President Obama speculates a lot about his vision of energy and its operation in our economy, but his vision often ignores economics. His proposals would probably become much more practical if he studied the economics of how markets function. While governments can subsidize high cost technologies, it doesn’t mean they are affordable to the American public, particularly in these gloomy times with official unemployment at 8.2 percent[i]. High-cost technologies are still affordable to a very small niche market with enormous government subsidies, but remain too expensive for average Americans. That explains why Obama’s goal of million electric car and plug-in hybrid vehicle goal by 2015 is lucky to be at 50,000 vehicles right now.[ii]
Edmunds, an industry research firm, expects electric cars and plug-in hybrids to make up only 1.5 percent of the U.S. market in 2017, compared with 0.1 percent last year. Lux Research estimates that number will be fewer than 200,000. [iii]
