HEARING OF HOUSE SUBCOMMITTEE ON ENERGY AND RESOURCES: AMERICA'S ENERGY NEEDS AS OUR NATIONAL SECURITY POLICY
APRIL 6, 2005
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Mr. Marchant. Thank you very much. It is pretty unusual to have a panel before you that two people on the panel have degrees from Texas Tech.
Mr. Issa. It is not unusual to note it, though, is it?
Mr. Marchant. It is good to see you. Just a couple comments.
Just recently in our Dallas Morning News we had--one of our respected personal financial analysts had basically wrote a story that discouraged anyone from buying a hybrid because he did this calculation of the cost for the hybrid and then the cost of the savings in miles per gallon and then basically came to the conclusion that, you know, no one really should buy one because of that.
The interesting part of the testimony today is the part that I have never seen interjected, and that is the cost, the low cost of the electricity that you can achieve there. I never see that in any of the calculations, and I think that is an interesting fact that needs to be in the public domain.
Mr. Woolsey. Congressman, a standard hybrid such as the Prius that I drive gets about 50 miles per gallon. Of course, it switches back and forth, just like the chairman's hybrids, between gasoline and electric power; and it charges the battery as it decelerates. And it depends. That financial analyst must not have been thinking at all about bin Laden or the Middle East or any of that. Because if he assumes a perfect market in oil that nobody is going to interfere with, then there may be something to the proposition that the added couple thousand dollars cost of a hybrid to 3,000 is not worth it.
But there are some answers. One is what you referred to, which is adding this plug-in feature so that one can use grid electricity for short trips and thereby, instead of a 50 mile a gallon car, you have a 100 mile a gallon or more car, at least as far as petroleum fuel is concerned. And the electricity that you are getting off the grid is 12 to 25, maximum probably 50 cent per gallon gasoline equivalent. So that ability to have a plug-in feature seems to me to be right at the heart of the attractiveness of hybrids.
Now there are complexities here. The nickel metal hydride batteries, it wears batteries down a bit to charge them and so one probably needs a few more batteries in the vehicle. That would increase the cost. So some of the home tinkerers who are turning their hybrids into plug-in hybrids may be doing something that makes their warranty not as good, for example.
But these are relatively small technical problems to overcome, even moving to advanced lithium batteries, compared to the extraordinary requirements of moving to something like hydrogen fuel cells which, you know, as was said up here a minute ago, is going to take many, many times a reduction in cost more than just a couple or $3,000. We are talking about going from $1 million more a car to something affordable. And I think that we have a chance here with advanced diesels, which soon will be able to meet our Tier 2 standards that came in 2004.
Europe is very heavily into diesels now, and we are somewhat more demanding on particulate emission standards than Europe. But the new diesels are very close to meeting our new standards. New diesels and hybrids, including hybrids with a plug-in feature, if incentivized by government policies seem to me to be just a natural.
In Texas, the Austin utility, which is owned by the city of Austin, has taken the lead in going around to other city-owned utilities around the country and started going to the Big Three in Detroit and saying we, the utilities, will give a $1,000 credit for the purchase of a plug-in hybrid because we want to be able to sell power at night when we need to sell it, off peak power, and we would be delighted to give everybody who buys a plug-in hybrid $1,000. You are a third of the way toward the consumers' credit that you need right there from utilities.
Mr. Hormats. Can I just add a couple points?
One, there is an additional advantage to the hybrid; and that is, because you get so many more miles to the gallon, you don't have to stop and fill up as much. So there is a time advantage.
Second, an analyst who comes to that conclusion misses a broader point, and that is we have a structural supply demand imbalance. So oil prices are going to stay high for quite some time. If you thought perhaps the price was going to come down
to $15 or $10, then maybe--but I didn't see the article, so maybe the economics works. But if you think oil prices, as I do and as the market does, thinks oil prices are going to remain very high for a period of time and may get higher and are subject to a lot of disruption, then it does seem to me you want to have a car that is very efficient and you can get more miles to the gallon when you fill your tank up.
And the third, to the extent there is some price discrepancy, as this person pointed out, that is why you do things like open up the HOV lanes or make it cheaper to buy E-ZPass membership if you have an energy efficient car or do things like a lower registration fee for energy efficient cars and a higher one for less efficient cars.
So there are things that can be done to give these cars at least a temporary incentive. Once the volume begins to pick up, the price will come down, as for everything. And we have seen that. So there is room for public policy here to help the transitional process along.
Mr. Marchant. Thank you, Mr. Chairman.
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