Hey Buddy, Can You Spare a Charge?

Plug-in electric vehicles have hit the market here in Oregon. A plug-in electric vehicle runs on batteries that can be recharged by connecting to an electric power source and uses no fossil fuel if its batteries are charged from nuclear, hydroelectric or other renewable resources. Compared to internal combustion engines, advocates profess that plug-in vehicles will reduce air pollution, dependence on foreign oil and greenhouse gases. Although plug-ins may be good for the environment, the subsidies and tax credits attempting to jumpstart the adoption of the electric car are misguided and unnecessary.

On a national level, Congress and President Bush passed the Energy Improvement and Extension Act as part of the bailout bill on October 3, 2008. The Act provided extensive tax credits, up to $7,500 per vehicle, for plug-in vehicles purchased until the first 250,000 are sold. In Oregon, Governor Kulongoski stated in his Climate Change Agenda that he plans to advocate an electric car tax incentive of $5,000 per electric vehicle, which trumps the existing hybrid vehicle tax credit of $1,500. In addition, PGE and local governments believe the state should be the leader in promoting this technology at public expense. Bill Nicholson, PGE vice president of customers and economic development says, “Oregonians are on the leading edge of all things green and we expect Oregon will be one of the top markets for plug-in vehicles. When more Oregonians begin driving plug-in vehicles, they can rest assured they will have places in our service area to plug in, charge up and drive on.”

There are currently five charging stations in Portland and surrounding areas, and PGE expects to help facilitate the installation of 7 more stations. Current stations are located at the Oregon Museum of Science and Industry, Lake Oswego City Hall, and three Portland General Electric offices. Several local governments, including Oregon City, plan to install charging stations in the near future at a cost of about $7,500 plus electricity usage. Right now, the owners of plug-in electric vehicles pay nothing for charging their vehicles at these stations and there are no solid plans to charge them in the future.

Who exactly pays for the charging? All PGE customers pay for the PGE charging stations scattered throughout downtown, and all of the citizens of Lake Oswego pay for a few plug-in vehicle owners to fuel their “environmentally friendly” vehicles. Soon, all Oregon City citizens will be paying for their charging station even if they don’t own a plug-in vehicle.

There are three fairly obvious problems with plug-in electric vehicles and the artificial jumpstarting of an industry with incentives. One is that the populations of cities like Lake Oswego and PGE ratepayers are eating the cost of driving for these plug-in early adopters. Another problem is that tax credits are being given to plug-in vehicle purchasers who are already saving money by not paying for gasoline. Lastly, road usage fees are collected by the gasoline tax, and plug-in vehicle owners are avoiding this tax.

What is being proposed is to bribe people to buy a car with plug-in technology, subsidize the fuel at 100% and exempt the user from paying for the roads. Certainly people can be expected to jump at such an offer, but how will we ever know if this technology is economically viable if we so distort the market?

Plug-in vehicles can be promoted without having to offer free services at the expense of non-benefiting citizens and ratepayers. Charging an electric vehicle has been promoted as more cost-effective than paying for a gallon of gas, typically estimated at paying the equivalent of 75 cents per gallon of gasoline. There is no need to provide free services and subsidies to a small group of customers that are already saving money by not paying for gasoline or paying road usage taxes. The best solution would be to charge user fees for the charging stations and let the free market naturally adopt the technology.

Initially, cities and utility companies like PGE can offer the charging service but charge a usage fee to make up for the cost of the installation and the associated energy usage. This could provide enough stations to meet the small but growing demand. If demand reaches a certain level, businesses may see a profit potential to install and maintain charging stations. Parking garages may realize a benefit of providing charging stations if they attract more users to park in their garages. Malls can provide charging stations for plug-in car owners to charge up while they shop. Large stores like Wal-Mart, IKEA and Costco in the near future may see potential in offering charging services in order to attract business and portray an environmentally friendly image. Also, just like gas stations, charging stations could spring up on street corners and be managed by private owners.

There is no sense in subsidizing a plug-in vehicle through federal or state tax credits or free charging services at the expense of the public. Plug-in vehicle owners have purchased these vehicles because of the environmental benefits that are proclaimed to exist but also because the costs of operating a plug-in is significantly lower than fueling a traditional vehicle. Using ratepayer and city money to pay for early adopters is not only unjust but it does not make any economic sense. Let the free market handle the adoption of new technology; and if it isn’t adopted, then it probably wasn’t a good idea in the first place.


Todd Wynn is the climate change and energy policy analyst at Cascade Policy Institute, Oregon’s free market public policy research center. Photo by Benjamin Brink appeared in “PGE opens stations around Portland for plug-in hybrids,” The Oregonian, July 30, 2008.

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Posted by at 06:00 | Posted in Measure 37 | 7 Comments |Email This Post Email This Post |Print This Post Print This Post
  • Jerry

    Why not? We subsidize everything else for the “less fortunate” who need whatever they need.

  • Joanne Rigutto

    Unfortunately, it’s not the ‘less fortunate’ who are buying a plug in vehicle. I don’t think that there are any used plugins available yet, so it’s people who are making enough money and have good enough credit to either pay cash for one or qualify for a new car loan, pay all the extra licensing fees for a new vehicle, and pay for full coverage insurance. The ‘less fortunate’ can’t afford that.

    One of the things that really irritate me about this whole hybrid/plug in car issue and city’s push to promote it is that for years, a lot of these same agencies have been trying to push everyone out of personal vehicles and into walking, bycicling, and public transit. The stated reason for this is, or was, because motorized vehicles cause sprawl and congestion on the roads.

    So now that we have hybrids and plug ins we won’t have congestion and sprawl? Please, give me a break…

  • Rupert in Springfield

    Tax subsidies for:

    Windmills
    Wave power
    Hybrids
    Bicycles
    and now
    Plug in cars.

    Look, environmentalists are fine. I’m married to one so I guess I pay for some of her toys.
    Please, if you are an environmentalist, could you for once stand by your convictions?
    Pay for the price of your convictions.
    You aren’t taking a stand on the environment when you ask everyone else to pick up the tab.
    That’s what college kids do, protest this or that while mom and dad are busy working to throw a burger down your throat.
    Don’t ask me to pay for your toys unless I am married to you or you are my offspring.
    If you do ask me to pay for your principles and you aren’t having sex with me, expect to be treated in the same child like manner in which you behave

    No one bought me a motorcycle.
    It gets better mileage than a hybrid.
    It solves congestion better than a hybrid.
    Seems to be plenty of a market for them, there is a waiting list for lots of models.
    I don’t get any special lanes ( well, I guess HOV lanes but there isn’t a dedicated lane )

    Not once did I ask for the hemp crowd to help me pay for it.

    You want me to take you seriously?
    You want to not always be characterized as a bunch of wimpy whiners?
    Get off your butt and pay for all the accoutrements your lofty minded sensibilities seem to demand.
    Until then, no matter what your green vehicle choice, If I am paying for it
    Expect to be treated as forever in a booster seat.

  • Nathan

    The over arching point of these government actions is to foster in new transportation technology and enable companies to provide the basic infastructure so that consumers are able to utilize these new vehicles. Is it not the government’s roll to facilitate such change? As time passes and if consumers take hold, then we will surely see a cut in subsidies allowing market forces to take a stronger hold. But we cannot expect, especially in light of recent events, that the market is the end all be all.

    I wonder what affect these subsidies will have on sales of the Chevy Volt? Hopefully Oregon’s progressive policies will aid in Detriot’s bid to revive its auto industry.

    • Rupert in Springfield

      Unlikely. The revival of Detroit’s auto manufacturing or the success of any manufacturing at all depends on one thing, will people buy it.

      Subsidies I suppose have instances of working, but more often are impediments to growth. When does one modernize faster? When one is under the gun to innovate or sink? Or when one is propped up through subsidy?

      Ever see a dying steel town? The country is littered with them. Our steel industry has been subsidized forever, and still the same problem, competition from overseas mini mills that can change production on a dime while we have behemoths that are fifty years out of date. Subsidies and import tariffs haven’t changed that worth a dime. I know, I buy steel, I have never paid a tariff in my life, the customers who buy my products do.

      So, who knows what people will buy? Well, in this case we have a few choices, but lets narrow it down to two. Auto manufacturers and government “new technology” pickers.

      Ok, so who do you think knows more about what will sell? The auto makers, who will lose money if they guess wrong and are actually in the industry, or brilliant technology pickers in government, who suffer no penalty if they are wrong, and have no real expertise in the industry?

      Gee, I wonder.

      Well, to look at the outcome we could look to history.

      Try reading Lee Iacocca’s book. In it he covers the Chrysler bailout. Iacocca was one of the innovators in small cars, producing the famous Mustang and the infamous, but small and fuel efficient Pinto. He should know a thing or two. When the bailout happened, what was the one type of car he couldn’t keep in stock? Big luxury cars. Chrysler New Yorkers had a waiting list while the small cars he was forced to produce due to CAFE standards sat on the lot collecting dust.

      Not such a good record for government picking what’s going to sell in the auto industry so far is it?

      Oh, but wait, people didn’t buy those small cars and preferred the big ones? Oh gee, that’s wrong?

      Big cars are bad, they use more gas, people should be made to buy the small cars

      Lets have tax incentives so people buy the small cars and tax penalties so those who buy the big ones are penalized.

      I’m sure that springs to mind in many a leftist.

      Hey, that’s real good. Ok, so peoples choice in car is to be dictated by the government. That fine and I can totally see the logic there. I can totally see the logic of government encouraging development in cars it deems appropriate for the future, and discouraging those it doesn’t see as appropriate. I can see doing all of this for the common good, the good of the country and all that. Lets face it, a huge amount of this is for the good of the planet. Somehow the smallest detail of ones life, big car little car, now has planet wide implications due to some sort of crises, oil, temperature, take your pick. That seems to be the position. I don’t agree with it, but if its your position fine. It has a certain logic to it.

      What is illogical is the response that those who advocate this sort of approach. My words to them would be:

      “If this all makes sense to you, and you wish to be accepted as taking a sensible reasoned approach, please don’t be upset when you are called a fascist. Its what you are advocating and if you are ok with it, if you view it as the enlightened progressive approach, that’s fine. Fascism was seen in exactly the same light in its day, enlightened, progressive, intellectual. Government control of industry and the populace, generally brought about through a crises mentality, with a heightened sense of nationalism ( in this case planetism ) and the submission of the individual to the needs of the state. We are on that road. Our president elect said in his victory speech we are not a nation of individuals. Advocacy has consequences.”

  • Anonymous

    “Is it not the government’s roll to facilitate such change?”

    No.

  • Sharon

    I recently came across your blog and have been reading along. I thought I would leave my first comment. I don’t know what to say except that I have enjoyed reading. Nice blog. I will keep visiting this blog very often.

    Sharon

    https://www.autoloans101.info

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