Wednesday, October 12, 2005

Fuzzy Math 101

Tax breaks are more than just money back in the pocket of a possible "do-gooder" or White House "Friend of the Family." They're about the message. What message is the federal government sending when it gives more credit and higher standard deductions to heavier SUV models than to hybrid passenger cars? A pretty clear one: you can have your cake and eat it too.

The recently enacted Energy Policy Act does exactly this with the help of some ancient mathematical tomfoolery (Bush perfers to call it "magic") that gives more money to those who purchase certain SUV hybrids than to those who purchase passenger vehicles like the Prius and Honda Insight. Albeit, I get the general idea here: save more gallons of gas from being burned and we save less from hitting the atmosphere. From Wired...

The odd math is an artifact of a two-tiered tax credit that's based in part on how fuel efficient the car is compared to the average consumption of vehicles of similar weight, according to Jim Kliesch, a vehicle analyst with ACEEE. For this reason, the Honda Insight receives less credit than the similar performing but heavier Toyota Prius. The fuel savings component is based on the total fuel saved during the expected lifetime of a vehicle, which enables slight improvements to gas-guzzling vehicles to equal that of big improvements in fuel-efficient vehicles. For example, increasing the gas mileage of an SUV from 14 to 16 miles per gallon saves the same amount of gasoline (134 gallons) in a year as boosting the fuel efficiency of a passenger car from 35 to 51 miles per gallon, according to Kliesch.

So, where is the green incentive? We're rewarding people more for buying a less efficient vehicle. If I come home with my . I understand the overall economic reasoning (kind of..even that seems like a stretch) but take a step back and look at why the general tax incentive was created and suddenly this seems like a real failure of being too involved in details. Ballentine's quote is the key to this question: "If the goal is saving oil, then it's not nonsensical."

We want to reward people who buy the most fuel efficient vehicles, not those who simply have the most fuel left in their tank at the end of the day. Afterall, if my tank is bigger than yours (which is the case with SUV gas tanks compared to passenger hybrids) I'll probably save more gas over the life of the vehicle than you ever could with your Prius.

Now, throw into the mix the fact that the tax incentive is manufacturer-specific (yikes...the federal gov't penalizing people for not purchasing from "recommended" brands?) and you've got yourself a thoroughly confusing rebate program, one which I don't have one to sit down to figure out and neither do most Americans.

The amount of the tax credit also depends on when you buy, and from which company, further complicating consumers' purchasing decisions. The tax credit is cut in half for each manufacturer three months after the company sells a total of 60,000 hybrids. For example, if Toyota sells 60,000 Highlander and Prius hybrids by March of 2006, then in July the tax credit is cut in half, and goes down to 25 percent in January of 2007 before ending in June. Capping the tax credit based on volume is biased against Japanese companies Toyota and Honda that were first-to-market, according to ACEEE's Kliesch. "This formula penalizes the companies that have been pursuing (hybrids) most aggressively and allows the laggards (such as Ford and General Motors) to take advantage of it for longer time," he said.

So, not only will the government encourage people to buy less efficient vehicles with a tax incentive program that was designed to reward those who purchase the most efficient vehicles, but it's allowing itself to pick the businesses and corporations for the very people it governs. Can't say I agree with how this falls inline with the classic conservative mantra, "government out of the private sector."

Sunday, October 09, 2005

Don't Move to the Gulf Coast

SF Chronicle has a good piece on where we are in the hurricane debate, whether its global warming or just nature kicking our ass every few decades. The good news? If you're on either side of this debate you win. The bad news? No conclusive evidence points to either. However, we do have some rather strident climatologists who would love to give you their opinion, which is what we pay them to do. So listen up, especially if you're planning on taking residence along the Gulf Coast (if you do can I suggest All-State and Geico for everything from your Cheerios to your Chevy, 'cause it'll all be gone when the next Katrina comes blowin' through.)

Right now two theories are coming out of the science community. Scientists that believe the last 15 years of intense hurricane activity is due to annual ocillations within a larger hurricane cycle occupy one side of the ring. On the other, we have those that firmly believe that global warming continues to play a role in "supercharging" these storms into tropical cyclones on steroids. And of course we have those in the middle who refuse to sign on to either theory entirely and are comfortable sitting on the fence with their own data to back them up. One thing everyone seems to agree on? That hurricanes have been slamming the eastern coast of the U.S. for the past 15 years in an unusual display of ferocity, frequency and power.

Here's a key fact that I thought backed up the global warming theory:

"Atlantic waters have been in a warm phase since 1995, and "we can expect to be
in a warm phase for the next 10 to 20 years," said Ryan Boyles, another
hurricane expert at North Carolina State University. "Therefore, we can expect
an above-average number of storms in the next 10 to 20 years."

Well, thats not good news. So it seems everyone also agrees that we'll have more Katrina's and Rita's (and Stans) in the next 2 decades? This cycle, for those that believe this is a natural cycle, one that we've weathered before, will be much longer than previous hurricane cycles or at least ones that were measureable. And if the ocean continues to warm (all theories point to yes thus far) we'll be getting more and more intense storms as well.

Sunday, October 02, 2005

Plug it In, Plug it In

When a former CIA director and hawk speaks out on our country's oil addiction and endorses plug-in hybrid vehicles, I tend to sit up and listen. James Woosley, CIA director from 1992-'94, has quite a resume. In 1963 he received his undergraduate degree from Stanford University (With Great Distinction, Phi Beta Kappa) an M.A. from Oxford University where he was a Rhodes Scholar from 1963-'65, and an LL.B from Yale Law School where he was editor of the Yale Law Journal. So...we've established the guy is bright. He's "wicked smaat."

So what's he got to do with plug-in hybrid vehicles? Woosley endorses the PHEVs as "a here-and-now technology to answer the nation's needs." The CS Monitor points to a growing group of diverse individuals, corporations, public utilities, energy companies, non-profit organizations, environmentalists and local governments who are doing more than talking about what to do with the sudden energy crisis: they're pluggin' in.

Hybrids, after going through a quick modification (includes more batteries, a circuit board, a charger and a power cord) are plugged in at night which taps the cheap off-peak energy from power plants and allows the cars to be driven around 50-60 miles without using a drop of gasoline. At that rate, you wouldn't need to fill up but 3 times a year. Hows that for cheap gas?

Some concern from enviros say that using energy from coal power plants to power efficient vehicles is dangerous. I agree. The ultimate setup will be with individuals who have solar panels on their roofs and will be drawing from completely efficient energy source. Granted if you needed to drive 125 miles you'd have to gas up...but how often are we all driving 125 miles at a time?

James Woosley may be enocouraging this move for different reasons (getting us off foreign oil which he argues is what funds terrorism). But isn't that what makes this coming together of diverse groups and individuals that much more exciting? We're arriving at a common agreement of what the end result needs to look like, regardless of "why?" Kudos to Mr. Woosley and his guts in standing up for something not many would in his cadre of suits and shiny cufflinks.