Let them eat electrons, says Pete Buttigieg, representing the supposed party of the working class. In an MSNBC interview yesterday, the occasional Secretary of Transportation told Americans that relief from high fuel prices were on the way — not by lowering fuel prices through more robust American production, however. Instead, Buttigieg asked everyone to get giddy in anticipation of buying hugely expensive electric vehicles and, um … not ask any questions about how much it will cost to charge them.
If they can charge them at all, of course. It picks up at about the five-minute mark, but I’ve rolled it back to 4:35 to get the full context:
Buttigieg said that families would essentially have a “$12,500 discount” in transportation costs, adding that “families who own that vehicle will never have to worry about gas prices again.”
“The people who stand to benefit most from owning an EV are often rural residents who have the most distances to drive, who burn the most gas, and underserved urban residents in areas where there are higher gas prices and lower income,” Buttigieg said.
“They would gain the most by having that vehicle. These are the very residents who have not always been connected to electric vehicles that are viewed as kind of a luxury item,” he added.
“If we can make the electric vehicle less expensive for everybody, more people can take advantage, and we’ll be selling more American-made EVs, which means in time they’ll become less expensive to make and to buy for everybody,” Buttigieg said.
Where does one start with this nonsense? Let’s start at the “discount,” given as a point-of-sale tax credit similar to that passed in 2009 in Barack Obama’s stimulus plan. Even with the more robust figure, five thousand dollars higher in Joe Biden’s BBB plan, it still doesn’t bridge the gap for car buyers. In a Quartz analysis one year ago cited at Car and Driver, the difference between an average gas-powered vehicle and an EV is $19,000, even if it’s narrowing recently, and repair costs are still higher:
According to Quartz, the average cost of a new car in June 2019 in the U.S. was $36,600. This was a 2% increase from the year before. However, according to data from Cox Automotive, the average cost of an electric vehicle decreased from $64,300 to $55,600: a 13.4% decrease from the year before. And this drop would be even more pronounced if most manufacturers were not still focusing on making luxury electric vehicles. According to Auto Insurance Nerds, repair costs can be more for electric cars which increase auto insurance for electric vehicles over gas-powered autos.
But what about the energy savings? C&D tried selling that, too:
When you’re considering buying an electric vehicle, you also need to include the cost of purchasing and installing a charging station in your home to determine the true cost of purchasing an electric vehicle. Also, the cost of powering an electric car varies based on where and when you charge it as well as your utility company’s rates.
According to Edmunds, electricity costs are more stable than gasoline costs. In the U.S., the national average kilowatt per hour cost is 12.7 cents, only about one cent more than the cost a decade ago. You can find the cost of charging your electric car by multiplying your car’s kWh/100 miles by your electric rate. The result tells you the cost of powering your electric vehicle per 100 miles. If your electric rate varies based on the time of day it’s in use, use the rate for the time of day you’re most likely to charge your car.
The Department of Energy has tried pushing these savings too by creating the “egallon,” the equivalent measure of energy use by an EV. They haven’t updated the algorithm since March, so the US average gas price for regular unleaded still reads as $2.85 per gallon. They compare that to an egallon price of $1.18, again based on electricity prices at the time, to argue that EV owners will save money over the course of a vehicle’s lifetime.
However, this calculation relies on a couple of factors that Buttigieg ignores. First, in most markets, electricity prices are regulated, which results in shortages rather than dynamic pricing. That regulated price makes comparison to free-market pricing of gasoline an apples-to-oranges affair anyway. Pricing on oil and gas reflects a somewhat natural equilibrium for supply and demand (as impacted by government policies, of course). Pricing on electricity does not reflect a market equilibrium in most areas, but rather a political decision by regulators on just how much producers can charge.
But even beyond that, the energy potential is also restricted by bars on the sources of energy production. Several states have adopted such restrictions, especially California, which shut down fossil-fuel and nuclear energy production in the state. Others have at least cut back on investment in proven and scalable energy production by subsidizing and indemnifying supposedly “renewable” sources, including Texas, a policy which contributed to the state’s energy catastrophe in February. Even without any crises, California suffers rolling blackouts already, without even transferring the energy demand from personal vehicles to the grid.
So what happens when we transfer tens of millions of personal vehicles from highly scalable and dynamically priced gasoline (and diesel) to the price- and source-regulated grid? We have seen the impact already in the larger economy when demand spikes while supply is restricted — costs will go through the roof and shortages ensue. Policymakers will feel pressure to keep cost caps in place, which means that the costs will come in both higher electrical rates to some extent, but much more in dramatic shortages of electricity overall. The cars will be both more expensive and less usable as a result, with all sorts of primary and secondary economic costs.
This could possibly be avoided with a parallel effort to ramp up production of all available energy sources, especially fossil fuels and nuclear power, which are scalable and reliable. No one — no one — has proposed adding any significant new sources of reliable and scalable energy to the grid as we transfer EVs from gasoline to electricity. We keep hearing about the promise of “green energy,” but we’ve been hearing those promises for decades. It’s not coming to pass in Texas, it’s certainly not coming to pass in California, and there won’t be enough solar panels and windmills in the world to supply America’s vehicle infrastructure, especially in reliable and scalable terms.
A barely competent Secretary of Transportation should already recognize all these issues. Buttigieg isn’t even barely competent, or apparently even aspires to that level. He’s there to repeat progressive mantras and play checkers in a complex, three-dimensional chess energy and transportation world.