The inefficiency of Electric cars

Buying these cars is the same thing as throwing out almost $20,000 dollars (the price of a Chevrolet Malibu starts at $21,800). Note that these costs don't include the cost of replacing the car batteries after four or five years. From the Washington Post:

The long-anticipated Chevrolet Volt, General Motors' electric car, will cost $41,000, the company announced Tuesday, leaving consumers to decide whether its environmental appeal is worth a price far above that of similarly sized conventional autos.

Electric-car technology has been around for years, but the high cost to make the vehicles has prevented automakers from producing them for the mass market. The price announcements for the Volt and its electric rival, the Nissan Leaf, have been highly anticipated as a result. Nissan, the only other major manufacturer expected to bring such a vehicle to market this year, said the Leaf will cost $32,780.

GM and Nissan are relying on a $7,500 federal tax credit for buyers of electric vehicles to offset some of the added cost, and they're hoping that the allure of their novel power source will make up the rest. . . .

UPDATE: This does not look very promising.

For the price of the Volt, you could buy almost two hybrids from competitors. But in these early days of electric vehicles, a cold economic analysis doesn't really apply. . . .

GM figures that if you drive within the Volt's 40-mile battery range, it will cost $1.50 a day to drive, compared to about $3.50 per day for a 30 mpg sedan. . . .

So let's take those numbers, that I assume are picked by GM to make the car look at its best. At $2 for a whole year that comes to $730. Even assuming a zero interest rate, over ten years that comes to $7,300. That doesn't come close to make up the cost difference.

The Cost of Owning Hybrids

I was reading about the Toyota Highlander Hybrids. The identical hybrid version of the Highlander apparently costs $5,100 more. On the highway, the hybrid gets 27 mpg versus 24 mpg for the regular version -- a 12.5 percent improvement. For city driving, it looks as if the improvement is much larger 18 to 25 mpg -- a 38 percent improvement. Assume an average improvement of 25 percent. A couple of simple calculations indicate that this is unlikely to be a wise investment for most people. First some assumptions:

1) Own the car for 10 years
2) Put 150,000 miles on the car
3) 22 mpg average
4) $3.00 in current dollars
5) 3 percent real interest

Over the lifetime of the car you would buy 6,818 gallons. The present value of those purchases in today's dollars over those 10 years are as follows:

Year 1 $496.46
Year 2 $482.01
Year 3 $467.97
Year 4 $454.34
Year 5 $441.11
Year 6 $428.26
Year 7 $415.79
Year 8 $403.68
Year 9 $391.92
Year 10 $380.50

$4,362.04 versus a payment today of $5,100. You are about $738 poorer for buying the hybrid. The day that you buy the hybrid you might as well throw out $738.

There is one caveat regarding resale value for the car and how much being a hybrid would increase its value. I looked up the 1997 Toyota Tacoma Xtra Cab's trade-in value (the Highlander only started in 2001). If the truck is in good condition, the value would be $2,300 (again assuming a 3 percent real interest rate that is the equivalent of $1,711). Assuming that the hybrid equipment depreciates at the same rate as the rest of the car, that would leave you with $296 from the sale.

A final net loss of $442. I don't know about you, but I wouldn't want to throw away $442.

The high cost of regulation: compact fluorescent lights

CFLs contain mercury. If one breaks in your home, Kazman says, EPA guidelines suggest you open windows and leave the room for at least a quarter of an hour before trying to clean up the mess. And for God's sakes don't use a vacuum, which could disperse the poison into the air. Even when they're intact, U.S. News happily tells us, "the bulbs must be handled with caution. Using a drop cloth might be a good new routine to develop when screwing in a light bulb."

I really wonder whether people have thought of these bulbs being used in real world use. How will be dispose of them? Will people actually keep them on for 15 minutes after they have been turned on? Suppose that you just want to temporarily turn on the light when you go into a room. What about the time costs of people having to come back a second time to turn it off? What about the costs of people's time waiting for these lights to warm up? What about the fact that people might have to turn on more lights because these new bulbs don't produce as much light? This has to be one of the dumber regulations in a long time.

Possibly the monopoly power of oil companies just declined thsi week?

Energy futures fell Monday after a tropical depression that moved the Gulf of Mexico late last week turned out to be a dud. . . . .

When Trade Protection and Environmentalism Collide

Do they realize that higher prices mean that fewer people will buy their so important energy-efficient light bulbs?

The European Commission has decided to retain import tariffs on Chinese-made energy-efficient light bulbs for up to another 12 months.

The decision was made even though only one of Europe's four energy-efficient light bulb producers, Germany's Osram, had called for more time to adjust.

The tariffs, introduced to stop cheap Chinese imports entering Europe, can add up to 66% to the price of bulbs. . . . .

Does this Environmental Regulation Endanger Safety?

Changing speed limits along a stretch road raises the probability of accidents. The effect might be small, but people slowing down has some risk. In the past there was some academic research showing that accident rates depend on differential speeds, and these changes in speeds would contribute to that problem. Anyway, it would be interesting to measure how big of an impact this might have.

The speed limit for truckers will drop from 70-to-55 miles per hour. The new speed limit for everyone else will be 65 miles per hour.

The reductions will affect more than 22 miles on I-81 and 12-and-a-half miles on I-26, from the Tennessee-Virginia border to the Sullivan-Washington county line.

Local officials requested the change to help bring the county into line with the Environmental Protection Agency's air quality health standard for ozone. . . .

Congressional Energy Bill Farce

The Energy Bill adopted by the Congress has many problems and provisions that will make the US poorer. For example, requiring that we use more expensive, less efficient sources of energy. This discussion in the NY Times caught my attention:

The utilities provision, or the so-called renewable electricity standard amendment, was among the most contested measures in the energy bill. Sponsored by Representative Tom Udall, Democrat of New Mexico, and several others, it will force utilities to make a significant share of their electricity from solar, wind, geothermal, water and other nonfossil fuel sources, although they can meet part of the requirement through conservation measures.

The standard applies only to investor-owned utilities and exempts rural electric cooperatives, municipal utilities, the Tennessee Valley Authority and the state of Hawaii from the mandate. . . . .

If cutting back on carbon dioxide is so important, why do these rules only apply to "investor-owned utilities"? Surely municipal utilities should also count? What about Hawaii? Carbon dioxide is being added to the atmosphere every place. Why does the administration only threaten to veto based upon the lack of oil production in the bill?

Congressional Energy Bill Problems

The Energy Bill adopted by the Congress has many problems and provisions that will make the US poorer. For example, requiring that we use more expensive, less efficient sources of energy. This discussion in the NY Times caught my attention:

The utilities provision, or the so-called renewable electricity standard amendment, was among the most contested measures in the energy bill. Sponsored by Representative Tom Udall, Democrat of New Mexico, and several others, it will force utilities to make a significant share of their electricity from solar, wind, geothermal, water and other nonfossil fuel sources, although they can meet part of the requirement through conservation measures.

The standard applies only to investor-owned utilities and exempts rural electric cooperatives, municipal utilities, the Tennessee Valley Authority and the state of Hawaii from the mandate. . . . .

If cutting back on carbon dioxide is so important, why do these rules only apply to "investor-owned utilities"? Surely municipal utilities should also count? What about Hawaii? Carbon dioxide is being added to the atmosphere every place. Why does the administration only threaten to veto based upon the lack of oil production in the bill?

What do workplaces owe their workers?: Banning Perfume?

One option would be for this woman to get a different job. Places of work could compete for workers based on working conditions just at they compete based on salary.

An employee in the Detroit planning department filed a federal lawsuit against the city Tuesday, alleging her co-worker's strong perfume has made it impossible for her to do her job.

City planner Susan McBride filed her complaint under the Americans with Disabilities Act, saying she is severely sensitive to perfumes and other cosmetics.

McBride alleges the city should accommodate her disability by prohibiting people from wearing perfume in the workplace.
. . . .

Walter Williams on everything from Global Warming to Gun Control to Taxes

I have only highlighted Walter William's discussion on gun control, but I advise people to read the entire piece.

Now let's turn to gun control laws. What do Virginia Tech's 32 murders, Columbine High School's 13 murders, Jonesboro Westside Middle School's five murders, Germany's Gutenberg High School's 16 murders, the murder of 14 legislators in Zug, Switzerland, and the murder of eight city council members in a Paris suburb all have in common? Answer: All the murders were committed in "gun-free zones." So a reasonable question is: Does legislation creating gun-free zones prevent murder and mayhem?

In 1970, Israel adopted a policy to arm teachers and parents serving as school aids with semi-automatic weapons. Attacks by gunmen at Israeli schools have ceased. At Appalachian Law School in Virginia, a gunman who had already murdered three people was stopped from further carnage by two armed students. Gun possession stopping crime is not atypical, though it goes unreported by the media. According to various research estimates, from 764,000 to as many as 2.5 million crimes are prevented by armed, law-abiding people either warning a criminal that they're armed, brandishing their weapon or shooting a criminal. In the interest of truth in packaging, I think we should rename "gun-free zones" to "defenseless zones." . . . .

Valentine Flowers are bad for the Planet?

Many of these flowers are grown in third world countries and the claim it is horrible that the flowers are shipped in the cargo holds of planes that travel to developed countries. By this notion, are we going to ban all foreign trade? This isn't serious. What do these environmentalists what these poor third world countries to do? Wealthier countries care more about the environment than do poorer ones. Just naturally cars and other things are more efficient in wealthier countries over time without any government intervention, so if we do something that makes these third world countries poorer, their environment will deteriorate.

The Valentine's Day bouquet — the gift that every woman in Britain will be waiting for next week — has become the latest bête noire among environmental campaigners.

Latest Government figures show that the flowers that make up the average bunch have flown 33,800 miles to reach Britain.

In the past three years, the amount of flowers imported from the Netherlands has fallen by 47 per cent to 94,000 tons, while those from Africa have risen 39 per cent to 17,000 tons.

Environmentalists warned that "flower miles" could have serious implications on climate change in terms of carbon dioxide emissions from aeroplanes. . . .

The "Bogus" Science of Secondhand Smoke

This person must be really hated among medical people, but my guess that he is sufficiently only that he is willing to go against the political correctness on the smoking issue. Look at his background: "former deputy director of the National Cancer Institute's Division of Cancer Cause and Prevention, and he received the U.S. Public Health Service Superior Service Award in 1976 for his efforts to define less hazardous cigarettes."

In any case, from an economist's point of view, the entire debate over secondhand smoke is largely besides the point when it comes to these regulations. The question an economist would ask is whether whatever harm from the secondhand smoke in born by the smoker, and the answer is that there is not a problem as long as someone owns the air. In a restaurant or other building someone clearly owns the air and bears the cost of allowing the air to have more smoke in it than their customers desire. Some people may like to smoke with their meals and they will pay to do it and others might want perfectly clean air. Even if you only had one restaurant in town, the restaurant owner has a strong incentive to give the customers who value the type of air the most what they want.

Smoking cigarettes is a clear health risk, as most everyone knows. But lately, people have begun to worry about the health risks of secondhand smoke. Some policymakers and activists are even claiming that the government should crack down on secondhand smoke exposure, given what "the science" indicates about such exposure.

Last July, introducing his office's latest report on secondhand smoke, then-U.S. Surgeon General Richard Carmona asserted that "there is no risk-free level of secondhand smoke exposure," that "breathing secondhand smoke for even a short time can damage cells and set the cancer process in motion," and that children exposed to secondhand smoke will "eventually . . . develop cardiovascular disease and cancers over time."

Such claims are certainly alarming. But do the studies Carmona references support his claims, and are their findings as sound as he suggests?