U.S. is trailing the rest of the world on EVs

As oil prices have tumbled, one thing has become clear: Electric vehicles are making much greater headway in the rest of the world than they are in the United States.

U.S. sales have remained flat over the past year after increasing steadily over the last decade. But sales have actually accelerated in some European countries, and several now have a larger percentage of their fleet in EVs than America does.

The website InsideEVs estimated that 160,670 EVs were sold around the world through the month of May, 34 percent ahead of last year during the same period. But U.S. global market share is declining: Domestic sales totaled 43,973 through May, a fraction ahead of last year’s pace. But when the June numbers came out, the U.S. had sold only 10,365, off 16.2 percent from the same month in 2014.

Norway is emerging as the world leader in making the transition from gasoline to electric vehicles. An incredible 33 percent of new-car registrations in the first quarter of 2015 were for EVs. Volkswagen’s e-Golf, the electric model, now sells 71 percent of its cars worldwide in Norway, giving it 40 percent of the Norwegian market. Tesla is not far behind with 16 percent of the market. Oddly, the Toyota Prius, the pioneer in the hybrid field, is seeing almost no sales now. People are beginning to opt for all-electric rather than the halfway point of gas-electric hybrids.

The Norwegian government has given EVs a raft of advantages over traditional gasoline-powered engines. Here’s a brief list:

• EVs get access to bus lanes
• The government has provided free charging stations
• EVs get free access to all toll roads
• EVs get free rides on ferries
• EVs get free parking in municipal parking spaces
• EVs carry a low annual road fee
• EV buyers pay no tax on purchase

Some of these advantages will eventually have to be cut back as the number of EVs on the road grows. But for now the incentives are huge and are not costing the government a great deal of money.

Other European countries have also been successful in promoting the purchase of electric vehicles. EVs now make up 5.7 percent of new car registrations in the Netherlands and 1.2 percent in the United Kingdom. The U.S. counts only 0.8 percent of new registrants as EVs, a figure that is matched by France. Germany and Japan counted only 0.6 percent of new registrations during the first quarter.

The reason EVs are doing so well in Europe is easy to identify: Europe imports nearly all its oil, and gasoline prices are much higher, mainly because of the imposition of heavy taxes. Gasoline sells for $8 a gallon in much of Europe, while prices are generally below $3 per gallon in this country. But air pollution is also playing a role. Pollution in some European cities has gotten as bad as it is in China and other parts of Asia. Paris shut down all auto traffic for three days last year when air pollution reached the same levels of Beijing and Shanghai. Sales of the Nissan Leaf – now the best-selling electric vehicle in the world – skyrocketed during this period. It’s expected that if emergencies like the one in Paris become commonplace, electric vehicles will be exempted from the ban.

Meanwhile, it appears that electric vehicles are finally taking off in China, which is now the world’s largest auto market. Back in the early 2000s, the Chinese government promised it would have 500,000 EVs on the road by 2011. Officials publicly announced they would be challenging the American industry by then. But as late as 2014, China was selling only 600 EVs a month, at the same time the U.S. was selling 6,000.
All that has reversed over the past year. In December, China sold 27,000 electric vehicles, almost 30 times the number as the previous January, and surpassed the U.S. in monthly sales for the first time. In 2015 China will probably become the world’s largest buyer of EVs.

All this has happened while Tesla was failing in its attempt to break into the Chinese market. The reason is plain: Tesla is marketing a luxury vehicle, something that few Chinese can afford. Meanwhile, the Chinese manufacturers, BYD, Kandi, Chery Zotye and BAIC, are selling no-frills vehicles that can only reach about 35 miles per hour. But such utilitarian vehicles are perfect for Chinese families to buzz around their cities for shopping and short commutes. There is even speculation that the Chinese manufacturers may start marketing their vehicles in the United States, where they would compete with entries such as the Chevy Volt and the Ford Focus. There is even talk that such vehicles may be able to feed off the rise of Uber for short-term ride-sharing in an urban setting.

Tesla’s moment of truth will come with the expected 2017 release of its Model 3, the $35,000 version of its EV, aimed at the average car-buyer. Then we will see if Tesla can really meet its deadlines, and if it can sell its highly stylized car on the mid-market. If it can, Tesla will probably have oodles of customers in both Europe and America, giving it a shot at the 500,000 sales Elon Musk has declared as his 2020 goal.

Muddling through to an ineffective ‘all of the above’ oil and gas strategy

Light Bulb Chalk Board2I used to teach public policy development, while a dean at the University of Colorado. Before that, I was lucky to be involved with colleagues at the U.S. Department of Housing and Urban Development (HUD) and other federal agencies in helping develop public policy. Finally, over the years I have had the good fortune to work with federal, state and local governments as well as nonprofit groups and the private sector in carrying out and evaluating programs to implement policies. And I am only 15! Just prematurely gray.

Looking back and thinking forward with Lewis Carroll’s admonition that “It’s a poor sort of memory that only works backwards,” I have come to the conclusion that few stated public policies come in packaging marked “this policy emanates from careful thinking and reflects a real understanding of cause and effect relationships and impact.” Most public sector policies, particularly those requiring coordination with other policies, are defined in the context of political scientist Charles Lindblom’s science of muddling through.

Many times, government policies appear guided by political intuition and not solid, pre-announcement analysis. When interagency collaboration and coordination concerning policy development is promised, it is often stated with lots of hope but few specific analyses concerning content and impact.  When analysis occurs, it, many times, is sporadic and sometimes suggests agency protectionism for their institution’s existing initiatives and sort of a “not in my back yard” department syndrome. For example, poverty programs were and remain conflicted, some focusing on fixing the environment and the physical characteristics of neighborhoods for the folks who live in them, some on thinning out neighborhoods through desegregation, mobility and income support. Linking the spatial and non-spatial policies together has been and is now difficult because of agency rivalry and claims that each agency’s policies and programs have significant value. Close coordination, they say, would rob America of program diversity and key public-interest objectives. Granting policy priority to one agency is difficult. We were and are told by involved agencies that the nation needs different approaches for the same folks or problems, even though resulting multiple programs overlapped, and often generated minimal funding for each program and an “all of the above” approach.

In a similar vein, job, health, housing and welfare policies allocated and still allocate lots of money for new facilities and services, in the belief that negative indices concerning wellness, behavior or illness would diminish significantly and pretty quickly. Among and between agencies, programs were and are now sometimes competitive, and most also appear based on a lack of a firm comprehension of what happens if and when the policy and related programs are implemented. Many observers often were, and some remain, surprised that new services could increase need-based statistics by bringing out people who required services, medical and otherwise. Surprise, low-income and or sick people, once without services, were and are now finding services and trying to secure them.  As a result of coming out, they are getting counted for the first time! Absence of careful analysis and relevant data often results in a mismatch between service and household need and policy expectations.

Now, what about energy and transportation fuel policies? The ones in place, and those seemingly desired by different political leaders, reflect the same conflicts, ambiguities and analytical weaknesses. “All of the above” is not a policy. It illustrates the failure of policy-making and the power of different constituencies, of which the most powerful is oil, to weaken the nation’s ability to make effective muddling through choices.

We have subsidized the production of oil and, in effect, its derivative gasoline, when the policy was assumedly to increase drilling and production. Yet we have retained and still retain most of the subsidies, even when we have oil surpluses and many analysts on the right and left indicate the subsidies would not be missed and skew expenditures. We restricted the export of crude oil, when supplies were scarce and security issues were front and center. Perhaps legitimately, we have retained and still retain the barriers to export when the prices are low and reserves among oil companies and the federal government appear relatively high. Maybe this is a legitimate policy because of fears concerning the future security of the U.S. Or maybe it is because of a fear of impending higher gas prices, once the Saudis and OPEC resume historical behavior concerning prices. But from a policy perspective, restrictions on exports are not likely to stand, as pressure builds in Congress to eliminate them.

Some environmental groups, aiming for the perfect and not perfectibility, lessen America’s ability to make strategic choices. Their advocacy of electric and fuel-cell cars, the exclusion of alternative fuels and their critique of natural gas-fired power plants — assuming such advocacy is politically successful — mute the nation’s ability to use alternative fuels as a transitional fuel before electric and fuel-cell cars are ready for prime time and a significant market share. Absent strategic long-term policies integrating alternative fuels with electricity, fuel cells and biofuels, Americans will lose tangible health benefits, environmental improvements, GHG emission reductions, and security options.

Let’s improve the muddle of muddling through. Getting to strategic oil and transportation strategies will involve a good deal of public and interest-group consensus-building, and some willingness to buttress the development with fresh data and analysis — knowing we will never have enough analysis and data to secure absolute wisdom about cause and effect relationships and impact.

We can begin with what we know relatively quickly: The textbooks that students read in high school and college note that America is the land of the free (or almost free) market and the home of risk-taking entrepreneurs. Nope! At least not now with respect to oil and gasoline! Oil companies, behaving like oligopolies, have convinced Congress to turn a deaf ear to policy and legislative options concerning open fuel markets and competition from alternative fuels at the pump. Not good for consumers!

Similarly, the EPA, while indicating that E85 is superior to gasoline concerning most environmental measures, including GHG emissions, has yet to simplify and shorten certification procedures of automobiles for flex-fuel vehicle status. In this context, it has certified only one conversion kit to convert older internal combustion engines to FFV status, resulting in high prices and minimal sales.

EPA has a complex agenda and has initiated many important initiatives to control and reduce GHG emissions and reduce environmental pollution. It has super leadership and bright staff. It’s facing budget constraints and conflicting external and perhaps internal debate over different alternative fuels. Hopefully, it will focus on making the certification processes more efficient, less time-consuming and less costly.

Weaning the nation off of gasoline, as the president has indicated, should be a national goal. It will require, paraphrasing the poet Robert Frost, many miles to go and explicit as well as implicit promises to keep, concerning the science and practice of creating more effective muddling in the creation of national oil and fuel policies. I wish Frost, for the purposes of this column, had used a different word than miles.  But such is life, and he remains one of my favorite poets.

Oil still a major source of revenue for terrorist groups

Oil prices continue to plummet, owing to an oversize inventory and the prospect of still more crude coming onto the market from Iran. But that doesn’t seem to have turned off the spigot of revenue flowing to extremist groups.

At one point last year, the Islamic State (also known as ISIS) was believed to be raking in $3 million a day in black-market sales of oil the group pumped from territories in Syria and Iran it took over during a swift campaign. ISIS once controlled several Iraqi oil fields, but thanks to a counteroffensive involving U.S. airstrikes and an American-backed campaign by the Iraqi security forces, the group now has only one, according to Agence France-Presse.

But ISIS’s oil operations have only been scaled back, not thoroughly halted. According to a story in The New York Times this week, ISIS has transformed from a simply bloodthirsty terrorist group, the successor to al-Qaeda, into a fully functioning government. It has a complex economy that relies not just on stolen oil, but other revenue sources, including kidnapping, extortion and an assortment of taxes and levies.

That complexity is evident in the way ISIS pumps and transports oil: Based on a BBC2 program called “The World’s Richest Terror Army” that aired this spring, ISIS even sells the oil it gets from fields in eastern Syria back to the Syrian government, even though the group is a sworn enemy of Syrian president Bashar al-Assad.

ISIS sells some of its oil to the people it governs — some 8 million in the territory it controls — and smuggles more of it across the Turkish border. According to a story in U.K.’s Independent, around the time of the BBC special in April:

A Syrian source involved in oil smuggling for Isis explained how oil brought in one of the group’s biggest streams of revenue. “Isis controls the oil wells in our region of Deir Ezzor, which is rich in oil,” he said. “My family, friends and members of my tribe by oil from Isis and smuggle it to the refineries and then to civilian markets.” The US treasury estimates Isis is still earning $2 million a week by smuggling oil in spite of a sustained bombing campaign by the US-led coalition.

The documentary reveals that militants have developed ways of pumping oil hundreds of metres across the border and floating it in barrels down rivers in order to export it into areas not held by Isis.

ISIS is far from the only extremist group that finances its activities through oil, one way or another. According to the Institute for the Analysis of Global Security, Saudi Arabia — a U.S. ally that also hates ISIS — is home to many financiers of global terrorism:

This Gulf monarchy is a … state in which no taxes are imposed on the population. Instead, Saudis have a religious tax, the zakat, requiring all Muslims to give at least 2.5 percent of their income to charities. Many of the charities are truly dedicated to good causes, but others merely serve as money laundering and terrorist financing apparatuses. While many Saudis contribute to those charities in good faith believing their money goes toward good causes, others know full well the terrorist purposes to which their money will be funneled.

Oil not only underwrites terrorism, it gives oil-exporting nations in the Persian Gulf an outsize influence on the world stage. The United States and other Western countries devote inordinate amounts of resources and attention to dealing with the Middle East and its many internecine struggles, at the expense of other parts of the world.

Also, the task of defending the flow of oil from the region routinely falls to the United States, and using less oil would absolve us of the need to send in troops and keep up military bases to protect supply routes.

“As long as we keep buying oil from the Middle East, our enemies can continue to fund terrorism,” oil and gas tycoon T. Boone Pickens wrote in TIME earlier this month. “For too long we have spent the lives and limbs of thousands of young men and women fighting in the Middle East, and we still bear most of the cost of protecting the about 17 million barrels that flow through the Strait of Hormuz every day even though only about 10% of that oil comes to us.”

Some say we can drill our way to oil independence, but the reality is, the U.S. still needs about 19 million barrels of oil a day to function, and the “shale revolution” only restored U.S. production to a peak of about 10 million barrels. The rest has to come from somewhere.

If the U.S. used more alternative fuels for vehicles, instead of primarily oil-based gasoline and diesel, we could reduce our dependence on oil — and shrink the influence of the countries that supply it.

To learn more about the connections between oil and terrorism, visit our National Security page.