Government forcing you to starve children with your car
These three articles are from the "Truth About Cars" website and focus on the unintended consequences of government regulations and subsidies.
By Bertel Schmitt on June 18, 2011
A chicken could become as unreachable as caviar in many poor countries, warns a study of the OECD and the United Nations. Chicken is projected to rise in price by 30 percent in the next ten years – inflation adjusted. Other staple foods such as corn, sugar or cooking oil are seen rising in price by twenty percent. Why? On one side of the ledger is higher demand, mainly from China and India. On the other side: „Increasingly, the crop doesn’t end up in the pot, but as fuel in the tanks of cars,“ says the German magazine Der Spiegel.
This trend is fueled, so to speak, by a shortage of water and higher energy costs. “Higher prices may be good for farmers, for people who spend a large share of their income on food, this is a catastrophe,“ says OECD General Secretary Angel Gurrķa.
In the coming week, agricultural ministers of the G20 will have a meeting in Paris to discuss the price increases. Aid organization Oxfam doesn’t expect any results from the meeting. The organization predicts that governments will not stop their ethanol subsidies. Oxfam warns:
What seems to have more results are buyer strikes against ethanol, such as the one in Germany.
By Bertel Schmitt on March 4, 2011
German motorists won an important battle against ethanol. They used a downright un-German tactic: Widespread insurrection. They simply won’t buy the stuff. An edict handed down from Brussels ordered that Super has to contain 10 percent of ethanol. An alliance from Germany’s ADAC autoclub to Greenpeace said the new gasoline is a work of the devil, it is liable to ruin , and the environment. That didn’t impress Brussels. But then, a buyer strike did set in.
Motorists in Germany shun the ethyl with ethanol and buy 98 Super Plus high-test instead,reports Das Autohaus from Germany. Refiners and gas stations are sitting on full tanks of unsold Super E10. On the other hand, there already are shortages of the more expensive, but also more energy-laden Super Plus.
Yesterday, gasoline companies pulled the emergency brake and declared that they would stop the roll-out of Super E10 in Germany. The pathetic petrol is only available in less than half of Germany’s gas stations.
Economy Minister Brüderle joined the fray and does what he does best: Run down the clock. He announced a “gasoline summit” where stakeholders should explain their position. No date has been set. At the summit, pretty much everybody will be against the bio-benzene: Customers don’t want it, auto clubs warn against it, environmentalists such as Greenpeace warn that the fuel will increase CO2 production. “E10 can ruin cars and the environment,” says Greenpeace.
The European Auto Maker Association ACEA is pouring gasoline in the fire by publishing compatibility lists that add to the widespread confusion.
No wonder everybody avoids it like the devil the holy water.
By Bertel Schmitt on January 2, 2012
An op-ed piece in The Washington Post praises the wisdom of Congress that refused to renew the 45-cent-per-gallon tax credit for corn-based ethanol and the 54-cent-per-gallon tariff on imported ethanol, thereby exposing alcohol to the rough treatment of the market. Also not extended was the tax credit for installing a charger at home or in a commercial location.
The WaPo thinks killing the $6 billion incentive to turn corn into fuel, and letting EV owners buy their own charger was righteous, but only a half-measure. Congress should have finished the job and should have finished handing out $7,500 tax credits to buyers of EVs. The WaPo thinks it’s a waste, and the technology is going nowhere.
What say you? Kill the credit or let it live?
The Post’s View
THERE MAY NOT have been a party in Times Square to celebrate, but two of the most wasteful subsidies ever to clutter the Internal Revenue Code went out with the old year. Congress declined to renew either the 45-cent-per-gallon tax credit for corn-based ethanol or the 54-cent-per-gallon tariff on imported ethanol, so both expired Dec. 31.
Taxpayers will no longer have shell out roughly $6 billion per year for a program that badly distorted the global grain market, artificially raised the cost of agricultural land and did almost nothing to curb greenhouse gas emissions. A federal law requiring the use of 36 billion gallons of ethanol for fuel by 2022 still props up the industry, but the tax credit’s expiration is a victory for common sense just the same.
lesser-known but equally dubious energy tax break also expired when the year ended Saturday: the credit that gave electric-car owners up to $1,000 to defray the cost of installing a 220-volt charging device in their homes — or up to $30,000 to install one in a commercial location. As a means of reducing carbon emissions, electric cars and plug-in hybrid electrics are no more cost-effective than ethanol. What’s more, only upper-income consumers can afford to buy an electric vehicle (EV); so the charger subsidy is a giveaway to the well-to-do.
The same goes for the $7,500 tax credit that the government offers purchasers of electric vehicles, a subsidy that, alas, did not expire at year’s end. The Obama administration says that the credit helps build a market for EVs, which helps create jobs. Given the price of eligible models, like the $100,000 Fisker Karma, that rationale sounds an awful lot like trickle-down economics.
Backers of the charger tax credit may lobby Congress to renew it when lawmakers tackle the payroll tax extension issue again in the new year. We hope that Congress says no. Not only is it a case study in upward income redistribution, it also would represent a deepening of the taxpayers’ commitment to what looks increasingly like an industry not ready for prime time.
Sales of electric vehicles were disappointing in 2011, with the Volt coming in below the 10,000 units forecast. In addition to its high price, the Volt brand is suffering from news that some of its batteries burst into flames after government road tests. Meanwhile, Fisker, the recipient of more than half a billion dollars in low-interest Energy Department loans, repeatedly delayed the introduction of its ballyhooed Karma — while repeatedly raising the sticker price. And now Fisker has announced a recall of the cars because of a potential defect in its batteries — made by A123 Systems, another large recipient of Energy Department support.
Evidence is mounting that President Obama was overly optimistic to pledge that there would be 1 million EVs on the road by 2015. Electric cars are not likely to form a significant part of the solution to America’s dependence on foreign oil, or to global warming, in the near future. They simply pose too many issues of price and practicality to attract a large segment of the car-buying public. More prosaic fuel-economy innovations such as conventional hybrids, clean-diesel cars and advanced gasoline engines all show much more promise than electrics.
The ethanol credit was on the books for 30 years before it finally died. Let’s hope Congress can start unwinding the federal government’s bad investment in electric vehicles faster than that.