government should intervene in the transition to alternative fuels
Debate Rounds (3)
people say the market will take care of itself. in the end, it will. but at what cost in the mean time? we should act now because we'll look back and see how much we've wasted on gasoline.
companies say they can make alternative biodiesel fuels for a dollar a gallon. (using algae farms, or any organic material, such as switch grass and other things more energy intensive than corn etc.. and exemplified by brazil etc who are energy dependent right now from gas)
but, there's a catch 22 occurring. alternative energy companies often must put operations on hold. why? because there's no demand. the consumers who make demand say there's no supply. who can afford as a consumer to buy alternative vehicles? the richer. does the rising prices right now of gasoline hurt them? not as much so they don't buy. but, even if they bought cars sometimes as they are now, there's still not much there in way of an infrastructure for the supply and demand sides.
the rich won't start buying more until it really starting hurting them. the poor won't do it cause they can't. the middle won't do it, probably for the same reason. it's conventional wisdom that the rich are the ones who start these new technologies... and the conventional wisdom is probably true here too.
but, unlike many situations with conventional wisdom... for alternative fuel, waiting till the rich start the technology isn't in the best interest of the country right now. that's because... unlike for many other things, like buying a DVD player... fuel isn't something that's simply a perk as much, and is a regular and substantial cost for the consumer. it has a noticeable affect on the economy.
while we're waiting for the rich to convert, what's happening? in the mean time, the poorer are spending their money on gas, or not being as productive. consider all that money they're spending on that, when they could be spending on an array of other things, going to the economy at large- you could buy a bunch of stuff, and support a bunch of companies, instead of a few companies, gas companies. (and foreigners, which is a major concern in and of itself)
to make it more of a practical example. say a new biodiesel machine at a gas station costs fifty thousand. all that money that the poorer are wasting right now would have been more than enough to either subsidize or lend to that station. (you could lend the money to them... and ensue they make a tidy profit before they ever have to pay it back, if ever considering there's a risk they might not make money) if we invested in them as a government then, the effects would be much sooner, and the poorer and middle class would save more, and it'd be a boon to the economy. (plus all the jobs involved with the transitioning infrastructure)
government intervention is the way to break the catch 22 sooner when it'll make a difference for the economy, than later when we'll look back and see all that wealth that has been squandered.
as to the argument the government should not be 'picking winners'. this is mostly based on the idea that who knows what technology will prevail. biodiesal, electric cars, etc. but, we can act as a hedge, and catalyst. making the companies get a head start to start sorting out the direction the economy should go.
i personally would be opposed to a 'Manhattan project' type situation, cause we'd put so much resources into a certain technology that might not even be the best. but we can act as catalysts.
http://www.eia.gov...), and that won't change in the near future. Some renewable sources will catch up, but the majority will still be more expensive than non-renewable sources. Also if you take a look at the mill/kWh of different energy sources from 2002-2012 (http://www.eia.gov...), you can see that natural gas even declined in price over thise period, whereas all other mentioned resources, renewable and non-renewable, increased by up to 80%.
Secondly, if the government should intervene, my question to you is how. Monetary, or by introducing new legislature? I'd like to remind you that if you want the government to assist renewable energy sources monetarily, the money has to come from somewhere; either from new taxes or cut away from other budget items (where I'd prefer the lesser option, gov is big enough already).
Thirdly, you don't provide any sources for your claims. Therefore I have some questions regarding your very vague arguments:
1) "companies say they can make alternative biodiesel fuels for a dollar a gallon" -> where does this number come from? What does it include (only investment, or also operating / maintenance cost, or only variable costs)?
2) "alternative energy companies often must put operations on hold. why? because there's no demand" -> Well, according to the EPA the demand for renewable sources is rising and will continue to rise, whereas e.g. coal is projected to decline (http://www.eia.gov...). Again, I ask you to elaborate on your claim and show me your sources for that. Your argument that there's "no" demand is invalid.
3) "say a new biodiesel machine at a gas station costs fifty thousand" -> This is just the investment. You purely ignore the O&M costs.
I could continue demading more sources, but altogether your arguments can't be judged as highly valueable if you only provide things you may know or may have heard/read somewhere without any source to prove your credibility.
Fourth, let me remind you that Tesla's foudner, Elon Musk, recently released the patents of Tesla cars and thereby made the technology open source (http://www.teslamotors.com...). This can be an incentive for car companies to create their own electric cars, as they don't have to do the R&D anymore (which can reach hundreds of millions of dollars). In the following costs per car can decrease as the large manufacturers can produce the cars faster and have more experience in assembling them (whereas Tesla's USP was the technology and R&D). Thereby electric cars can get cheaper, meaning more people will buy them. Following that, the demand for electricity will rise whereas the demand for fossil fuels will fall. Whether the electricity comes from renewable or non-renewable sources is another question, but according to various sources (e.g. http://www.acore.org...), wind power will increase heavily, as well as solar power, geothermal, TPD and others.
Last but not least: rather than allowing the government to intervene to increase renewable energy sources, the government should, and is already, stop to prefer non-renewable sources like oil. The DoD for example already plans to lower its reliance on oil and increase renewable energy consumption (http://energy.defense.gov...).
even if i haven't established that those are the odds, doesn't con at least admit that they could be the odds, and government involvement could be the best bet?
i dn't argue specific numbers, but i argue it's clear that a fuel will prevail in the end, that is renewable. that means we should be acting to further that change.
how we pay for it is a side point to whether we should do it. we can cut other programs to pay for it. i'm sure con wouldn't be opposed to that. the point we're debating it has to do with whether it's the best efficiency or not, the right thing or not assuming we'd take care of the finances behind it.
con argues it is unclear whether that catch 22 was clear. no demand cause no infrastruction, no infrastruction cause no demand. that observation is self evident. if there was a demand, investors would invest. but note the issue here. if it was a demand that seemed decently profitable. most companies don't want to because there's too many uncertainties. i've shown that it's certainly possible the economy at large could benefit if we switched sooner, but it's not happening due to self interested investors.
so yes, we would be forcing an artificial demand by driving down costs to consumers and suppliers. but that is a good thing, because it will stimulate a change quicker that should come, but is being hampered by a market that doesn't act truly efficiently on its own, here due to self interested investors and a lack of information, or a lack of certitude.
the government should roll the dice, to at best catalyze a change that comes to fruition due to the government involvement, or at worst to act as a hedge, to say even if we lost money on the bets we made, we are okay with that. the odds are high enough and clear enough for us to take action sooner than later.
we don't have to take taxes from everyone, so if it was merely a tax credit, what is wrong with that? if people are doing things that are potential or actually are beneficial to society, it's entirely fair to not tax them as much. if we don't, then that is government involvement. but also if we accepted doing tax credits, why not spend a little money too? if we allow one we shouldn't be so hesitant about doing the other. sure private investment will be best done when it is using its own money, but there are plenty of incentives to do it right, even when the government is paying some too. such as the potential for profit, and the potential for loss of the private money that the government does use. aa
while we can bicker about how high the odds are for a certain fuel, it seems clear that merely not taxing someone as much at the least is something we should do, which is government involvement. we are not bound to tax people so if we choose not to, for legitimate reasons, we are not just doing as we could.
con points out that nonrenewables are cheaper. yes, they are, but that doesn't mean we should just allow things to played out as is until that is no longer the case, in a free market way. i'm arguing we internve to increase efficiency, save the classes none y that would be better spent stimulating the economy at large. if we wait till the rich are hurt, the overall economy is hurt for it.
http://www.teslamotors.com...), will reduce costs further. Also the EPA predicts a further decline in battery costs over the next years (http://energy.gov... + other sources).
No, government involvement is not the best bet. First, it creates artificial demand, meaning that the gov subsidizes the cars but these subsidizes, the demand they try to reflect, are by far not the real consumer demand. Secondly, the money for this involvement, whether it's subsidizes or the drafting of new laws, requires money, which normally comes from the tax payers.
What leads me to my third point: "the point we're debating it has to do with whether it's the best efficiency or not" ... we are debating the efficiency behind it and I argue that the market is more efficient than the government. In the market, sales revenues flow to the company's finance department and then to e.g. R&D (what makes the cars cheaper and better in the end, as side note). When government intervenes you have to send all the monetary flows through bureaucracy, legal affairs, middlemen and in the end a large part of the money is eaten up by those processes.
Demand and infrastructure are not correlated in my eyes. Take a look at Tesla and their Supercharger stations (http://www.teslamotors.com...): I doubt that every station is already used now. It looks like if Tesla builds the infrastructure to raise demand, therefore you can't argue "no demand cause no infrastruction". Again, there's not "no" demand for alternative fuels, just lesser than for non-renewable, at least at the moment.
"so yes, we would be forcing an artificial demand by driving down costs to consumers and suppliers. but that is a good thing,"... No, it's not. Who pays for the reduced costs if the government intervenes? I've answered this question before. The market is the most efficient body per se, the government is just a major player in it. The government may influence the demand and supply, but the better way is if these factors are driven by consumers.
"con points out that nonrenewables are cheaper. yes, they are, but that doesn't mean we should just allow things to played out as is until that is no longer the case, in a free market way" .. The market will notice increase in prices once we can't rely on these resources anymore, and it will look for alternatives. Yes, it'll take longer until the market switches compared to gov intervention. But market makes the better decision, as it represents >300 mio people, whereas gov represents, in the last resort, 1 person.
Also I ask Pro to put a little more sources and explanations into his arguments, it's hard to find a response if I don't even know how you come to that conclusions.
please address teh question, and the argument i make.
in fact, if the variables are in society's favor to transition, it would make sense to intervene.
yes it does cost money to intervene, that's implied. but i'm arguing that it is worth it, as just mentioned.
i dont know how you would say demand and infrastructure are not correlated. people dont buy electric cars cause they dont have fueling stations everywhere like gasoline stations. etc etc. that tesla builds a small infrastructure, they are helping build a small demand, and it doesn't negate the idea that the two ideas are correclated.
merely merely asserts that the market is 'the most efficient body per se'. i'm trying to challenge that conventional wisdom. again by things i just mentioned. and past posts.
i also have to ask con to put a little more explanation into his arguemnts. especially in regards to things related to the first paragraph of this post.
http://www.afdc.energy.gov...). Yes, it wil take longer, because it's harder for a market of 300 mio + consumers and countless companies to adjust to a new standard. It's bigger, therefore it'll take longer to catch up speed, but the transition will last, whereas gov intervention may not have a lasting effect.
Everyone can choose how much he spends on gasoline. Take a look at (http://www.fueleconomy.gov..., Family+Sedans, Large+Sedans, Upscale+Sedans, Luxury+Sedans, Hatchbacks, Coupes, Convertibles, Sports/Sporty+Cars, Station+Wagons&srchtyp=newDslCars) and you'll see that you can get a Volkswagen Passat for 21,000$, less than most pick-ups, running on diesel and thereby only costing you 1,650$ per year (no maintenance, just fuel costs). Or you get a Mitsubishi iMIEV for 23,000$ which only costs 550$ per year in "fuel" (http://www.fueleconomy.gov...). Your argument that people can't choose how much to spend on fuel is therefore invalid.
Every investor knows that a high return only comes with a high risk, they know those things go together, and you should remember that. They mostly don't even look for low-risk adventures. Yes, only because investors jump on every train doesn't mean whatever they ignore isn't good for the country. And I also admit that investment into alternative fuels is in decline... but my idea is that the R&D became cheaper and that they're now focusing on production, a sector that could cost less over the long term.
Electric vehicles are already on the rise with more than 100% growth rates in some years (http://www.zsw-bw.de...) --> USA is the largest player, just as a side-note ;) . At this growth rate I fail to see why we need even more government intervention.
"people dont buy electric cars cause they dont have fueling stations everywhere like gasoline stations."
1) Take a look at these numbers (http://electricdrive.org...) and then think again.
2) I posted this link before, but obviously you don't wanna believe what I say and therefore don't click on the links. Anyways, now really take a look at this: http://www.teslamotors.com...
If you scroll down to the timeline you'll see that by 2015 all of USA will be covered with Tesla Superchargers. Tesla now released its plans so they could cooperate with other manufacturers so more cars can use the same chargers.
You argument is therefore invalid again, I suppose you just lack the research.
To the first paragraph of my second post.... not sure what you don't understand, but I basically say that electric cars and their components get cheaper.
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