U.S. President Joe Biden’s goal to make 50% of all cars and light trucks electric by the end of the decade is going to have negative ramifications across the U.S. economy. Not only is this goal impossible to reach, but the plan will also add to greenhouse gas emissions, the supposed reason for this massive $100-billion government cash handout. While union auto makers General Motors Company (NYSE:GM), Ford Motor Company (NYSE:F) and Chrysler parent Stellantis (NYSE:STLA) were all in attendance at Biden’s presser, Elon Musk and Tesla (NASDAQ:TSLA), the company that made electric vehicles a realistic possibility, was absent. That was extremely telling. This huge cash handout to union automakers is an attempt to win back union votes that were lost by the Democrats over the past decade because many union workers realize that the policies of the Democratic party did not help them. Under the Obama administration, they lost jobs to countries overseas and they saw their job security fall. Union workers were told that there was no magic wand to wave and get those jobs back, they were gone.
The cost of the Biden plan will be astronomical. Not only the cost of upgrading the power grid, but the fact the only way to do those upgrades is with fossil fuels. Wind and solar will never be scalable enough to power millions of electric vehicles. Building a million electric cars will add to greenhouse gas admissions as it takes more fossil fuels to build electric vehicles because of the creation of lithium batteries. It takes more fossil fuels to build an electric car than it does your traditional SUV. Right now, for electric cars to have a net positive on the environment they must be driven for at least 30,000 miles based on U.S. data, yet in some parts of this country and the world it may be more like 100,000 miles driven before there is a net positive on the environment. This may get more complicated as we start to build millions more electric cars that will take millions of lithium-ion batteries.
The auto industry was already embracing movement to more electric vehicles, yet never planned to go as big as the Biden plan. The truth is that not one of these big oil car companies would have agreed to Biden’s goal unless the government was handing out money to them as I told Liz Claman yesterday on the Claman Countdown on the Fox Business Network. Not only is the government trying to force people into electric cars that they do not want, they are forcing them into cars that do not have the range or the efficiency of the internal combustion engine. This is going to be a disaster for the economy and taxpayers. It also means higher prices for cars due to the fact that electric cars are much more expensive than their internal combustion engine counterparts.
Zero hedge reported statistics from Automotive News, “noting that EVs were 2.3 times more expensive to service than ICE (NYSE:ICE) vehicles after three months of ownership. Analytics firm We Predict compiled the data by looking at roughly 19 million vehicles between the 2016 and 2021 model years. That figure drops to just 1.6 times more expensive after one year, the report noted, as a result of a 77% drop in maintenance costs and a decline in repair costs. The data showed that service techs spend about twice as much time diagnosing problems with EVs as they do with regular gas vehicles. They spend about 1.5 times longer fixing them and the labor rate for repairs was about 1.3 times higher.
There will be billions that will have to be spent on the electric grid to try to make this work. We will need to use more fossil fuels to charge those electric vehicles because wind and solar cannot charge millions of electric vehicles.
The other problem is the Biden administration cracking down on fracking in the United States, which is going to make the most logical bridge fuel, natural gas, unaffordable. We have been saying for sometime the fundamentals for natural gas look extremely bullish. We have been telling people to get hedged. Strong global demand and a hot summer have natural gas inventories on track to end up at the lowest level we have seen in more than 10 years going into winter. What that means, of course, is that we could see huge price spikes this winter if we get a colder than normal winter, so be prepared to have a little extra money in your pocketbook because your heating bills are probably going to be a lot higher.
Bloomberg News goes further saying, “The Era of Cheap Natural Gas Ends as Prices Surge by 1,000%." They write: “Natural gas, used to generate electricity and heat homes, was abundant and cheap during much of the last decade amid a boom in supply from the U.S. to Australia. That came crashing to a halt this year as demand drastically outpaced new supply. European gas rates reached a record this week, while deliveries of the liquefied fuel to Asia are near an all-time high for this time of year. With few other options, the world is expected to depend more on cleaner-burning gas as a replacement to coal to help achieve near-term green goals. But as producers curb investments into new supply amid calls from climate-conscious investors and governments, it is becoming apparent that expensive energy is here to stay.”
Of course, it doesn’t have to be that way. The Biden administration’s war against fracking is reducing the world’s best chance to have reasonable natural gas prices. The U.S. has become a major exporter of liquefied natural gas but production has stalled out mainly because of the war against fracking by the Biden administration. While the Biden administration has big dreams about reducing carbon emissions, they refuse to invest in fracking which could provide enough natural gas to replace coal plants across the globe and they also refused to invest in nuclear power which is the other greenhouse gas-free power source. Don’t tell me that wind and solar is carbon-free! Do you know how much carbon it takes to create millions of wind turbines? Not to mention the chemicals used to create solar panels? The Biden administration needs to get adults and real energy people on board that know what they’re doing. The U.S. economy is headed for a disaster unless they get their act together when it comes to energy.
And if you think that Biden’s push to green energy is going to make gasoline prices cheaper, well think again! Gasoline prices are going to go through the roof as investment in fossil fuels is drying up and it’s drying up as we speak. Right now, major energy companies are reducing their production. Investment dollars are going into far-fetched green energy projects like wind and solar and at the end of the day, we’re going to spend billions in subsidy’s on energy sources that are not going to pan out. Biden lives in a green dream world when it comes to energy and every American is going pay the price.
In the meantime, retail gasoline prices continue to go up but dipped slightly from a seven-year high of $3.19 a gallon to 3.189 a gallon, the national average for regular unleaded.
Today, oil prices are trying to mount a comeback as the market prices have been devastated by the concerns about the Delta variant of the COVID-19 virus. The biggest concern at this point is the slowdown in demand in Asia. China has shut down some means of transportation impacting demand. We’re also seeing reports that companies are delaying their back to the office mandates because of this new strain. Yet, once we get past this delta variant demand drop, we still think there are risks to the upside. Perhaps the jobs market data today might influence the next move for the crude oil market.