Obama, Where’s My Volt?

Since the government takeover of General Motors, the Obama Administration has pumped billions of taxpayer dollars into the failed auto company, in hopes that it will revitalize its green initiatives.  Recently, they have doubled down on their efforts to interfere with free market economics by subsidizing the research, design, and sales of Chevrolet’s new electric car, affectionately known as the Volt.

President Obama testing out a new Chevy Volt

The Chevrolet Volt carries a sticker price in excess of $40,000. However, with some nifty Obama subsidies, the price has been brought down into the low $30,000’s.  With these tax credits, a Volt purchaser still buys a $40,000 car, but allows the American taxpayer to foot the bill for the remainder of the cost.  Failed logic exists in abundance.

Let’s just say that I’m going car shopping and I have $40,000 to spend.  If I purchase the new, “highly efficient” Chevy Volt, I can look forward to dismal electric-only ranges, a puny 34 MPG gas-only mileage, and a high possibility of spontaneous combustion in the event of a collision.  Or…I could buy a brand new BMW 3 Series.  One could also argue that this sort of tactic drives business away from American vehicle manufacturers. With that said, the average American, in the current economy, cannot afford a new BMW, so it stands to reason that they shouldn’t be able to afford a Chevy Volt.  So what is really going on here? Are we, the taxpayers, subsidizing the price of cars for the so-called “rich?”  And furthermore, why is GM producing far more of these cars than the market demands?

With Obama in the back pocket of the “green” industry, it is not surprising to hear that the government has pumped over $400 million into the design and production of the Chevy Volt.  Historically speaking, “green” industries have not fared so well in the past. The solar company Solyndra was loaned half a billion dollars by the Obama Administration, just in time for them to file for bankruptcy. If this isn’t overwhelming proof of crony capitalism, then I don’t know what is.

The proponents of these hybrid cars argue that they eliminate the need to purchase gasoline, therefore saving the consumer money in the long run. But, while Chevrolet originally claimed that the Volt could travel up to 40 miles on its electric motor alone, many early purchasers have found that claim to be inaccurate. Some owners have reported that they can only travel between 23 and 28 miles before the gasoline engine kicks in.  And once the gasoline engine kicks in, they are only able to achieve roughly 34 miles per gallon. This is disgusting when you consider that Chevrolet also produces an all-gasoline car called the Cruze that is capable of 42 miles per gallon and costs about half as much. So, as is often the case with these “green” projects, the fuel economy estimates were highly inflated.

In addition to less-than-desired mileage, there is also the hidden electricity cost associated with powering these cars. The Volt is a true plug-in vehicle, which means you can plug it into an outlet in your garage.  The electricity from your home will charge the massive lithium-ion batteries that run down the center of the Volt.  These batteries must be replaced every 8 years, and the cost is estimated to be somewhere in the range of $3,000 to $12,000.  In addition to any maintenance costs that the vehicle would incur, charging the Volt also increases the utility bill at home. When Obama praised his cap-and-trade policy, he promised that “electricity rates would necessarily skyrocket.” If this is the case, why would anyone want an electric car?

It doesn’t make any sense to continually waste taxpayer money to fund technology that nobody wants. Furthermore, Chevrolet has openly admitted that they expect to lose money on the Volt, so it is expected that more subsidies are imminent in order to keep production afloat.

As a free market advocate, I believe that we need to eliminate these government subsidies that are clearly more politically driven than performance driven.  General Motors is owned by the government, so through subsidies, they are discounting the price of their own vehicle, which is unfair to every other vehicle manufacturer.  Without subsidies, the green energy industry will almost certainly collapse.  The opportunity cost of these subsidies is too great to continue down this path.

Jeffrey Max // Texas Wesleyan University // @Jeffrey_Max

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Comments

  1. Good article and good for you for writing it….

  2. The thing about hybrid automobiles is that they run on both gas and COAL (liberals forget that’s where electricity comes from). Diesel fuel is more efficient than either gasoline or coal. And don’t let the liberals realize where the lithium for the battery comes from (Bolivia). So much for energy independence. Idiots…

  3. Excellent article. I think the liberals would want us to believe that the electricity for running the cars would come from windmills.

  4. For goodness sakes, people, be fair. Sure, we should not subsidize any new technologies. Let them fail on their own, you say. Then if that is what we should do, why are we subsidizing oil companies, which are in direct competition with electric cars?
    (And which also reported another year of record profits in 2011. And who are exporting our refined oil products quicker than you can say, why is gas so high.)
    To help stop crony capitalism, stop ALL subsidies, not just the ones for future technologies which will then come later, rather than sooner, if that is what you want. I agree, the tendency for corruption is too great to supply certain industries with cash for research and development. So stop them all, not just part. Stop all those tax credits, and while you’re at it, stop the credits to defense companies. Don’t they make enough money already?
    Right, so you see that will never happen. So come up with a solution, bright minds. It’s your world soon, you will be the ones who have to survive in it.

  5. Oil companies do not receive subsidies from the federal government. They do, however, take advantage of the tax code by writing off much of their research and development, which is completely different than what I’m talking about in the article. They are not given these outright financial gifts in order to pursue their goals.

    Another thing you need to consider about the Chevy Volt is that it is not just a US exclusive vehicle. It is being sold in Europe under the name Opel Ampera. Since Chevrolet has claimed that they are losing money on each Volt sold, it should be noted that the American tax payer is subsidizing cars for foreigners as well.

  6. From your comment above, it’s obvious that you have not begun to study subsidies. Oh I wish it were that simple.
    Virtually all U.S. energy resources have received or currently receive subsidies.
    http://www.window.state.tx.us/specialrpt/energy/subsidies/

    Relatively few studies examining federal energy subsidies for different types of fuels have been conducted, and some of those are more than five years old and thus do not include the results of major recent changes in federal law. Still other studies provide figures on total subsidies, but relatively little detail on which subsidies are included in their estimates.
    Practical difficulties may explain why so few studies of federal subsidies have been completed. Detailed assessments of federal subsidies across multiple fuels require months of work and a wide scope of knowledge. The necessary data often are lacking and many incentives are difficult to quantify. Furthermore, subsidies for energy sources occur in many government programs across multiple agencies, and the U.S. government itself does not compile comparative information about them.
    For these reasons, examinations of subsidies and costs applicable to different fuel sources tend to be infrequent and incomplete. Chapter 30 lists some additional subsidy studies.

    I managed to find some figures, though, from 2003:
    http://www.progress.org/2003/energy22.htm

    TAX SUBSIDIES
    The federal government provides the oil industry with numerous tax breaks designed to ensure that domestic companies can compete with international producers and that gasoline remains cheap for American consumers. Federal tax breaks that directly benefit oil companies include: the Percentage Depletion Allowance (a subsidy of $784 million to $1 billion per year), the Nonconventional Fuel Production Credit ($769 to $900 million), immediate expensing of exploration and development costs ($200 to $255 million), the Enhanced Oil Recovery Credit ($26.3 to $100 million), foreign tax credits ($1.11 to $3.4 billion), foreign income deferrals ($183 to $318 million), and accelerated depreciation allowances ($1.0 to $4.5 billion).
    Tax subsidies do not end at the federal level. The fact that most state income taxes are based on oil firms’ deflated federal tax bill results in undertaxation of $125 to $323 million per year. Many states also impose fuel taxes that are lower than regular sales taxes, amounting to a subsidy of $4.8 billion per year to gasoline retailers and users. New rules under the Taxpayer Relief Act of 1997 are likely to provide the petroleum industry with additional tax subsidies of $2.07 billion per year. In total, annual tax breaks that support gasoline production and use amount to $9.1 to $17.8 billion.
    PROGRAM SUBSIDIES
    Government support of US petroleum producers does not end with tax breaks. Program subsidies that support the extraction, production, and use of petroleum and petroleum fuel products total $38 to $114.6 billion each year. The largest portion of this total is federal, state, and local governments’ $36 to $112 billion worth of spending on the transportation infrastructure, such as the construction, maintenance, and repair of roads and bridges. Other program subsidies include funding of research and development ($200 to $220 million), export financing subsidies ($308.5 to $311.9 million), support from the Army Corps of Engineers ($253.2 to $270 million), the Department of Interior’s Oil Resources Management Programs ($97 to $227 million), and government expenditures on regulatory oversight, pollution cleanup, and liability costs ($1.1 to $1.6 billion).
    PROTECTION SUBSIDIES
    Beyond program subsidies, governments, and thus taxpayers, subsidize a large portion of the protection services required by petroleum producers and users. Foremost among these is the cost of military protection for oil-rich regions of the world. US Defense Department spending allocated to safeguard the world’s petroleum resources total some $55 to $96.3 billion per year. The Strategic Petroleum Reserve, a federal government entity designed to supplement regular oil supplies in the event of disruptions due to military conflict or natural disaster, costs taxpayers an additional $5.7 billion per year. The Coast Guard and the Department of Transportation’s Maritime Administration provide other protection services totaling $566.3 million per year. Of course, local and state governments also provide protection services for oil industry companies and gasoline users. These externalized police, fire, and emergency response expenditures add up to $27.2 to $38.2 billion annually.

  7. Great article! I will never understand the logic these Green Hippies have. One second they hate the “rich” the next they want to drop 40k on a car that isn’t worth 20. Well then again, I don’t understand liberal ideology in general

  8. Keith,
    Let’s see $62.1 billion in subsidies and $100 billion in taxes, roughly 1 dollar is returning 2 dollars. I doubt the Chevy Volt can do that. We turned a profit on the first Gulf war and the second one was a success as 500+ chemical weapons were found.

    http://www.taxfoundation.org/files/sr183.pdf

    littlegreenfootballs.com/article/21161

    PLEASE DELETE THIS POST IF CURRENT ENROLLMENT IS REQUIRED

  9. Ian, I don’t like 62 becoming 100 instead of 124. That’s too rough for me. That’s just barely a 60% increase not 100% as you want to claim.
    The whole point I was making was we should eliminate all subsidies and tax breaks, to fully level the playing field for business. Then just charge a flat rate tax. Besides saving companies untold amounts in accounting fees, this would dramatically increase our tax revenues, especially when you realize so many of the largest corporations pay NO income taxes. If I use figures to back up my statements, I’m sure you can find figures somewhere else that will refute them. Such is the nature of 21st Century Schizoid man.
    If you say we turned a profit in the first Gulf War, was it worth it to the soldiers who have Gulf War Syndrome? How would they react to your statement? Only if you ignor all the other data which reveal a different story would you say we made a profit. I found several conflicting accounts of this claim. I doubt anyone, especially us, is capable of knowing what is the truth and what is dam* lies (statistics as used this way).
    Estimated cost of the Gulf War as of 20 April 1991: $100 billion.
    —US General Accounting Office

    Others did pay for the great bulk of the cost of the war. They paid for over $49 billion of the total cost of $56 billion. But the United States still put up $7 billion for the effort and forgave Egypt $7 billion in debt to have it participate in the 35-member coalition. We paid for fewer of the direct costs of this war than of any war we have ever fought as a nation. Although that may be good on one level, cartoons of a US GI with tin cup in hand in front of coalition members were not a positive commentary on our circumstances. GAO estimates of the direct costs of the war are more than double what we collected.10 Our total is closer to $100 billion. But direct war costs to eventual war costs for the United States yield an average ratio of one to three. That is, the total cost of the Gulf War—after we factor in medical costs, pension costs, survivor benefits, and so forth—will be more like $300 billion. This may sound far-fetched, but it is not. In 1990 when the Gulf War started, the US government sent out 51 checks for survivor benefits to relatives of veterans of the US Civil War! Thus, the monetary costs alone are far greater than we have led the public to believe.

    http://www.airpower.au.af.mil/airchronicles/apj/apj98/fal98/hammond.html
    I have other data I found which refutes the claim that oil companies paid more taxes than they received in subsidies, but I don’t see the point in such a barrage back and forth of data. Like I said, it’s all out there, for the student to make a point he wants to make. Any point. At some point we must use common sense, if we have any.
    In closing, I don’t think the relatives of the 62 people who were killed in Iraq by violent attacks on the day we left would call the war a “success.”

  10. Basicly the cevy volt as with all plug in cars are fueled by coal you know that black stuff that Greenies hate

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