“Somehow we have to figure out how to boost the price of
gasoline to the levels of Europe,” said Dr. Steven Chu, Director of
the Lawrence National Laboratory, in an interview with the Wall
Street Journal in September 2008.
We ended that year with an average U.S. retail price of
$1.67 for all grades of gasoline on December 31, 2008.
In contrast, the price of a gallon of regular gasoline
that summer was $6.78 in Greece, $8.24 in Italy, and $9.39 in the
Netherlands, according to Eurostat, the statistical office of the
European Union.
Dr. Chu’s proposal to hike gas prices in the United States
to European levels was published in the Wall Street
Journal on December 12, 2008. Six weeks later, on January 21,
2009, he was sworn into office as President Obama’s Secretary of
Energy.
The difference between the Dutch gasoline price of $9.39
and the U.S. price of $1.67 is $7.72 per gallon. The U.S. Energy
Information Administration reports that the average U.S. household
purchases 1,100 gallons of gasoline per year. That means a $7.72
price increase per gallon would cost the average American family an
extra $8,492 per year.
For the middle fifth of the U.S. population in terms of
income, the $8,492 price hike per year would cut their after-tax
income by an average of 15 percent.
For the bottom fifth of U.S. households, the $8,492 price
hike per year would cut their annual income by 47
percent.
Raising U.S. gasoline prices to European levels, said Chu,
would encourage — or, more accurately, force — Americans to move
to neighborhoods closer to work and dump their trucks and SUVs for
Chinese bikes and scooter-like Smart Cars.
I can see why Obama chose Chu to run the Energy
Department. Both are on the same page in seeing skyrocketing energy
prices and central planning as the top ways to fix the U.S.
economy.
“If somebody wants to build a coal-powered plant they
can,” said candidate Obama in a 2008 interview with the editorial
board of the San Francisco Chronicle. “It’s just that it
will bankrupt them because they’re going to be charged a huge sum
for all that greenhouse gas that’s being emitted.”
Additionally, the rest of us, as alleged climate enemies,
would also be pushed towards bankruptcy. “Under my plan of cap and
trade, electricity rates would necessarily skyrocket,” continued
candidate Obama. “Coal-powered plants, you know, natural gas, you
name it, whatever the industry was, they would have to retrofit
their operations. That will cost money. They will pass that money
on to consumers.”
The next step would be the demonization of price-hiking
industries as money-grubbing capitalists in need of even more
mandates or a full government takeover.
I don’t doubt that Dr. Chu is a smart guy. He’s the
co-winner of the 1997 Nobel Prize for Physics, for the “development
of methods to cool and trap atoms with laser light.”
Plus, according to his Energy Department biography, he
knows a lot about everything from climate change to nerve growth
factor transport cadherin adhesion and sub-nanometer molecular
imaging with optical microscopy.
That sounds impressive, but none of it qualifies Dr. Chu
to be the nation’s top venture capitalist, picking oil company
losers and windmill winners.
The Chevy Volt, set in motion by coal-fired electricity
(why wasn’t it called the Chevy Bituminous?), looked like a great
idea on paper but not so good when it started to explode three days
after a collision.
Due to lack of demand, even with the $7,500 per car
federal tax rebate and another $5,000 giveaway in California,
General Motors recently announced that it is suspending Volt
production for over a month, idling 1,300 workers.
The Obama administration’s solution for the Volt being a
dud is to hike the federal rebate to $10,000, a move that will
redistribute wealth in the opposite direction from what President
Obama generally advocates. Last October, General Motors reported
that the average income of Volt buyers was $175,000.
There’s another expensive dud in Elkhart, Indiana, with
100 tiny and unfinished Think cars currently lined up in Think
City’s plant with no completion date on the horizon, a clear
example of a failed jobs program designed by politicians who didn’t
think enough.
Only two Think employees remain employed at the Think City
plant, after untold millions of investment dollars and government
incentives, tax breaks, and loan guarantees.
The cost to taxpayers at the federal and state levels of
the Think boondoggle and the associated downfall of Ener1, a maker
of batteries for plug-in vehicles, is confidential, according to
Indiana’s economic development office.
“What is known, however, is that both the Obama and Bush
administrations poured millions of dollars into battery production
in a quest to power thousands of Think City vehicles with
lithium-ion batteries,” reports the Chicago Tribune. “To
date, Ener1, parent of the battery company, has spent $55 million
in federal funding, according to the Energy Department.”
Friedrich Hayek succinctly explained the problem in his
1988 book The Fatal Conceit: “The curious task of
economics is to demonstrate to men how little they really know
about what they imagine they can design.”
