August 6, 2017

Walls Street Journal Agrees with Me on Problems of Charging Electric Cars

On July 15, I published a post on the weaknesses of al the forecasts about electric car growth -- the inability of many to but cars because of lack of access to chargers.  Today, the Wall Street Journal had an interesting article on another aspect of the problem -- the lack of public charging locations and the immense strain that  might be placed on the electricity network if electric car users try to charge at the wrong time.  It also refers to an article in the MIT Technology Review about the problems that electricity utilities will have with high speed chargers that may overwhelm neighborhood grids.  I am glad to see that some of the practical problems with electric cars are being aired.

August 3, 2017

DC Circuit Ignores Economics in Ordering FAA to Reconsider Denial of Rulemaking on Seat Pitch.

On July 28, the DC Circuit ruled on the denial by the FAA of a request by a non-profit to promulgate rules governing the minimum requirements for seat sizes and spacing  (seat pitch) on passenger aircraft.  It used colorful language that implied some sympathy with the petitioner's arguments, and rejected the FAA's argument that the case should be dismissed.  However, it also rejected the petitioners' request that FAA be required to institute a rulemaking proceeding.  It is unlikely that, in the end, the court will require the FAA to regulate seat size and spacing.  The Court did not, as some alarmist headlines proclaimed, order the FAA "to solve the case of the incredible shrinking airline seat."

The petition argued that over 20 years, seat pitch had decline from 35 inches to 31, or even, in some cases, 28 inches, that seats had narrowed from 18 1/2 to 17 inches, and that passengers had grown heavier.  The FAA did not argue about passenger weight -- in fact, over 20 years, average weights had increased by 15-17 lbs.  However , it did claim that the petitioners' concerns did not warrant action because the issues raised related to passenger health and comfort, and did not raise an immediate safety or security concern.  It noted that seat pitch numbers were not directly comparable with earlier data because modern, thinner seats at lower seat pitch provided more space than older seats at higher pitch, and that the emergency evacuation tests it had conducted showed that reduced seat pitch did not affect safety.

However, the court found that the FAA did not provide acceptable evidence on evacuation tests because it had relied on confidential, non-public information.  The Agency had, therefore, relied materially on information it had not disclosed and had pointed to that information as the basis for affirmance.  It remanded the case to the FAA "for a properly reasoned disposition of the petition's safety concerns".  However, it did not require the Agency to undertake a rulemaking proceeding.

Thus, the remaining work on this case is basically a lawyer's job -- write a better opinion.  Put some emergency evacuation evidence into the public record.  Emphasize that narrower seats invalidate comparison of historic seat pitch changes.  And make the economic argument that the petitioner's proposed rule would reduce seats on the aircraft, requiring higher prices for the remaining seats.  This would, in turn, divert some passengers to lower cost forms of transportation which have poorer safety records than airlines.

An aside -- in researching I found a very useful aviation website.  Seat Guru has seat maps, seat pitch and width,by aircraft type for almost all the major airlines in the world.

July 15, 2017

The Push for Electric Cars -- the biggest folly of all

The Wall Street Journal had an excellent  article this week on the future of electric cars without massive subsidies .  Basically it noted that, without subsidies, such cars are simply not competitive with gas-powered vehicles.  It also noted the results when subsidies are eliminated,  Thus:

1.  When Hong Kong eliminated subsidies, Tesla sales in the following quarter fell to Zero.

2.  In Georgia, electric vehicle sales plummeted 80% the month after a $5,000 tax credit was repealed.

In order to become competitive with gasoline engines, electric battery costs will have to decline substantially and gasoline prices would have to increase substantially.  Battery costs have decreased substantially -- from $1,000 per kilowatt hour in 2010 to $273 per kwh in 2016 -- but they still have a long way to go to match the advantage of gasoline.  A typical electric battery adds $20,000 to the cost of a car. One article estimates that. at the current battery cost of $270 per kwh, oil would have to cost more than $300 per barrel to make electric and gasoline equally attractive.

 I have always thought that one basic problem with the idea of electric cars is that a substantial portion of possible purchasers don't have garages in which to charge them.  I must admit that I haven't seen any literature on this, but it seems logical that electric cars will not be able to compete for a significant portion of the market.  I live in a 85 year old house with a garage that was built for Model -Ts.  Modern cars do not fit in it.  Many other people may use garages primarily for storage, and park cars in their driveways.  Many other American live in apartments -- 17% of the population.   Most of these are served by parking lots, and those in multi-story garages are unlikely to have access to electric plugs.  And many apartment dwellers in cities simply park on the street.   None of these people are candidates for electric car ownership.

An interesting blogpost this week discussed real world issues in electric vehicle driving -- for example that the range of electric cars is substantially reduced in cold weather.  Also, to maximize range, drivers really can't go over 60 mph.  Try doing this in Texas.

June 30, 2017

Resuming publication

It has been three years since I last posted in this blog.  Much has happened since,  In particular, President Trump has been making  major changes in the structure of regulation.  I find that I now have the time and the interest to start publishing this blog again.  I have started to accumulate material and hope to post my first article of substance within the next two weeks.

December 1, 2014

Steven Pearlstein column on Net Neutrality gets close to real issues in debate.

Steven Pearlstein, a professor at George Mason University, has published a column in the Washington Post Sunday that penetrates the phoney issues in the current debate.  All the noise at present is about neutrality, with claims that Internet Service Providers (ISPs)are discriminating and that they will destroy the Internet as we know it.  Pearlstein's column, entitled " Shades of complexity dominate the debate over "net neutrality", turns the debate to economics. which is where it belongs.

Pearlstein says:

"This is a debate that has come to be dominated by hypocrisy, half-truths and impenetrable complexities.  At one level, net neutrality is a solution to a problem that, for the moment, doesn’t exist.  ... At another level, what the net neutrality debate is really about is deciding who will pay the considerable costs of building out the infrastructure to handle all those bandwidth-hogging videos and games that we’ll be downloading from the Internet. The content providers and start-up app creators, naturally, think they shouldn’t have to pay because that would discourage their economy-disrupting innovation. The ISPs, naturally, think they will only have the money and incentive to expand their network if they can levy an extra charge on the Netflixes and the Googles who have sucked most of the value out of the Internet."

Pearlstein is correct that the fundamental issue is economic.  However, it is not merely related to the cost of building out additional infrastructure.  Rather, it relates to the manner in which the cost of the entire Internet will be recovered.  Like many other networks, the Internet is a joint product in economic terms – it has substantial fixed costs which must be recovered either from suppliers of information, or from consumers.  At present such costs are recovered from consumers.  However, there are proposals to recover some of those costs from suppliers in the form  of higher charges for greater speeds.  These are certainly reasonable proposals, but, obviously, shifting part of the burden to suppliers who had a free ride has generated opposition.  To win the argument, suppliers have camouflaged their economic interest with claims about equity, unfairness to small vendors, etc.  But remember, underneath all the propaganda is the fundamental economic issue of who should pay for the Internet.

25 years ago, I was involved in antitrust litigation with respect to how the cost of airline computerized reservation systems would be recovered.  The CRSs were the essential link between travel agents and the airlines upon which they made reservations.  The vendors, who were all airlines themselves at that time, initially recovered the costs from travel agents, but competition among the airline vendors reduced charges to them.  Therefore, with the help of government regulation requiring nondiscrimination in booking fees, they imposed substantial fees on other airlines.  Outraged, other carriers sued for over $4 billion, claiming that each CRS was a monopoly  After a three-month trial, a jury rejected this claim.

The current debate has many similarities that long-ago controversy.  I will write more about net neutrality and joint products in the future.  I may also devote another post to Pearlstein's bizarre solution to the problem – he  proposes to grant local monopolies to ISPs based upon competitive bidding.  The winning ISPs would then be able to charge monopoly prices.

November 18, 2014

Washington Post Columnists Attack Jonathan Gruber

I don't know if the Washington Post has taken an official position on the veracity of Jonathan Gruber, but its columnists are having a field day attacking President Obama and the entire Obamacare structure,  They rely on Gruber's straightforward, cynical explanations of what the administration was doing to get the bill passed.  Yesterday's newspaper (November 17) contain an interesting column by Marc Theissen, entitled "Thanks to Jonathan Gruber for Revealing Obamacare Deception."   He suggests that "The reason Democrats are running from Gruber is the same reason conservatives should be thanking him: Gruber has exposed what liberals really think of the American people".   Last week, Charles Krauthammer wrote on "The Gruber Confession."  His view was that"Gruber's admission that, in order to get it passed, the bill was made deliberately obscure and deceptive constitutes the ultimate vindication of the charge that Obama care was sold on a pack of lies".

On the other hand, the New York Times in an editorial yesterday entitled "The Impolitic Jonathan Gruber" laments the ammunition he has provided opponents of Obamacare, and claims that he really wasn't that important, and his frank statements are "largely wrong".  Its basic point is don't believe him, even if what he says was correct.  However, it is very difficult for it to show that we shouldn't believe our "lying eyes."

November 17, 2014

The Gift that Keeps on Giving: Gruber tells the truth about the Cadillac Tax

For the last couple of weeks, debate about Obama care has been inflamed by revelations about comments by Professor Jonathan Gruber of MIT, an architect of the Affordable Care Act, who gave several speeches disclosing details about the creation of Obama care.  The latest information that has come out involve the "Cadillac" tax that will start in 2017 upon more expensive healthcare plans. This is well covered in an article today on the opinion pages the Wall Street Journal – Another Obamacare Deception, by Tevi Troy, president of the American Health Policy Institute and a former deputy secretary of Health and Human Services.  I will let you read it, rather than summarize it myself.