Archive for the ‘Climate Control’ Category

WaPo: $369 billion won’t do much to control the climate.

August 9, 2022

… or curb inflation, for that matter.
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The Dems massive Inflation Reduction & Climate Control Bill is getting backlash … even from the left!

Let’s start with the Inflation Reduction malarkey.

More than 200 economists wrote a letter to Senator Schumer detailing how this bill will not reduce inflation, nor reduce the deficit.” Source

“Several nonpartisan experts believe it’ll have no noticeable downward pressure on prices — including the Congressional Budget Office (“negligible at best”), the Bipartisan Policy Center (“small impacts one way or the other”), and the Penn Wharton Budget Model (“statistically indistinguishable from zero”).” Source

And, my favorite:

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Even Mark Zandi — Moody’s Analytics chief economist and Biden’s go-to flack — says that the bill will have near-zero impact on inflation.

Why? Corporations will pass through tax increases to consumers, oil prices will stay high (or increase) and drug price controls won’t kick in until “mid decade””.

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And, about climate control…

Specifically, the electric car incentives that are headlined to shave $7,500 off a high-priced EV.

In WaPo’s own words:

“An entire supply chain of rare minerals, semiconductors, batteries and financing has to fall into place before Americans give up their combustion engines.”

Here’s the big rub…

“American consumers can only claim the full $7,500 credit for an all-electric engine if their manufacturers displace Chinese batteries by 2024 and minerals from China or other countries lacking free-trade agreements — a threshold that automakers are warning could be impossible to meet.” Source

For the record:

60–80 % of EV batteries’ mineral ingredients are controlled by China which currently produces 76 % of the world’s lithium-ion batteries, while the U.S. produces only 8 %.

Despite ambitious plans to scale up, the U.S. and Europe together will likely account for only about a quarter of total global production of EV component minerals by 2030. Source

English translation: Expect to pay full price if you want to impress your friends with a climate-cooling EV.

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So, I guess we’ll have to count on windmills circling Nantucket and dotting the Jersey coastline.

When that happens, I’ll start taking the climate-controllers seriously…

What’s the fundamental difference between oil prices and electricity rates?

June 29, 2022

Hint: Who (or what) sets the prices?
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This week, the G7 leaders reached “an agreement in principle to begin the process of imposing price caps on Russian oil.”

The agreement on oil, would aim to limit how much money Russia can earn from each barrel of oil it sells on the global market, reducing the fossil fuel revenues Russia is relying on to finance its war effort.

It would also attempt to stabilize global oil markets — and hopefully bring down prices.

It remains unclear how caps would work, and there is more speculation than specifics. NY Times

Hmm.

Coupled with my recent digging on EVs, the G-7 agreement lit my light bulb, so to speak.

I asked myself: “What’s the fundamental difference between oil prices and electricity rates?”

Well, oil prices are set “by the market” … largely driven by supply and demand … subject to some governmental supply policies (e.g. OPEC supply agreements and capped pipelines) … and short-lived price controls (that invariably backfire).

Electricity rates (i.e. “prices) are controlled by state regulatory agencies… electric companies submit pricing plans that must be approved by government bureaucrats.

Hmm

So, under the umbrella of climate control — less oil, more electricity — governments intend to wrest near total control of energy prices away from “the market”.

Is that a good idea?

The economist side of me says: “Nope”.

I’m surprised that pundits haven’t explored this “wrinkle” in Biden’s “incredible transition” plan.

An unintended second-order consequence or part of the plan.

Draw your own conclusion.


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