Here’s The Only Chart You Need To See To Understand Why The US Is Screwed
March 2, 2011
Business Insider
By Henry Blodget
We’re still working our way through Kleiner Perkins’ partner Mary Meeker’s excellent analysis of the financial condition of the United States.
We’ll be breaking out some key sections in the next few days. In the meantime, here’s the one chart you need to see to understand why the US is screwed.
This is the “income statement” of the United States in 2010. “Revenue” is on the left. “Expenses” are on the right.
Note a few things…
First, “Revenue” is tiny relative to “Expenses.”
Second, most of the expense is entitlement programs, not defense, education, or any of the other line items that most budget crusaders normally howl about.
Third, as horrifying as these charts are, they don’t even show the trends of these two pies: The “expense” pie is growing like gangbusters, driven by the explosive growth of the entitlement programs that no one in government even has the balls to talk about. “Revenue” is barely growing at all.
As we’ll illustrate with more of Mary’s charts next week, the US cannot grow its way out of this problem. It needs to cut spending, specifically entitlement spending. We hereby announce that we’ll give a special gold star to the first “leader” with the guts to say that publicly.
Here’s the chart. Click for larger version. SEE ALSO: Your Short Course On Why The US Is Screwed
Unions… again!
March 2, 2011
Note: My excellent appeal to members to respond to the IJ comments posted by the usual brain dead liberals somehow didn’t make it to this page and was submitted as blank.
It included links to Brad’s article and the comments page I am responding to as well as the letter itself. Unfortunately, it didn’t make it to meet-up! I’ll try again:
Marin Independent Journal
Letters to the Editor
Brad,
I saw your excellent article last Thursday. It echoed much of what was written in my editorial printed the following day. However, the majority of comments have refused to acknowledge that, though unions in Wisconsin had already increased their contribution toward the benefits package, it is still well below the national average of private sector employees. I would also suspect these union supporters are union members themselves.
Regardless of their passion, we can’t afford it. Everyone else has had to participate in this recession (which is still going on despite what the pundits say) by taking lower paying jobs just to work. Why shouldn’t the unions sacrifice too? As an independent contractor working less than 20 hours a week and at a much reduced (22% of my contract rate 8 years ago) hourly rate, I have been looking for full time work, but the jobs just aren’t there. Show me one union group that has taken that kind of hit. To add insult to injury, I am being taxed to pay these government union salaries and benefits! Besides, if refusing to negotiate brings down a state, or the country, how does that help anyone?
People in Marin County are smug in thinking this can’t happen to us. I attended a Mill Valley City Council meeting last year. They were discussing a Miller Avenue improvement project even though they were running a deficit. “Maybe there will be money for us from the stimulus,” was the Mayor’s comment. California has much the same attitude. A bailout is not the answer; the federal government is out of money too.
I am not against unions. I am just against irresponsible government spending and people who refuse to look at the truth about what is going on. Remember; if the state fails, we all lose.
Sincerely,
Mick Orton
Vice President
Marin Conservative Forum
Battery-electric cars will struggle after normal buyers replace early adopters
March 1, 2011
Some say electric cars will save the planet from man-made climate change. Others see a need to clean up the exhausts of an increasing number of cars clogging up city centers across the globe. Most agree that oil will run out one day, and some manufacturers have bet the farm that battery-only electric cars will be able to rise to the occasion and provide us with viable personal mobility.
The evidence is mounting that this won’t happen.
According to a new report from Trend Tracker, an automotive research company based in Wiltshire, England, electric cars are unlikely to be able to raise their game to bail out the world’s need for mobility as the oil runs out by, say, 2050. Trend Tracker says car manufacturers’ expensive scramble to produce electric cars with limited ability would be better spent on long-term research to produce electric cars good enough to compete with regular ones.
Business strategy consultancy Roland Berger reckons electric cars will face a crisis by around 2015, when the limited demand created by early adopters becomes more like a mass market, and electric cars have to compete with internal combustion engines and plug-in hybrids on level terms. This will mean manufacturers will have to offer compelling packages of services to make up for the electric cars’ limitations.
With battery-only cars unable to meet range and cost demands that would make them popular among buyers without government subsidy, and fuel cells failing to beat the cost barriers, the possibility of the world running out of oil before a viable replacement for the internal combustion engine emerges is a possibility, says Trend Tracker director Toby Procter.
The planned production of electric cars indicates they will still be a peripheral choice by 2050, with the global market rising to about two billion, with only about 30 million electric vehicles, the report said.
Not ready for prime time
“EV production would need to increase by an average two million units a year over 23 years to effectively electrify the global car market by 2050 when the ‘peak oil’ scenario may have played out. In the medium term, EVs will continue to suffer adverse comparison in terms of price and utility with conventional cars and plug-in hybrids. Suppliers will need to develop more enticing value propositions,” the report said.
The Nissan Leaf, the first of the new EV or battery-only cars, is going on sale now. Range: a claimed 100 miles. The Chevrolet Volt range-extended electric vehicle is also hitting showrooms. Range with gas engine backup: at least 350 miles. Toyota’s Prius gas-electric plug-in hybrid will appear next year. Range: ditto.
All of the important automakers are spending big money readying battery-only and plug-in hybrid cars without any real conviction for which cars will be successful long-term.
The all-electric car falls short of being ready for prime time on many fronts. Range needs to be improved by at least 100 percent. Battery prices need to be shaved at least in half. The problem of depreciation — batteries are unlikely to last much more than eight years — will destroy the value of the first electric vehicles. If battery technology does make a big, unexpected lurch forward, that will be even worse for the economics of the early adopters.
“Cars that look pretty much like ordinary cars, cost twice as much and go a third of the distance, don’t look like cracking the problem,” said Procter in an interview.
Max Blanchet, a partner at Roland Berger’s Paris office, said limitations won’t be a problem until about 2015, because early adopters won’t pay attention to the electric cars’ disadvantages.
“Between 2011-2015, there are huge expectations for electric cars with many players, many fleets, and customers looking for electric cars. In the meantime the (electric car) production of car manufacturers will be slowly ramping up, so for the next three or four years there will be under-capacity and a scarcity of vehicles. The problem comes when manufacturers want to sell EVs as an alternative to thermal (internal combustion engine) vehicles. These buyers will want to see a clear advantage,” Blanchet said.
Compelling packages required
Because the advantage won’t be there, manufacturers will have to offer compelling packages to make up for the fact that they will be too expensive to be sold as products in their own right.
“To be able to compete, the offer (from battery-only manufacturers) must be for complete mobility,” Blanchet said.
This will include what he calls a mobility “ecosystem” combining specific use, targeted customers, tailored products and services like recharging batteries and intelligent navigation. There will be electric taxi fleets with battery replacement stations, last mile-delivery firms, and car-sharing schemes, he said.
An early example of this idea comes from BMW. The German luxury car manufacturer announced that it will unveil its new “BMW i” sub-brand at the Geneva Motor Show next month. The first vehicle will be the i3, known until now as the Megacity, and will be a four-seat electric-only city car. To make this car more appealing, BMW said it will sell a package of “premium mobility” services including Smartphone applications that provide traffic, parking and other real-time information. The i3 will go on sale in 2013.
No shortage of negatives
How soon will battery-only cars be able to compete in the market place on their own qualities?
“2020 is too soon to make EVs competitive. This will be 2030 at the earliest,” said Blanchet.
There are other negatives.
Lithium-ion batteries, which are used in most battery-only cars, are prone to catching fire from overheating or sudden impact. Fast charging is said to be able to get around the problem of short range and the many hours needed to replenish, but this will quickly weaken the battery.
“The use of such fast charging systems has potentially severe negative impacts on battery life, and is not compatible with the capacity of domestic power outlets,” the report said.
Attempts to get around the battery range problem by setting up exchanges for spent batteries have been suggested by Better Place of Palo Alto, Calif., in conjunction with GE of the U.S. and Renault-Nissan. The report believes the case for battery swapping is “economically fragile.”
The Franco-Japanese Renault-Nissan alliance has allocated about $5.5 billion for the development of battery-only cars. The alliance reckons battery-only vehicles will account for 10 percent of global sales by 2020, about twice as much as many other automotive organizations estimate. Roland Berger sees a five percent market share for battery-only vehicles. Other manufacturers expect two percent or less.
Devastating conclusion
The report concludes that the move to battery cars has got ahead of itself, by going to the market before it was ready. It quotes Peter Wells of the Centre of Automotive Industry Research at the Cardiff Business School in England with this devastating conclusion.
“For electric-vehicle sales to grow significantly several things need to happen. Vehicles need to be much lighter, battery technology needs to be cheaper and offer greater performance, urban authorities have to promote zero emission zones, industrial capacity to support the technologies needs to be created, petroleum prices have to rise, renewable energy prices have to fall and consumers have to be re-educated in terms of how they think about personal mobility.
“In the latter regard, we have to break the culture of ‘just in case’ purchasing whereby consumers buy a car for the maximum application, and instead encourage a culture of ‘minimalism’ or ‘just enough’ purchasing where consumers buy a car for their normal everyday needs,” Wells said.
Good luck to manufacturers who try to encourage “minimalism” or “just enough.”
Not too late
It is not too late for car manufacturers to change course and go for a much simpler, cheaper and less ambitious solution. Why not produce a little vehicle that doesn’t attempt to emulate the car with its speed, range and comfort? Why not make something utilitarian which would go about 30 mph down to the shops or around campus, where limited range would make no difference, and which many families could afford. Why not apply the new electric technology to the golf cart? This would be an affordable, unpretentious little utilitarian second car which didn’t attempt to reinvent the wheel.
Unfortunately, this is unlikely to happen any time soon.
“The technology would be very suited for a golf cart,” said Roland Berger’s Blanchet, “but the car manufacturers are not in that market today. They are selling volume and they will hope that short range mobility will be more than a niche market. They aren’t going to make a car that isn’t a car.”
Neil Winton, European columnist for Autos Insider, is based in Sussex, England. E-mail him at neil.winton@btinternet.com.
From The Detroit News: http://detnews.com/article/20110223/OPINION03/102230301/Battery-electric-cars-will-struggle-after-normal-buyers-replace-early-adopters#ixzz1FOCXMJ25
Can Electric Vehicles Change the Game?
March 1, 2011
February 22, 2011 – National Journal
Tom Kuhn
President of Edison Electric Institute
We face numerous energy policy challenges as a nation, but perhaps none looms larger right now than energy security. The recent and ongoing instability in the Middle East is yet another reminder that the United States remains heavily dependent on foreign nations–not all of them friendly–to meet much of our energy needs. In my view, energy security, along with the move towards cleaner energy, is the number one policy challenge facing the United States.
Can we “kick the oil habit?” That’s been a popular topic in Washington, as well as an elusive goal, for many years. In reality, oil will continue to have an important place in our energy mix. But we do need to dramatically expand efforts to harness our domestic energy resources. The transformation of the nation’s transportation fleet to one fueled in large part by domestically-produced electricity can gradually help wean the United States from its dependence on foreign energy sources.
As one of 15 Consumer Advisory Board members for the Chevy Volt, I’ve had the good fortune to test out one of the cars that will change the way America drives–and where it gets its fuel. The first wave of PEVs already is hitting major US markets, as car manufacturers join utilities in embracing electricity as a significant transportation fuel.
So, what happens next? There is bipartisan support for EVs in Congress, as well as support from the national security community. President Obama has set a goal of 1 million electric vehicles on the road by 2015. How close can we get? What are the biggest hurdles, and what do you see as the biggest potential benefits?
Editor’s Note: I am a citizen not being paid by anyone except those who hire me for IT consulting. The comments section of this article found at: http://energy.nationaljournal.com/2011/02/can-electric-vehicles-change-t.php?comments=expandall#comments are all officers of corporations or organizations to promote electric vehicles. Where will the energy come from? If we can’t burn coal, dam up rivers, build nuclear plants or drill for natural gas and oil how the hell are we supposed to fuel our energy lives? Do I sound mad? You’re damn right I am. While all these people are getting fat on government grants from my tax dollars, I am struggling to make enough money to pay my electric bill. And I can’t even leave this post on their website because I haven’t paid to become a member!!!
Comment from FedUpWithTheEditor is full of It!
March 1, 2011
The person who commented on driving 55 as a sane energy policy is… well, frankly, full of crude! Driving 55 will do very little to reduce the energy consumption in the United States. What we need to do is DRILL! What good is oil when it is left in the ground? If it’s okay to drill in China or Venezuela, then it should be okay to drill here.
Second of all, your assertion that driving 55 is any safer than any other speed is liberal pap. Show me the statistics. In fact, there are more accidents in parking lots where people are going under 5 MPH than there are on the highways.
Your third assertion is also asinine. Read the book “Climate Confusion” by Dr. Roy Spencer and you will see what a small percentage of the air is made of up of carbon dioxide that even doubling it would be negligible. Besides, as a liberal don’t you like plants and trees? After all, they use CO2 to grow and release more oxygen. Seems to me more carbon dioxide, the healthier the plants. The healthier the plants, the more oxygen produced. The world keeps spinning.
Typical of liberals to figure legislation is the only solution. Passing laws does very little to improve our lives. In California we have no cell phones while driving, it’s a law you have to have your lights on if you run your windshield wipers and there are seat belt laws. Does that stop anyone from doing or not doing these things? NO!
So crawl back into your little hole and shut the heck up until you can prove what you are saying is the truth!
Fed Up Editor (and I will always get the last word!)
