Posted by: SWL | March 6, 2012

General Motors Idles 1300 Autoworkers as Demand for Chevy Volt Remains Low

Last Friday afternoon General Motors announced they would suspend production of the Chevy Volt for five weeks, idling 1300 workers. It is ironic given the two television ads GM is currently running for the Volt. One shows various shots of the Volt with a voiceover stating that this is the car “America had to build”. The other commercial features a young woman extolling the virtues of the Volt. (If the Volt is so wonderful, why do more people buy the Ford Focus and the Nissan Leaf?)

President Obama continues to praise the Volt (as opposed to electric cars in general). There is a lot at stake for the President since his administration engineered the federal bailout of GM. As part of the TARP bailout, GM received $49.5 billion and GM suppliers received $3.5 billion. (The amounts paid back so far are $23.2 billion and $140,000 respectively.) We, the taxpayers, currently still own 26% of General Motors. Taxpayers have also paid $60 million in federal tax breaks for buyers of the Volt. ($7500 for each of about 8000 cars sold in the past two years.)

Right now the main problem with all electric cars is that the electricity to charge the batteries comes mainly from coal-fired power plants – not very environmentally friendly. Advocates defend that by saying that alternative electric sources are being developed, that battery technology is still developing, that charging stations will eventually be available most everywhere. But those improvements are several years in the future.

And that is where I see some hypocrisy. President Obama (most recently in a speech last week), and other alternative energy advocates, are constantly saying there is no point in building the Keystone Pipeline or drilling in new areas because it would take 5-7 years to get the oil to consumers, so it would not bring down gasoline prices. Why is it o.k. to develop electric car technology and support services in stages, but new oil production seemingly would only be acceptable if it could be in full production almost immediately?

It is also deceptive to use the time-table argument because having lots of electric cars on the roads would not bring down gas prices either. It is actually possible that if demand for gasoline goes down, the price could go up for the majority of citizens still driving traditional cars. Of course, that is likely the goal of many alternative energy advocates.

On February 23, Charles Krauthammer commented that drilling opponents have been using the it-takes-too-long-and-will-not -affect-gas-prices argument for the last 25 years. Krauthammer suggested that if the US had started projects back then, we would have plenty of lower priced gasoline now.

Many people do not want to spend $35,000-$40,000 for an electric car, or may not need a new vehicle any time soon. Eventually electric cars will be economically and environmentally viable. Let’s keep developing the technology without federal funding and see if the price goes down and demand goes up. But in the meantime, we still need oil for other vehicles, and also for heating homes and fueling industry. So let’s continue to develop new oil fields and more environmentally friendly production technology. For the US to become energy independent, we need to utilize all forms of energy available across the nation.



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