Obama vs. Keystone.....again.

U.S. Senate Republican Leader Mitch McConnell made the following statement on the Senate floor Thursday regarding efforts by the President to lobby Democrat Senators against Senator Hoeven's amendment on the Keystone XL Pipeline:

“Last night the two parties reached agreement on amendments to the Highway Bill. I’m happy to report that there are a number of strong job creating measures in the mix. One that stands out is Senator Hoeven’s amendment on the Keystone XL Pipeline.

“Most Americans strongly support building this pipeline and the jobs that would come with it. And it’s incomprehensible to me that the President of the United States is lobbying against it.

“There’s a report this morning that President Obama is personally making phone calls to Democrat Senators he thinks might vote for this amendment. He’s asking them not to. And, frankly, it’s hard to even comprehend how out of touch he is on this issue.

“I mean, think about it: at a moment when millions are out of work, gas prices are skyrocketing and the Middle East is in turmoil, we’ve got a president who’s up making phone calls trying to block a pipeline here at home. It’s unbelievable.

“What we’re seeing in Congress this week is a study in contrasts.

“On the one hand you’ve got a Republican-controlled House that’s about to pass a bipartisan jobs bill that would help entrepreneurs and innovators by getting Washington out of the way. And today we’ve got a Democratic-controlled Senate trying to line up votes against amendments that would create jobs—and a President lobbying against the biggest one.

“We’ve got an opportunity to work together to create jobs. We can do that with these amendments. And we can do that by taking up the bipartisan jobs bill the House will pass later today.

“Let me just say a word about that. The bipartisan jobs bill the House will pass later today is supported by the President. It is ready to go, and I hope that once it gets over to the Senate we'll simply take it up and pass it.

“It's an example of a measure that is supported by Republicans and Democrats and the President that we believe will clear the House with a very large majority. I think the sooner we pass that here in the Senate and send it down to the President for signature, the better.

“With that, Mr. President, I yield the floor.”(1)

Upon Further Review

Many talking heads, pundits and media-types put forth the proposition that Obama is preventing oil independence, etc., and/or he is siding with environmentalists by opposing Keystone. Fair enough arguments.

What one doesn't seem to experience with the media is this public choice theory proposition: since Obama and his ilk built a massive network of crony capitalist green energy, a massive political constituency building exercise through use of taxpayer dollars, does not Obama have a vested interest to protect [reduce/eliminate competition] regarding such a purposely built massive network of crony capitalist green energy concerns? That is, given the network of constituency building exercises, Obama is merely acting rational to protect the purposely built network of crony capitalists.

Now consider this political economy proposition:

Many politicos with a vested interest in the crony capitalism regarding alternative energy also have a vested interest in environmentalists. As the formula goes, the politico through the mechanism of government uses taxpayer dollars to build a political constituency. In this particular case the constituencies are associated in that the crony capitalist of alternative energy “appear” to also be the champion of the environmentalist. Therefore the politico enabler receives a double constituency building outcome through the awarding of taxpayer dollars.

Notes:

(1) McConnell: President Lobbying Against Keystone XL Pipeline Jobs, Real Clear Politics, 03/08/2012

March 45,000 Low Volt Shocker: GM Halts Production Of Chevy Volt… Again

When oil prices climb in a constant fashion [rising oil prices vs. oil price shocks] the consumer has time to adjust consumption patterns. That is to say, James and Jane Goodfellow can change the composition of their basket of goods consumed to accommodate rising oil prices. As the story goes, the Goodfellow’s delay a purchase, substitute goods, and put off some purchases all together (skip a night out for dinner) to accommodate the rising energy price.

A phenomena expected to occur during a constant oil price increase would be the price of gasoline rising hence signaling consumers to increasing car pooling, more combining of trips and one would expect an increase in consumer interest and consequential purchase of electric vehicles and/or hybrid vehicles. That is, consumer preference may change regarding solely gasoline powered vehicles, in that, electric or hybrid vehicles would garner some additional consumer preference even if the increase is at the margin.

Enter the Chevy Volt. General Motors announced today that Chevy Volt production will be halted with 1,300 idled and are anticipated to be recalled April 21^st. 


' "Even with sales up in February over January, we are still seeking to align our production with demand," GM spokesman Chris Lee said.

The car company had hoped to sell 45,000 Chevy Volts in America this year, according to the Detroit News, but has only sold about 1,626 over the first two months of 2012.' (1)

"The news comes just one day after GM announced that the Volt sold 1,023 vehicles in February, up from just 603 in January.” (2)

“General Motors has told 1,300 employees at its Detroit Hamtramck that they will be temporarily laid off for five weeks as the company halts production of the Chevrolet Volt and its European counterpart, the Opel Ampera.” (3)

“It will be the third time that Volt production has been stopped for at least a month since the car first went on sale in December 2010.” (4)

Therefore we do see marginal consumer preference change from  603 Volts sold in January climbing to the astounding sales rate of 1,023 albeit the assumed sales rate is 3,750 per month (45,000 unit goal/12 months). Hence January production rate was 16% of goal and February sales was 27% of goal. Wow!

When considering rising gasoline prices pushing Chevy Volts to the astounding sales pace of 1,023 per month, one must not overlook an additional incentive: a $10,000 tax credit! Yes, your tax dollars are at work!

“The White House intends to boost government subsidies for wealthy buyers of the Chevy Volt and other new-technology vehicles — to $10,000 per buyer.


That mammoth subsidy would cost taxpayers $100 million each year if it is approved by Congress, presuming only 10,000 new-technology autos are sold each year.” (5)

Despite rising gasoline prices, despite the massive tax subsidy, the Chevy Volt must be contrasted to total vehicles sales for the month of February which spiked upward.

“For the second month in a row, U.S. auto sales came in much higher than the consensus expected in February and reached a four-year high of 15.1 million units at a seasonally-adjusted annual rate. Despite higher gas prices, total February light vehicle sales came in an impressive 15.7% above a year earlier, led by a 40.4% increase for Chrysler and 34% increase for Volkswagen. Sales of the Ford Focus doubled over the last year, and the company overall had a 14.4% increase. GM highlights included a 28% year-over-year sales increase for the Chevrolet Silverado truck and a 20% annual gain for the GMC Sierra truck.” (6)

Is there a lesson to be learned? Has this lesson been learned before in the US auto industry? The basic lesson is that consumer preference is revealed by the market place. The producers then need to match the demand revealed by the preference. However, if from the supply end producers create a supposed preference item, most times the item does not match the consumers revealed preference as a centrally planned preference rarely matches a spontaneous/emergent order preference of millions of freely choosing consumers. If one recalls, in the early 1970’s Detroit built vehicles they considered vehicles that customers wanted. Sales slumped as low quality non-demand vehicles would not sell and a flood of imports came into the US market that more closely matched consumer preference. Ah, the evil of it all.....history repeats itself yet again.

Moreover, there is likely a third lesson. If a bailed-out producer, beholding to politicos who bestowed taxpayer money onto such producer, is coerced into producing a supposed preference item merely reflecting the vision of particular politicos and their preference for “the way things ought to be”, the plans of the few end in not matching the plans of the many.


Notes:

(1) GM Laying Off 1300 Due to Low Volt Sales, Washington Examiner, 03/02/2012

http://campaign2012.washingtonexaminer.com/blogs/beltway-confidential/gm-laying-1300-due-low-volt-sales/406771


(2) GM shuts down Chevy Volt production for five weeks, temporarily lays off 1,300, Torque News, 03/02/2012


http://www.torquenews.com/1081/gm-shuts-down-chevy-volt-production-five-weeks-temporarily-lays-1300


(3) GM Halts Production of Chevy Volt, Lays Off 1,300 Workers, Zipwire, 03/02/2012


http://weaselzippers.us/2012/03/02/heartache-gm-halts-production-of-chevy-volt-lays-off-1300-workers/

(4) G.M. Again Pauses Production of Chevy Volt, NYT, 03/12/2012


http://www.nytimes.com/2012/03/03/business/gm-suspends-production-of-chevrolet-volt.html?_r=1

(5) More than one way to sell a volt, Edmonds.com, 02/13/2012


http://townhall-talk.edmunds.com/direct/view/.f157543/920

(6) Car Sales Shift Into High Gear, 4-Year High in Feb., Carpe Diem, 03/01/2012


http://mjperry.blogspot.com/2012/03/car-sales-shift-into-high-gear-4-year.html

Being Green -or- Merely Wearing Green Shaded Glasses: Conundrums, Product Substitution Panacea, and the Prius Fallacy

“A favorite trick of people who consider themselves friends of the environment is reframing luxury consumption preferences as gifts to humanity. A new car, a solar-powered swimming-pool heater, a 200-mile-an-hour train that makes intercity travel more pleasant and less expensive, better-tasting tomatoes—these are the sacrifices we're prepared to make for the future of the planet.

Our capacity for self-deception can be breathtaking. In 2010, a forward-thinking friend of mine took me for a ride in a Ford Fusion, a gas-electric hybrid that gets more miles per gallon than comparable cars with conventional engines. His dashboard fuel gauge filled with images of intertwining green foliage, a symbolic representation of the environmental benefits we were apparently dispensing from the tailpipe as we aimlessly drove around.

I felt a twinge of idiotic virtue while in that car, as I also do when I leave an especially large pile of cans, bottles and newspapers at the end of my driveway for the recycling truck. Like many concerned Americans, I'm susceptible to the Prius Fallacy: a belief that switching to an ostensibly more benign form of consumption turns consumption itself into a boon for the environment.” - It’s Too Easy Being Green, David Owen, WSJ, 02/04/2012

Link to the entire article appears below:

http://online.wsj.com/article/SB10001424052970203889904577198922867850002.html