Diminishing returns to increasing car MPG?

The Eco adds apparently $1,600 to the price of the Malibu (with a sales tax of 7 percent that comes up to $1,712). Suppose that people spend about $2,900 on gas over the course of a year and that this 2 mpg increase represents a 7.7% increase (from 26 combined mpg to 28), it would take about 7.67 years to make up the $1,712 (and that assumes that the interest rate is zero).  A 3 percent interest rate will make it take about 10 years to pay this back.  Any repair costs would add to the number of years it would take before one breaks even.

From the Pittsburgh Post-Gazette:

On the nonhybrid side, the poster car for conventional fuel-efficiency excellence is Chevrolet's own Cruze Eco, which returns a government-rated 28 m.p.g. in town and 42 on the highway without any electrical assistance. Instead, the Cruze Eco uses a small turbocharged engine, a manual transmission and old-fashioned tricks like lightweight forged wheels.
The Malibu Eco is a larger, more powerful car, but its mileage numbers are a long way off the nonhybrid Cruze, at 25 m.p.g. city and 37 m.p.g. highway. The Cruze Eco even has more trunk space than the Malibu Eco because there's no battery pack beneath the carpeting.
While the Environmental Protection Agency hasn't released final numbers for the new base Malibu, I can't imagine that the Eco will beat it by more than 2 m.p.g. For comparison, the old 4-cylinder Malibu netted a combined city-highway rating of 26 m.p.g., while the 2013 Eco returns 29 m.p.g. combined. The Camry Hybrid beats both Chevys with a combined rating of 41 m.p.g.
Even the 2013 Nissan Altima, with a conventional nonhybrid powertrain, improves on the Malibu Eco by 2 m.p.g., with a combined city-highway estimate of 31. . . . .

More Democrat attacks on business, going after oil companies again

Democrats see the future as attacking oil companies.  From Politico:

Democrats have a “huge opportunity” to reclaim control of the debate over gas prices by training attention on the excesses of oil companies, two prominent party strategists argue in a memo obtained by POLITICO.
The document circulating among Democrats was authored by Center for American Progress Chairman John Podesta and pollster Geoff Garin, and cites private polling that confirms “Americans are tired of the stranglehold oil companies have over our national energy policy.”
The strategists reveal that a CAP Action Fund poll taken by Garin’s firm, Hart Research, found that 59 percent of Americans say they’ve suffered due to high gas prices – “with large majorities of the public assigning a significant share of the blame to the major oil companies and Wall Street speculators.”
“The fact is domestic production is at an eight-year high, domestic demand for oil and oil products is down, and gas prices continue to rise. Meanwhile the big five oil companies earned a record $137 billion in profits in 2011,” Podesta and Garin write. . . .

Obama administration’s energy policy chief on Tuesday gives himself an "A" grade

Can't the Obama administration give this guy some media advice? Wouldn't one think that this would be embarrassing statement? From Fox News:

The Obama administration’s energy policy chief on Tuesday gave himself an A for controlling gas prices that have reached a record high at pumps across the country, drawing criticism and even chortles from Washington Republicans.
Energy Secretary Steven Chu made the comment during a House Oversight and Government Reform Committee hearing in which he was asked whether he was still doing A-minus work.
“Well, the tools we have at our disposal are limited, but I would say I would give myself a little higher,” he told committee Chairman Darrell Issa. “Since I became secretary of energy, I've been doing everything I can to get long-term solutions."
Issa, a California Republican, said later that the administration’s “DOE is DOA.”
The average price of regular gas is now $3.87 a gallon, a record high for March and more than double the $1.85 a gallon price when Obama took office in January 2009, according to the federal Energy Information Administration. . . .

New piece in Philadelphia Inquirer: Speculators smooth out the rough spots

My new piece with Grover Norquist in the Philadelphia Inquirer starts this way:

With regular gas prices topping $3.70 last weekend, angry politicians are blaming the higher prices on speculators and greedy oil companies. On Monday, The Hill newspaper reported that 23 senators and 45 congressmen, all Democrats except for one independent, called for urgent action against the "speculators" they hold responsible. Sen. Bob Casey of Pennsylvania demanded, "Consumers shouldn't be forced to pay higher prices at the pump because of speculative bets on Wall Street."

These politicians want the Commodity Futures Trading Commission to use its new regulatory powers under a law signed by President Obama two years ago to limit the amount of oil that speculators can buy.

This isn't a new concern. Last April, when regular gas prices hit $4 a gallon, the president launched a Department of Justice investigation into what he called "manipulation in the oil markets that might affect gas prices."

Unfortunately, neither the Democrats in Congress nor Obama appear to have a clue how markets work. The policy reminds one of Richard Nixon's attacks on speculators during the 1970s. . . .

Bill O'Reilly goes after oil companies yet again

Of course, there is the false statement about Obama not being able to do anything to impact the current price of oil through future production.
I agree with virtually nothing in this discussion, but I am putting it up to remember to possibly write something on it.

Gretchen Carlson grills Democratic Nation Committee chairwoman Debbie Wasserman Schultz over high gas prices

Carlson nails Wasserman on many issues, including the issue of gas prices (starting around the 4 minute mark).
Wasserman claims that it would take 20 years for drilling to impact gasoline prices. That is simply not serious. More gas supplies next month or next year or twenty years from now all work to lower the price of gasoline today. If prices are lower tomorrow than today, you will move gasoline available for consumption from the future periods to the current period. Gas will be less likely to be stored.

Ezra Levant nails Obama on Keystone Decision

Ezra does a good job skewering Obama and his broken campaign promises. The one critique that I have is that we live in a world energy market so the price of gas isn't really dependent noticeably depending on who it is sold to.

Congressional Dems getting worried about high gas prices

From The Hill newspaper:

Congressional Democrats are ramping up pressure on President Obama to tap the Strategic Petroleum Reserve (SPR) to prevent rising gas prices from threatening the economy and their election-year prospects.

They are growing anxious that the price of fuel could reverse their political fortunes, which had been improving due to signs of growth in the economy.

Republicans have hammered Democrats on the price spike, repeatedly noting that gas prices — now at $3.72 per gallon for regular — have doubled since Obama won the White House. . . .

John Stossel has this piece responding to the claims about monopoly power by oil companies driving up the price.

Democrats then and now over high gas prices

Now the Democrats claim that nothing can be done to control prices. Back six years ago, Democrats didn't have the same view:

Democrats running for Congress are moving quickly to use the most recent surge in oil and gasoline prices to bash Republicans over energy policy, and more broadly, the direction of the country.

With oil prices hitting a high this week and prices at the pump topping $3 a gallon in many places, Amy Klobuchar, a Democratic Senate candidate in Minnesota, is making the issue the centerpiece of her campaign. Ms. Klobuchar says it "is one of the first things people bring up" at her campaign stops.

To varying degrees, Democrats around the country are following a similar script that touches on economic anxiety and populist resentment against oil companies.

"It's a metaphor for an economy that keeps biting people despite overall good numbers," said Senator Charles E. Schumer of New York, chairman of the Democratic Senatorial Campaign Committee. Mr. Schumer said Democratic candidates in 10 of the 34 Senate races this year had scheduled campaign events this week focusing on gasoline prices. . . .

Democrats are tailoring campaign messages to pierce any economic good news by focusing on other aspects of the energy law . . . .

Democrats are eagerly laying blame for the situation on the Republicans . . . .

Of course, if you increase gas supplies 10 years from now, that will lower prices today. Obama is simply wrong when he claims:

“there are no quick fixes to this problem, and you know we can’t just drill our way to lower gas prices.” . . .

Obama's solution is this:

A pre-summer spike in gasoline prices has ignited an election-year furor, with President Obama mocking presumed Republican "three-point plans for $2 gas," all of which involve drilling, and Republicans claiming that Obama's energy strategy relies on algae, pond scum and chicken manure, not to mention bankrupt Fremont solar manufacturer Solyndra. . . .

Like his predecessor, George W. Bush, who lamented in 2008 that he had no "magic wand" to reduce gas prices, Obama said he had "no silver bullet" and embraced an "all-of-the-above" energy strategy, which includes "public investments" in green energy companies, "even though some companies will fail," a tacit acknowledgement of the Solyndra bankruptcy and other green energy companies that received billions of dollars in taxpayer funds.

Obama also touted algae as a fuel source, prompting ridicule from the Republican National Committee, which recycled Obama campaign quotes from 2008 about pond scum and chicken manure. . . .

During April of the 2008 presidential campaign, Obama opposed tapping the Strategic Petroleum Reserve.

McCain advocates suspending U.S. purchases for it. Obama supports suspending purchases for the reserve and advocates tapping it only if there's a short-term disruption in the oil supply. . . .

His administration seems to have a different position:

On Friday, Treasury Secretary Tim Geithner suggested the SPR is a possibility. "There's a case for the use of the (reserves) in some circumstances, and we'll continue to look at that and evaluate that carefully," he told CNBC Friday morning. . . .

UPDATE: These guys don't understand economics. Again, the Obama spokesman is wrong about how long it takes for policies to impact the price of gas at the pump. In addition, if these "efficiency" savings made a difference, they would lower the price of gas today.

Guess where the Stimulus' top 10 loans went to

All of these are solar energy companies, even the one that doesn't have "solar" in its name. Information from Recovery.gov.

Dem Congressman says higher taxes on oil companies will lower fuel prices

Lower taxes is the same as subsidies to Democrats. In any case, whatever you want to call these lower taxes, it seems like a big stretch to go from raising taxes to lower prices. You can read this discussion multiple times and I don't think you will see an explanation for the claim.

CHRIS JANSING, MSNBC HOST: "Let me ask you is there anything Congress can do to lower fuel prices?"

REP. STEVE ISRAEL (D-NY): "Yeah, there's lots of things we can do. Start by eliminating the $4 billion subsidy that big oil companies get."

JANSING: "They say, Congressman, they say that will not affect the price of gas."

ISRAEL: "Well, of course they're going to say that. They're getting the subsidies. It doesn't surprise me that a bunch of rich oil executives would go to Congress and say 'don't touch our subsidies, you have to lower our taxes.' That's a self-serving argument. It is just ludicrous that we are continuing to provide $4 billion a year in subsidies to big oil companies that are making more profits than they've ever made. And the notion that we can end Medicare in order to fund tax cuts and tax subsidies to oil companies is really transforming this election and electoral battleground."

With Fed ban on 100 Watt bulbs looming, substitute LED bulbs cost $50

If these mandated bulbs were efficient, that they saved enough energy to offset their higher initial price, no one would have to mandate them.

Two leading makers of lighting products are showcasing LED bulbs that are bright enough to replace energy-guzzling 100-watt light bulbs set to disappear from stores in January.
Their demonstrations at the LightFair trade show in Philadelphia this week mean that brighter LED bulbs will likely go on sale next year, but after a government ban takes effect.
The new bulbs will also be expensive — about $50 each — so the development may not prevent consumers from hoarding traditional bulbs. . . .
To encourage energy efficiency, Congress passed a law in 2007 mandating that bulbs producing 100 watts worth of light meet certain efficiency goals, starting in 2012. Conventional light bulbs don't meet those goals, so the law will prohibit making or importing them. The same rule will start apply to remaining bulbs 40 watts and above in 2014. Since January, California has already banned stores from restocking 100-watt incandescent bulbs.
Creating good alternatives to the light bulb has been more difficult than expected, especially for the very bright 100-watt bulbs. Part of the problem is that these new bulbs have to fit into lamps and ceiling fixtures designed for older technology.
Compact fluorescents are the most obvious replacement, but they have drawbacks. They contain a small amount of toxic mercury vapor, which is released if they break or are improperly thrown away. They last longer than traditional bulbs but not as long as LEDs. Brighter models are bulky and may not fit in existing fixtures. . . .

Obama's games on drilling, being as restrictive as possible

From US News & World Report, Obama's impact on gulf oil drilling:

The president's yearlong de facto moratorium on deepwater exploration in the Gulf of Mexico has artificially tightened supply—by 375,000 barrels of oil a day, or, as the EIA forecasts, a 13 percent drop in offshore oil output from 2010 estimates.
The president's choice to prohibit deepwater drilling in the Gulf for a full year costs jobs. Tens of thousands of workers and their families are suffering because the administration's opaque energy policies have kept them from working. In Baton Rouge, the civilian unemployment rate jumped from 6.6 percent to 8.2 percent (from March 2010 to this past March). That 1.6 percent drop in employment was the worst for any U.S. city, followed closely by a 1.3 percent drop in New Orleans.
The president isn't opposed to drilling for oil, just not off U.S. shores. The president prefers that Americans enrich Brazil—both as a customer of its oil exports and as the beneficiary of our experts and innovative technologies leaving the Gulf of Mexico.
The president's position on domestic energy production will not put Americans back to work exploring for new sources of affordable, abundant energy, or ease our pain at the pump, or make us less reliant on oil imports.
The president could do something about this. He could direct his interior secretary, Ken Salazar, to expedite the release of previously approved permits and start issuing new deepwater permits to explore for domestic oil. But we know that he won't. [Read the U.S. News debate: Should offshore drilling be expanded?]

Now House passage of a bill to again allow drilling in the Gulf has forced Obama to move back from the ban that he has imposed. Previously a court had put some cracks in the ban and forced the Obama administration to allow some new permits to be issued (see also here).

President Barack Obama is looking to bolster U.S. oil drilling, announcing Saturday a preemptive strike against bolder efforts from Capitol Hill as consumer unrest deepens over the price at the pump.

The White House will move forward without congressional action on a set of ideas espoused by Republicans and oil-state Democrats to expand oil and gas drilling in the Gulf of Mexico, Alaska and potentially parts of the Atlantic seaboard.

It’s the closest Obama has come to rivaling his short-lived pro-drilling stance that ended with the BP oil spill.

At the same time, Obama is also firing up the liberal Democratic base by urging Congress to repeal billions of dollars in oil-industry tax incentives and to raise fees against companies that do not act quickly on drilling leases they own. . . .

But drilling is where the political problems lie for the White House. Republicans and oil-state Democrats have continued to criticize Obama and the Interior Department for what they say is a dramatic slowdown in new permits off and on shore. . . .

Obama continues going after Oil Speculators

High gas prices are solved by raising taxes on oil companies? More on speculators unjustifiably raising prices? At least that what Obama was advocating in his weekly Saturday radio address. See my earlier post on his attacks on speculators available here.

Now, whenever gas prices shoot up, like clockwork, you see politicians racing to the cameras, waving three-point plans for two dollar gas. You see people trying to grab headlines or score a few points. The truth is, there’s no silver bullet that can bring down gas prices right away.

But there are a few things we can do. This includes safe and responsible production of oil at home, which we are pursuing. In fact, last year, American oil production reached its highest level since 2003. On Thursday, my Attorney General also launched a task force with just one job: rooting out cases of fraud or manipulation in the oil markets that might affect gas prices, including any illegal activity by traders and speculators. We’re going to make sure that no one is taking advantage of the American people for their own short-term gain. And another step we need to take is to finally end the $4 billion in taxpayer subsidies we give to the oil and gas companies each year. That’s $4 billion of your money going to these companies when they’re making record profits and you’re paying near record prices at the pump. It has to stop.

Instead of subsidizing yesterday’s energy sources, we need to invest in tomorrow’s. . . .

On Wednesday, ExxonMobile will be announcing its profits for the latest quarter, and with the soaring gas prices its profits will be quite high. Of course, higher profits are what you want if you want to encourage more energy being produced.

How does media coverage of the higher prices now compare to the higher prices under Bush? A couple discussions are available here and here.

Meanwhile the Obama administration is doing everything it can to stop oil production in the US.
EPA Rules Force Shell to Abandon Oil Drilling Plans
Protecting lizard would put jobs at risk
Oil companies should pay their 'fair share'

UPDATE: "Obama pounces on Speaker's remarks, urges end to oil subsidies"

In a letter to the leadership of both chambers and both parties, Obama used House Speaker John Boehner's words against him, referencing the Ohio Republican's criticism of the oil companies in an interview with ABC News.
"I was heartened that Speaker Boehner [Monday] expressed openness to eliminating these tax subsidies for the oil and gas industry," Obama wrote. "Our political system has for too long avoided and ignored this important step, and I hope we can come together in a bipartisan manner to get it done."
The president also urged Congress to get behind his energy plan even though he acknowledged that Republicans won't agree with much of it.
"I hope we can all agree that, instead of continuing to subsidize yesterday's energy sources, we need to invest in tomorrow's," Obama said.
Sen. Charles Schumer (D-N.Y.) also seized on Boehner's remarks, saying his comment that large companies don't "need to have" some subsidies was "almost too good to be true." . . .
“The Speaker made clear in the interview that raising taxes was a non-starter, and he’s told the president that. He simply wasn’t going to take the bait and fall into the trap of defending 'Big Oil' companies," Steel said.
"Boehner believes, as he stated in the interview, that expanding American energy production will help lower gas prices and create more American jobs. We'll look at any reasonable policy that lowers gas prices. Unfortunately, what the president has suggested so far would simply raise taxes and increase the price at the pump."
In the interview with ABC, Boehner said: "I don't think the big oil companies need to have the oil depletion allowances, but for small, independent oil-and-gas producers, if they didn't have this, there'd be even less exploration in America than there is today." . . .

Further UPDATE: From Fox News:

But Boehner's office pushed back Tuesday, suggesting the speaker wants to see a more comprehensive approach before signing on to any changes.
"The speaker wants to increase the supply of American energy and reduce our dependence on foreign oil, and he is only interested in reforms that actually lower energy costs and create American jobs," spokesman Brendan Buck said in a statement. "Unfortunately, what the president has suggested so far would simply raise taxes and increase the price at the pump." . . .

If Obama really wants to reduce the true cost of energy, stop subsidizing really costly alternative "green" energy. Part of the cost of energy are all these taxpayer funded subsidies for producing the energy.

Boehner's ABC interview is available here.

How have gas prices changed over time?

I always get a kick out of people making predictions about what gas prices will be at some point in the future. Drudge had a prediction up that gas prices would reach $5 per gallon by Memorial day. If that were true, the price would already be at that level. If you really thought that gas would be at $5 a gallon at the end of May, it would pay for gas companies to store gas that would have been sold today and keeping putting it aside until the current price were equal to the future expected price. Of course, doing that would lower the future price at the same time it raised the current one. To do anything else would be essentially leave money on the table.

Click on figure to make it bigger.
The source for gas prices is available here.
The source for the CPI is available here from Table B–62.

If the energy savings paid for themselves, don't you think that businesses would do this on their own?

Why does Obama think that he has to force companies to do something that he claims will save them money? What a waste of money.

With an aggressive plan that has put businesses on notice, the White House has recently targeted the country's biggest energy guzzlers: skyscrapers and buildings. Hospitals, universities and colleges, too.
Commercial and industrial buildings suck up about 49% of the country’s energy supply, worse than cars and trucks, says the Department. of Energy.
President Barack Obama has tapped former President Bill Clinton and General Electric (GE: 20.12, +0.26, +1.31%) chief executive Jeffrey Immelt to lead the way in cutting buildings’ energy usage by a fifth over the next decade.
The plan? Hundreds of millions of dollars in tax breaks, government loans and grants. Who pays? Oil companies, with potentially $39 billion in tax hikes.
Ironically, the Government Accountability Office says the federal government is the nation’s single largest energy consumer, its buildings making up 35% of the government’s energy consumption. . . .

If you are worried that high gas prices will dislocate the economy, why not put on regulations that make the disruption even worse?

Anne Jolis writing at the WSJ's Political Diary:

As Libya burned and oil prices edged up, Madrid reduced Spain's maximum highway speed limit to 110 kilometers per hour (68 mph) from 120 kilometers per hour. Ostensibly, the forced deceleration is intended to save Spaniards money and reduce oil imports, on the claim that cars will consume roughly 15% less regular gasoline when moving at the lower speed. The BBC reports that the government has deployed workers across Spain to change 6,000 road signs to reflect the new speed limit, which will last at least until the summer.

"Sometimes you have to adopt measures, even if they are unpopular," Spain's Socialist Deputy Prime Minister Alfredo Perez Rubalcaba told journalists. "With the price of a liter of gasoline at its highest in history, we have to save because what is at stake is the economic recovery."

Not all studies agree that driving more slowly means driving more efficiently. Car type, road conditions and other factors play key roles. But forcing drivers to slow down isn't Madrid's only play to cut fuel use and "save" people's money for them. The government will also be dropping fares on state-owned rail networks, subsidizing the purchase of energy-efficient tires and requiring oil companies to use 7% biofuels in their diesel and gasoline, rather than 5.8% currently. . . .

It is bad enough that Spaniards are already bearing the burden of higher cost gas, but now they are limited in figuring out the best way to bear those costs.

As the price of oil skyrockets, the Obama administration fights to stop oil drilling in the US

The Obama administration seems to be doing everything that it possibly can to stop oil drilling.

The Obama administration has fired another shot in the fight over the speed with which the Interior Department is — or isn’t — letting oil drillers resume work in the Gulf of Mexico after last year’s Deepwater Horizon explosion and oil spill.

The administration late Friday appealed a judge’s orders directing the department to act on several pending Gulf Coast deep-water drilling permits.

Gulf state lawmakers and the oil industry have accused the department of dragging its feet on the permits, enacting a de facto moratorium against new drilling, while the department has said it needs to ensure that safety and environmental protections are in place.

Friday’s appeal challenges rulings by U.S. District Judge Martin Feldman, who on Feb. 17 gave the department 30 days to make a verdict on five pending deep-water drilling permit applications. He later added two permits to that order.

Interior Secretary Ken Salazar hinted at the appeal during a Senate hearing Wednesday.

Feldman “in my view is wrong,” Salazar said. “And we will argue the case because I don’t believe that the court has the jurisdiction to basically tell the Department of the Interior what my administrative responsibilities are.” . . .

Meanwhile, the price of oil has gone up dramatically.

U.S. gasoline prices increased nearly 33 cents in two weeks, the second-biggest two-week jump in the history of the gasoline market, according to a new survey of filling stations.
The latest Lundberg Survey of cities in the continental United States was conducted Friday. It showed the national average for a price of self-serve unleaded gasoline at $3.51, an increase of 32.7 cents from the last survey two weeks earlier, survey publisher Trilby Lundberg said.
The jump was the biggest since a 38-cent hike between August and September 2005. At the time, the price increase was driven by damage caused by Hurricane Katrina. . . .

Consumer Reports says that the GM Volt is a dud

Consumer Reports doesn't always get things right (e.g., on the iPhone), but I think that they are dead on regarding the GM Volt.

Consumer Reports offered a harsh initial review of the Chevrolet Volt, questioning whether General Motors Co.'s flagship vehicle makes economic "sense."The extended-range plug-in electric vehicle is on the cover of the April issue — the influential magazine's annual survey of vehicles — but the GM vehicle comes in for criticism.
"When you are looking at purely dollars and cents, it doesn't really make a lot of sense. The Volt isn't particularly efficient as an electric vehicle and it's not particularly good as a gas vehicle either in terms of fuel economy," said David Champion, the senior director of Consumer Reports auto testing center at a meeting with reporters here. "This is going to be a tough sell to the average consumer."
The magazine said in its testing in Connecticut during a harsh winter, its Volt is getting 25 to 27 miles on electric power alone.
GM spokesman Greg Martin noted that it's been an extremely harsh winter — and as a Volt driver he said he's getting 29-33 miles on electric range. But he noted that in more moderate recent weather, the range jumped to 40 miles on electric range or higher.
Champion believes a hybrid, such as the Toyota Prius, may make more sense for some trips.
"If you drive about 70 miles, a Prius will actually get you more miles per gallon than the Volt does," Champion said. . . .

I had these discussions earlier here and here.

If these bulbs would really save people money and they were as good, why are they mandated?

Either these bulbs aren't as good at producing light or they aren't cheaper or some combination of the two. But it they really were so unambiguously better, why are people having to be forced to buy the new bulbs?

Californians can start saying goodbye to traditional 100-watt incandescent light bulbs now that the state has become the first in the country to require a new standard for the screw-base bulbs.
Experts say the new rules, which took effect New Year's Day, will save residents money and energy. California is already the nation's leader in energy efficiency standards.
As of Saturday, what used to be a 100-watt light bulb manufactured and sold in California will have to use 72 watts or less. The 72-watt replacement bulb, also called an energy saving halogen light, will provide the same amount of light, called lumens, for lower energy cost.
Similar new standards for traditional 75-watt, 60-watt and 40-watt incandescent bulbs will go into effect in California over the next few years, with wattages reduced to 53, 43 and 29 respectively.
The new rule does not ban incandescent light bulbs; it just requires those bulbs to be 25 to 30 percent more efficient. And it only affects incandescent light bulbs manufactured after 2011, not light bulbs already in use or on store shelves. . . .