Monday Note

Last week’s column got me the most energetic feedback – so far. Some dislike what they call my negativism, my being a non-believer in a bright future for new energies, others think I’m wrong to call the electric car an out-of-reach dream.  Look at ethanol, a green replacement for Foreign Oil, look at the Tesla, right in my Silicon Valley backyard.  Add a few ad hominem barbs and the picture is complete.
This is understandable.  The general topic of new energies, of our dependence on foreign oil, of lowering CO2 emissions, of replacing today’s gas-guzzling vehicles with electric ones is loaded with strong emotions.  One doesn’t have to be a climate scientist to worry about the effects of dumping ever-increasing amounts of CO2 into the atmosphere.  Some of us criticize China for burning more coal than the US, Europe and Japan combined in its 541 coal-fired power plants.  Sure, but how do we convince the Chinese they shouldn’t aspire to the same level of electric power consumption as ours?  And India and Indonesia…  Add oil prices rising to $145 a barrel before falling below $40.  Both climate and economic ruin threaten us.
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All too true.  But those truths don’t turn some of the more popular hopes into market-ready realities.
One example is ethanol.  The only green thing about ethanol is the money a company called Archer Daniels Midland made from its successful lobbying, from convincing the US legislator to mandate ethanol use.  Producing ethanol costs about as much energy as it produces and does little or nothing to reduce atmospheric pollution or CO2 emissions. The fallout has been a rise in the price of corn, nice for taxpayer-subsidized farmers, no so good for the cost of basic foods in poorer countries.
Energy issues are complex, systemic ones.  Here, by systemic I mean many variables, complicated interconnected formulae that will say anything under torture, just like an Internet Bubble business model, or a subprime mortgage securitization prospectus on Wall Street.
If you’re a cynical politician or a competent crook, what do you do when you see a complex problem and strong emotions, many people yearning for a way out of the bind?  You exploit the “believers”.
An inverted example of sorts is nuclear power.  One can argue they’re much safer than coal, that nuclear ashes, spent fuel, can be safely buried a mile deep into abandoned mines, and so on.  Emotions are too strong, evidence from Europe notwithstanding.
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Another example is the electric car.  I started reading the French version of Popular Mechanics over 56 years ago. The electric car was “around the corner” then – as it is now.  But there is the Tesla, it was featured on CBS 60 Minutes a few weeks ago.  The latter part of the sentence is accurate, but not relevant.  The Tesla is a Lotus Elise, a very light car, reworked to use an electric motor and lithium-ion batteries.  It is expensive, more than $100K, losing money at that price, and impractical two-seater, with a real-world (as opposed to markitecture) range of 100 miles, and hours to recharge the battery.  In fact, we should stop discussing the electric car, we know how to make those but for one component, batteries.  I will turn into a believer the day I see a monthly index tracking the progress of battery efficiency posted on the Web.  With such an index, I’ll be able to extrapolate the date of my electric car delivery.  All I want is the same price and feature set as, say, a Volkswagen Jetta, including the 4 minutes refueling that I enjoy today.
Yes, we have electric vehicles such as golf carts and forklifts; they do very well at a specialized tasks in a closed environment.  We’ll note they’ve been doing this for decades now with no sign of being extrapolated to general-purpose cars.  That’s why we “vulture capitalists” see no easy prey in electric cars, sorry, batteries.
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The Prius question.  I owned and operated one of each generation, 2000 and 2005. These are great achievements by the most successful carmaker, Toyota.  Engineering achievements to be sure.  But a marketing tour de force as well.  Toyota figured out something Honda and others didn’t pay enough attention to.  All cars make a statement about me, the buyer.  Toyota saw they shouldn’t limit themselves to putting a hybrid engine/transmission into one of their existing cars: no one would notice.  Instead, they gave the Prius a very recognizable, charmingly geeky (opinions vary) shape.  I was seen driving a Prius, I might not have been noticed driving a hybrid Camry.  Honda saw the error of its ways: the hybrid Accord is gone and, in 2009, the hybrid Civic will yield to a new Insight, closely resembling a Prius.
As for owning and operating the two Prius, as I frequently drive modern diesel-powered  midsize cars in Europe, I see little difference in mileage between the two kinds.  Consumer reports ran a “miles to compensate the price premium” test of various hybrid and conventional models.  The conclusion is you need several years to get a payback from the better mileage offered by the hybrid.  (This took place when gas sold for around $4 a gallon.)  Another test was run by the Times of London, comparing real-life mileage of the Prius and the BMW 520d.  No meaningful difference.
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Lastly, higher gas taxes as a way to tame our behavior. I write this from Paris, I just drove a Ford C-Max, a nice “monospace”, minivan, doing about 35 mpg (6.7 l/100km) in real-life Paris and country driving.  (The magic number is 235, with it you convert mpg into litres/100km, divide 235 by one and you get the other.)  This with gas costing close to $7 a gallon.  Clearly, the high gas prices haven’t killed Europeans’ love of cars.  Actually, they make a few good ones.  Even GM, with its Opel subsidiary, makes interesting vehicles that, even more interestingly, we don’t see in the US.  That’s another story, one of “protecting” US jobs.  Back to gas prices, let’s raise US gas prices to $7 a gallon, that would be an incentive to conserve and to make more efficient cars.  For the long term, maybe.  Assuming we can trust our government to put our tax dollars to good use.  But, in the short term, this would hurt lower income people the most.  They need their cars to go to their low-paying jobs as our public transportation infrastructure isn’t ready to replace cars for such needs. (It might never be given our geography, imagine the time and money required to build a real PT network in Los Angeles.)  Higher gas prices might happen anyway, in an uncontrolled way, we just need to remember who will suffer the most.  A strong CAFE (Corporate Average Fuel Efficiency), without the light-truck loophole that gave us SUVs might be a better if somewhat unpopular but progressive (as in time, not politics) solution.
This said, I wish I could see how the auto industry will react to its current predicament.  After the last OPEC crises of the seventies, many thought the auto industry had seen its glory days.  The 55 mph speed limit was a killjoy.
We know what happened: 30 years of terrific cars from all horizons.  My professed skepticism of miracle solutions aside, I trust our ingenuity and desire will combine again for another generation of interesting and yet more sober machines. — JLG
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