President Obama wants to force car manufacturers to raise average fuel efficiency to a ridiculous 56.2 miles per gallon by 2025. If this number becomes the law of the land, the only way car manufacturers will be able to comply is by selling millions of plug-in hybrids.
Like all government central planning, this forced transformation of our cars is a sweet dream so long as it is only a theory. And like all central planning, once it becomes reality it will introduce us to its list of unintended consequences.
At the top of that list are two major problems. The first has to do with car prices. Plug-in technology is expensive, so expensive in fact that the federal government wants $40,000 for the Chevrolet Volt it produces. It gives its own car (and other qualifying plug-ins) a market-distorting $7,500 subsidy, but $32,500 is still a steep price for a car that is less useful than a $15,000 Hyundai Accent.
When the government forces us all into plug-ins, many of us will no longer be able to afford a car.
Proponents of the draconian fuel efficiency standards could argue that the price of plug-in technology will fall with larger production volumes. This is correct in theory, but it will literally take decades before the price of a Volt falls within the realm of affordability for most Americans.
Another major problem with the suggested fuel efficiency standards is the need to produce enough electricity to recharge all those plug-ins.
There seems to be a consensus that it will cost about $1 per day to recharge a plug-in hybrid. Based on average national electricity prices, $1 buys approximately 10 kilowatt hours (kWh) worth of electricity. In other words: It takes 10 kWh to recharge a plug-in hybrid overnight.
Suppose that Obama’s plug-in dream came true tomorrow. All of a sudden we all drive plug-ins, which means 200 million of them on the streets of America. Every night 200 million power cords consume 10 kWh each. This adds up to a total of 2 terra-watt hours (TWh) worth of electricity per day.
Based on March 2011 data from the Energy Information Administration, the total electricity consumption in the United States is approximately 10 TWh per day. A fleet of 200 million eco-friendly, government-endorsed, ocean-lowering, polar-bear-saving, plug-in hybrids would increase that electricity consumption by 20 percent.
To put this in perspective, our nuclear reactors produce almost 2.2 TWh per day. Would Obama and the Democrats accept a 90 percent expansion of America’s nuclear power production to put a plug-in hybrid in every American driveway?
Probably not. So let’s try something they like. The world’s largest solar power plant system, the Solar Energy Generating Systems (SEGS), is located in the Mojave Desert in California. It sits on a nice piece of real estate: 1,600 acres of land. If we use the SEGS solar technology for 200 million plug-in hybrids, we would have to cover every square inch of Massachusetts and every square inch of New Jersey with solar panels. Then we have to hope that it does not rain there, at least not any more than it does in the Mojave Desert.
This is all based on the assumption that we do not lose a single coal-generated kWh. Coal gives us almost half of our electricity.
Here is a radical idea: Tell the car manufacturers that so long as they make annual progress in improving the fuel economy of their cars, there will be no new regulations. Give the industry a fair chance to do the right thing without having the government wave the regulation wand at them at every turn. It might actually work.
Sven R. Larson is a research fellow with Wyoming Liberty Group, a free-market think tank. He has written two books and numerous research papers and articles about economic policy, state budgets, health care reform and the welfare state. He is often interviewed by TV, radio and newspapers on his topics of expertise.
