Search anytime by typing below

Thanks for joining the AEA efforts to help combat rising energy prices. We don’t want to bug you that often, so let us know what energy issues interest you, and we’ll keep your inbox happy.

*Please fill in all items

Federal EV tax credit: unnecessary, inefficient, unpopular, costly, and unfair

October 9, 2019 by 19 Comments

In April, Senator Debbie Stabenow (D-MI) introduced the Drive America Forward Act, a bill that would expand the tax credit for new plug-in electric vehicles (EVs) by allowing an additional 400,000 vehicles per manufacturer to be eligible for a credit of up to $7,000. Currently, the tax credit is worth up to$7,500 until a manufacturer sells more than 200,000 vehicles. In late September, groups that stand to benefit from the extension of the federal tax credits wrote to Senator McConnell and other leaders in Congress, encouraging them to support on the Drive America Forward Act. As IER has documented in the past, lawmakers should not extend the EV tax credit as the policy is unnecessary, inefficient, unpopular, costly, and unfair.

Unnecessary and inefficient

The EV tax credit is not necessary to support an electric vehicle market in the U.S. as one group estimates that 70 percent of EV owners would have purchased their vehicle without receiving a subsidy, which is reasonable seeing as 78 percent of credits go to households making more than $100,000 a year.  Furthermore, the federal tax credit overlaps with a number of other government privileges for EVs, including:

  • State rebates and/or other favors (reduced registration fees, carpool-lane access, etc.) in California, as well as in 44 other states and the District of Columbia.
  • Tax credits for infrastructure investment, a federal program that began in 2005 and, after six extensions, expired in 2017.
  • Federal R&D for “sustainable transportation,” mainly to reduce battery costs, averaging almost $700 million per year.
  • Credit for EV sales for automakers to meet their corporate fuel economy (CAFE) obligations.
  • Mandates in California and a dozen other states for automakers to sell Zero-Emission Vehicles—a quota in addition to subsidies.

Even if the federal tax credits were needed to support demand for EVs, the extension of the tax credit would be an absurdly inefficient means of achieving the stated goal of the policy, which is ostensibly to lower carbon emissions. The Manhattan Institute found that electric vehicles will reduce energy-related U.S. carbon dioxide emissions by less than 1 percent by 2050.

Unpopular

Lawmakers should be aware that the vast majority of people do not support subsidizing electric vehicle purchases. The American Energy Alliance recently released the results of surveys that examine the sentiments of likely voters about tax credits for electric vehicles. The surveys were administered to 800 likely voters statewide in each of three states (ME, MI and ND). The margin of error for the results in each state is 3.5 percent.

The findings include:

  • Voters don’t think they should pay for other people’s car purchases. In every state, overwhelming majorities (70 percent or more) said that while electric cars might be a good choice for some, those purchases should not be paid for by other consumers.
  • As always, few voters (less than 1/5 in all three states) trust the federal government to make decisions about what kinds of cars should be subsidized or mandated.
  • Voters’ sentiments about paying for others’ electric vehicles are especially sharp when they learn that those who purchase electric vehicles are, for the most part, wealthy and/or from California.
  • There is almost no willingness to pay for electric vehicle car purchases. When asked how much they would be willing to pay each year to support the purchase of electric vehicles by other consumers, the most popular answer in each state (by 70 percent or more) was “nothing.”

The full details of the survey can be found here.

Costly and unfair

Most importantly, an extension of the federal EV tax credit is unfair as the policy concentrates and directs benefits to wealthy individuals that are predominantly located in one geographic area, namely California. A breakdown of each state’s share of the EV tax credit is displayed in the map below:

In 2018, over 46 percent of new electric vehicle sales were made in California alone. Given that California represents only about 12 percent of the U.S. car market, this disparity means that the other 49 states are subsidizing expensive cars for Californians.  However, in order to understand the full extent of the benefits that people in California are receiving, some further explanation is in order.

When governments enact tax credit programs that favor special businesses without reducing spending, the overall impact is parallel to a direct subsidy as the costs of covering the tax liability shift to the American taxpayer or are subsumed in the national debt (future taxpayers). California offers a number of additional incentives on top of the federal tax credit for electric vehicles that are also driving demand for EVs in the state. These incentives include an additional purchase rebate of up to $7,000 through the Clean Vehicle Rebate Project, privileged access to high-occupancy vehicle lanes, and significant public spending on the infrastructure needed to support EVs. Therefore, the additional incentives that California (and other states) offer to promote EVs have broader impacts as these policies incentivize more people to make use of the federal tax credit, passing their costs on to American taxpayers. In other words, you’re not avoiding the costs of California’s EV policies by not living in California.

This problem is made even worse when we consider the impact of zero-emission vehicle (ZEV) regulations, which require manufacturers to offer for sale specific numbers of zero-emission vehicles. As recently as 2017, auto producers have been producing EVs at a loss in order to meet these standards, and they have been passing the costs on to their other consumers. This was made apparent in 2015 by Bob Lutz, the former Executive Vice President of Chrysler and former Vice-Chairman of GM, said:

“I don’t know if anybody noticed, but full-size sport-utilities used to be — just a few years ago used to be $42,000, all in, fully equipped. You can’t touch a Chevy Tahoe for under about $65,000 now. Yukons are in the $70,000. The Escalade comfortably hits $100,000. Three or four years ago they were about $60,000. What this is, is companies trying to recover what they’re losing at the other end with what I call compliance vehicles, which are Chevy Volts, Bolts, plug-in Cadillacs and fuel cell vehicles.”

Fiat Chrysler paid $600 million for ZEV compliance credits in 2015 (plus an unknown amount of losses on their EV sales), and sold 2.2 million vehicles, indicating Fiat Chrysler internal combustion engine (ICE) buyers paid a hidden tax of approximately $272 per vehicle to subsidize wealthy EV byers. ICE buyers were 99.3 percent of U.S. vehicle purchases in 2015. So, even if half the credits purchased were for hybrids, each EV sold in 2015 was subsidized by more than $13,000 in ZEV credit sales, in addition to all of the other federal, state, and local subsidies.

As is typical with most policies that benefit a politically privileged group, the plan to extend the federal tax credit program comes with tremendous costs, which are likely being compounded by people abusing the policy.  One estimate found that the overall costs of the Drive America Forward Act would be roughly $15.7 billion over 10 years and would range from $23,000 to $33,900 for each additional EV purchase under the expanded tax credit. Seeing as the costs of monitoring and enforcing the eligibility requirements of the EV tax credit program are not zero, it should surprise no one that the program has been abused as it has recently come to light that thousands of auto buyers may have improperly claimed more than $70 million in tax credits for purchases of new plug-in EVs. Finally, additional concerns arise over the equity of the federal EV tax credit due to the fact that half of EV tax credits are claimed by corporations, not individuals. 

End this charade

When the tax credit was first adopted, politicians assured us that the purpose of the program was to help launch the EV market in the U.S. and that the tax credit would remain capped at the current limit of 200,000 vehicles. At that time, we warned that once this program was in place, politicians would continue to extend the cap in order to appease the demands of manufacturers and other political constituencies that were created by the program. A decade later, we find ourselves in that exact situation. At this point, it should be clear that Congress should not expand the federal EV tax credit as the program is nothing more than an extension of special privileges to wealthy individuals and corporations that are mostly located in California. If Congress can’t find the courage to put an end to such an unfair and inefficient policy, President Trump should not hesitate to veto any legislation that extends the federal EV tax credit, as doing so would be consistent with his approach to other energy issues such as CAFE reform.

Filed Under: Blog, Electric Vehicles Tagged With: , , , , , , , ,

AEA to Senate: Highway Bill is Highway Robbery

July 30, 2019 by Leave a Comment

WASHINGTON DC (July 30, 2019) – Today, Thomas Pyle, President of the American Energy Alliance, issued a letter to Senate Environment and Public Works Committee Chairman John Barrasso highlighting concerns about the recently introduced America’s Transportation Infrastructure Act. Included in the legislation is an unjustified, $1 billion handout to special interests in the form of charging stations for electric vehicles.  AEA maintains that provisions like this are nearly impossible to reverse in the future and create a regressive, unnecessary, and duplicative giveaway program to the wealthiest vehicle owners in the United States. 
 
Read the text of the letter below:
 

Chairman Barrasso,

The Senate Committee on Environment and Public Works is scheduled to consider the reauthorization of the highway bill and the Highway Trust Fund today.  At least some part of this consideration will include provisions that provide for $1 billion in federal grants for electric vehicle charging infrastructure.  This is among $10 billion in new spending included in a “climate change” subtitle.  All of this new spending is to be siphoned away from the Highway Trust Fund (HTF), meant to provide funding for the construction and maintenance of our nation’s roads and bridges.  The HTF already consistently runs out of money, a situation that will only be exacerbated by these new spending programs.

We oppose this new federal program for EV infrastructure for a number of reasons, including, but not limited to the following:

  • The grant program, once established in the HTF, will never be removed.  Our experience with other, non-highway spending in the trust fund (transit, bicycles, etc.) is that once it is given access to the trust fund, the access is never revoked.  Our nation’s highway infrastructure already rates poorly in significant part due to the diversion of highway funds to non-highway spending.
  • As we have noted elsewhere, federal support for electric vehicles provides economic advantages to upper income individuals at the expense of those in middle and lower income quintiles.  This grant program would exacerbate that problem.
  • This program will result in taxpayers in States with few electric vehicles or little desire for electric vehicles having their tax dollars redirected from the roads they actually use to subsidize electric vehicle owners in States like California and New York.
  • This program is duplicative.  There is already a loan program within DOE that allows companies and States to get taxpayer dollars to subsidize wealthy electric vehicle owners.

For these and other reasons, we oppose the provisions that would create a regressive, unnecessary, and duplicative giveaway program to wealthy, mostly coastal electric vehicle owners.  This giveaway not only redirects taxpayer money from the many States to the few, in looting the Highway Trust Fund it also leaves those many States, including Wyoming, with less money to maintain their own extensive road networks.


Sincerely,

Thomas J. Pyle

Filed Under: Press Releases Tagged With: , , , , , , ,

Whoever Is Calling The Shots At The White House Takes Another Swing At Alaska

July 26, 2024 by Leave a Comment

The Biden-Harris administration is considering further restricting oil development in Alaska’s National Petroleum Reserve (NPR-A), the nation’s largest swath of public land. The Interior Department’s Bureau of Land Management (BLM) will be soliciting public comment on whether to expand or designate new “special areas” in the 23-million-acre reserve. The move could extend the areas of the NPR-A that are mostly off limits to drillers and stymie new exploration for oil in the western Arctic. BLM claims it is protecting caribou and herd health, as well as other wildlife, migratory birds, and native plants. The evaluation is part of the Biden-Harris administration’s attempts to dampen oil and gas activity in the Arctic to appease environmentalists following its 2023 approval of the $8 billion Willow oil project in the national reserve. The Biden-Harris administration has targeted Alaska’s resource development opportunities 65 times, affecting the state’s energy and economic future. The Biden-Harris administration has kowtowed to environmentalists in an attempt to gain favor at the ballot box.

The NPR-A, which is an area the size of the State of Indiana, has experienced limited drilling since it was created in 1923 as a potential oil supply for the U.S. Navy. In recent years, the reserve has garnered increasing interest due to the discovery of deposits that could hold millions of barrels of oil and help reverse Alaska’s declining oil production. Oil revenues support the state’s economy and contribute to jobs and annual dividends to its citizens.  Oil and gas jobs represent about one quarter of all state jobs, and generate about half of the state’s economy, while providing as much as 90 percent of state unrestricted General Fund revenues in most years and accounting for over $180 billion in total revenue since statehood.

Along the reserve’s eastern border, and near Alaska’s prolific North Slope oil fields, companies are tapping into large oil deposits. The Willow project is expected to produce up to 750 million barrels of oil, and ConocoPhillips has expressed confidence that more oil likely lies deeper into the reserve. An Australian company, 88 Energy, is also exploring a potential 1.6-billion-barrel oil discovery in NPR-A called the Peregrine prospect. The rising oil activity in the NPR-A, however, has heightened calls for greater limits on drilling from environmental groups, who have always opposed the Trans-Alaska Pipeline (TAPS) into which oil would flow.

A day before approving the Willow project last year, the Biden-Harris administration announced sweeping regulatory changes for additional protections in special areas of the NPR-A, making drilling and exploration more difficult but not banning them outright. The new rules, finalized in April, allow BLM to reevaluate the boundaries of special areas and consider new ones. BLM’s recent solicitation marks the beginning of the first of those evaluations. BLM  also plans to consult with local people about the special areas and it has sent invitations to consult with Alaska Native Villages and Corporations, but a group of North Slope cities, tribes and Alaska Native corporations is already challenging previous federal restrictions on oil development in the National Petroleum Reserve-Alaska.

Roughly half of the NPR-A is already designated as special areas, and in some locations there are bars on drilling infrastructure or limits on new oil leasing. That includes an expansive wetland around the Teshekpuk Lake that supports caribou herds and migratory birds, which are common on Alaska’s North Slope.

ConocoPhillips, Alaska Attorney General Treg Taylor (R) and a nonprofit representing Alaska’s North Slope Iñupiat sued to block the Biden administration’s NPR-A rules. The state argues that the Biden administration is “dramatically” changing the way the reserve is managed. The reserve’s management is governed by the Naval Petroleum Reserves Production Act of 1976, which orders the Interior Department to balance oil development with other values like conservation, wildlife protection and subsistence hunting. In response to the oil and gas industry’s interest in the NPR-A, the Trump administration in 2020 opened most of the reserve to exploration. In 2022, the Biden-Harris administration reversed that decision.

According to the Alaska Oil and Gas Association, “This latest maneuver by BLM regarding Alaska’s Petroleum Reserve is indicative of BLM’s continuing refusal to manage the Petroleum Reserve as Congress directed. Rather than follow Congress’s direction for ‘expeditious’ development of the Petroleum Reserve, the current administration — in its effort to appease Lower 48 environmental activists — is seeking to set aside large swaths as off-limits to any development.”

NPR-A Lawsuit

A coalition of North Slope local and regional governments, tribal governments and Native corporations has sued the Biden-Harris administration in the U.S. District Court in Anchorage for prohibitive environmental protections President Biden placed on the National Petroleum Reserve in Alaska (NPR-A).The NPR-A lawsuit, filed by the organization Voice of the Arctic Iñupiat, claims that the rule enacted by the Department of the Interior on April 19 should be invalidated because it resulted from a flawed process. The rule was enacted improperly because of several legal shortcomings, including the agency’s failure to conduct a full environmental impact statement, the diversion from four decades of NPR-A management that emphasized oil development and a lack of “meaningful” engagement with the people of the North Slope. The lawsuit claims the rule “turns vast swaths of the NPR-A into a de facto conservation system unit.” The new rule was proposed by the Bureau of Land Management last September and finalized in April. The group says the Biden-Harris administration’s environmental restrictions threaten to reverse progress that has improved their lives.

Trans-Alaska Pipeline System

Put in service in 1977, the 800-mile pipeline is the primary way to carry oil drilled on Alaska’s North Slope to ports, refineries and pipelines farther south. It is the lifeline of the state’s industry crisscrossing the state’s rugged terrain and keeping oil from freezing in frigid temperatures.  So far, the pipeline has transported 18.7 billion barrels of oil over its lifetime. Oil flow through the Trans-Alaska Pipeline System however, averaged around 470,000 barrels a day last year. The 48-inch pipeline is capable of transiting 2 million barrels per day, and once did, from Prudhoe Bay to the ice-free port of Valdez for shipping to the continental United States. At its peak, in the late 1980s, about 2 million barrels a day flowed through the line. The pipeline is looking for additional oil supplies to keep it operating since it has about 1.5 million barrels per day of available capacity. Oil production in the NPR-A can keep the pipeline viable and provide decades of oil for American consumers if the Biden-Harris administration gets out of the way. Opponents of the pipeline have sought to reduce oil produced on the North Slope, in hopes of an early closure.  President Biden was one of only 5 U.S. Senators to vote against the final pipeline conference report 51 years ago in 1973, which passed 80-5.

Conclusion

The Biden-Harris administration is doing all it can to restrict new development of oil and gas in the United States despite having a wealth of those resources here and particularly in Alaska. The Biden-Harris Administration has fought economic development in Alaska beginning with its refusal to honor the law that opened ANWR, denying the state access to their own mineral lands and closing opportunities in the National Petroleum Reserve-Alaska. In doing so, the Biden-Harris administration is depriving Americans of their public wealth, increasing energy prices and spurring on inflation.

*This article was adapted from content originally published by the Institute for Energy Research.

Filed Under: Blog Tagged With: , , ,

Candidate Profile: Kamala Harris on Energy

July 25, 2024 by Leave a Comment

President Biden ended his reelection campaign on Sunday, July 21, under mounting pressure from Democrats following his poorly received debate performance. By endorsing Harris, he has positioned her as the frontrunner to succeed him. However, there is still some degree of uncertainty looming as Democrats hurriedly work to assemble a new 2024 ticket before the party’s convention on August 19-22 in Chicago.  

Harris’ stance on energy, both during her tenure as a senator and as a candidate in the 2020 Democratic presidential primary, was to the left of Biden’s, leaning more towards far-left positions that favor government control and political direction of energy production.  In her 2019 platform, she outlined climate goals that surpassed those of the current administration, aiming to achieve a renewable reliant economy by 2045. Her plan proposed that new buses, heavy-duty vehicles, and vehicle fleets must be zero-emission by 2030, with all vehicles mandated to be 100 percent zero-emission by 2035.

Fracking Bans

As a candidate for president in 2020, she advocated for a ban on hydraulic fracturing.  Furthermore, during her tenure as California’s attorney general, Harris filed a lawsuit against the Obama administration’s Interior Department in 2016, challenging potential fracking activities off the state’s coastline and describing the practice as a “threat to the health and well-being of California communities.” 

The shale revolution has profoundly changed American energy production. Through hydraulic fracturing, precise drilling techniques, and private ownership of subsurface resources in strategic regions, the United States has emerged as a global energy leader.  

According to a 2015 report by the National Bureau of Economic Research titled “Welfare and Distributional Implications of Shale Gas,” the U.S. shale boom significantly lowered natural gas prices. The report estimated an annual welfare gain of $48 billion from 2007 to 2013, a substantial figure given that retail spending on natural gas totaled around $160 billion in 2013. This economic impact represented approximately one-third of one percent of the gross domestic product, equivalent to about $150 per capita.  The reduced prices of natural gas facilitated its displacement of coal in the U.S. energy mix. In 2023, carbon dioxide emissions dropped by 3 percent, continuing a consistent decline in U.S. emissions observed over the past 15 years.  

The benefits of the shale boom extend to royalty payments for individuals and families, as well as substantial economic advantages for local and regional economies. For every million dollars of new oil and gas extraction, there is an associated $80,000 increase in wage income, $132,000 in royalty payments and business incomes, and the creation of 0.85 jobs within the local economy. These economic impacts are magnified threefold when considered across the broader region.  According to a recent report by the American Petroleum Institute, the oil and natural gas industry supports 0.8 million jobs across all 50 states, both full-time and part-time. This workforce accounts for 5.4 percent of the nation’s total employment and contributes nearly $1.8 trillion to the U.S. economy annually.

Green New Deal

Harris was also an early supporter and original co-sponsor of the Green New Deal, a resolution initially proposed in 2019 by progressive Democrats such as Representative Alexandria Ocasio-Cortez of New York and Senator Ed Markey of Massachusetts.  The Green New Deal (GND) comprises a range of policy proposals aimed at addressing what is claimed to be a climate crisis, with a central goal of achieving net zero greenhouse gas (GHG) emissions by 2050 in various iterations. 

While proponents of the GND claim it aims to address energy, environmental, and climate concerns, its policies are predicted to bring no economic benefits while imposing significant economic costs. Historical data on energy consumption, economic growth, employment, income levels, and poverty suggest that the GND would have adverse effects across all of these dimensions. In particular, reducing reliance on conventional energy sources will stall economic growth and increase poverty by limiting opportunities in energy production. The estimated annual cost of implementing the GND’s electricity mandate alone is projected at $490.5 billion annually, impacting households unevenly across states.  Transitioning to “clean” electricity is expected to require extensive land use and may increase greenhouse gas emissions from backup power generation. The unreliability of intermittent renewable sources like wind and solar power would jeopardize electricity grid stability and lead to widespread blackouts. Beyond energy concerns, the GND’s broader costs will be approximately $9 trillion per year, excluding costs from shifts in the transportation sector and environmental damages. The proposal to fund the GND through money creation is dismissed as likely to cause inflation and devalue currency, further straining economic stability and reducing investments in environmental protection over time. 

Climate Equity

In conjunction with her support for the GND, Harris also supported several pieces of legislation that would expand the federal bureaucracy in the name of advancing “climate equity.”  In 2020, Harris proposed the Climate Equity Act, which aimed to create a new independent Office of Climate and Environmental Justice Accountability.  

In practice, the current administration’s approach to “equity” consisted of transferring hundreds of millions of taxpayer dollars to President Joe Biden and Vice President Kamala Harris’s own environmental justice advisors.  Just days into his presidency in 2021, Biden issued an executive order to create his environmental justice advisory council. This council operates under the EPA, includes four designated federal officers from the agency, and holds authority to advise both the White House Council on Environmental Quality and an interagency council consisting of various Cabinet secretaries.

The Washington Free Beacon reviewed a database of federal grants and found that four prominent environmental justice organizations — WE ACT for Environmental Justice, the Bullard Center for Environmental & Climate Justice at Texas Southern University, the Deep South Center for Environmental Justice, and Kean University’s Center for the Urban Environment — collectively received $229 million in grants from the Environmental Protection Agency. Additionally, they were designated as partners to recipients of another $200 million in grants. Leaders from these organizations serve on the White House’s Environmental Justice Advisory Council, housed within the EPA, the agency responsible for awarding these grants. According to the White House, the council provides “independent advice and recommendations on how to address current and historic environmental injustice.”  Peggy Shepard, executive director of WE ACT for Environmental Justice, chairs the council. Other council members include Robert Bullard from the Bullard Center, Beverly Wright from the Deep South Center, and Nicky Sheats from the Center for the Urban Environment.  

Except for the Center for the Urban Environment, all of these organizations are linked to Mike Bloomberg’s Beyond Petrochemicals initiative, an $85 million campaign launched in 2022. They have also received substantial funding from Jeff Bezos’s Earth Fund and other progressive funding channels.  Large firms run by people like Bezos and Bloomberg stand to benefit from complex environmental regulations. Regulations often either directly restrict competition, or indirectly imposes a greater burden on smaller businesses as they have fewer resources to comply with new rules.  The Free Beacon’s investigation concluded that these revelations raise concerns about the oversight of the Biden-Harris administration’s allocation of significant environmental grants because of the close ties between the EPA’s environmental justice efforts and these organizations.

In addition to her Environmental Equity Act, then-Senator Harris also introduced legislation titled the Environmental Justice for All Act. This too would have seen hundreds of millions of tax-dollars go to radical foundations and nonprofits aligned with Harris’ politics. However, it goes much further by targeting American energy producers with new taxes and fees. The proceeds of these new punitive taxes would go to further grantmaking for the very organizations attempting to put American energy workers out of jobs. On top of the traditional spending spree and new taxes, this bill would create new programs seeking to enact “reparations” to communities most “impacted” by climate change. One such program proposed in the bill is to fund the creation of make-up and other cosmetic products exclusively for “women of color” all in the name of fighting climate change.

Electric Vehicle Mandates

Vice President Harris has also been a consistent supporter of the Biden administration’s unpopular EV mandates.  During her 2020 presidential campaign, Harris pledged ambitious climate policies.  She aimed for 50 percent of all new passenger vehicles sold to be electric vehicles (EVs) by 2030, and a complete transition to 100 percent EVs by 2035. Additionally, she supported a mandate that by 2030, all new vehicle purchases for corporate fleets, transportation networks, and heavy-duty vehicles must be electric.

Back in January 2019, months after announcing her presidential bid, Harris cosponsored the Zero-Emission Vehicles Act. Initially targeting 43 percent of car sales to be electric by 2027, the bill evolved to set a goal of 100 percent electric car sales by 2035.  In contrast, the Biden administration’s current approach includes finalized standards that aim for 56 percent of new light-duty car sales to be battery-electric and 13 percent hybrid by 2032. For heavy-duty vehicles under these standards, fewer than half of trucks produced in 2032 are expected to be electric.

A recent poll conducted by the Remington Research Group, commissioned by the American Fuel & Petrochemical Manufacturers, revealed that in key states such as Arizona, Michigan, Nevada, Ohio, Pennsylvania, and Wisconsin — pivotal for determining the election outcome — 59 percent or more of likely voters oppose government bans on gas-powered cars.

Bans On Plastic

Harris has also supported bans on plastic straws and single use plastics even though these policies routinely fail to provide any sort of meaningful benefit to the environment.  For example, in 2020, New Jersey enacted legislation prohibiting single-use plastic and paper bags in all stores and food service businesses, which took effect in May 2022 and was applauded by environmental groups. Despite a reduction of over 60 percent in the total number of plastic bags to 894 million, the switch to alternative bags led to a significant increase in the state’s plastic consumption, soaring nearly threefold from 53 million pounds to 151 million pounds. 

Most stores in New Jersey adopted heavier, reusable shopping bags made from non-woven polypropylene, which require over 15 times more plastic and generate more than five times the greenhouse gas emissions during production per bag compared to polyethylene plastic bags. Moreover, these alternative bags are not widely recyclable and typically lack post-consumer recycled materials. Greenhouse gas emissions surged by 500 percent compared to the previous bags used in 2015, adding to consumer expenses for reusable bags at a time when economic pressures from inflation were already affecting grocery budgets.

AEA Congressional Scorecard

Senator Kamala Harris received a lifetime score of 0 percent from the American Energy Alliance’s Energy Scorecard.

2019 – 2020 votes:  

2017 – 2018 votes: 

Filed Under: Blog Tagged With: , , ,

The Unregulated Podcast #192: Meritocracy and Freedom

July 25, 2024 by Leave a Comment

On this episode of The Unregulated Podcast Tom Pyle and Mike McKenna cover the fallout of the Kamala Coup, recent bombshell proceedings in Congress, and what it all means for the 2024 presidential election.

Links:

Stay Connected With The Show:

Filed Under: Podcast Tagged With: , , ,

Biden-Harris Admin Giving Out Billions In EV Subsidies

July 19, 2024 by Leave a Comment

The Biden administration plans to award General Motors and Chrysler-parent Stellantis nearly $1.1 billion in grants to convert existing car manufacturing plants to build electric vehicles and components. The Department of Energy (DOE) announced $1.7 billion in planned grants to help fund the conversion of 11 “at risk” plants in eight states to enable the production of 1 million electric vehicles annually, help retain 15,000 existing jobs, and create 3,000 new positions. The plants are “at risk” because of EV transition policies being forced by Washington, D.C. The awards are for plants in Michigan, Ohio, Pennsylvania, Georgia, Illinois, Indiana, Maryland, and Virginia — some of which are swing states in the November presidential election.

To support the EV effort further, President Joe Biden has prodded U.S. automakers to assemble a rising number of electric vehicles, introduced new tax incentives and funded EV charging stations. Biden federal regulators have also issued stricter emissions rules to boost EV sales. Despite these initiatives designed to increase demand, Americans’ interest in purchasing electric vehicles isn’t matching the Biden administration’s desires as the rate of growth of EV sales has fallen due to the high cost of electric vehicles and lack of charging stations, of which the federal government has only installed seven out of the 500,000 it promised. As a result, electric vehicles are piling up on dealer’s lots.

The White House is courting union workers in key battleground states and seeking to reassure autoworkers that its policies pushing electric vehicles will not cost jobs, despite requiring fewer workers to manufacture them and maintain them than gasoline and diesel vehicles. The Energy Secretary told reporters the awards were a “hallmark of the Biden administration’s industrial strategy” and would “modernize historical auto manufacturing facilities.”

The Biden administration’s grants include more than $650 million for two factories in Michigan. The plants in Michigan include General Motors’ Lansing Grand River Assembly, which is to be refurbished at an unspecified future date to allow production of new EV models and could receive up to $500 million, if it, like the other projects, hits marks for retooling, production and hiring or employee retention. The plan calls for retaining more than 650 UAW jobs at the facility and adding 50 new hires. GM will make its own unspecified investment to produce electric vehicles in Lansing at a future date but said the plant will continue to produce the Cadillac CT4 and CT5.

ZF North America Inc. was also awarded a grant of up to about $158 million to retool a portion of its plant in Marysville in St. Clair County to move from making axle drive component parts for internal combustion engine vehicles to components for electric vehicles. The grant calls for retaining 536 jobs, including 387 UAW employees.

The potential grants also include $335 million to help reopen and convert Stellantis’ idled Fiat Chrysler assembly plant in Belvidere, Illinois, to building electric vehicles, restoring some 1,450 union jobs. Another $250 million will go to convert Stellantis’ transmission plant in Kokomo, Indiana, to make electric drive modules, which combine the motor, transmission and other electronics in a single unit in battery-powered electric vehicles. The grant expects to retain 585 UAW jobs. In October, Stellantis agreed to build a new $3.2 billion battery plant and invest $1.5 billion in a new mid-size truck factory in Belvidere, Illinois under a new union contract.

Other plants in Ohio, Pennsylvania, Georgia, Maryland and Virginia also received grants to help shore up supply chains and assembly of electric cars, trucks and buses. The funding was included in the Democrat-passed Inflation Reduction Act in 2022.

Hyundai Mobis, which operates a Stellantis supplier in Ohio, will receive $32 million to produce plug-in hybrid components and battery packs.

Other awards include $89 million for Harley-Davidson to expand its York, Pennsylvania plant for EV motorcycle manufacturing; $80 million for Blue Bird to convert a former Georgia plant to build electric school buses; and $75 million to engine company Cummins to convert part of an existing Indiana plant to make zero-emission components and electric powertrain systems. The DOE also plans $208 million for the Volvo Group to upgrade plants in Maryland, Virginia and Pennsylvania to increase EV production capacity.

The DOE must still complete negotiations with companies on milestones and other requirements and complete environmental reviews before the awards are finalized.  Given the current time it takes DOE to complete negotiations for awards, there is little chance these awards will be finalized and the money will go to these companies until after the next Presidential inauguration.

Conclusion

The Biden administration is handing out grants and other incentives to increase EV production in order to reach Biden’s goal of a 50 percent EV share of auto sales by 2030—part of the plan to keep his promise to the U.N. in support of the Paris Climate Accord. Biden’s Department of Energy has proposed grants of $1.7 billion to companies that will either manufacture electric vehicles or their component parts. This situation of free wheeling with taxpayer dollars is reminiscent of Solyndra and Fisker—companies that the Obama administration funded that failed in that administration’s endeavor to transform the energy market.  Rather than let markets work and consumers select the best technologies to meet their needs, the Biden administration is using regulations, grants, tax credits and other incentives to push manufacturers towards faster EV production and sales, despite the rate of growth in EV sales slowing.

Donald Trump has criticized Biden’s EV policies and vowed to reverse them if he takes office.  Trump vowed to “terminate” green vehicle mandates, warning that if they continued under Biden, “American auto production will be totally dead.” Currently, the U.S. auto industry cannot compete against electric vehicles made by Chinese manufacturers, who are making the cheapest electric vehicles on the market and gaining market share in Europe. Only U.S. trade policy is keeping those manufacturers from flooding U.S. vehicle markets.

*This article was adapted from content originally published by the Institute for Energy Research.

Filed Under: Blog Tagged With: , , , , , , , ,

The Unregulated Podcast #191: Hey Joe, How Are You Doing?

July 19, 2024 by Leave a Comment

On this episode of The Unregulated Podcast Tom Pyle and Mike McKenna go over the fallout from the attempted assassination on Donald Trump, the events at the RNC, and what Trump’s choice of J.D. Vance for vice-president means for the future of American energy and politics.

Links:

Stay Connected With The Show:

Filed Under: Podcast Tagged With: , ,

Biden And Harris Block Development In Alaska

July 16, 2024 by Leave a Comment

On July 5, Biden’s Interior Department blocked 28 million acres of federal land (D-1 lands) in the state of Alaska from any mining or oil and gas development, which removes an area the size of the state of Pennsylvania from resource development. The Biden administration also blocked a 211-mile gravel road, the Ambler Access Road, that would have connected mining districts in west-central Alaska to a highway that runs through the middle of the state. The mines are rich in copper and cobalt needed for the green energy transition. In 2020, President Donald Trump had approved the permit to build the road, but after Joe Biden was elected President, Interior Secretary Deb Haaland ordered a new analysis, arguing that the Trump-era studies had been inadequate.

The Biden administration has targeted Alaska’s resource development opportunities 65 times, affecting the state’s energy and economic future. The Biden administration has kowtowed to environmentalists to gain favor at the ballot box. This time, it is placing 28 million acres off-limits to responsible development, which empowers China, Russia and other enemies of the United States, and has blocked a gravel road used to reach areas for mineral development needed for Biden’s green energy transition. The Biden Administration has done everything environmental groups have requested in Alaska, except for the decision to allow development of the Willow Project in NPR-A, making some wonder if the Willow decision was an artificial controversy to mask later anti-energy and mineral actions such as those taken recently.

D-1 Lands Removal

“D-1” lands are about 50 million acres of federally managed public lands found in pockets across the state from Bristol Bay to the Brooks Range, Copper River watershed, and northern Southeast Alaska. D-1 lands, overseen by the Bureau of Land Management (BLM), were withdrawn from mineral entry under the Alaska Native Claims Settlement Act (ANCSA) in 1971 to allow the Secretary of the Interior to determine whether those lands should remain withdrawn to protect the public interest. D-1 protections cover most of each BLM regional planning area, making them off-limit to extractive development.

Source: Audubon Alaska

In 1980, President Jimmy Carter signed the Alaska National Interest Lands Conservation Act (ANILCA) into law, designating the largest swatch of protected areas in the United States.  Alaska now hosts 60 percent of the acreage in the National Park System, 88 percent of the acreage in the National Wildlife Refuge System, and the two largest National Forests.  The D-1 areas were left for later disposition, but most Alaskans believed they would become lands of multiple use, allowing them economic and recreational opportunities after the huge battle over ANILCA.  Until President Trump’s decision made in consultation with the State of Alaska, the lands remained in limbo.

The Trump administration, seeing the need for fossil fuel and mineral development, prepared, but did not finalize, five Public Land Orders to lift the D-1 protections for 28 million acres of BLM-managed lands within Bristol Bay, Bering Sea Western Interior, East Alaska, Kobuk Seward, and the Ring of Fire regions of Alaska for multiple uses. On August 16, 2022, however, Biden’s BLM initiated a process to prepare an Environmental Impact Statement (EIS) to determine the impact of lifting the D-1 protections on fish and wildlife habitat, subsistence opportunities, and Alaska communities.  On December 15, 2023, the BLM opened a 60-day comment period seeking input from the public. In its final environmental impact statement concerning Alaska’s D-1 lands, the BLM selected the “no action” alternative, which will prevent all future oil, gas and mining activities on 28 million acres spread across Alaska.  This action follows Biden’s closure of ANWR despite lease sales mandated by federal law and his foreclosure of future energy development in the Indiana-sized National Petroleum Reserve-Alaska (NPR-A}.

Ambler Access Road Project

The Ambler Access Road project had bipartisan support from Alaska’s congressional delegation and was mandated to be permitted by Congress. In December, Republican Senators Dan Sullivan and Lisa Murkowski, along with the state’s Democratic Representative Mary Sattler Peltola, sent a letter to Haaland urging the analysis be conducted quickly and the road project re-approved. The Alaskan lawmakers argued that Alaska and the nation needed the jobs, revenues and minerals to which the road would allow access. Those minerals, the lawmakers explained, would also make America less dependent on foreign countries with poor records on human rights and environmental quality for oil and gas development. According to the delegation, Congress had mandated the road’s construction through the 1980 Alaska National Interest Lands Conservation Act (ANILCA), meaning that the Biden administration was overreaching its executive authority to deny the road’s right away.

China dominates global critical mineral supply chains, accounting for approximately 60 percent of world-wide production and 85 percent of processing capacity. Transitioning from fossil fuels, which is the goal of Biden’s climate mandates, would leave the U.S. dependent on China for energy, unless the U.S. develops its own mines and processing facilities. While there are some other sources of minerals in the world, such as the cobalt mines in the Democratic Republic of Congo, human rights investigations have discovered widespread use of children in dangerous and toxic conditions. China also holds a heavy hand in the ownership of those mineral rich areas.

Ignoring guidance from Alaska’s Congressional delegation, in its formal record of decision, the Bureau of Land Management (BLM) picked the “no action” alternative, which prohibits construction of the road on public lands. The Alaska Industrial Development and Export Authority intends to pursue litigation against the decision.

Conclusion

The Biden administration is doing all it can to restrict new development of fossil fuel and mineral resources in the United States despite having a wealth of those resources here and particularly in Alaska. In doing so, the Biden administration is depriving Americans of their public wealth, increasing energy prices and spurring on inflation. It is also making the United States dependent on countries such as China, who has spent decades in placing itself as a forerunner in critical mineral development as it has little oil and gas resources to compete against the massive U.S. resource base.

*This article was adapted from content originally published by the Institute for Energy Research.

Filed Under: Blog Tagged With: , , , , , , ,

The Unregulated Podcast #190: Making Fetch Happen

July 12, 2024 by Leave a Comment

On this episode of The Unregulated Podcast Tom Pyle and Mike McKenna discuss the latest woes of Team Biden, America’s out of control spending, the fading EV fad, and commemorate the passing of the great James Inhofe.

Links:

Stay Connected With The Show:

Filed Under: Podcast Tagged With: , , , ,

Biden’s Tik-Tok Inspired LNG Ban Blocked By Courts

July 12, 2024 by Leave a Comment

A federal judge halted President Joe Biden’s temporary moratorium on new licenses for exports of US liquefied natural gas (LNG). U.S. District Judge James D. Cain Jr. in Louisiana issued a preliminary injunction in a lawsuit filed by 16 states, including Louisiana, Alaska, Texas, West Virginia and Wyoming, which argued Biden violated the U.S. Constitution and other federal laws by halting licenses in January to assess their impact on climate change. Under Biden’s direction, the Department of Energy stopped approving new licenses to export LNG to Asian nations and other countries that are not free trade partners with the United States, including Europe and Ukraine, while the department reviewed how the shipments affect climate change, the economy and national security. According to U.S. gas producers, the halt in licensing threatens to harm allies dependent on American energy supplies as well as billions of dollars in LNG export projects.

According to Judge Cain, the government’s decision to halt approvals appears to be “completely without reason or logic and is perhaps the epiphany of ideocracy,” adding that the states can pursue their legal challenge to Biden’s moratorium. Cain cited evidence submitted by the plaintiffs that showed loss of revenues and deferred investments in LNG projects due to the Biden administration’s actions. For example, some $61 billion in pending infrastructure construction in Louisiana is at risk from Biden’s pause. The case is Louisiana v. Biden, 24-cv-406, US District Court, Western District of Louisiana (Lake Charles).

Despite the court order, the short-term practical effects are likely to be minimal. Under federal law, the Department of Energy decides whether such LNG exports are in the public interest — and it can continue scrutinizing proposals for new export authorizations. Meanwhile, rival developers with existing licenses remain unaffected by Biden’s decision, and Biden’s LNG pause is a boon to foreign adversaries that produce energy, including Iran and Russia, as well as Qatar, which is expanding LNG production rapidly to corner world market share. Some key U.S. projects affected include:

  • Energy Transfer LP’s extension for a Louisiana project whose license expired before construction was completed.
  • Commonwealth LNG’s license request that has been under review since November 2022.
  • Venture Global LNG’s CP2 project, which has a major deal with Ukraine.

Already-licensed projects can move forward including expansions by NextDecade Corp., Cameron LNG, Freeport LNG, and Texas LNG, whose expansions depend on order books and financing. According to the DOE, current authorizations for exports of LNG to non-free trade agreement countries stand at over 48 billion cubic feet per day, or more than 45 percent of the current domestic production of natural gas. The agency also said the United States will continue to be the largest exporter of LNG for at least the next six years based on the current export capacity.

The judge’s ruling comes just days after the Federal Energy regulatory Commission (FERC) approved what would be the nation’s largest export terminal for liquefied natural gas. Venture Global’s Calcasieu Pass 2 southwestern Louisiana project, often referred to as CP2, was recently approved by the Federal Energy Regulatory Commission, but the project still needs DOE approval. According to DOE, the project’s application is pending.

The CP2 project has had several delays as FERC has requested more data for its environmental review, after anti-fossil energy groups began a campaign to stop them. Notably, the Biden administration invited a 25-year-old TikTok “influencer” involved in the campaign to the White House to share his policy “expertise” with the White House Climate Team and relevant decision makers before making a final decision.

Ukraine recently struck a major deal with Venture Global to help wean Eastern Europe off Russian natural gas as many EU countries still depend on Russian gas that is shipped through a pipeline that crosses Ukraine. Ukraine does not intend to renew a five-year transit agreement with Russia’s Gazprom that expires at the end of this year. Instead, Ukraine’s largest private energy company, DTEK, recently signed a deal with Venture Global. DTEK would buy LNG from Venture Global’s Plaquemines facility “to support near to medium term energy security needs for Ukraine and the broader Eastern European region.” Under the deal, DTEK will also be able to purchase up to two million metric tons of gas each year from the company’s CP2 facility, which is ensnared in the Administration’s moratorium on new LNG export projects.

Russia still accounts for about 15 percent of Europe’s gas supply. In May, Europe had to import more gas from Russia than the United States for the first time in nearly two years amid problems at a U.S. LNG facility, proving the need for more LNG capacity to support U.S. allies. If Europeans cannot get gas from the United States, they will have to rely on Russia. CP2 could supply about 5 percent of the world’s LNG by 2026. It already has contracts with Germany and Japan in addition to eastern Europe. Biden officials have told allies not to worry, and that the Administration’s permitting pause will not have an immediate impact on U.S. LNG exports. But Biden’s moratorium has caused enormous political uncertainty about the future supply of U.S. gas, which in turn damages investor confidence in projects and affects the jobs and lives of construction workers who would build them.

Conclusion

A U.S. District Judge has temporarily blocked the pause on LNG export licenses that the Biden administration put into effect in January due to a suit by 16 states that the pause violates the Constitution and other federal laws. The short-term impact is expected to be minimal due to the fact that Biden’s Energy Department will still be in charge of scrutinizing the applications for facilities. The pause affects U.S. European allies and their ability to sever their gas imports from Russia. Ukraine has a major deal with an LNG exporter that is affected by the pause. And, while DOE studies the Impact of  LNG on climate during Biden’s moratorium, other countries are building LNG facilities, signing deals and creating jobs in their countries.

supplier.

*This article was adapted from content originally published by the Institute for Energy Research.

Filed Under: Blog Tagged With: , , , ,

Alaska Sues Biden Over War On American Energy

July 11, 2024 by Leave a Comment

Two lawsuits have been recently filed against the Biden administration over lost leases on Alaska’s North Slope. A coalition of North Slope local and regional governments, tribal governments and Native corporations has sued the Biden administration in the U.S. District Court in Anchorage for prohibitive environmental protections President Biden placed on the National Petroleum Reserve in Alaska (NPR-A). And, the state of Alaska has filed suit in the U.S. Court of Federal Claims to recover lost revenues from nine canceled federal oil and gas leases covering lands in the Arctic National Wildlife Refuge’s (ANWR) Coastal Plain. Alaska’s state budget is heavily reliant on its oil production as are jobs of Alaskan residents.  Oil and gas jobs represent about one quarter of all jobs, and generate about half of the state’s economy, while providing as much as 90 percent of state unrestricted General Fund revenues. Virtually all of Alaska’s oil transits the 800-mile Trans-Alaska Pipeline System (TAPS) from state lands at Prudhoe Bay to a marine terminal in Valdez.

NPR-A Lawsuit

The NPR-A lawsuit, filed by the organization Voice of the Arctic Iñupiat, claims that the rule enacted by the Department of the Interior on April 19 should be invalidated because it resulted from a flawed process. The rule was enacted improperly because of several legal shortcomings, including the agency’s failure to conduct a full environmental impact statement, the diversion from four decades of NPR-A management that emphasized oil development and a lack of “meaningful” engagement with the people of the North Slope. The lawsuit claims the rule “turns vast swaths of the NPR-A into a de facto conservation system unit.” The new rule was proposed by the Bureau of Land Management last September and finalized in April. At 23 million acres, the National Petroleum Reserve is an area the size of the State of Indiana, established as a petroleum reserve in 1923.

The rule makes changes to the Integrated Activity Plan that was issued in 2013 by the Obama administration. That plan put about half of the reserve off-limits to leasing and identified five “special areas” as sites closed to development because of their ecological and cultural importance. The new rule codifies protections that are in the integrated activity plan, making them requirements rather than guidelines. It makes the protections for the five designated areas more permanent and contains provisions for possible future additions.

The members of Voice of the Arctic Iñupiat, a diverse group that includes the North Slope Borough government, Arctic Slope Regional Corp., the Iñupiat Community of the Arctic Slope and Ilisagvik College in Utqiagvik, have significant interests in continued oil development in the reserve. The members benefit from revenues and employment generated through the area’s oil development.

The new rule followed a Trump administration plan to replace the Obama-era integrated activity plan. That plan would have opened 82 percent of the reserve to oil leasing, including the areas in and around Teshekpuk Lake, the North Slope’s largest lake. The Trump plan, which was finalized in the final days of the Trump administration, was never enacted, and management continued under the 2013 Obama administration plan.

The petroleum reserve, located on the western side of the North Slope, holds large amounts of oil in a geologic formation called Nunashuk, according to the U.S. Geological Survey. Though development there occurred much later than that at Prudhoe Bay and other sites on state land, there have been some large discoveries within the reserve that are connected to the Nunashuk formation. The most prominent is Willow, currently under development by ConocoPhillips and expected to start production in 2029. Little exploration has occurred in the region but the area is known to have enormous potential for oil, gas and coal.

ANWR Lawsuit

The state of Alaska sued the Biden administration to recover lost revenues after it canceled oil and gas drilling leases in the federal Arctic National Wildlife Refuge (ANWR). The state in its lawsuit said the cancellation of the leases issued during the Trump administration cost the state hundreds of millions if not billions of dollars. Alaska lawmakers in 2017 secured the opportunity to develop the leases through a provision included in a tax cut bill that was signed by President Trump. In the final days of the Trump administration, it issued nine, 10-year leases for drilling in ANWR after a lease sale was held January 6, 2021. Two of the entities that won leases withdrew from their holdings in 2022, and Biden’s Department of Interior canceled the remaining seven leases last September, which had been issued to the Alaska Industrial Development and Export Authority. In October, the state agency filed a separate lawsuit which remains pending before a federal judge in Anchorage that argues the administration’s decision violates a clear Congressional mandate in the 2017 tax bill to open up ANWR to drilling.

The state in the most recent lawsuit focused on the financial impacts of the Biden administration’s actions on Alaska and sought to “compel the United States to face the logical and legal consequences of its policy decision.” Under the Tax Cuts and Jobs Act of 2017, the state was entitled to a royalty of 8.335 percent of the revenues generated through production of oil and gas under the leases. The lease cancellations also deprived Alaska of expected revenue derived from corporate income taxes and local taxes stemming from the oil and gas construction activities, which would have produced billions of dollars in revenue that would benefit the education, health and well-being of residents of Alaska, whose state budgeting is heavily reliant on oil production. The case is the State of Alaska v. United States, U.S. Court of Federal Claims, No. 1:24-cv-01017.

Conclusion

Alaska and some of its residents are suing the Biden administration over lost opportunities for oil production on the state’s North slope which would provide billions of dollars for the state budget and jobs for Alaskan residents. The Biden administration cancelled ANWR leases that were provided as a provision in a tax cut bill signed by President Trump. The Biden administration also required the removal of areas of the NPR-A from further oil and gas development for environmental reasons that was originally issued as only guidelines under the Integrated Activity Plan of the Obama administration. The National Petroleum Reserve was established in 1912 as a backup source of oil for the federal government, originally for the Navy, as it was at one time referred to as the Naval Petroleum Reserve. The Biden administration actions regarding oil production in the ANWR and the NPR-A are costing Alaskans billion of lost dollars and numerous jobs.

ANWR lies to the east of Prudhoe Bay and TAPS while the NPRA lies to the west.  They both are federally owned, and have geological potential to contribute to the pipeline, which is currently running at less than ¼ of nameplate capacity.  If additional oil is added from these federal sources, it will extend the life of the line, while allowing Alaska full development and production of its resources, while supplying additional domestic production of energy. Green groups have long held that shutting off new sources of oil for the Alaska Pipeline would hasten its closure, while leaving billions of barrels of oil in the ground on- and offshore Alaska.

*This article was adapted from content originally published by the Institute for Energy Research.

Filed Under: Blog Tagged With: , , , ,

EV Hype Fading As Biden Mandates All Electric Future

July 9, 2024 by Leave a Comment

A recent survey by McKinsey & Co. found that almost half of American electric vehicle (EV) owners are considering going back to internal combustion engine cars, i.e. gasoline or diesel vehicles. Forty-six percent of survey respondents said they were likely to purchase a gas-powered vehicle for their next car purchase. The top three reasons behind the shift are the lack of charging infrastructure, high cost of ownership and the complexityof long-distance trips. Globally, 29 percent of EV owners are likely to switch back to internal combustion engine cars. The findings challenge the belief that once someone becomes an EV owner, they will stick to purchasing electric vehicles. Twenty-one percent of worldwide survey respondents stated they had no interest in purchasing an electric vehicle. The survey was distributed to 30,000 consumers across 15 countries.

Mainstream media sources have also admitted the failures of electric vehicles. “EV euphoria is dead,” CNBC wrote in a March report. The major car companies, such as Ford, GM, Mercedes-Benz, and others are scaling back or delaying their electric vehicle plans to give consumers greater choices. According to CBNC, an “all-electric future” is still in the works, but “at a much slower pace” than originally thought. Although consumer demand for electric vehicles has not shown up in the way executives had originally expected, sales of the vehicles are still predicted to increase in the years to come.

U.S. EV sales totaled a record 1.2 million vehicles last year, representing 7.6 percent of the overall national market. That share is projected by some forecasters to increase to between 30 percent and 39 percent by the end of the decade. A slowdown in the shift to electric vehicles was expected as early adopters satisfied their EV thirst and less tech-savvy buyers were slow to catch onto the trend, which will slow the EV market share growth over the next few years.  Costs are also a consideration for many customers, as insurance and repair costs are higher and home charging requires substantial outlays. The cost of a replacement battery could be as much as $20,000. According to J.D. Power, the cost of replacing a battery in the Tesla Model 3 is approximately $13,000, which is over 30 percent of the sedan’s starting price.

Source: CNBC

Last year, thousands of car dealership owners across the United States signed a letter to the Biden administration opposing his push for electric vehicles. More than 3,800 auto dealers wrote, “We are deeply committed to the customers we serve and the communities where we operate, which is why we are asking you to slow down your proposed regulations mandating battery electric vehicle (BEV) production and distribution.” “Last year, there was a lot of hope and hype about EVs. Early adopters formed an initial line and were ready to buy these vehicles as soon as we had them to sell. But that enthusiasm has stalled,” the letter added. “Today, the supply of unsold BEVs is surging, as they are not selling nearly as fast as they are arriving at our dealerships — even with deep price cuts, manufacturer incentives, and generous government incentives.” “With each passing day, it becomes more apparent that this attempted electric vehicle mandate is unrealistic based on current and forecasted customer demand. Already, electric vehicles are stacking up on our lots which is our best indicator of customer demand in the marketplace.”

The available inventory of electric vehicles in the United States, measured in days’ supply, has soared to 136 days, according to Cox Automotive. That compares to the overall U.S. industry at a 78 days’ supply of new vehicles. The data excludes Tesla, Rivian and other automakers that sell directly to consumers rather than through franchised dealers. The slower adoption of electric vehicles has led to price cuts or discounts on several models such as the Ford Mustang Mach-E, Tesla Model Y and the Nissan Ariya. According to Nissan, cuts of up to $6,000 will “improve the model’s competitiveness and ensure we are delivering maximum value to our customers.”

Source: CNBC

GM, which was the first traditional automaker to go all in on electric vehicles, plans to roll out plug-in hybrid electric vehicles for consumers alongside electric vehicles and gas cars. Others, such as Hyundai, Kia, Toyota and, potentially, Volkswagen, plan to offer different levels of electrification across their lineups. GM is losing money on every electric vehicle it sells, but the company says it is on track to generate mid-single-digit pretax profit margins in 2025 as it produces more higher margin electric vehicles, works out kinks in battery manufacturing, and sees battery cost reductions.

Ford has never stated plans to exclusively offer electric vehicles globally, but it set targets to be all-electric in Europe by 2030, for 50 percent of its sales in North America to be electric by that same year and to achieve an 8 percent EV profit margin by 2026. It has since backed off many of these targets and is producing hybrids — specifically trucks — along with electric vehicles and plug-in hybrid electric vehicles for the United States. Ford’s losses per electric vehicle topped $100,000 during the first quarter of this year, which was reportedly more than double the loss per electric vehicles last year. At issue is the high cost of production — including batteries, which remain one of the largest costs of electric vehicle manufacture.

Conclusion

There is disillusionment with owners of electric vehicles in the United States with almost half of those surveyed indicating they will purchase a gasoline vehicle on their next vehicle purchase rather than another electric vehicle. Reasons are lack of charging stations, high cost, and long-range trip planning issues. This has made traditional car companies change their production plans, at least in the near term, slowing the pace of EV production and investing in hybrids that consumers seem to prefer. Traditional car companies have profits from sales of internal combustion vehicles to cover their losses in EV production, but many companies solely manufacturing electric vehicles are going under as they have no way to cover their losses. Consumers are definitely in the drivers’ seat. Just because the government mandates electric vehicles should not mean that U.S. consumers should blindly accept those mandates, particularly as they are somewhat of a lifestyle change.

*This article was adapted from content originally published by the Institute for Energy Research.

Filed Under: Blog Tagged With: , , , , ,
Next