Even in all-electric mode, the Fisker Karma gets worse mileage than an SUV (only a deeply flawed EPA MPGe rating, purposely designed to over-state electric car efficiency, hides this fact).
Posts tagged ‘SUV’
I do not agree with Mitt Romney's implied protectionism in his ads, particularly when he says
Obama took GM and Chrysler into bankruptcy and sold Chrysler to Italians who are going to build Jeeps in China
The problem with Obama's intervention in the GM and Chrysler bankruptcies was cronyism -- the protection of favored insiders to the detriment of the operation of the rule of law -- rather than any accelerated globalization. The auto industry is a global business, deal with it. We should be thrilled that Chrysler is participating in the Chinese economy, an opportunity they would not have had a generation or two ago. This kind of populist BS is exactly why I voted Johnson, not Romney, this morning.
Anyway, this statement has been subject to a lot of "fact-checking." Chrysler head Sergio Marchionne wrote a letter in the Detroit News, and while he did not attempt to deny the part about Italians (though that would have been funny), he did write:
Chrysler Group's production plans for the Jeep brand have become the focus of public debate.
I feel obliged to unambiguously restate our position: Jeep production will not be moved from the United States to China.
OK, thanks for the clarification. But wait, the letter goes on. He spends a lot of time explaining how Chrysler is investing a lot in Jeep SUV development and production, and that many jobs are being added making Jeeps. In fact, Jeep SUV's seem to be the big bright spot in the Chrysler turnaround, which is funny because Obama's logic for handing Chrysler over to Fiat for about a dollar was that Fiat would turn Chrysler around with all of its great small car designs.
Anyway, the really interesting part comes late in the article, where he says in paragraph 9:
Together, we are working to establish a global enterprise and previously announced our intent to return Jeep production to China, the world's largest auto market, in order to satisfy local market demand, which would not otherwise be accessible.
So Chrysler ... is going to build Jeeps in China.
This is why the whole "fact check" genre is so stupid. We could fact-check this three ways, depending on what political axe we want to grind:
- We could say that Romney's ad was exactly correct, that Chrysler's CEO says it is going to build Jeeps in China, just as Romeny said. Romney's statement is literally true as written, which one would think might be a good criteria for a fact-check.
- We could say that Romney's ad was misleading, because the implication was meant to be that Chrysler is shifting North American production to China, and they are not (Politifact took this tack).
- We could argue that Romney's entire premise is wrong, because what matters to long-term economic health and wealth creation in this country is that Chrysler is making the optimum production decisions, wherever the factories end up. And further, that making these decisions the subject of political discourse virtually guarantees they will be made for reasons other than optimizing efficiency. This is the fact-check I would make but you will not hear in mainstream media fact-checks, because the level of economic ignorance on trade in most of the media is simply astonishingly high.
John Stossel has a great link-filled round up of failed and failing solar and green energy programs funded by the Obama Administration with our money. Check out the extensive list.
Here, for laughs, is Ray Lane of Kleiner Perkins rhapsodizing about Obama as the greatest government venture capitalist ever, and using for his prime example ... Solyndra!
I suppose at one point Kleiner Perkins used to take private risks with private money, but it seems to have found out it can make higher returns leveraging its investments with taxpayer money, and then using political influence to mandate business for the companies in which it invests. Thus the hiring of Al Gore, among other moves, to the KP board. Lane, by the way, is Chairman of serial government trough-feeder Fisker automotive, which make admittedly very cool-looking cars that require a lot of taxpayer subsidies.
Certainly Mr. Lane knows something about marketing, including that age-old tactic the "bait and switch." The taxpayer subsidies of Fisker were made on the theory that electric cars were somehow greener than gasoline cars because they use less energy. But looking at the fuel at the power plant it takes to make the electricity that goes into a Fisker Karma, the car gets worse gas mileage than an SUV (only an EPA equivalent MPG standard that breaks the second law of thermodynamics hides this fact). Congratulations Mr. Lane, green subsidies for sub-SUV gas mileage. All those checks KP partners wrote to Obama in the last election certainly got a good return.
Apparently electric vehicle maker -- and recipient of lots of your and my money -- Fisker Automotive is struggling. Who would have thought that a company that could not fully fund itself privately and had to rely on political connections to use the coercive power of government to take money from taxpayers might be a bad investment?
As a reminder, Fisker's taxpayer largesse likely came at the behest of politically powerful Ray Lane of Kleiner Perkins. It is his firm's investment returns we taxpayers are supporting. So it should come as no surprise that Ray Lane says, in the video below, that he thinks Obama is the greatest public sector venture capitalist ever. What does he use as justification for this conclusion? Why, Solyndra! I kid you not, check it out.
By the way, if you did not see it, check out my Forbes article on how the Fisker Karma gets worse mileage than an SUV when you trace its electricity back to the power plant.
I started blogging because I was always frustrated in live arguments that I would remember the killer comment 5 minutes too late, so it is no surprise that I find live TV frustrating. Here is how I had hoped the interview would go this morning on Fox. In actual execution, I decided not to play the "2nd law of thermodynamics" card on the morning show just after the in-studio visit by a bunch of bijon frise's.
I'm confused, why are we we even talking about miles per gallon in an electric car?
- We measure how well traditional cars use fossil fuels with the miles they drive per gallon of gas, or mpg
- Of course, we can't measure efficiency the same way in an electric car since they don't use gas directly, though the electricity we use to charge them is mostly produced from fossil fuels.
- So the EPA came up with a methodology to show an equivalent MPG for electric cars so their fossil fuel use (way back in the power plant) could be compared to traditional carsAnd you think there is a problem with those numbers?
- It turns out the EPA uses a flawed methodology that overstates the electric car equivalent MPG, in part because they assume the potential energy in fossil fuels can be converted to electricity in the power plant with perfect efficiency, which doesn't happen in real life and actually violate the second law of thermodynamicsHow should they have done it?
- During the Clinton administration, the Department of Energy came up with a better methodology which uses real world power plant efficiencies and fuel mixes to determine how much fuel went into charging an electric car.
- Using this methodology, the Fisker Karma, even in all-electric mode, gets about 19 mpg equivilent, not 52. This means that it uses about the same amount of fossil fuels to drive a mile as does a Ford Explorer SUV -- the only difference is that the fossil fuel use is better hidden.
Ray Lane of VC Kleiner Perkins is seen in this video trumpeting how the Obama Administration is, for the first time in his memory, succesfully making investments in private companies. His main example: Solyndra!
The reason this is particularly timely and fascinating is that just a few weeks ago, Ray Lane took delivery of the first Fisker Karma electric car, financed with $529 million of our tax money and promoted with $7500 of our tax money on every sale, Mr. Lane and Kleiner are investors in Fisker (and Lane is Fisker's Chairman) and therefore huge beneficiaries of Obama's largess, and Mr. Lane got the first Karma as a big thank you for his political connections that helped score the cash.
Of course Kleiner (who also hired green Crony-in-chief Al Gore) is going to be thrilled with the government money. Nothing is worse than being a VC in with a large early round position in a company and being unable to get the next stage of investment. Since it appears they could not get any private investors to fund this, the taxpayer money probably saved their investment .... at least for a while.
Update: Ray Lane is apparently ticked off by the negative publicity surrounding the Fisker Karma and the money they received from taxpayers. Tough. Surely he is used to his investors being ticked off about bad outcomes. Well, now he gets to see how REALLY ticked off his investors can be when their money was taken against their will, even without their knowledge. At least he can tell his institutional guys, when things go bad, that they came in with eyes open. What's his response to taxpayers?
For those who have not seen it, my article on how the Fisker Karma, even on all electric, uses more fossil fuels per mile than an SUV is here.
Via Carpe Diem, yet another group of market incumbents using licensing and regulation to limit competition and, in particular, ban business models different than those of the incumbents.
From the Institute for Justice: "Until 2010, sedan and independent limo services were an affordable alternative to taxicabs in the Music City. A trip to the airport only cost $25. But in June 2010, the Metropolitan County Council passed a series of anti-competitive regulations requested by the Tennessee Livery Association - a trade group formed by expensive limousine companies. These regulations force sedan and independent limo companies to increase their fares to $45 minimum.
The regulations also prohibit limo and sedan companies from using leased vehicles, require them to dispatch only from their place of business, require them to wait a minimum of 15 minutes before picking up a customer and forbid them from parking or waiting for customers at hotels or bars. And, in January 2012, companies will have to take all vehicles off the road if they are more than 7 years old for a sedan or SUV or more than 10 years old for a limousine.
At the American Geophysical Union meeting late last month, University of Miami geologist Shimon Wdowinski argued that the devastating earthquake a year ago may have been caused by a combination of deforestation and hurricanes (H/T Treehugger). Climate change is spurring more, stronger hurricanes, which are fueled by warm ocean waters....
The 2010 disaster stemmed from a vertical slippage, not the horizontal movements that most of the region's quakes entail, supporting the hypothesis that the movement was triggered by an imbalance created when eroded land mass was moved from the mountainous epicenter to the Leogane Delta.
I have heard this theory before, that landslides and other surface changes can trigger earthquakes. Now, I am not expert on geology -- it is one of those subjects that always seems like it would be interesting to me but puts me in a coma as soon as I dive into it. I almost failed a pass-fail geology course in college because in the mineral identification section, all I could think to say was "that's a rock."
However, I do know enough to say with some confidence that surface land changes may have triggered but did not cause the earthquake. Earthquakes come from large releases of stored energy, often between plates and faults. It's remotely possible land surface changes trigger some of these releases, but in general I would presume the releases would happen at some point anyway. (Steven Goddard points out the quake was 13km below the surface, and says "It is amazing that anyone with a scientific background could attempt to blame it on surface conditions.")
The bit I wanted to tackle was the Thin Green Line's statement that "Climate change is spurring more, stronger hurricanes." This is a fascinating statement I want to attack from several angles.
First, at one level it is a mere tautology. If we are getting more hurricanes, then by definition the climate has changed. This is exactly why "global warming" was rebranded into "climate change," because at some level, the climate is always changing.
Second, the statement is part of a fairly interesting debate on whether global warming in general will cause more hurricanes. Certainly hurricanes get their power from warm water in the oceans, so it is not unreasonable to hypothesize that warmer water would lead to more, stronger hurricanes. It turns out the question, as are most all questions in the complex climate, is more complicated than that. It may be hurricanes are driven more by temperature gradients, rather than absolute temperatures, such that a general warming may or may not have an effect on their frequency.
Third, the statement in question, as worded, is demonstrably wrong. If he had said "may someday spur more hurricanes," he might have been OK, but he said that climate change, and by that he means global warming, is spurring more hurricanes right now.
2010 is in the books: Global Tropical Cyclone Accumulated Cyclone Energy [ACE] remains lowest in at least three decades, and expected to decrease even further... For the calendar year 2010, a total of 46 tropical cyclones of tropical storm force developed in the Northern Hemisphere, the fewest since 1977. Of those 46, 26 attained hurricane strength (> 64 knots) and 13 became major hurricanes (> 96 knots).
Even with the expected active 2010 North Atlantic hurricane season, which accounts on average for about 1/5 of global annual hurricane output, the rest of the global tropics has been historically quiet. For the calendar-year 2010, there were 66-tropical cyclones globally, the fewest in the reliable record (since at least 1970) The Western North Pacific in 2010 had 8-Typhoons, the fewest in at least 65-years of records. Closer to the US mainland, the Eastern North Pacific off the coast of Mexico out to Hawaii uncorked a grand total of 8 tropical storms of which 3 became hurricanes, the fewest number of hurricanes since at least 1970.
Global, Northern Hemisphere, and Southern Hemisphere Tropical Cyclone Accumulated Energy (ACE) remain at decades-low levels.
The source link has more, and graphs of ACE over the last several decades (ACE is a sort of integral, combining the time-average-strength of all hurricanes during the year. This is a better metric than mere counts and certainly better than landfall or property damage metrics).
So, normally I would argue with alarmists that correlation is not causation. There is no point in arguing about causation, though, because the event he claims to have happened (more and stronger hurricanes) did not even happen. The only way he could possibly argue it (though I am pretty sure he has never actually looked at the hurricane data and simply works from conventional wisdom in the global warming echo chamber) is to say that yes, 2010 was 40-year low in hurricanes, but it would have been even lower had it not been for global warming. This is the Obama stimulus logic, and is just as unsupportable here as it was in that context.
Postscript: By the way, 2010 was probably the second warmest year in the last 30-40 years and likely one of the 5-10 warmest in the last century, so if warming was going to be a direct cause of hurricanes, it would have been in 2010. And yes, El Ninos and La Ninas and such make it all more complicated. Exactly. See this post.
From the department of wishful thinking comes this:
The worst oil shock since the 1970s has put a permanent mark on the
American way of life that even a drop in oil's price below $100 a
barrel won't erase.
Public transportation is in. Hummers are out. Frugality is in. Wastefulness is out....
As prices come falling back to earth, Americans aren't expected to
drop their newfound frugality. The jarring reality of $4-a-gallon
gasoline stirred up an unprecedented level of consumer angst that
experts say will keep people from reverting to extravagant energy use
for years to come - if ever again.
High gas prices prompted calls to lower speed limits to 55 mph in some states and touched off a seemingly endless wave of "Go Green" campaigns.
"I see a permanent shift," said Kit Yarrow, a consumer psychologist
at San Francisco's Golden Gate University who has studied how high oil
prices have affected Americans' buying behavior. "Historically, when
gas prices come down, people use more. But we've learned a lot of new
things during this period and it will be hard to go back to our
Really? I could have sworn people said that in 1972 and again in 1978. But the SUV and the Hummer were not even invented until after these oil shocks. He mentions the 55 mph speed limit, but we once had a national speed limit at 55 in the 1970s and we chucked it. What possible evidence does this guy have, particularly since the recent shock was not nearly as bad as 1972 or 1978. In fact, you can see that here in this graph of gas price pain:
And, we have not seen the absolute shortages and gas lines we saw in the 1970s. Usually these weird statements like this published by the AP are the start of some kind of broader political campaign. The only thing I can guess is that this is the front end of some leftish/Obama polical message that we need to keep slamming on government conservation directives and alt-energy subsidies even as prices fall.
If you have watched the Olympics at all, you have likely seen the Obama commercial promising:
"The hands that install roofs can also install solar panels. The hands
that build today's cars can also build the next generation of
fuel-efficient vehicles. Barack Obama [will] ... create 5 million jobs developing homegrown energy technologies."
A few reactions:
- Private individuals, not politicians, create jobs
- Job promises like this are never incremental, nor can they be. If the hands that build current SUV's can build electric cars instead, then we haven't added any new hands, we've just changed what they are working on.
- It strikes me that this is the broken windows fallacy writ large. In effect, Obama promises to make much of our perfectly-serviceable transportation and electrical generation installed base obsolete, requiring an enormous effort to replace it. But the resources to fund this huge new investment have to come from somewhere. Industries that flourish and grow under this government enforced shift in capital will be offset by those that are starved. Every other part of the economy will slow due either to higher taxes or higher prices (or both) that subsidize this effort. But since it is harder to find and count the latter than the former, it makes for a good, un-auditable political pledge
- I'll bet that 5 million number focus groups really well, but does it make any sense at all? Here are some current employment numbers for the US as of January, 2008:
|Construction of power generation facilities:||137,000|
|Power generation and supply:||399,000|
|Production of power gen. equipment||105,000|
Production of transportation equipment (planes, trains, autos, boats,
OK, so the total employment of all these industries that might be related to an alternate energy effort is about 2.28 million. So, to add 5 million incremental jobs would require tripling the size of the utility industry, tripling the size of the utility construction and equipment industry, tripling the size of the auto industry, tripling the size of the aircraft industry, and tripling the size of the shipbuilding industry. And even then we would be a bit short of Obama's number.
The other day, I posted an update to my light rail bet saying that not only was light rail incredibly expensive for the amount of transportation it provides, it is not even clear that it provides any "green" benefits (with "green" today meaning only the potential to reduce CO2, since the global warming hysteria has sucked all of the oxygen out of other environmental goals).
The Antiplanner has more information, this time from the transportation planners in Denver. Normally, transportation planners grossly exaggerate the benefits of their proposed systems, so it is interesting that even they so no net CO2 savings from their proposed rail lines:
The Antiplanner's review
of rail transit and greenhouse gases found that Denver's light-rail
lines produce more greenhouse gases per passenger mile than a typical
SUV. The Gold Line DEIS agrees, admitting that the rail alternative
will result in a regional CO2 increase of 0.034% (see page 3.7-10).
By the way, the Denver system does not do so great on the financial part either:
Now, RTD says the line will cost more than $600 million, which is a
lot for a mere 11 route miles. Moreover, RTD has changed the proposed
technology to something it calls "electric multiple-unit commuter
rail," which sounds something like the Chicago Electroliners or some of
the Philadelphia commuter trains.
For this high price, the DEIS reports incredibly trivial benefits.
The proposed rail line is projected to take 0.0085 percent of cars off
the road. Of course, that's for the region as a whole, but in the
corridor it will take a whopping 0.227 percent of cars off the road. A
handful of buses could do as well.
While that might seem terrible, it actually outdistances our guys here in Phoenix, who are projecting that the next 3.2 mile line here will cost $306 million. While the Denver line is projected to cost $10,300 per foot, the Phoenix line will cost at least $18,000 per foot.
I generally have a bet I make for new light (and heavy) commuter rail systems. I bet that for the amount the system cost to build, every single daily rider could have instead been given a Prius to drive for the same money; and, with the operating losses and/or subsidy the system requires each year, every one of those Prius drivers could be given enough gas to make their daily commute. And still have money left over. I have tested this bet for the systems in Los Angeles and Albuquerque.
Well, it turns out I left something out. Many people are interested in commuter rail because it is perceived to be greener, which nowadays generally means narrowly that it uses less energy and thus produces less CO2. But in fact, it may not. Blogger John Moore sent me a link to this article by Brad Templeton analyzing energy usage in various transportation modes. While a full train can be fairly efficient (just as a full SUV could be if 7 passengers were in it), cars and trains and busses are seldom full. When you look at their average load factors, trains are seldom better than cars:
In fact, a car at its average load factor (1.57 pax) has about the same energy use as busses or light rail per passenger mile. The analysis is difficult to do well, but even with errors, its clear that rail projects do not dominate over car travel in terms of energy use (One must be careful to differentiate rail project construction decisions from individual choice of mode decisions -- an individual at the margin shifting from car to train saves a lot of energy; a city choosing to invest in a large new rail system to entice drivers off the road does not).
In fact, relevent to my bet, Mr. Templeton says this:
My first conclusion is that we would get more efficient by pushing
small, fuel efficient vehicles instead of pushing transit, and at
a lower cost.
He explains his results, which are counter-intuitive to many
A full bus or trainload of people is more efficient than private cars,
sometimes quite a bit more so. But transit systems never consist
of nothing but full vehicles. They run most of their day with light
loads. The above calculations came from figures citing the
average city bus holding 9 passengers, and the average train (light
or heavy) holds 22. If that seems low, remember that every packed
train at rush hour tends to mean a near empty train returning down
Transit vehicles also tend to stop and start a lot, which eats
a lot of energy, even with regenerative braking. And most
transit vehicles are just plain heavy, and not very aerodynamic.
Indeed, you'll see tables in the DoE reports that show that over the past 30 years,
private cars have gotten 30% more efficient, while buses have
gotten 60% less efficient and trains about 25% worse. The
market and government regulations have driven efforts to make cars
more efficient, while transit vehicles have actually worsened.
In order to get people to ride transit, you must offer frequent
service, all day long. They want to know they have the freedom to leave at
different times. But that means emptier vehicles outside of
rush hour. You've all seen those huge empty vehicles go by, you just
haven't thought of how anti-green they were. It would be better
if off-hours transit was done by much smaller vehicles, but that
implies too much capital cost -- no transit agency will buy enough
equipment for peak times and then buy a second set of equipment for
light demand periods.
A lot of his data can be checked at the US Department of Energy data book here. In particular, you can see the key numbers in table 2.12. After perusing this data for a bit, I had a few other reactions:
- Commercial air travel gets a bad rap. On a passenger mile basis, it is really not worse than driving and only about 20% worse than Amtrack (and probably the same as Amtrak or better if you leave out the Northeast Corridor). (table 2.14)
- Busses have really gotten way more inefficient over the years, at the same time cars have become substantially more efficient. While the government criticizes its citizens for not practicing enough energy conservation, in fact its citizens have been buying more and more fuel efficient vehicles while the government has been buying less efficient vehicles. (table 2.13)
- While passenger cars have increased substantially in efficiency, over the road trucks have seen no progress, and have actually gotten less efficient over the last 10 years (table 2-18)
Make sure to read the whole article. I think the author is pretty fair at achnowleging where the uncertainties are in the analysis. He also has comparisons of mass transit energy numbers between cities. A few individual cities seem to beat even the most efficient cars -- most, including places like New York, do not.
Postscript: I don't think numbers for New York include taxis. If they did, New York would likely look terrible. From an energy standpoint, taxis are a horrible transportation option, perhaps the worst possible. It would be interesting to know how many New Yorkers who look down on SUV's routinely get around town using taxis.
The government claims that it is important to crack down on gambling because people who gamble might do themselves financial harm. Of course, just like the teenager who is thrown in jail because it is better for him than smoking marijuana, so goes the case of Salvatore Culosi:
"¦ Salvatore Culosi "¦ was a 37-year old optometrist in the
Washington, D.C. suburb of Fairfax, Virginia. According to friends,
Culosi was a wealthy, self-made man. He was easygoing and friendly, a
guy who enjoyed his success.
He was also a small-time gambler. Culosi and his friends
regularly met at bars in the area to watch sports, and frequently
wagered on the outcomes of games. The wagers weren't insignificant "”
$50, $100, sometimes more on a given afternoon. But the small circle of
friends also had the means to back up their wagers. No one was betting
the mortgage, here"¦
Fairfax police detective David J. Baucom met Culosi in a bar
one evening last October, befriended him, and was soon making wagers
himself"¦ Baucom began upping the ante, encouraging Culosi to wager
larger sums than what the friends were used to"¦
Baucom eventually encouraged Culosi to wager at least $2,000
in a single day, the lower threshold under which Culosi could be
charged under state law with "conducting an illegal gambling
operation." On January 24 of this year, Detective Baucom assembled the
Fairfax County SWAT team, and marched off to Culosi's home to arrest
According to press accounts, police affidavits, and the
resulting investigation by the Fairfax prosecutor's office, Baucom
called Culosi that evening, and told him he'd be by to collect his
winnings. With the SWAT team at the ready just behind him, Baucom
waited outside Culosi's home in an SUV. As Culosi emerged from the
doorway, clad only in a t-shirt and jeans, SWAT officer Deval Bullock's
finger apparently slipped to the trigger of his Heckler & Koch MP5
semiautomatic weapon, already aimed at the unarmed Culosi.
The gun fired, releasing a bullet that entered Culosi's side,
then ripped through his chest and struck his heart, killing him
Hopefully, the idea of burning food to power automobiles is finally being discredited. It's amazing to me that environmentalists, of all people, who for years have criticized America's love affair with cars, have been at the leading edge of advocating government subsidies to shovel our food supply into our SUV's. Particularly when corn ethanol creates more CO2 and other pollutants than it eliminates. More on the insanity of biofuels here and here.
I almost never post about politics, because I don't really have a horse in the Democrat-Republican race. However, this post from Kevin Drum quoting E.J. Dione kind of tickled me. They claim Democrats are winning the suburbs from Republicans, which I have no particular reason to dispute. But the whole concept of Democrats competing in the suburbs is kind of funny to me. Almost at every turn, the Left tends to use the suburbs as its great cultural whipping boy. We hate your SUV's and your lack of public transportation and your large houses and your Walmarts and your churches and your private schools and we take your money and send it to the city centers which culturally we have much more affinity for, but thanks for voting for us.
began investigating the carbon offset industry this week. The inquiry
could produce some "inconvenient truths" for Al Gore and the nascent
Carbon offsets ostensibly allow buyers to
expunge their consciences of the new eco-sin of using energy derived
from fossil fuels. Worried about the 8 tons of carbon dioxide (CO2)
emitted each year by your SUV? Similar to the indulgences offered by
Pope Leo X in the 16th century, you can absolve yourself of sin by
purchasing $96 worth of CO2 offsets "“ typically offered at $12 per ton
of CO2 emitted "“ from offset brokers who, in turn, supposedly use your
cash to pay someone else to produce electricity with low or no CO2
Capitol Hill staffer told me that the congressional inquiry would look
into the possibility of "double-dipping" in the offset industry.
Only double-dipping? Earlier, I argued that the purveyors of offsets may be triple dipping:
- Their energy projects produce electricity, which they sell to
consumers. Since the
electricity is often expensive, they sell it as "CO2-free"
electricity. This is possible in some sates -- for example in Texas,
where Whole Foods made headlines by buying only CO2-free power. So the
carbon offset is in the bundle that they sell to
electricity customers. That is sale number one.
- The company most assuredly seeks out and gets
government subsidies. These subsidies are based on the power being
"CO2-free". This is sale number two, in exchange for subsidies.
- They still have to finance the initial construction of the plant, though. Regular heartless
investors require a, you know, return on capital. So Terrapass
finances their projects in part by selling these little certificates that you
saw at the Oscars. This is a way of financing their plants from people
to whom they don't have to pay dividends or interest "”just the feel-good
sense of abatement. This is the third sale of the carbon credits.
I have written on this before on the context of Vioxx, but is it really rational public policy to have juries be allowed to effectively ban products, products that both legislatures and regulatory bodies have explicitly or implicitly deemed as legal? Ted Frank takes this on at Overlawyered in a nice follow-up post on a $31 million jury verdict against Ford:
SUVs are designed to have high clearance to traverse rugged terrain.
This raises the center of gravity and affects the handling: it's a
known tradeoff of the laws of physics. There are a wide variety of
tests of varying degrees of scientific merit one can use to suggest a
vehicle is "too prone" to roll over, and plaintiffs have the benefit of
cherry-picking which tests to apply to which vehicles. You'll find lots
of lawyers complaining that the Bronco II allegedly responded poorly in
"J-turn tests", where the steering wheel is turned 330 degrees in one
third of a second and held there for another 4.67 seconds. Ford
designed the Explorer to pass the J-turn test to take away this claim,
and the trial lawyers started using different methodologies to claim
that the Explorer was too prone to roll over.
Empirically, however, the Bronco doesn't roll over more than several
other SUVs on the market, which is why NHTSA, in both the Bush I and
Clinton administrations, refused to recall the Bronco when the
plaintiffs' bar asked it to. When I say Ford was held liable for
producing an SUV, I'm not spinning: it was because it was held liable
for producing an SUV.
Moreover, a vehicle should be viewed in totality: an auto that is
more likely to roll over may be safer in other particulars that more
than compensate for that increased propensity. So I question the
premise. One can't change the rollover propensity without creating a
different vehicle entirely. The vehicle should be viewed holistically,
and holistically, the Bronco is a safe car when used as designed.
Perhaps we as a society would be better off taking the nanny-state
step of banning SUVs, forbidding people from wildnerness driving
because too many drivers don't know how to drive SUVs in highway
conditions, but that's a decision that not only would end the American
auto industry, but should be made other than by a 12-person jury of
laypeople. This vehicle rolled over because the driver drove off the
I had similar thoughts about the Vioxx cases:
Anyway, the point of this post is that this verdict represents a very dangerous assault on individual choice. Recognize that there are many, many activities in life where individuals are presented with the following choice:
If I choose to do X, my life will be improved in some way but I may statiscally increase my chance of an early death.
may react at first to say that "I would never risk death to improve my
life", but likely you make this choice every day. For example, if you
drive a car, you are certainly increasing your chance of early death
via a auto accident, but you accept this risk because driving allows
you to get so much more done in your life (vs. walking). If you ride a
bike, swim, snow ski, roller blade, etc. you are making this choice.
Heck, everyone on the California coast is playing Russian Roulette with
an earthquake in exchange for a great climate, beautiful scenery, and
The vast majority of drugs and medical therapies carry this same
value proposition: A drug will likely improve or extend your life in
some way but carries a statistical chance of inducing a side effect
that is worse than the original problem, up to and including death.
The problem is that we have structured a liability system in this
country such that the few people who evince the side effects can claim
more money in damages than the drug was worth to all the people it
helped. For example, if a drug helps 999 people, but kills the
thousandth, and that thousandth person's family is awarded $253 million
in damages (as in this case), the drug is never going to be put on the
market again. Even if the next 1000 people sign a paper saying we are
willing to take the one-in-a-thousand risk to relieve the pain that is
ruining our lives, they still are not going to get the drug because the
drug companies know that some Oprah-loving jury will buy the argument
that they did not understand the risk they were taking and award the
next death another quarter of a billion dollars....
By the way, have you noticed the odd irony here? Robert Ernst (the
gentleman who died in the Vioxx case) is assumed, both by the FDA and
the litigation system, to be unable to make informed decisions about
risk and his own health. But a jury of 12 random people who never
experienced his pain can make such decisions for him? And us?
Alex Tabarrok at Marginal Revolution said it even more succinctly:
How did we arrive at a system in which 12 random Texans are assigned
responsibility for evaluating the scientific merits of statistical evidence of
this type, weighing the costs and benefits, and potentially
sending a productive blue-chip American company into bankruptcy protection?
When I first heard the GM ad campaign to give consumers access to the same discounts their employees get, I had two reactions:
- I sure hope that they have some alternative employee incentive lined up. I remember when I applied to GM as an engineer, this car discount was high on the list of how they sold the job. Now what are employees thinking, since their employment buys them nothing on this dimension? They are probably thinking they weren't getting much of a discount if GM can offer that discount to everyone
- If I were a stockholder, I would be selling, because it sure smacks as desperation. If you think of all the incentives GM has offered over the years, if they are offering an incentive that is unprecedented in their 80+ year history, then you know there must be some panic in the boardroom
Only GM could come up with a program that makes both employees and shareholders upset. George's Emploment Blawg has more thoughts along these lines. This all assumes that "same pricing as employees" means just that -- remember that this is the industry where "invoice pricing" means nothing of the sort.
Many people have analyzed GM's problems. It is tempting to say that their main problem is that they have not good cars, but I want to be careful not to substitute my preferences for market research. So, instead, I will point out a couple of facts:
- GM makes most of its profit from SUV's
- All the profit in a car line, given high fixed costs, come from the last 10-15% of the cars produced.
So, as gas prices rise and silly tax loopholes are closed [thanks Mark], SUV sales only need to fall 10-15% to wipe out most of GM's profitability.
Five years ago, I probably would sooner have had my head held underwater in a toilet bowl than drive a Volvo. This probably wasn't a fair bias, but they just looked so unappealing and seemed to embody "uncool" like no other car out there.
Anyway, things have changed, and Volvo is now offering several compelling vehicles. A few months back I was looking for an SUV to replace my Lincoln Navigator and tote my kids around. I had several complaints with my Navigator:
- It was too large and unwieldy around town
- The fit and finish was terrible. It started rattling after about 8000 miles
- At $2 a gallon for gas, its terrible mileage started bankrupting me.
- Its cargo space was poorly engineered - the seats didn't fold down all the way and the space in the rear was not very usable.
I chose the XC90 for a number of reasons:
- It was the smallest, tightest SUV with a third seat in the back, allowing me to take up to five kids with me. No other small SUV's had this third seat - you have to go to Suburbans or Navigators to find another car that has it
- The rear cargo area is superbly engineered. Both the back seats fold down flat making a totally usable flat space all the way up to the front seats.
- The car maneuvers and parks really well, especially with the ultrasonic sensors when backing up.
- The fit and finish is really nice
- The car's exterior looks pretty good; its actually remarkably similar to the BMW SUV.
- The car handles pretty well, particularly with the AWD (all-wheel drive) and is a hell of lot better at cornering than the large SUV's.
- Its very safe - it consistently ranks as safest car on the road - not just SUV but safest car period
- I got a good deal on it at the end of the last model year, though even then it certainly can't be called inexpensive
The car does have a couple of flaws. The biggest one is the engine. Both the 5 and the 6 cylinder options are fairly weak. I ended up buying the smaller engine, because it was cheaper and the larger engine wasn't noticeably more powerful. The pickup in the car is pretty mediocre, though I would not call it dangerous - there is enough power to get on the freeway without getting smushed. However, it is disappointing that this small and under-powered engine is simultaneously weak on gas mileage. I am getting about 16-17 mpg with the car, which is certainly better than my Navigator, but low given how much smaller the car is and how small the engine is. I would have hoped it got at least 20. This would probably be the perfect car if Honda or Toyota would make an engine for it (By the way, I heard on the radio the other day that Volvo is adding a V-8 option).