those arguments and look at what’s being left out of them, oftentimes (certainly not always) there’s a lot. Like in this case, where the entire subsidization of gasoline cars is completely ignored.
But to be fair, this certainly isn’t true of all articles on Mises (obviously, otherwise why would I keep reading?), and I was being a bit inflammatory with my final joking tagline. I was trying to provoke some thought, and it certainly seems like it accomplished … oh wait no, it mostly just provoked knee-jerk reactions. Damn.
>> US oil sources:
First off, thank you J. Murray (and Gil too) for actually responding to my point and not just blindly defending the honor of poor Mises
However, I unfortunately can’t respond to your point, as I can’t find the source you linked (the URL appears to be broken), and I strongly suspect that “the devil is in the details” of the facts you’re trying to show me. But let me make a simple argument that doesn’t require me to see your link: if we didn’t fight Iraq war for oil, what did we fight it for? (Hint: It wasn’t to stop Al Quaida or prevent weapons of mass destruction)…
Oh, and as for you Walt D, you just made an insult not a point, so there’s nothing really to say. It’s easy to dismiss other’s arguments as fantasy; it’s much harder to think critically of your own position and engage with the points others make against it. Good luck.
Jeremy,
Your final joking tagline was offensive to people who follow the philosophy advocated here because the Austrian school inherently opposed to government subsidies, even for things like oil. I have never seen an article on this site (and I have read hundreds) that has even so much as hinted that government subsidies of cars or oil (or anything else) are a good thing, so you will have to excuse people for assuming you are new here if you missed picking up that central point.
Alright, you’re not new — you’re just out of your depth. Fair enough.
You claim that it’s hypocritical not to criticize government subsidies of non-electric cars while in the process of attacking subsidies of electric cars. No, it’s only hypocritical if the author ignores such logic altogether or outright embraces those former subsidies. That the author didn’t mention it is more a function of the purpose of the article, which was to talk about the electric car. If the article had been about government subsidies of cars in general, we might then be able to determine the author’s opinion on the matter and make a judgment whether it was consistent or not.
Given that I do read the Mises.org articles fully (most, though not all, of them), I am in a much better position to conjecture about the ethical consistency employed here. Your point that the article did not tackle non-electric car subsidies is valid; but it does not follow that the author is hypocritical. Knowing this site’s regular condemnation of pretty much everything the state does, I think it’s safe to say the author would similarly criticize other car subsidies.
Seriously, if you think that the Mises Daily articles would conveniently leave out criticism of war and oil, then you are being thick. Scott D advised you to search the site. You completely evaded that advice and then pretended you wouldn’t find anything.
I’m not defending “the honor of poor Mises”. I’m just a bit annoyed over your hypocrisy: you make an admittedly inflammatory comment and then cry foul that a couple regular users here didn’t respond nicely. But not all: I gave you the reasoning behind the article and mentioned that it was not the full argument. J Murray provided a link (which worked, I checked it). These you either ignored or belittled.
On top of this, you had the audacity (balls even!) to end your comment with this:
“It’s easy to dismiss other’s arguments as fantasy; it’s much harder to think critically of your own position and engage with the points others make against it.”
Keep it up. I’m beginning to think you type in front of a mirror.
Ok, first off that last comment was directed specifically towards Walt D., who (by his own admission was being a little glib and) “shot down” my whole argument by dismissing it as simple fantasy without actually considering its merits. He did the exact opposite in his second post, so kudos to him on that. But as for me, I’m directly responding to each person’s critical points here (and not just saying they live in a fantasy); I’m not sure how I could be any more engaged. But call me egotistical (or whatever you meant with that mirror remark) if that helps you sleep better *shrug*.
As for J Murray, his link really didn’t work last night, so I couldn’t view it. It works now though, and I’ll respond to it later (running late for work). In the meantime though I’ll pose the same question I posed to him to you: if we didn’t go to Iraq for oil, why did we go? Because again, people at the highest levels of our government knew that Iraq was not affiliated with Al-Quaida nor did the have weapons of mass destruction.
Now for the real meat: your claim that the article wasn’t being hypocritical because it was only “one facet” talking about electric cars, and that “it’s safe to say the author [or others on Mises.org] would similarly criticize other car subsidies.”
If I complain about how the government is subsidizing small organic farmers and that doesn’t seem very efficient, that’s fine … but if I leave out the part about how the big non-organic farmers receive far more subsidization, I’m being *at best* disingenuous. You can’t pretend that very small portions of the economy exist in a complete vacuum from everything else.
But that’s exactly what the author did! Re-read the article, one of the headers is even “Trust Only the Free Market”. Well wake up: there is no free market! So pretending that electronic car subsidies are somehow ruining a non-existent free market is a completely bogus argument. Yes you *can* point out that the subsidies of e-cars suck, regardless of other subsidies. But that’s not what the author did, he just completely left out the acknowledgement that there are TONS of other subsidies out there, and that subsidies are absolutely no reason to choose or not choose an electronic car because those same subsidies are even more of a factor for non-electronic cars.
Re-read the end: “right now the all-electric car appears to be a black hole for wasting more taxpayer money.” How can you tell me that electronic cars are somehow a waste and gasoline cars aren’t. And if gasoline cars are a waste, what’s the point of having an entire article about just e-cars; clearly the point of the article was to attack e-cars specifically, not car subsidization in general!
And finally, I didn’t evade anything in my response to Scott D. I was just:
A) being lazy
B) didn’t have any need to search to argue my point
Because my point wasn’t “Mises loves war and oil subsidies”. Please don’t misunderstand. My point was “Mises often leaves out very relevant bits of information that completely disrupt the argument they’re making … things like the cost of the Iraq war and gasoline-powered car subsidization”. And again, I stand by that point, and no amount of searching about Iraq and oil is going to do anything to convince anyone on that point one way or the other.
If I complain about how the government is subsidizing small organic farmers and that doesn’t seem very efficient, that’s fine … but if I leave out the part about how the big non-organic farmers receive far more subsidization, I’m being *at best* disingenuous. You can’t pretend that very small portions of the economy exist in a complete vacuum from everything else.
Your argument is unsound. It’s based on your wholly unfounded assumption that an article about the economics of the electric car was obligated included some criticism of non-electric car subsidies, or governmental oil policy generally.
You have claimed that omitting this other discussion is either hypocritical or disingenuous. It is obviously neither. It is a related but different topic.
You obviously feel very strongly about the Iraq war, oil, and such, and that’s fine, but really, the world does not revolve around you — not every discussion is obligated to focus on what you want to talk about. Your idea that the article is somehow misleading for only addressing electric cars is not only fallacious, but a little weird.
Ok, can we step back for a minute here? Where is the central point of the article? I’d suggest it’s the sentence that inspired the title:
“So, by converting his car to a plug-in hybrid for $9,000, buying a yet-to-be produced 100-mile range battery for $33,000, and buying electricity for the equivalence of 75¢ per gallon of gasoline, Mr. Sandalow could have purchased enough $3 per gallon gasoline to enable him to drive to work for 132 years!”
Before that sentence, there’s a whole lot of talk about numbers and costs and math and it all sounds very official, like the author has considered every possible cost that should be factored in to the equation. But the ENTIRE calculation requires the assumption of a $3 per gallon oil price. You add in the real cost of that gallon of oil, and suddenly the whole argument goes right out the window.
The author started the article attacking the perceived holes in the original article’s calculation, and that culminated in “Call me cynical, but this number does not sound as if it were the result of a scientific analysis either.” He then proceeded to spend four paragraphs doing very scientific-analysis-like stuff and at the end claimed victory over the original article’s logic.But he just did the exact same thing he criticized the original authors for: he used bad numbers. A $3 per gallon of gas number makes ANYTHING non-gas-powered look cheap! The only problem is, that gallon of gas cost you the American taxpayer far more than $3 … which means the whole argument is deeply flawed.
So, it’s not that I “feel very strongly about the Iraq war, oil, and such”, or that “every discussion is obligated to focus on what you want to talk about”. It’s about the basic premise of the article … which I think is fairly germane to the discussion.
Let’s call a truce. I think I’m beginning to see your point. I still think you’re wrong, but I see the point, and to some degree I think it’s valid. Your inflammatory come-on at the beginning did not engender any goodwill in my replies; and my vituperative answers did nothing to make it better. My apologies.
To your arguments:
That the article makes its calculations on numbers that are distorted. You have a point. There are subsidies in gasoline prices. But there are also taxes. There is a 50-cent-a-gallon tax, for instance. There are also state-level taxes and synthetic fuel costs. Further, there’s the federal Strategic Petroleum Reserve, which artificially increases prices. All told, there are a lot of government-induced price increases. As J Murray illustrated above, the Iraq War (to protect oil interests) has done little to affect prices downward. More likely, the uncertainties of war (as well as their drain on resources) have caused further increases in price. I think, while valid, your argument is overstated. In any case, even if better than I cede, it still does not follow that the author’s whole argument is fallacious and goes out the window.
Your second point was to suggest that Mises Daily articles routinely omit criticism of war and oil subsidies. I deign this to be patently false. Repeatedly, the content on this site upbraids war both morally and economically. DiLorenzo has condemned all forms of protectionism (direct and indirect); Rothbard has written extensively on the warfare state; Tom Woods recently edited a collection of American antiwar writing which frequently blasts the relationship between subsidies and war. Perhaps the articles have not satisfied you in this regard. But there are plenty of websites out there with an antiwar, anti-military-industrial complex bent. How many will discuss a topic like the electric car? Perhaps some, but not nearly as many, nor nearly as intelligently, as this one.
You are free to be dissatisfied with the article, and to criticize that it didn’t tackle other subsidies. But the accusation of hypocrisy is unfounded.
I’m all for a truce
My only objective was to encourage critical thought, and if I haven’t done that by now I doubt I’m going to. Also, in retrospect I have to admit that my half-joking tagline was really in the wrong vein. I was trying to be clever, but instead of saying what I meant to say … maybe something like “Mises we rail against the subsidies that are convenient to our argument but leave out the rest (like military costs and oil subsidies in this case)” … I tried to go for brevity and lost my intent. Mea culpa.
>>There are subsidies in gasoline prices. But there are also taxes Right, but if you look at all the subsidies, not just the gasoline ones (the ones to Detroit gasoline-automakers for instance) AND you consider the foreign policy cost, taxes don’t even register. I’ll admit, our foreign policy isn’t JUST about oil control, it’s also about control of other resources, and this makes it hard to gauge exactly what fraction of our astronomical military costs come specifically from oil. But clearly it’s a pretty big piece of the pie (and what a pie it is!).
If you don’t think our foreign policy (and accompanying ridiculously expensive military) is all about resource control then … well all I can say is you need to learn more about what we’re doing in the world! And not just now, but historically as well, because if you take things out of their context you lose a lot (*insert your favorite quote about history and what happens if you don’t learn it here*).
And I agree: to Mises credit, this site has featured criticism of the many “complexes” that don’t get enough attention, including the military-industrial; this article’s author even referred to it in a negative sense at the beginning. That’s awesome. I was just saying that, for me (not trying to instigate or break the truce,
), it doesn’t excuse making a sloppy-to-the-point-of-(again, just my opinion)-being-false/hypocritical argument.
I’m not sure if I implied something earlier about not being against the current American foreign policy, but I am radically against it. It’s been my biggest gripe with the Obama administration (that, and the concurrent decline in antiwar criticism since his election).
Good. We have reached a general agreement. If you comment in the future, I will try harder to understand it instead of reacting negatively.
Jeremy:
I apologize for being glib.
Nobody on this site is going to deny that Winston Churchill, with the help of the CIA, overthrew the government of Iran for the purpose of protecting oil interests.
However,that was over 50 years ago. I think that the official DOE numbers that J. Murray links to are correct.
That being said, you need look no further that GM or Chrysler – you do not need a magnifying glass to look for evidence of government subsidies of gasoline engine technology.
Apology accepted, and my apologies for being a bit glib myself and provoking you
On Murrays numbers, same thing I’ve said twice already: if we didn’t go to Iraq for oil, why did we go? Please, someone tell me (and I want a real answer, not the official BS about WMDs).
Also, who used to be the head of the CIA? That’s right, George Bush #1, the father of the guy who lead us in to the Iraq war. I mean, not all US imperialism is that neat and clean, but damn this particular one seems very obvious. History is important!
Also, one last point: current oil exports aren’t what are military and political leaders looking to solidify American power in the future are going to look at. They’re going to look at future anticipated oil exports, and Iraq still has a lot of oil in the ground.
Jeremy:
“if we didn’t go to Iraq for oil, why did we go? ”
Power.
The same reason we bombed Libya, and invaded Afghanistan. To send a message that the US would go after the leaders of any country that supported terrorists/freedom fighters (I’ve forgotten the current euphemism). Iraq had been bank-rolling suicide bombers in Israel.
Why would Donald Rumsfeld believe that Saddam Hussein had weapons of mass destruction ? Because we (the US) gave them to him during the Iran-Iraq war.
Global resource domination (which I’ll grant, is not JUST about oil) vs. power. You say potatoe, I say potatow
And I’m not exactly sure what you’re referring to with Rumsfield; we gave Saddam weapons, but not nukes or anything else I’d consider “WMD”.
Another analysis consistent with praxeological theory is that Mr. Sandalow subjectively values his car set-up more than the costs. He could be unknowledgable regarding Mr. Barron’s arithmetic example and would have made another choice when he would’ve been aware of it. But let’s assume Mr. Sandalow did know about it, then it would still be rational for him to make the choice he made. The argument made by Mr. Barron that the government should get out of the way to make rational monetary calculation possible is a fair one but the argument stands apart from the subjective valuation of Mr. Sandalow regarding his car set-up. Maybe Mr. Sandalow ‘s choice would be different in a situation where government does not intervene; either way his choice would be rational nonetheless.
However, all big car manifacturers have launched or are launching soon their electric veichles. Nissan Renault, BMW, etc.
And consumers are not so against it. Car manifacturing requires huge investments, but it is quite clear that electric cars have their future.
Here a research on the UK market: http://video.thesmart.co.uk/?ReleaseID=23020
I actually have a Prius, and it gets anywhere between 40 and 50 mpg most of the time. So, factoring that in, and using the same math as the author, it would take Mr. Sandalow about 46 years to recoup his $9000 investment.
While most people would agree this in not a good investment, some people, knowing all these facts would still invest the $9000 to make the all electric conversion. However, this does not make them guilty of an economically incorrect decision. They might simply value things differently than you and I. Maybe they have a phobia of gas stations and wouldn’t mind paying the $9000 just to guarantee that they never have to go to one again.
The same goes for putting solar panels on your roof. Yes, it may take a lifetime to recoup the investment, but maybe the individual puts a large premium on being off the grid, or never having to worry about a power outage, or having a “green” house, etc.
I agree fully with the author that these issues should be left to the free market, with no subsidies of any kind. My only point is that individuals within a free market do not behave like robots programmed to always make decisions based on price alone.
Just so people don’t get confused by the 46 year figure, that is comparable to the 22.7 year figure in the original article.
Running the full set of calculations for a 45mpg Prius gives us a break-even figure of 297 years. Also I just wanted to add that the author has chosen to err on the side of caution as he uses a yearly workday number of 265 instead of the commonly used figure of 260. Payback takes 135 years using the common figure for a 20mpg Prius and 303 years for a 45mpg Prius.
There’s a real entrepreneur working on fuel cell technology. They claim they can use these to generate electricity (for our homes and cars) for 50% the cost of burning the same fuel to generate power.
Check out Bloom Energy. http://www.bloomenergy.com/
The only downside is they apparently are eager to get government subsidies and they spent a fortune getting their patent ducks in order. But at least they’re a mostly private solution. They claim to be able to make these out of sand.
No doubt some people will buy all-electric vehicles. But until costs can be brought down, it will only be the wealthier, those who can afford to spend MORE rather than less for transportation. The extra costs will be written off as part of the cost of status symbol, while the poorer people will stick with beaters, scooters, and bicycles. This will not achieve the numbers that government wants, so we can expect more laws and subsidies in the future.
In the meantime, yes, automobiles and the auto industry is subsidized–it is also heavily regulated. Getting rid of subsidization would no doubt make the nominal cost of autos higher, but getting rid or at least cutting back on the reglations would also cut costs.
This is the important argument–while getting rid of government intervention might initially make nominal costs higher, actual costs would be lower, and greater freedom to experiment and innovate would eventually make even the nominal costs lower than ever thought possible. And if we consider transportation as a whole, and not just automobiles, we would undoubtably see a greater diversity of transportation options available, as real, working solutions tend to not be one-size-fits-all propositions.
And we should consider transportation as a whole–think bigger!
Everyone should be happy to know that Afghanistan is apparently rich with Lithium. Can I hear “no blood for Lithium!”
than get ready for a war in bolivia
the country with the biggest lithium reserve (9 million tons, 5 can be used and have a estimated value of 500 us. billion and they dont want any foreign countries there! “We will not repeat the historical experience since the 15th century: raw materials exported for the industrialization of the West that has left us poor.” *thumps up : )
Feh, we don’t have wars in Latin America. Wars are for the Middle East and Asia
America uses the CIA when we want to act imperial in Latin America.
there’s a whole club of back yard mechanics around here that put together very functional electric cars for the price of an ancienct non running fiat or honda civic, a second hand electric motor and ten or so deep cell batteries. most of them commute in them, one guy races one at the local dragstrip.
the internal combustion engine is and always was one third efficient, the other two thirds goes out the tail pipe or off the engine as heat. electric motors are in the high nineties.
what isn’t efficient is our socalled free market. not even close. oil barons have been profitting off the same thing the author complains about for years, government handouts.another article that supports the status quo under the guise of “free markets”.
can we get some new ideas here before Mises starts getting filed with the old TV Guide mags?
There was actually a battery that performed very well in electric cars. Unfortunately the oil companies gobbled up the patent on it and ditched the whole thing.
Anyone in favor of patent reform, say I.
I.
I would love to see a link if you can find one. This sounds more like urban myth then anything else. If an Oil company had such a battery they could make a fortune off of it. Contrary to what many beleive, it would not put them out of business unless we are going to stop using the other 20 something products that are made from refining oil. Worst case, they would sell gasoline for less, which would at some point make the battery not as favorable, and the other by-products for more. The economics of oil go far beyond fuel.
There was also a solar panel that worked at night. Big Oil bought that out as well. See the movie “The Man in the White Suit”.
I use to be one of those people that invested in things and now I am one that invests against them. The one thing I have learned thanks to Mises and the Austrian approach, is that the market is more powerful then any and all governments and no matter how much intervention takes place, it only affects the timing, but not the end result. While these green energy companies that are living off of the government doll might find themselves riding high today, you can bet that as soon as government subsidies are cut or even look like they’ll be cut ( and they will be), this house of cards will come crashing back to earth.
BTW most payback periods for green energy solutions are never reached since they usually require the equipment to last far beyond is normal life maintenance free. Good luck with that.
The all-electric car will be the first new coal powered vehicle since the steam engine. Unfortunately, about 50% of the electricity in the US comes from coal plants, most of which are over 40 years old. To claim that all-electric cars are zero emission is out-and-out fraud. They only produce zero emissions in the location where they are operated. They are actually the dirtiest vehicles on the road. Coal plants not only produce CO2, but also release large amounts of mercury and uranium into the atmosphere.
Transmission losses on a 500KV DC line run around 5% per 1000 miles.
You then have the energy loss charging the battery – this increases the faster you try and charge the battery. The actual conversion from the battery to the electric motor is very efficient – >80%.
It’s the conspiracy theories in energy that really drive me nuts. “Tesla developed free energy, but the secret was lost.” “New carburetor gets 100 mpg but was bought up and removed from market.” Actually someone else said a carburetor was developed that gets 1000 mpg. I had somebody the other day tell me that he had developed a cold-fusion engine for the automobile that runs on water and plutonium isotopes. But his prototype and notes were stolen. Uh-huh. Now why would I have trouble believing that?? The writers at Cracked.com are more believable.
I wholeheartedly disagree with the author’s assertion that Fast Breeder Reactors are a waste of money. In fact, market forces will eventually drive the human race to use this form of energy production as petroleum and later naturally fissile uranium are depleted. Had we continued down this road, many lives might have been saved, and many more to come. In the future mankind will have to unlock the secrets of fusion to survive and prosper, but the ability to breed fissile fuel will provide a 100,000 year stop-gap. Overall, not a bad article, but the author would do well to limit the scope of his examples to things he understands.
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