Yesterday, president Obama announced emission standards which he said would raise the cost of automobiles by $1300.
While the new fuel and emission standards for cars and trucks will save billions of barrels of oil, they are expected to cost consumers an extra 1,300 US dollars per vehicle by the time the plan is complete in 2016. Mr Obama said the fuel cost savings would offset the higher price of vehicles in three years.
His remarkable comment caught my attention, because one of the primary purposes of Obama’s “cap and trade” plan is to massively raise the cost of fuel. There aren’t going to be any fuel cost savings. In fact, Mr. Obama told the San Francisco Chronicle last year that he actually intends to bankrupt coal fired power plants using cap and trade:
You know, when I was asked earlier about the issue of coal, uh, you know — Under my plan of a cap and trade system, electricity rates would necessarily skyrocket. Even regardless of what I say about whether coal is good or bad. Because I’m capping greenhouse gases, coal power plants, you know, natural gas, you name it — whatever the plants were, whatever the industry was, uh, they would have to retrofit their operations. That will cost money. They will pass that money on to consumers.
Two automobile companies are already going bankrupt, so I think we should take Mr. Obama’s words seriously.
I can make a firm pledge. Under my plan no family making less than $250,000 a year will see any form of tax increase. Not your income tax, not your payroll tax, not your capital gains tax, not any of your taxes.
WASHINGTON – Democrat Barack Obama said Sunday that if elected he will push to increase the amount of income that is taxed to provide monthly Social Security benefits.
Audacity indeed. The assumption seems to be that no one remembers what was said last week.
Discover more from Watts Up With That?
Subscribe to get the latest posts sent to your email.
NC (10:08:50) :
Gary the last I looked it was deregulation of banks, read free market, that got everyone into this fiscal mess.
Which, of course, is utter nonsense. The US financial industry is the most regulated in the world. Try educating yourself on basic economic theory and then learn why Keynsian arguments such as the one you just made are not just wrong, but outright ludicrous.
Mark
NC, deregulation of banks had nothing to do with our current fiscal mess. They contributed to, but were not the cause of, the financial crisis. The fiscal mess is the sole responsibility of the Democratic Party and the Obama Administration.
There are some very stable banks in the US. If the unstable banks had been allowed to fail, we would have been over the crisis by now. Uncertainty is what is stifling the economy at this point..
NC,
You obviously get your news from the NYT. It was the Senate and House Banking Committees requiring banks to make loans to those who couldn’t repay them which resulted in this mess – too much NOT too little government intervention.
You have to go all the way back to the Carter administration for the beginning of this specific issue. It evolved over the years and BOTH Democrats and Republicans are guilty for their parts in contributing to the mess. But the very compressed history went something like this:
Government: You’re not giving loans to people with lower incomes.
Banks: Becuase they are high credit risks and we have a responsibility to safeguard the money of our customers and investors.
Government: Too bad – give them loans.
Banks: But we’ll go out of business.
Government: Then we GUARANTEE your loans through various entities – Fanny Mae and Freddie Mac for example. And even though they are not officially government entities, we’ll use tax payer money to shore them up.
Banks: But we’ll still hold the loans and if/when defaults happen it will hurt our customers
Government: So you’ll no longer be long-term lenders of credit, but only loan originators, and Fanny and Freddie will take them off your hands shortly after you originate (so that you can get busy originating more loans!) and when Fanny and Freddie can’t handle it, we’ll draft legislation encouraging the creation of derivatives and other instruments to hide bad loans in larger packages with good loans to keep the ball rolling – and we’ll encourage whole companies to spring up who actually aren’t banks but simply exist for the purpose of originating and selling loans. And since all the lendres now make their money off of loan ORIGINATION and NOT off of loan MAINTENANCE (with no risk for making bad loans) we’re actually ENCOURAGING predatory lending practices – and the faster you make them the more money you make!
And when the whole thing spins out of control – we’ll put the American Taxpayer on the line to clean it up.
Yes, GW, I see how it was lack of government intervention that caused this mess. Please don’t believe me. Try looking for yourself – but somewhere other than the editorial page of the NYT or Obama’s speeches. Try starting with the Community Reinvestment Act.
You might be right if 1) Auto makers weren’t going backrupt BEFORE Obama was elected into office and 2) we’ll all be better off without being dependant on fossil fuels. Instead of being beholden to major corporations who control nearly all the resourses we can begin moving toward more renewable resources. What is the problem with that? ~snip~
Gordon Ford:
I watch boat after boat being loaded up with coal in Tswassen (just south of Vancouver) going over seas, I would say at least 1/3 or your investment strategy is correct.
BC is going to “SAVE THE WORLD” with our carbon tax, but we’ll ship the deathly coal anywhere. Every boat carries a ton of hypocrisy for every ton of coal.
The idea financial forecasters let alone gov’t, can predict it is going to cost $1300 extra per car and you’ll be able to pay it off in 3 years is laughable. Much like climate forecasters, future cost estimates are a large part SWAGs.
So the existing CAFE standards are why we experienced socialism under George W Bush?
Or is there something magic about a 35 mpg CAFE standard vs. a 25 mpg CAFE standard that causes the former to lead to socialism while the latter did not?
“Let’s see the math:
I drive a 40 mile round trip to work every day so 40 miles * 5 days * 50 weeks = 10000 miles per year. To make the math easy let’s say my F150 gets 15mpg (true) and Obama doubles that to 30mpg. That takes my gallons used per year from 667 (4800/15) down to 333 (4800/30). That is a difference of 334 gallons. So take Your $1300/334 gallons saved and that comes out at $3.89 a gallon.”
He said it would be over the life of the car, not in one year. And most people drive more than 10,000 miles per year. Do you only use your car to get to work?
The $20 billion “auto bailout” earlier this year could have been used instead to purchase one thousand $20,000 cars from each of the one thousand GM dealers who lost their franchises last week. ($20,000 per car X 1,000 dealers X 1,000 cars = $20 billion.
If the government wanted to keep Government Motors out of bankruptcy, it could have been done at no additional expense.
Luis Dias (08:32:19) said :
So, you think that Obama is responsible for the bankruptcy of the two automakers? If not, why the rethorical question?
This kind of demagogy won’t take you anywhere. At least the guys at Climate Resistence know how to make adult arguments.
Hey Luis! I only WISH that Obama et al WERE responsible for REAL bankruptcies of Chrysler and GM. Real, as in according to established bankruptcy LAW. You know, as in the phrase “rule of Law”.
Instead we have the rule of one man (the dire prospects of which was the main motivating force behind the drafting of the constitution and the Bill of Rights) who is essentially doling-out favors to HIS constituents (read: the UAW) and screwing the bondholders. (Unfortunately, I know about this travesty myself in some considerable detail, as I own a few of them GM bonds.)
These moves are the hallmarks of a socialist dictatorship. (cf Senor Chavez in Venezuela). That sentence isn’t demagogery or hyperbole or exageration, it’s a plain and simple fact.
Since apparently you never took a USA Civics or American History class, perhaps you’d like to mosey-on over to Real Politics for a bunch of clear- headed adult opinions which completely agree with me. Start with say George Will. Brooks in the NYT today is good.
So what does it all mean, Obama playing Banana Republic Strongman? I note with some trepidation that ALL the gun stores in Texas are STILL sold-out of 9mm, .40 S&W, and .223 ammunition; it’s STILL selling-out within minutes of hitting the shelves. Everybody I know has a minimum of 30 days of food and gasoline. Most have an “abandon ship” bag packed (although they call it the SHTF bag).
I’m seriously afraid that if Obama follows this political “arc” for another year or so, there is going to be real, serious trouble. Summer of 1968-type trouble, Watts and Detroit-type trouble. Folks who have never protested anything ever (Nixon’s old silent majority) taking to the streets, waving flags with segmented snakes on them. (Or, in Texas, one that says “Come And Take It.”) This time, however, there may be some real serious hardware coming out of closets.
“It seems a shame that some people on this site are more concerned about the cost of gas than they are about future generations!”
Maybe folks are concerned about being able to feed any future generations. Cost of gas is of great importance, as is access to affordable energy. It doesn’t make much sense to shun abundant cheap energy that is already available for expensive intermittent energy. Money lost has no benefit to society (broken window fallacy). Oil may run out someday, and THEN we can pay more for something else. Money spent now is also much more expensive than money spent in the future.
“”” Luis Dias (08:32:19) :
So, you think that Obama is responsible for the bankruptcy of the two automakers?
If not, why the rethorical question?
This kind of demagogy won’t take you anywhere. At least the guys at Climate Resistence know how to make adult arguments. “””
Well Luis, as I am sure you are aware, the Constitution of the United States authorizes the Congress to make uniform bankruptcy laws throughout the whole country.
It gives no authority to the President of The United States to have any involvement whatsoever in such matters; and the white house did in fact dictate the reorganisation of those companies; something that the uniform bankruptcy laws are supposed to address, and be worked out in a court of law; not by a telepropmter reading of the President.
And by the way it is in Article I, Section 8, the section that gives the Congress authority to do about 18 things; I am sure that US school children all learn Section 8 of Article one by the time they reach 8th grade.
Re: jon (09:30:34) :
“I don’t put much faith in the role of AGW with respect to climate but I DO believe in conservation”
Strongly agree
“… oil supplies are rapidly dwindling …”
Are they?
http://www.energybulletin.net/node/22522
http://business.timesonline.co.uk/tol/business/columnists/article3823656.ece
http://mises.org/story/1717
http://www.insideview.ie/irisheyes/2009/04/ruchir-sharma-deflates-peak-oil-myth.html
http://www.newswithviews.com/Monteith/stanley.htm
The New York Times explains why polliticians like Cap and Trade: . Here is an excerpt:
How did cap and trade, hatched as an academic theory in obscure economic journals half a century ago, become the policy of choice in the debate over how to slow the heating of the planet? And how did it come to eclipse the idea of simply slapping a tax on energy consumption…
The answer is not to be found in the study of economics or environmental science, but in the realm where most policy debates are ultimately settled: politics…Cap and trade…is almost perfectly designed for the buying and selling of political support through the granting of valuable emissions permits to favor specific industries and even specific Congressional districts.That is precisely what is taking place now in the House Energy and Commerce Committee…
Don’t worry about it.
We are not building more refineries and we are not opening any new oil fields for drilling. Global demand for oil is currently low because of the economy, but demand will increase as the situation improves. You won’t be able to afford to buy gas, so why worry about how much a new car costs or whether or not it’s a death trap?
Nuclear is out of the equation for our future energy needs and coal is being phased out. Wind and solar can’t generate enough power to meet future demands, so it also doesn’t matter how expensive electric cars are, either. There won’t be enough electricity to power them on calm days or overnight, while parked in your garage. That’s if you could afford a garage, or the house it goes with.
But don’t worry about it. You’ll be taken care of.
Nasif Nahle (08:51:03) : As spanish is your mother tongue and having a deep knowledge of the controversial climate issue, i think you could be of great help, for avoiding the dissemination of this maliciously provoked psychic pandemia, among the current laymen population of spanish speaking countries, by making a simpler version of the studies you publish in your webpage.
Just as an example, a very common question is the following: “How is it so that so prominent scientists and the UN itself say that the world is warming, they can not be lying?”
You see, this issue has became a religious war, with all its undesirable consequences. I just don’t know if “they” just want a tax increase, this is only the case of the USA, we already pay a US$4.30 per gallon of oil in SA, and publicity on global warming it’s the same, so which is their ultimate goal?, why don’ t they tell it clearly?, what is it so terrible that it can not be openly shown?
Luis,
My bad, you are correct – raising auto manufacturers expenses and fuel prices simultaneously during a recession is a brilliant way to help out the car companies – and save consumers money at the same time.
“I can make a firm pledge. Under my plan no family making less than $250,000 a year will see any form of tax increase. Not your income tax, not your payroll tax, not your capital gains tax, not any of your taxes.”
Cap and Trade – The politicians that bring this in will not call it a tax. I doubt this cost will appear as a seperate item on peoples power bills and the same politiciians who bring this in will be the ones that shout loudest about the higher prices brought to bear on the electorate. (Probably blaming corperate greed).
jon (09:30:34) :
I don’t put much faith in the role of AGW with respect to climate but I DO believe in conservation … oil supplies are rapidly dwindling … it is crazy and totally irresponsible to treat oil as if it were a renewable resource! I think Obama is on the right track here. It seems a shame that some people on this site are more concerned about the cost of gas than they are about future generations!
Any ideas of how much oil has been consumed to date, versus the known oil reserves?
Here’s a hint: there is plenty of oil and the more expensive oil gets, more oil becomes economically feasible to collect and refine.
Re NC – in real free and deregulated market (understand: no cheap money printed by FED, no state-owned mortgage companies spreading these money and no Community Reinvestment Act), banks would never lend money to so many folks with suspicious financial future. Governments now behave like fool who poured oil on steps and now blame sliding and falling people for not using wall handles properly.
To prevent snipping for OT, we have a huge scandal in Slovakia now – our enviroministry sold free CO2 emissions through some quickly-established company in US for 30% lower unit price than surrounding countries did at the same time. No wonder politicians gotta love this cap-and-trade – another source of endless corruption.
So… the cars will cost MORE, but you’ll make it up in gas savings down the line? (Assuming, of course, that gas prices rise to painful levels…)
The air conditioning systems in my house are a patchwork with 2 30-year old compressors, one 30 year old evaporator, and one 15 year old evaporator. They all work fairly well – but they’re not exactly thrifty on the energy side, you know?
This year we got a quote on an upgrade. Yank everything out, put in 14-16 seer units (as opposed to the jokingly .2 seer stuff we’ve got now) and we could see our energy bills drop considerably. In fact, we could likely SAVE enough in the next 4-5 years to pay for the new system.
But we aren’t going to do it.
We’d LIKE to upgrade – but we can’t afford the initial investment without taking out a loan for it – and for some strange reason with the economic climate the way it is we’re loath to take on more debt.
Now we’re supposed to prep our wallets to buy an approved Governmental Motors eco-mobile?
It ain’t gonna happen.
So – I’m afraid we can’t afford to help save the planet. Sorry, Obama – the cost is too high for us REGULAR people who can’t print money and actually have to worry about the debt we incur. YOU, however, will likely be out in three years – and even if you aren’t you’ll never have to worry about paying for the garbage you’ve obligated US to pay for.
jon (09:30:34) said :
I don’t put much faith in the role of AGW with respect to climate but I DO believe in conservation … oil supplies are rapidly dwindling … it is crazy and totally irresponsible to treat oil as if it were a renewable resource!
Fact: oil supplies are not “dwindling”, they are getting marginally more expensive to retrieve. If you include Natural Gas, USA supplies (that is, BTUs of proven reserves) have actually sky-rocketed in the last couple of years , thanks to tight shale production. The Haynesville field may be the largest gas field EVER found anywhere. The recent run-up in prices was due primarily to speculation and secondarily to underinvestment in production facilities, NOT “dwindling supplies”, whatever that means.
Fact: The original L. King Hubbard “Peak Oil” Theory [READ IT sometime] worked pretty well (that is, accurately) because it covered oil production in one FREE MARKET ECONOMY before NIMBY. It DOES NOT work in a worldwide market because that isn’t a Free Market with enforceable property rights. (cf the sorry tale of the Russian Oilagarchs]
The real danger here is that folks have lost the ability for sober, fact-based discussion, and are instead, in the words of my son, the oilfield engineer in East Texas, “making shit up”.
Bankrupting coal will NOT make solar and wind a good idea.
Demonizing oil & gas will only come back to bite you when (a) my son (presently learning Portuguese) and his ilk, fed-up with being called criminals, move to Brazil and (b) every oil & gas company flees for Zug Switzerland, and (c) the dollar drops like a stone relative to a barrel of crude (what’s your price TODAY? $60+ all of a sudden? There’s plenty of oil, but WAY too many literally “worthless” dollars)
Besides, I understand that the girls in Brazil are OK.
Note: Bankrupting the coal plants has nothing to do with the price of gasoline for cars.
That said, if they allow construction of more nuke plants, I’d be more than happy. From my readings, it seems that the guys at NASA who are the AGW zealots may be purposely overexaggerating GW to get more nuclear power in the US and as a spinoff, get more funding for nuclear power and propulsion in space, where NASA needs it.
The main problem for getting more nukes is that historically the inflation adjusted price of fossil fuels has dropped over time, not risen, as the costs of recovery and refinement dropped. Fer instance, the 1979 price of gasoline, adjusted for inflation to 2009 dollars, should be somewhere about $4.00 a gallon. Instead gas is now $2.20. As technology improves resource extraction efficiencies, these prices continue to drop over time.
The green argument is that the prices go down because fossil fuels are not forced to pay for either the cost of dumping their pollution externalities into the environment (even ignoring CO2, you have CO, NOx, SOx, as well as radioactive heavy metals in fly ash), or for the opportunity cost of reducing what they believe is a finite stock of natural resources. Once these are taken into account, the price of fossil fuels should rise more in line with inflation, and these price signals should consequently stimulate investment in nuclear fission, fusion, solar, and wind.
Let’s all not forget the increased insurance costs that will accompany the mandate for more fuel efficiency. Lighter, smaller cars are more fragile and more easily damaged in an accident. Do you think the insurance industry won’t notice this and increase your rates?
Of course, lighter smaller cars can be made safer for those able to pay more. A higher sticker price also means higher insurance premiums.
What is the estimated increase human death toll when the new mileage standards are inacted?
What’s really interesting is if the higher death toll was for polar bears or snails or fish, the environmentalists would be screaming bloody murder!
Luis,
If the inconsistency of President Obama’s statements offends you as an “adult,” then I am truly sorry.
M White (11:28:03) :
“I can make a firm pledge. Under my plan no family making less than $250,000 a year will see any form of tax increase. Not your income tax, not your payroll tax, not your capital gains tax, not any of your taxes.”
Cap and Trade – The politicians that bring this in will not call it a tax. I doubt this cost will appear as a seperate item on peoples power bills and the same politiciians who bring this in will be the ones that shout loudest about the higher prices brought to bear on the electorate. (Probably blaming corperate greed).
As I understand, this really isn’t a tax increase because you will be reimbursed for the cost through increased government services.