In two recent posts (here and here), I examined EPA’s and the National Highway Traffic Safety Administration’s (NHTSA’s) rationale for establishing first-ever fuel-economy standards for trucks. Today’s post provides additional evidence that what the agencies call the trucking industry’s “under-investment” in fuel-saving technology is an unintended (although not unforseen) consequence of EPA’s ever-tightening diesel-engine emission standards. The declining fuel economy of 18-wheelers is a case of government failure, not market failure. Conveniently, EPA’s role in holding back heavy-truck fuel economy is never discussed in the agencies’ proposed rule.

The trucking industry is highly competitive, profit-margins are thin, and fuel is the single biggest operating expense. Consequently, truckers, especially those who haul freight long distances in “combination tractors” (semis), have a strong incentive to purchase vehicles incorporating cost-effective improvements in fuel economy. …

[Editor note: Robert L. Bradley Jr.’s book review of Charles Koch’s The Science of Success (New York: John Wiley & Sons, 2007) appeared in the August/September 2008 issue of The New Individualist (Atlas Society). It is reprinted below to better publicize the worldview of the individual who has been behind a number of free-society initiatives across the country for several decades–and is now a target of Al Gore and the anti-free-market Left).

In 1859, the first treatise on “best practices” appeared: Self-Help, With Illustrations of Character, Conduct, and Perseverance, by Samuel Smiles. Motivational self-improvement books were not new, but Smiles’s 400-page opus was persuasive. Profusely illustrated with stories of men-made-good in industry, engineering, the arts, and music, Self-Help combined age-tested wisdom with knowledge of the industrial present.

From Self-Help to Organizational Success

Nearly 150 years later, the most recent addition to the self-help literature is The Science of Success by Charles G.…

[Editor note: This was sent as a July 12, 2010, letter from Mr. Schleede to Virginia’s Governor Robert McDonnell and  Lieutenant Governor Bill Bolling]

SUBJECT: Federal and State Tax Breaks and Subsidies for Wind Energy

Introduction:

Both of you have made statements indicating that you favor greater use of wind energy in Virginia and you have used our tax dollars[i] to promote wind energy. However, if you consider objectively the true costs and benefits of electricity from wind, you will conclude that greater use of wind energy is NOT in the best interests of Virginia’s taxpayers or electric customers.

Recently, I have sent you several emails demonstrating that:

· Electricity from wind is very high in true cost and very low in true value.

· The wind industry and other wind energy advocates greatly overstate its benefits and understate its adverse environmental, economic, energy, scenic, and property value impacts.

[Editor’s note: Mr. Graf’s cash flow analysis of wind power projects is presented as another view of the inappropriateness of planned public policy in the electricity sector. The economics of wind power is a broad topic; previous posts at MasterResource are listed at the end of this post. For general problems of industrial wind, see here.]

There are many arguments to be made against government subsidization of industrial wind power, some objective and others subjective. We hear about noise, shadow flicker, disruption of wildlife, lack of consistent energy output (intermittency), questionable performance with respect to pollution reduction, and undesirable aesthetic appearance.

It occurs to me, however, with regard to subsidies for energy ventures and technology, three things must be kept in mind:

(1) any good investment must be made in worthwhile ventures that can show a reasonable return;

(2) arbitrarily subsidizing some ventures may cause inadvertent (or advertent) exclusion of others; and

(3) jobs cannot be created by subsidizing ventures that do not provide a viable return.