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McCain’s $300 Million Battery Prize

Senator McCain proposed a $300 million prize to the developer of a battery that “far surpasses existing technology” today.  He called this “a small price to pay for helping to break the back of our oil dependency.”

I couldn’t agree more, but there are still some problems with this proposal.

First, we need some kind of definition with this goal. What exactly does “far surpasses existing technology” mean? Senator McCain elaborates:

such a device should deliver power at 30 percent of current costs and have the size, capacity, cost and power to leapfrog the commercially available plug-in hybrids or electric cars.”

The cost figure is helpful, but what exactly does it mean to “leapfrog” the current commercially available technologies? Are we talking the leapfrog game where the thin athletic kid doubles the distance, or is this the leapfrog game where the fat kid racks his groin on the back of your head and shoves your face into the mud in the process?

Three hundred million dollars is a lot of money to offer up without knowing exactly what we’re supposed to be getting for it.

Battery technology for electric cars has come a long way, but still suffers from some serious deficiencies that need to be addressed before full-fledged electric cars will be viable.  The cost, availability and lifespan of these things still stand as major obstacles to widespread adoption – and perhaps this is what Senator McCain is getting at, but he needs to spell that out.

Senator Obama gets nailed all the time for having pie-in-the-sky ideas without much supporting detail. McCain’s little battery prize sounds remarkably similar.

Remember, this is the candidate who has yet to issue a transportation policy. You can cobble one together from bits and pieces based on the fact that McCain wants us to get off of foreign oil, expand our own drilling and refining capacity, expand nuclear power and alternative energy usage, and now this new little battery thing. But what good are all of these brand new electric cars going to be if we don’t have a coherent policy to maintain and expand the highways that these cars drive on, or the energy infrastructure to support them? We should expect better from Senator McCain.

Breaking our dependence on foreign oil is laudable, but how does this position set Senator McCain apart from Senator Obama?

Currently about 83% of every barrel of oil (34.8 out of 42 gallons per barrel) goes toward transportation fuels. This incentive is clearly a step in the right direction, but how does it does help as an interim fix for the gas crunch?

Achievement of this goal isn’t going to happen tomorrow. What are working class Americans going to do until then?

The answer isn’t simply to ride mass transit. The existing systems cannot handle that capacity, and their expansion will take years to accomplish. These systems aren’t final fixes to the problem anyway since their fares are also susceptible to the rising cost of fuel.

Senator McCain has a few different pieces in play, but he has yet to elaborate a grand vision to pull it all together. In a country where more people vote for American Idol than the President, this needs to be presented in the most straightforward manner possible if it’s going to reach anyone.

Senator McCain, as well as Senator Obama, can’t expect people to put this complicated puzzle together for themselves.

If McCain wants to get serious about this problem, let’s talk about eliminating the gas tax permanently and directly subsidizing oil to keep the cost low. Oil is integral to every single mode of transportation in this country. It fuels everything from cars to planes and trains, and it provides products that even bicyclists need to get around – lubricants and asphalt. A direct oil subsidy would benefit everyone, and if coupled with initiatives like this – albeit more clearly defined and precisely executed – could serve as an interim fix to this problem without crushing everyday Americans.

We use 20.6 million barrels of oil per day and import roughly 60% of that (12.4 million barrels). With the cost at $137 per barrel that’s $1.7 billion per day worth of oil imports.

We just passed a bill to pay out $165 billion for the War on Terrorism through the middle of next year. That same money could subsidize up to one quarter of the cost of the oil we import, or enough to effectively make the price of our imports feel like $103 per barrel.

Obviously we can’t just pull out of Iraq and the Middle East, and we can’t just divert war funds to pay for this subsidy. But we managed to find $165 billion lying around somewhere recently, and shifting it over to pay for Iraq didn’t really affect any of the “service” we’re getting from our elected officials as far as I can tell. We can probably safely cut that much again from somewhere else and put a nice subsidy stop-gap in place until we could get something like Senator McCain’s initiative off the ground.

To put this another way, approximately 131 million tax returns were filed last year. Spreading this cost evenly across all taxpayers would amount to a tax of $1260. By contrast, Senator Obama’s health care proposal requires taxes that have been estimated at between $124 and $130 billion per year on just the top 6% of earners.

The point is that even if we institute a new tax (which I am against since we should be able to trim fat elsewhere) to pay for this, we don’t have to crush the lower classes at tax time to make this happen. There is plenty of room to spread this tax evenly over all taxpayers so that everyone pays their fair share and no one eats it like they currently are. One year ago, gas was near $3 per gallon. If you have a fifteen gallon tank that you fill up once per week, you are paying $780 more this year at $4 per gallon than you were last year to drive. Any tax distribution that significantly undercuts that is helping working people while not being oppressively harsh on the top earners (who have more disposable income and drive more) – particularly if it comes with a sunset date.

I hate the idea of a tax increase when there is so much rampant waste in the current system, but if I’m going to feel the pain, I’d prefer to feel it to help our country achieve the strategic goal of energy independence so that my children won’t have to fight in Iraq-Part XII. That’s a sacrifice I’m willing to make provided we have a concrete plan with some defined milestones.

It’s fair to say that this would subvert some of the initiative to move away from foreign oil – that the “pain at the pump” serves as a catalyst to force change. The problem with that view is that it crushes our economy. Where do those drivers go? To mass transit systems that cannot carry the increased capacity and start to raise fares to cope with their own fuel prices?

There are those who advocate that our entire societal structure has to fundamentally change – that we need to become more urban and people need to abandon the suburbs and attendant sprawl. There are valid points behind that idea, but the residents of the suburbs also cannot move back into the cities any more easily than we can magically make our dependence on oil disappear tomorrow. Where will those people go? Where will they all live? Unless we have tons of plans for new high-rise housing sitting around just waiting to spring up overnight, and tons of vacant land to put it on, this is only a pipe dream for the foreseeable future.

My subsidy idea may be out to lunch, but we need to start thinking about short term solutions that don’t require us to suck it up for fifteen years before technology and industry catch up to this problem. And regardless of whether it’s McCain or Obama who ultimately addresses the problem, certain facts need to be reckoned with:

People will continue to drive cars before any new solutions – energy, infrastructure or housing can come online.

Unless the price of gas falls, the price of everything else will continue to rise and working class Americans will be hit the hardest.

Energy and Transportation policy are closely linked, and we need long term solutions. The uncomfortable truth is that we also need short term fixes until those long term solutions are technologically feasible.

Update: 6-25-08

For those who think my plan to subsidize oil may be too expensive, here are a couple of examples of pork that could easily cover us:

It turns out that the Pentagon has $295 billion in cost overruns on weapon systems. Translation – poor management and oversight has led to a ridiculous waste of money. Examples of this idiocy include:

bizarre results, such as the fact that the Pentagon has hundreds of millions of dollars in spare parts now on order that are already marked for disposal. Despite huge cost overruns, major contractors have received $8 billion in performance bonuses that have been paid out regardless of the results of their work.

In other news, our wise leaders across the Potomac somehow found $300 billion – that’s a 3 with 11 zeros behind it – to bail out people affected by the mortgage crunch. So, if we’re setting the precedent that we are willing to bail people out of the idiotic decisions they make, and we seem to have no problem finding the cash to make it happen, why not bail them out of the gas crunch too? 

For the record, I think the oil prices should be subsidized and the housing market should not. The gas crunch has the potential to affect way more people in much greater ways than the housing crunch. I see the burst of the housing bubble as a good thing – it forces some fiscal responsibility back onto lenders, punishes those who made foolish decisions and drove prices so high that no one can afford to buy any more, and ultimately makes housing more affordable for the rest of us. The price of oil affects the price of everything, because everything is made, transported to points of sale, and powered by oil. My position is that we should take that $300 billion and apply it toward something useful and in the strategic interests of this nation rather than to pick up the pieces for people who took a risk and got burned.