Market Forces at Work in Energy Conservation

And Tom Levenson is writing about what he thinks he ought to be writing about:

Updates on the 100 mpg car front: Way, way back when there was a Republican fight for the nomination, Mike Huckabee made a little splash by calling for a one billion dollar prize to encourage the production of a generally available care capable of 100 mpg. I ridiculed Mike... because (a) the billion bucks was such a wildly disproportionate reward given the X-prize being offered for the same basic goal seemed to think that ten million would do the trick, and... at least one production vehicle on the verge of release, the Tesla roadster, could already lay claim to the milestone.... But what I want to highlight here is the power of 4 buck a gallon gas to concentrate the mass market manufacturer’s mind.

Most immediately, it looks like the GM Volt is real as of 2010 — though at a higher price than originally proposed, 40K instead of around 30K. It will have an MPG equivalent of 150 mpg running on its electric motor, which will drop if the range-extending gasoline engine gets called into use. GM also has a Saturn Vue plug-in SUV project in the works. Toyota is working on its plug in response, with a current, very short range claim of 99.9 mpg.

But what caught my eye today was... the British Motor Show’s latest offerings of cool to cute electric, energy efficient cars. The headliner? The four-seconds-to-60/10 minutes to recharge Lightning GT. 300 large, I’m afraid, so this is another pure fantasy. But taken all in all, and never forgetting the 350 mpg personal transportation available in the form of this electric scooter, it looks like the use of market mechanisms to control green house gas emissions is, pace the McCain campaign’s whispered walk-back on the issue, is working just as the econ 1 textbooks tell you it should.

Comments

[Ian Whitchurch]

On the electric car front, Tesla are announcing a new 5 door sedan, with a target price of USD60k. www.teslamotors.com . Cheech owns one. You should too.

As far as hydrocarbon cars are going, Ford and GM are building some very good, very fuel efficient vehicles. They just dont build or sell them in the US, because ... well, I dont know. Maybe their managers are short Ford and GM debt or something.

OK. 4 seats. 2 airbags. 50 miles per gallon (ok, thats the performance 2.0 liter engine. If you're a tree hugging cheapass, the 1.6 liter will do 67 mpg) The Ford Focus, available today in many fine, fine first world countries. But not the US. Because, ummm, yeah thats right. The US has higher environmental requirements than Denmark.

http://uk.cars.yahoo.com/car-reviews/car-and-driving/ford-focus-tdci-range-1004539.html

[jerry]

"Most immediately, it looks like the GM Volt is real as of 2010 — though at a higher price than originally proposed, 40K instead of around 30K."

How much is that Prius? At $40K the GM Volt will be grounded.

[derek]

"Market mechanisms" aren't controlling greenhouse gases! The limit on how much oil we're capable of puling out of the ground is. If we were controlling greenhouse gases, we'd be pumping well below the limit. We'd actually be voluntarily leaving fossil fuels in the ground. The rising price of oil is actually working against attempts to limit greenhouse gases, because it incentivizes companies to drill and pump more for more profit.

I never thought I'd encounter a confusion more dumb and infuriating than the one in the 80s and 90s between global warming and destruction of the ozone lsyer. But now I have: the confusion between global warming and the oil demand crisis.

[Alfred]

Jerry-According to a GM rep on a NOVA TV special last night with Tom and Ray from Car Talk the Volt will go 40 miles per battery charge while using no gas. It comes with a gas powered generator when needed and it averages 150 mpg. It's far more fuel efficient than the Prius at about 50 mpg and it is far better looking. http://www.rpmdaily.com/images/volt-front2.jpg
$40,000 seems in line to me.

[Tom Levenson]

Derek,
I could have said that this was a case demonstrating that market forces influence consumer behavior. Instead I used a shorthand to encompass the impact of such a change in behavior integrated over time. The point being that you cannot limit oil consumption in a meaningful way until you create the infrastructure needed to replace the one we have now -- and high oil prices incentivize that as well as the pursuit of more oil in the ground. It is sometimes hard to remember that a single causal agent can have more than one effect, but in the real world it is often so.

[bigTom]

Talk of average mpg for a plugin can be deceptive. You are better to use a simple model based upon two numbers; (1) the range in pure electric mode (this might be a not quite true, if you really floor it, it might use both gas and electric to deliver your heavyfooted acceleration), and (2) the milage it will get in normal driving mode (i.e. what you would get if you never plugged it in). Then based upon your usage you can compute your expected fuel consumption.

I don't see this as the market working. What we need are solutions that can be widely deployed by the time peak oil hits. Most analysts thing 2010-2015 for PO. What we are getting is that the market is only starting to fund serious research after the price has begun to spike. This is about fifteen years too late. It will take at least a decade to ramp up production, and at least another decade to replace the old gas guzzlers. Meanwhile last year Russian car sales increased by 40%, and Chinese and Indian car sales are increasing almost as rapidly. The $2500 Tata motors Nano, is due out this fall. The ratio of gas consuming vehicles to world oil production is going to get much lower pretty rapidly, and this means the oil price will be bid up to levels that are seriously painful.

No leaving it to the market has NOT anticipated the need. Large scale investment in the solutions will only start, when the inescapablity of the problem is obvious to nearly everyone. That is grossly too late for mitigation of the effects.

[baileyman]

It is totally amazing that anyone can seriously promote a 2740 pound vehicle (net of 400 lbs of batteries) as "efficient". Prius is similar. They will be serious when they're building 800 to 900 pound vehicles (or lower) including the batteries.

[hmd]

I'm not sure what it even means to talk about mpg when you are getting any significant fraction of your energy from the electrical grid. Electricity isn't free, and it isn't green either.

Maybe miles per MWH or miles per ton CO2, or both. Or energy dollars per mile. But talking about miles per gallon when you are powering the vehicle with electricity from the grid is just plain crazy talk.

[jerry]

Alfred,

Thanks for the update. I actually think both cars are pretty ugly, but that's neither here nor there. I do think $40K is much too high regardless.

[Tuco]

"Electricity isn't free, and it isn't green either."

Thanks for that. If enough people switch to electric powered cars this will become a big issue pretty quick. Nukular, sucking the life out of reasonably priced natural gas, or lotsa coal - pick yur poison.

"I do think $40K is much too high regardless."

Especially when you are still making mortgage payments on your $500,000 one bedroom shack.

[Michael Turner]

"... talking about miles per gallon when you are powering the vehicle with electricity from the grid is just plain crazy talk."

Welcome to the New Energy Crisis. When Carter established the Department of Energy, a college friend of mine taking the same physics course quipped "What next? The Department of Mass?" (More likely the Department of Spin.) The U.S. was then deriving a much larger fraction of its electricity from burning oil. So, to a very rough first approximation, calling it the Department of Energy was about like calling it the Department of Oil Conservation Plus Where the Hell Else Can We Park Civilian Control of Nuclear Weapons Production. But that was then. Why now?

"Energy Crisis" is so much more pithy than "Liquid Transportation Fuels Crisis", and it rings more bells among those who were around the last time it was a common term. Check out the Google News Archive Timeline Skyline for Energy Crisis

http://tinyurl.com/5dtblb