Category Archives: markets

Mandating Supply in the Absence of Demand

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What could go wrong? Look at Progressive-Democrat President Joe Biden’s mandate, through his Energy Department (run by the Secretary who thought it hilarious that we should—or could—produce more oil), that American automakers—Ford, GM, and Stellantis—make only battery cars by 2032. Along the way, look at his Energy Department’s proposed new rule:

The Energy Department in the spring proposed to eliminate the 6.67 multiplier….
Detroit auto makers would be slammed harder than foreign competitors by the regulatory changes because pick-ups and SUVs make up a larger share of their fleet sales. “The average projected compliance cost per vehicle for the D3 is $2,151, while non-D3 auto manufacturers only see an increase of $546 per vehicle,” the Big Three recently told the Energy Department.

That multiplier was an early regulation that made it possible to impute (however accurately or inaccurately) the miles per gallon achieved by internal combustion engines—itself subject to increasingly higher requirements under successive ED regulations—to the “mileage” achieved by battery cars. ED’s proposed rule change—under that D3 regime—essentially eliminates the mileage equivalent multiplier.

Combined with Biden’s requirement that our automakers make only battery cars by 10 (now 9) years from now, results in this outcome:

[U]nder the Energy Department’s proposal, it could make more sense to pay the government penalties than to increase production of EVs that don’t sell. This may be why GM is now throttling EV production, as Ford has also done.

It’s cheaper for the manufacturers to non-comply and pay the vig than it is for them to produce and pay the even bigger cost of not selling a government-required product the buyers—us ordinary Americans—don’t want and won’t buy.

And what does that preference for violating a law say about a culture of routine law-breaking?

Biden and his Progressive-Democratic Party syndicate can’t even get Rule by Law right, much less live within the dreary and inconvenient process of operating within the law—Rule of Law. And we Americans pay the price of that.

Federal Energy Subsidies

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Here are some data regarding the magnitude of favoritism the Federal government is displaying for one American industry over others. These are from the government’s own Energy Information Administration.

  • Renewable energy, led by wind and solar, received $15.6 billion in federal government subsidies in fiscal year 2022
  • natural gas and petroleum liquids industry received $2.3 billion
  • coal industry received $0.873 billion

“Green”-sourced energy is getting orders of magnitude more taxpayer money than are the far cheaper and reliable fossil fuel-sourced energy.

This is how much green energy is supported by taxpayer funds rather than by energy users with the rates they pay their utilities.

This is how desperate “green” energy pushers are for funding because of how far distant “green” energy is from being economically viable.

Why Lend?

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How can a financial entity lend? Progressive-Democrat President Joe Biden now is moving to hide individuals’ medical debt from potential lenders.

[P]roposed regulations would prohibit consumer reporting companies from including medical debts and collecting information on consumer reports that creditors use to make underwriting decisions. Creditors would also be barred from using medical collections information when evaluating borrowers’ credit applications.

This on the heels of his constant attempts to render student debt holders unaccountable for their debt.

Since lenders are increasingly being denied recourse, and now they’re to be denied useful information about a potential “borrower’s” ability to repay a debt a priori, why—how—could any lender make a decision to lend, other than to raise its interest rate very high, commensurate with the very high risk being inflicted on that lender by Government?

Look for the Biden administration to start trying to cap lending interest rates, next.

Not at all Baffling

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Last weekend, the San Francisco 49ers and the Los Angeles Rams played an NFL football game. With four seconds to go in the game, and the Rams in possession and down by ten, they went for—and made—a field goal. No time left, and the Rams lose by seven. Had they gone for a touchdown (not a pipe dream, the line of scrimmage was the 49ers’ 20 yard line) and made that, they would have lost by three (or two had they then chosen a two-point conversion). Fail on the touchdown try, and they’d have lost by those ten. Some folks thought the Rams’ decision was “baffling.”

But maybe losing by seven points was all they needed.

By game start, the betting spread on the game had settled at the 49ers winning by 7 points or 7.5 points, depending on the betting parlor. (Lots of parlors don’t like gambling ties, and that half-point in the spread eliminates those.) By losing by 7 instead of by 10, they beat the spread, and the field goal was a surer thing than going for the touchdown. The parlors paid holders of the correct side of the 7.5 point spread, and they refunded all bets on the 7 point spread (one reason parlors don’t like ties).

The Rams coach, Sean McVay, has a different take on his decision. Before the field goal’s prior play, he intended that prior play simply to get them into field goal range, and with time on the clock, hit the field goal, recover an ensuing onside kick, and go for the tie or win. In the realization, though, the down and in (in-cut) ran longer on the field and on the clock than expected so there wasn’t time left–those four seconds–to hit the field goal, get the onside kick, and…. At that point, he simply decided to stick with the field goal. He says he was unaware of the betting line [bowlegs in the original]:

Apparently, (Rams V.P. of communications) Artis (Twyman) told me there’s a lot of people in Vegas pissed off about that decision. I clearly was not aware of that stuff[.]

The first-linked article went on at some length about the spread and the field goal, but it missed the larger point: this is the impact of allowing gambling on professional sports, even if McVay, on the sidelines, wasn’t aware of the betting line. The mere discussion of the betting implications demonstrates the vulnerability.

Buying Battery-Operated Cars

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My then-new gasoline-powered 2022 Ford Escape and my wife’s new 2023 Ford Maverick hybrid, each one level down from Ford’s top tier, each cost in the low- to mid-$30 thousands. Joanna Stern, The Wall Street Journal‘s Senior Personal Technology Columnist, evaluated a number of battery-operated cars under $60,000 to see which one of those she liked best. The ones she looked into were the Ford Mustang Mach-E, Tesla Model Y, Hyundai Ioniq 5, Kia EV6, and Volkswagen ID.4.

The prices of these, as tested, were—oh, wait; she didn’t discuss equipage in any detail, nor did she name the price of those cars as tested. Accordingly, here are the prices I found after an arduous five minute Bing search. All prices, save Tesla, are via Edmunds; Tesla’s prices are per Tesla.

  • Mach-E: $42,500-$60,000, depending on how gussied up you want it
  • Model Y: $52,900-$66,000, depending….
  • Ioniq 5: $47,700-$59,400, depending….
  • EV6: $45,900-$60,200, depending….
  • 4: $40,300-$56,500, depending….

Assume, arguendo, that Stern’s evaluations are reasonable (noting that some of her criteria are matters of taste), and truncate the gussying to Stern’s $60,000 cap. This is the cost of transportation that the Progressive-Democrat Biden administration is trying to force us to pay in the name if its—and the Left’s—climate funding industry and related artificial hysteria.

This is just to get into the car, too; the comparison elides questions of range; the availability of charging stations outside the home garage; the long time to charge to the battery-operated cars’ 300-ish miles range (my Escape reaches 400+ miles on a tank of gas, and the tank fills in three minutes, or so); and of special importance to the Left (except when inconvenient to them); the environmental damage done by mining the raw materials and disposing of the spent batteries.