Trading One Problem For Another

Jim Brown
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President Obama has given three speeches in the last week on energy and reducing our importation of foreign oil. He favors electric cars, hybrids, ethanol, biofuels, wind and solar. His Energy Secretary Steven Chu has advocated more than once that fuel prices should be raised to the same levels as Europe ($6-$8) to encourage conservation. Obama also mentioned that in his campaign. Are you ready to go electric?

It is amazing what $4 gasoline can do to the public discourse. Suddenly people with no energy policy become the experts on what policy we should endure in the future. The Chevy Volt is on the verge of being named America's national car similar to the eagle being the national bird.

The Volt costs $41,000 less a few bucks in rebates and incentives. Originally GM was targeting 5,000 units a year and now that number has risen to 60,000. The president now has a targeted goal of getting one million electric cars on the road. This is being done by passing laws that require government agencies to buy electric and by twisting the arm of big business. GE has committed to buy 12,000 Volts. Is that how Jeffrey Immelt got appointed head of the president's committee on jobs?

By the way, the Volt is NOT an electric car using almost any standard available. Yes it has a battery and yes it will run for 40 miles without a charge. Once past 40 miles the internal combustion engine kicks in to "recharge" the batteries and power the car. The main difference between a Prius and a Volt is that the Volt can be charged from a charging stand. But, that is not the focus of this article.

The president says he wants to cut the importation of foreign oil by switching the U.S. fleet over to electrical alternatives. Biofuel would be nice too but the technology does not exist today to create biofuel in any meaningful quantities. In theory it will in decades to come but not this decade.

That leaves us with the electrical alternative. As the push towards more electrical vehicles accelerates, so will the need for electrical power. Multiple studies have been done on the requirements for electricity once plug in cars become common.

We are already facing a new problem in electrical generation. Daniel Yergin penned an article over the weekend charting the current increase in demand for electricity as everything we touch is becoming electronic. He said current demand trends will require the equivalent of an additional 540 coal fired plants or 200 nuclear plants by 2030. That means we better start construction on many of those today.

So what happens when the battery powered plug in car becomes acceptable? Either the government will mandate higher fuel prices like they do overseas to force the conversion or peak oil arrives and does the mandating for them. The government would rather it be in the form of a fuel tax so they can keep the extra money in the USA rather than higher oil prices where the money goes overseas.

"IF" and that is a very big if, electric car technology suddenly broke through the distance barrier of 100 miles between charges as the Nissan Leaf now claims, we could see a sudden acceptance of the electric car idea. Some scientists believe that can be expanded to 300 miles by the end of the decade.

The problem is the relatively sudden strain on the electrical grid if we started adding a million plug in cars per year to the fleet. The unofficial target is 20% of the fleet and that is roughly 52 million cars. There are currently more than 260 million registered cars in the USA. We are currently selling about 12 million cars per year and headed for 14 million.

If the 100 mpc (miles per charge) technology was readily available at a reasonable price in a reasonably sized package I could see it taking off in America.

The simple problem is that we don't have enough electricity today to charge a million cars. If 10% of the cards sold were electric that would jump to 2.4 million in year two, 3.8 million in year three and over five million plugging into the grid in year four.

Automakers can obviously build electric cars faster than we can build electric plants. Coal plants take 2-3 years once the permitting is approved and nuclear plants 10 years if everything lines up just right. According to Yergin we are already behind the generation curve not counting the additional load from new cars.

I certainly hope lawmakers don't rush to mandate higher taxes on fuel and other restrictions tailored to force us into electric cars. I think they would find out rather quickly they only traded one problem, imported oil profits going overseas, for another set of brownouts and blackouts when the grid melts down from all the additional charging.

I did not even mention the estimated $1-$2 trillion in estimated expenses to upgrade the power grid. We are running on borrowed time on that already. Exactly how long does it take to replace a million miles of high voltage cables and the associated transformers and switching stations?

I don?t think I will be rushing to trade in my gasoline-powered car. Actually a generator is starting to look like a good investment for the future.

Jim Brown

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