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Mileage Math Mania

There might be a case for buying the Volt or other hybrids, but it isn’t based on economics. It is based on bragging rights, on showing everyone how concerned you are about Mother Earth. There is nothing intrinsically wrong with any of these things, but you have to be pretty darn rich to afford them.

There is another problem with this economically inefficient activity. Many years ago, I toured the first big solar power demonstration plant in the Mojave Desert -- Solar One, near Barstow, California. It was very impressive: a vast array of mirrors, reflecting sunlight onto a boiler. There was a lot of electricity used in making all the glass for the mirrors, the electric motors, the boiler, the computer systems controlling all this, the posts holding the mirrors, and aluminizing the glass to make the mirrors (a very energy intensive process). I asked the tour guide: “How do we know that the system is a net producer of electricity? Even if it is a net gain, how much net gain?” She had no idea.

Eventually, I received a letter that admitted: They had no idea. The enormous subsidies that went into this project made it impossible to figure out what (if any) net gain there was. Energy is a major part of the cost of many alternative energy systems, and energy costs money.

How much energy is going into making the batteries that go into these hybrids? How much energy is spent transporting the batteries from China? How much will be spent recycling those batteries at end of life? When you see one of the “Save Mother Earth” projects that requires federal tax credits and is still a bad economic deal for the buyer, my immediate suspicion is that it is hiding an enormous energy input that destroys most of the ecological reason for doing it.

There may well be a case for the government subsidizing basic research or demanding new technologies. Throughout American history, such subsidies or government purchases have often more than paid for themselves in technological development and economic growth. Interchangeable parts and the development of the vertical milling machine are both results of government musket contracts in the 1790s, for example. Microprocessors and the Internet have similar U.S. government origins.

R&D encouragement, however, is not the same as subsidies to production, which can introduce severe distortions without producing much of value. Corn ethanol subsidies are among the most obvious of these -- but in another ten years, we are probably going to see a lot of “green” technology, such as hybrids, fall into the same category.

If you are rich, and want everyone to admire your commitment to Mother Earth, by all means, buy a hybrid. If you want to help drive the cost of hybrids down so that they are more reasonably priced in the future, buy a hybrid. But don’t buy one because you are going to save a bunch of money on your commute -- you are going to be disappointed.