Gas 2.0

Faced with dwindling cash reserves, several states are considering raising their Gas Tax. Those with efficient vehicles will come out ahead. Low income families, the trucking industry and the alternative fuel industry will finish last.

Now I am all for taxes - there are many essential services that the government performs and they need money to do this. Most often, gas tax goes directly into maintaining and repairing roads and highways - a costly endeavor - but absolutely essential to keep our country alive.

What I’m specifically concerned about is how this will affect three groups: those with low incomes, the trucking industry, and the alternative fuel industry. Read the rest of this entry »

According to a just-released report from the well-respected Brookings Institution, the US is experiencing its longest and quickest decline in the amount of driving since World War Two — a decline which the report’s authors claim marks a permanent shift away from the automobile and towards other forms of transportation.

The report, The Road… Less Traveled: An Analysis of Vehicle Miles Traveled Trends in the U.S., points out that the beginning of the current decline in driving predated the high gas prices of last summer and, as gas prices have come back down over the last few months, drivers are not going back to their cars (click the graph below for an expanded view of these statistics).

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So, finally we complete the trifecta. Chrysler says they need $7 billion in loans to stay afloat through 2009 and have pointed to the example of their ENVI design unit in leading the turnaround with the introduction of many new Neighborhood Electric Vehicles (NEV), City Electric Vehicles (CEV), Range-extended Electric Vehicles (ReEV), and full-function battery electric vehicles (BEV) by 2012.

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As the second of the Big Three to come wagging their tails between their legs to the US Congress, General Motors is asking for a total of $18 billion dollars to avoid imminent bankruptcy. The only problem: nobody gave them the electric car memo.

Unlike Ford, which in their tail wagging earlier today made a huge shift to focusing on electric car development, GM chose to focus their restructuring plan on the fact that they have a large number of fuel efficient vehicles (defined as 30+ mpg on the highway) already on the road. Plus, they say that by 2012 more than half of their cars will be flex-fuel capable.

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Billionaire American entrepreneur T. Boone Pickens is optimistic that the Obama administration will bring the United States’ energy infrastructure into the new millennium by implementing his plan for energy independence.

After eight long years there is finally a cause for hope here in the United States. George Bush may still be in office, but right now all America’s problems are President-Elect Obama’s to solve (see Obama Recession, thanks Rush), but he seems ready for them.

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Poll results released by General Motors today clearly indicate that the majority of Americans think the government should provide bailout loans to the auto industry and that without those loans the “Big 3″ (GM, Ford, and Chrysler) will go bankrupt.

In a random survey of 804 American adults conducted by Peter D. Hart Research Associates and commissioned by General Motors (PDF), there is broad support for bailing out the the American auto industry — and even broader support of President-elect Obama’s plans to make sure “the American automobile industry continues to be able to operate.”

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The net is buzzing with discussion about the fate of the Big Three automakers. The American auto industry is in the middle of a meltdown of epic proportions. As the New York Times reports:

Whichever path they choose, Democrats could be headed for a confrontation with Mr. Bush and were setting the stage for a dramatic lame-duck session

The confrontation in question is a proposal from Senate Democrats, with backing from President-elect Obama himself, to bail out the Big Three, under the premise that they are too big to fail and that if they went under, the ripple effects would be devastating. Curiously absent from the discussion, however, is the fate of a host of cleantech startups making extremely efficient vehicles powered by electricity, electricity plus gasoline or biofuels, and so forth.
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When the only factor that determined if farms lived or died was the price of food, farm income was rather boringly steady. Now that biofuels have given agriculture a value greater than staple food crops, farmers have seen some huge rewards. But with those rewards have come greatly increased risks — risks that farmers are finding out the hard way right now.

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While much of the global auto industry continues to shed employees, Ford Motor Co. said Thursday it would call back 1,000 workers to a truck plant in Dearborn, Mich., saying it expected growing consumer demand for its new F-150 pickup truck.

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After announcements last month that Tesla will be laying off some employees, scaling back the release schedule of the upcoming Model S, and restructuring the company’s management, Tesla has now announced that they have secured an additional $40 million of funding from “almost all current major investors.”

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According to a VeraSun press release, a “series of events” had shrunk its liquidity, impairing its ability to invest in production facilities and operate its business. “A dramatic spike in corn costs,” partly due to its hedging arrangements and “worsening capital market conditions and a tightening of trade credit resulted in severe constraints on the company’s liquidity position,” the release said.

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The US auto industry’s woes are well known — we’ve covered them here at Gas 2.0 many times — but are these companies deserving of taxpayer money for a government bailout, or should they be left to deal with a mess that they mostly created?

This is the question that will be debated live on NPR.org today at 3 PM EDT (19:00 Greenwich Mean Time).

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In a new report, the Renewable Fuels Association (RFA) says the events of recent months clearly indicate that production of corn ethanol is not a major driving factor behind the continued high food prices at the supermarket.

In the report, “Will the Plunge in Grain Prices Mean Lower Food Prices at the Supermarket?,” the RFA points out that, while prices for agricultural staple commodities such as corn, wheat, and soybeans have all plummeted by about 50% in the last half year, food prices at the grocery store have remained highly elevated. At the same time, ethanol production has dramatically increased.

When the above factors are taken together, the link between grocery store food prices and corn ethanol production becomes dubious. Not only that, and also somewhat unintuitively, it seems that the diversion of relatively large portions of the US corn crop to ethanol production has very little effect on even the market price of corn.

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Several bits of news trickled out this week that, when put together, indicate great confusion even among experts about whether or not corn ethanol government subsidies are helping or hurting.

To start with, researchers at Iowa State University have found that, even though $1.3 billion was given to the corn ethanol farming industry in the form of subsidies in 2007, the government saved $3.45 billion on what are called loan deficiency payments as a direct result of these ethanol subsidies.

Loan deficiency payments were established in 1985 as a way to ensure farmers’ incomes remained steady even when prices for commodities such as corn were abnormally low. Since 1998 the loan deficiency payment program has cost taxpayers more than $29 billion.

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The 700 Billion dollar bailout bill just passed the house, and automakers got $25 billion in low interest government loans, and plug-in tax credits have now been passed by both the House and the Senate, making the Chevy Volt $7,500 cheaper.

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