Teaching the economics of innovation to college students isn’t a tough job. They understand intuitively that pro-competitive policy maximizes their ability to choose the best product for them. More options for consumers leads to opportunities to optimize their choices. If the cost of one option is too high, for whatever reason, consumers can choose something else.
That’s not the Biden administration’s goal when it comes to electric vehicles. Their goal is to enrich their friends and themselves using policy to eradicate internal combustion vehicles. If the Biden administration is successful, EV’s will not be one option among many. Whether or not they will be successful remains to be seen.
Occasionally, the Biden administration gets to the truth of their boss's energy policy. In an interview about the Keystone XL pipeline that would have facilitated the delivery of high-quality Canadian crude to our refineries, Biden’s advisor noted that “Any action on Keystone wouldn’t actually increase supply, and it would transmit oil years in the future.” Did you catch that? The primary concern is that oil production and use will be facilitated years from now. As Biden promised during his 2020 campaign, they want oil and gasoline production to cease and they don’t care who bears the cost.
In the short run, though, the chaos brought about by Russia’s war with Ukraine is complicating things. The Biden administration is desperately trying to get Canada to send more oil to the U.S. in the short term via truck and rail. Biden’s terrible approval numbers, driven in part by skyrocketing gasoline prices, has pushed the administration into a desperate search for more oil to push down gasoline prices. So the policy is, more oil now to limit political damage, but less oil later.
The three west-coast states are leading the charge to ban the registration of new internal combustion engine cars. Recently, Governor Inslee of Washington state signed a bill creating an agency tasked with devising a plan to do so by 2030. California and Oregon plan to do so in 2035 and 2040, respectively. Canada and the European Union also plan to ban internal combustion in 2035. Twelve Democrat governors sent a letter begging Biden to ban internal combustion car sales nationwide by 2035 and federal entities like the Securities and Exchange Commission and the Federal Reserve are also pushing this agenda.
These proposed bans are likely to limit Americans’ choices whether they are actually implemented or not. A ban on new internal combustion engine cars would include vehicles powered by hydrogen and synthetic fuels that might turn out to be much better environmentally and much less expensive than EVs. The threats against internal combustion powered vehicles introduce more risk into the research and development processes of hydrogen and other alternative fuels. More risk potentially means less investment in developing these technologies for the road.
Of course, there are also problems with electric vehicles. Heavy metal mining, which is necessary to make large electric batteries, is a notoriously dirty process, both in terms of its environmental cost and human rights abuses associated with it. Biden wants to subsidize heavy metal mining right here in the U.S. to produce more batteries. Though EV fanatics are not transparent about it, the environmental and human rights cost of these batteries is immense. Assuming the Biden administration’s planned extraction of heavy metals for these batteries will follow U.S. law, thus alleviating some of the environmental and human rights concerns, they will be made at a much higher cost than those sourced from Tibet and the Congo. You can bet that cost will increasingly be hidden with ever larger subsidies to EV makers and their customers.
Beyond the massive cost of rebuilding the entire country’s electric grid to facilitate this forced transition, there are significant financial concerns. EVs currently enjoy enormous subsidies that artificially prop up demand. EV drivers don’t pay taxes to fund the roads, which are mainly funded by fuel taxes. This is particularly ironic given that EVs are much heavier than their internal combustion powered counterparts and as a result cause more road and tire wear. The average price of an EV is $56k, not exactly something the average blue collar American can afford, even with Biden’s promised $80/month gasoline savings.
Further, the notion that politicians and bureaucrats are pushing extremist environmental policies to line their pockets isn’t a conspiracy theory. Two major watchdog groups are fighting to expose Biden’s energy secretary, Jennifer Granholm, for her investments in EV-related firms and financial transactions she declined to disclose. Her office’s excuse for this behavior was that they are focused on saving the planet; truly something only a child would believe.
Will Democrats succeed in banning registration of new internal combustion powered vehicles in the next decade? If oil industry interests are as powerful as we are told and Democrats come to their senses about the political reality of their proposed policies, it’s not likely.
On the other hand, Biden’s EPA recently finalized a 25% increase in fuel efficiency standards for cars made from 2023 to 2026. This increase pushes the standard to 40 miles per gallon and will require a 10 percentage point increase in the number of plug-in vehicles sold in the U.S. in just a few years. Perhaps those of us who enjoy the freedom and auditory joy of internal combustion should be more concerned about the future than we are.