The politics of incentives

[justforfun]

Some may have gotten pushed to the edges of the suburbs by taxes and land values, but I still know of quite a few around here that are thriving in the middle of urban areas, though some of them are a bit hidden from the main streets.

Older numbers, but https://www.jowanza.com/blog/mobile-home-parks-in-the-united-states

Many are now called Park Model Homes in resorts. https://parkmodels.com/

Roy

 

[ThirstyBarbarian]

I had those inverters in my BOM. Great gadgets

I don’t know what BOM is. I looked up some acronyms, and my favorite was Barrel of Monkeys, but I’m guessing that’s not it.

 

[Blast it Tom!]

Bill of Materials, maybe?

 

[boatgeek]

I don’t know what BOM is. I looked up some acronyms, and my favorite was Barrel of Monkeys, but I’m guessing that’s not it.

Bill of Materials. Far less fun than a barrel of monkeys, particularly if you have to keep them up to date or in agreement with another drawing.

[edit] Ninja'd by Tom.

 

[Funkworks]

And therein lies the foundation of EVs getting taxed by the .fed and .state and .local governments like ICE vehicles do.....at the pump/recharge.

Another complete waste of tax money.

View attachment 522455

I also lose my way once in a while.

It happens.

Carry on.

 

[Funkworks]

+1. Those should be privately funded, and installed at gas stations and/or hotels.

It's just going to be another rusty, broken, ghetto spray painted, eye sore, on our already overly ugly highways.

 

[Funkworks]

I wasn’t aware that model rockets were heavily subsidized.

Is that what I said? Did anyone ever say that? Maybe it's a dream you had? Maybe you're looking for an arguement? Argue with someone else, not me. Here's something to start with.

 

[Tyeeking]

Is that what I said? Did anyone ever say that? Maybe it's a dream you had? Maybe you're looking for an arguement? Argue with someone else, not me. Here's something to start with.

I'm from the labs. I don't talk about taxes for EVs any more than I talk about taxes for model rockets. Please ask in here: https://www.rocketryforum.com/threads/the-politics-of-incentives.172418/

Yes. Actually you did say it in the other thread when we were “discussing” EV subsidies

 

[Tyeeking]

So now that we’re in the proper thread I will ask my question again. You said the EV manufactures cannot keep up with supply. So if that is the case why is there a need for such large tax incentive subsidies for the purchase of EV’s?

 

[rharshberger]

So now that we’re in the proper thread I will ask my question again. You said the EV manufactures cannot keep up with supply. So if that is the case why is there a need for such large tax incentive subsidies for the purchase of EV’s?

Because in comparing apples to apples features on two cars (not including drivetrain just capability and features) a similarly sized, equipped, and purpose function ICE vehicle will still be cheaper than an electric. Given a choice I would go with an ICE over EV, the powers that be would rather see people buying EV's.

 

[smstachwick]

Because in comparing apples to apples features on two cars (not including drivetrain just capability and features) a similarly sized, equipped, and purpose function ICE vehicle will still be cheaper than an electric. Given a choice I would go with an ICE over EV, the powers that be would rather see people buying EV's.

If it were truly apples-to-apples, consumers would be paying up-front for environmental cleanup costs incurred by every automotive purchase. Then the EVs would have a clear advantage.

A subsidy produces similar enough economics that consumers have the same incentive they would if the hidden cost were actually accounted for.

Not disagreeing with you, as I think you’re mostly on the right track, I just wanted to point that out for the benefit of the discussion.

 

[Tyeeking]

If it were truly apples-to-apples, consumers would be paying up-front for environmental cleanup costs incurred by every automotive purchase. Then the EVs would have a clear advantage.

But to be apples and apples wouldn’t EV owners need to be paying up-front for battery disposal costs? Upfront for the environmental costs of cobalt and nickel mines? The production, operation and disposal of EV’s is hardly without environmental costs.

 

[smstachwick]

But to be apples and apples wouldn’t EV owners need to be paying up-front for battery disposal costs? Upfront for the environmental costs of cobalt and nickel mines? The production, operation and disposal of EV’s is hardly without environmental costs.

I guess that depends on how you define apples-to-apples. Functionally equivalent by producing the same obvious choice for a large population segment, or exactly proportional in terms of costs conferred to the consumer? I don’t think the latter is entirely feasible.

Either way, the existential risks to humanity and Earth posed by production and disposal of batteries are much smaller. Imagine somebody complaining about how many birds wind turbines kill while giving an oiled pelican a Dawn bath, and you’ll get the picture of how unfounded and ridiculous this faux-concern is.

 

[rharshberger]

But to be apples and apples wouldn’t EV owners need to be paying up-front for battery disposal costs? Upfront for the environmental costs of cobalt and nickel mines? The production, operation and disposal of EV’s is hardly without environmental costs.

Everything or nearly everything in both EV and ICE can be recycled the difference is cost to recycle, currently EV batteries are not cost effective (a cost effective process has not been developed). All fluids in a ICE are recyclable, lead acid batteries are easy to recycle. The big sticking point disposal cost is the EV battery.

 

[boatgeek]

You dodged the question which asked for specifics examples unique to the industry and are simply making broad based generalizations.

Stepping in on this one, in the right thread. Fossil fuels get ~$20B in annual direct subsidies, plus a variety of additional indirect subsidies and externalities.

https://www.eesi.org/papers/view/fa...-closer-look-at-tax-breaks-and-societal-costs

But to be apples and apples wouldn’t EV owners need to be paying up-front for battery disposal costs? Upfront for the environmental costs of cobalt and nickel mines? The production, operation and disposal of EV’s is hardly without environmental costs.

Golly, I didn't know that I paid up front for the cost of cleaning up oil spills. You want to actually provide some evidence on that? Or are you just holding EVs to a higher standard of cleanup than ICEs. I'm also pretty sure that your cost of gas doesn't include Shell cleaning up the Niger River delta, so why the deep concern about the cobalt mines in the Congo?

 

[Tyeeking]

Golly, I didn't know that I paid up front for the cost of cleaning up oil spills. You want to actually provide some evidence on that? Or are you just holding EVs to a higher standard of cleanup than ICEs.

The comment was posed that environmental costs “should be” included in the costs of an ICE. My comment was that if so then the same should apply to EV’s so I was in fact holding both EV’s and ICE vehicles to the same standard (similar to my feelings about subsidies). Context is everything my friend.

 

[ThirstyBarbarian]

So now that we’re in the proper thread I will ask my question again. You said the EV manufactures cannot keep up with supply. So if that is the case why is there a need for such large tax incentive subsidies for the purchase of EV’s?

I don’t know the details, but there are existing subsidies for EVs. So at least some of the existing demand is due to existing subsidies. It’s not clear to me that the new subsidies actually will increase demand or just maintain the demand that is there now.

It might seem odd to subsidize the purchase of something that already has greater demand than supply. But demand pressure should result in greater supply. It looks like manufacturers are rushing to scale up production of batteries and EVs. It really seems like the industry is turning a corner right now. I’m not sure that would be happening without the incentives.

 

[Tyeeking]

Stepping in on this one, in the right thread. Fossil fuels get ~$20B in annual direct subsidies, plus a variety of additional indirect subsidies and externalities.

https://www.eesi.org/papers/view/fa...-closer-look-at-tax-breaks-and-societal-costs

Good for you for “stepping in it”.

So let’s tackle to the two big supposed direct subsidies.

Intangible Drilling Costs as your cite clearly states “Allows companies to deduct a majority of the costs incurred from drilling new wells”. In other words cost of goods sold. This is not unique to fossil fuels but rather is generally accepted accounting practices. Even EV manufacturer, battery manufacturers, cobalt and lithium mines get to deduct the costs to produce or extract what they sell. In fact there is not a business out there that does not get to deduct the cost to produce.

Percentage Depletion is as per your cite “An accounting method that works much like depreciation”. This is an accounting method that is virtually the same for all mining businesses (even the cobalt, lithium, nickel, etc mines favored by EV enthusiasts). It is not unique to the oil industry but rather the norm in all “extractive businesses”.

If you do some basic research you will find that the so called “Big Oil” subsidies are simply generally accepted accounting practices that are not really unique at all to “Big Oil”. They are phrased a certain way to promote a certain hatred of the industry.

On the other hand EV subsidies are very much unique to “Big EV”. There is no tax incentive for the purchase of an ICE vehicle.

As I stated earlier I hate virtually all subsidies that favor a particular industry. The political class of either stripe should not be picking winners and losers.

 

[smstachwick]

Good for you for “stepping in it”.

So let’s tackle to the two big supposed direct subsidies.

Intangible Drilling Costs as your cite clearly states “Allows companies to deduct a majority of the costs incurred from drilling new wells”. In other words cost of goods sold. This is not unique to fossil fuels but rather is generally accepted accounting practices. Even EV manufacturer, battery manufacturers, cobalt and lithium mines get to deduct the costs to produce or extract what they sell. In fact there is not a business out there that does not get to deduct the cost to produce.

Percentage Depletion is as per your cite “An accounting method that works much like depreciation”. This is an accounting method that is virtually the same for all mining businesses (even the cobalt, lithium, nickel, etc mines favored by EV enthusiasts). It is not unique to the oil industry but rather the norm in all “extractive businesses”.

If you do some basic research you will find that the so called “Big Oil” subsidies are simply generally accepted accounting practices that are not really unique at all to “Big Oil”. They are phrased a certain way to promote a certain hatred of the industry.

On the other hand EV subsidies are very much unique to “Big EV”. There is no tax incentive for the purchase of an ICE vehicle.

As I stated earlier I hate virtually all subsidies that favor a particular industry. The political class of either stripe should not be picking winners and losers.

You’d prefer that Shell, BP, Chevron, etc. choose themselves as the winners and leave everyone else to deal with global catastrophe? (EV manufacturers don’t pose a comparable ethical dilemma.)

Neither is ideal but a little thought will quickly expose which is more fair and workable.

 

[PhilC]

We're having the same debate about phasing out ICE in the UK. The UK Gov (well, Boris but he's on the way out) announced that new sales of ICE will end in 2035. Call me a cynic, but announcing that a few days before hosting the Glasgow climate conference may not be entirely coincidental.

In general people seem to like the idea but are concerned about (a) the lack of range of current EV, (b) the absence of any strategy or funding to install charging points and (c) the cost of an average family-sized EV is about £10000 more than the equivalent ICE.

An example of the problem: A journey to see my brother in Liverpool is about 4 hours each way in an ICE and can be done there and back on one tank of unleaded. The same journey in an equivalent sized EV requires a two-hour stop each way to top up the battery, and an overnight charge. I looked at the map of charging points and the most direct route only passes about 13 places where I can charge the car, and they have a total of 34 charging points between them. It's just too risky to get an EV as I could end up either waiting for a charging point to become free, or running out of juice.

If UK Gov is serious about mandating EV then there needs to be some incentive to install charging points. Gov has withdrawn the subsidy for domestic charging points, and there is no programme to encourage/subsidise/promote charging points on commercial premises. It's going to take years to plan and install enough charging points but no-one is willing to take the first step.

 

[Peartree]

As a sort of incentive, this is interesting food for thought. Quite a number of years ago, Germany passed a law that said any product manufactured, could be returned to the manufacturer for recycling at the end of life of that product as a last resort if other recycling options were unavailable (at least that's how I remember it). The people who were selling the Russian/East German Trabant automobiles had parking lots full of unrecyclable crap because of the way that they were built, as were some appliance manufacturers. But, it didn't take long for manufacturers to figure out that it was in their best interests to design with recycling in mind.

Such a rule might not be legal here, but I've often thought it would be a good start.

And that would be the same for both ICE and electric cars, as well as wind turbines, and other things that people say are not recyclable. Nobody seems to mind how much crap goes into the landfill, until they want to build a new landfill near where you live.

Similarly, if we really want to rapidly expand the network of available charging stations nationwide, AND level the playing field, the government should a) require a minimum fee for every charge (per stop or per Kw/h) that goes to the owner of the charging station to provide a profit incentive for building and maintaining them. And b) add a per KW/h tax to maintain highways. If there is money to be made by building charging stations, it won't take long before we have more than we need.

 

[ThirstyBarbarian]

As I stated earlier I hate virtually all subsidies that favor a particular industry. The political class of either stripe should not be picking winners and losers.

That’s part of your political philosophy — a policy position regarding subsidies in general and how much of a role government should play in the free market. Certainly a lot of people see it that way, but a lot of people also disagree. I happen to be one who strongly disagrees.

There are a few reasons why a society might not want to leave everything up to free markets to solve. For one thing, a completely free market doesn’t capture all of the costs of a product in the price charged to consumers. In the case of the fossil fuel and ICE vehicle industries, the cost of the pollution is not included in a gallon of gas. It’s a cost born by society in general, mostly by those most directly impacted by the pollution, not the consumers or producers of the product. And if you believe that CO2 pollution is driving global climate change, then the costs of extreme weather, drought, fire, floods, storms, etc., are definitely not being paid for through free-market mechanisms and are not priced into the cost of fuel. So there are important reasons why almost all countries in the world see a need to shift away from fossil fuels and ICE vehicles, and it’s clear that free-market mechanisms won’t enable that shift. I think using subsidies to incentivize that shift is probably the most market-friendly way to do it. Alternatives might include taxing fossil fuels, taxing ICE vehicles, making the sale of new ICE vehicles illegal, etc., all of which are definitely on the table.

 

[Tyeeking]

You’d prefer that Shell, BP, Chevron, etc. choose themselves as the winners and leave everyone else to deal with global catastrophe? (EV manufacturers don’t pose a comparable ethical dilemma.)

Neither is ideal but a little thought will quickly expose which is more fair and workable.

This is a great example of “emotional hyperbole”. At a minimum it’s lazy to paint Shell, BP, Chevron, etc as evil.

Shell, BP, Chevron, etc provide products that all of us willingly use. From fuel, to fertilizer (yes it’s fossil fuel based), to plastics, to pharmaceuticals, to what generates most of the electricity that EV owners love it’s horrible “Big Oil” that’s providing what we all ask for.

 

[boatgeek]

Ah, bu the devil is in the details.

Good for you for “stepping in it”.

So let’s tackle to the two big supposed direct subsidies.

Intangible Drilling Costs as your cite clearly states “Allows companies to deduct a majority of the costs incurred from drilling new wells”. In other words cost of goods sold. This is not unique to fossil fuels but rather is generally accepted accounting practices. Even EV manufacturer, battery manufacturers, cobalt and lithium mines get to deduct the costs to produce or extract what they sell. In fact there is not a business out there that does not get to deduct the cost to produce.

There are different rule sets for how expenses are deducted for mining and oil drilling. The biggest one that I can see on a quick read of the regulations is that oil drillers are allowed to deduct the cost of acquiring the property and/or drilling rights, and miners can't. That's a pretty huge difference when millions of dollars are paid for oil leases.

https://www.law.cornell.edu/cfr/text/26/1.612-5https://www.law.cornell.edu/cfr/text/26/1.617-1

Percentage Depletion is as per your cite “An accounting method that works much like depreciation”. This is an accounting method that is virtually the same for all mining businesses (even the cobalt, lithium, nickel, etc mines favored by EV enthusiasts). It is not unique to the oil industry but rather the norm in all “extractive businesses”.

Oil companies can deduct up to 100% of the gross income from the property, and other mining companies can only deduct 50%. There are also differing percentages of what percentage can be deducted. Cobalt, lithium, and nickel have slightly higher percentages, but again I believe these are for mines in the US and relatively little of these minerals are produced in the US.

https://www.law.cornell.edu/uscode/text/26/613

If you do some basic research you will find that the so called “Big Oil” subsidies are simply generally accepted accounting practices that are not really unique at all to “Big Oil”. They are phrased a certain way to promote a certain hatred of the industry.

If you do some basic research, you'll find that even though the Big Oil deductions are similar in nature to mining deductions, there are differences in detail that make the oil deductions more profitable.

On the other hand EV subsidies are very much unique to “Big EV”. There is no tax incentive for the purchase of an ICE vehicle.

As I stated earlier I hate virtually all subsidies that favor a particular industry. The political class of either stripe should not be picking winners and losers.

Somehow, I doubt that you'd advocate for removal of subsidies that benefit your lifestyle.

 

[Tyeeking]

Somehow, I doubt that you'd advocate for removal of subsidies that benefit your lifestyle.

I stand by my earlier comment that I am against virtually all subsidies that are specific to favoring one business over another. I don’t believe that politicians should pick winners and losers.

If a guy named boatgeek doesn’t want to believe that, well that’s a you problem.

How about you. Do you favor the subsidies for “Big EV”, a part of your lifestyle?

 

[Funkworks]

Probably the same reason we’re forced to subsidize fossil fuels?

I agree. Big Oil gets huge subsidies/tax breaks from the US Government thanks to the political whores in Congress.

Please explain. There is no tax credit specifically for buying an ICE car. What unique subsidies (not genrsl accounting practices that apply to all extraction businesses) to the fossil fuel industry are you referring to?

Please explain what huge subsides/tax breaks “Big Oil” receive that are unique to them and not just general accounting practices that are used by all extraction businesses.

And for the record with rare exception I’m opposed to any subsidy that is aimed specifically towards a given industry. The political class regardless of stripe should not be picking winners and losers.

You're in the wrong thread. If you want to talk about subsidies and tax credits, try this one:
https://www.rocketryforum.com/threads/the-politics-of-incentives.172418/

We keep fossil fuels artificially cheap, which increases their use and removes funding and effort from alternatives. If gas is cheap why replace it, right? It doesn’t matter how the subsides are applied, we dump wayyyy too much money into an industry that makes insane profits to begin with. But I’ll leave it alone here… feel free to respond to the other thread, I guess.

An yet there are numerous posts in this thread touting the renewal of EV subsidies and how wonderful they are all without a comment about moving those comments to another thread.

No worries I’ll leave it alone. As I stated earlier the obvious answer to the question made it more of a rhetorical question.

FWIW I do find The technology of EV’s fascinating and am impressed with how quick they have progressed.

You dodged the question which asked for specifics examples unique to the industry and are simply making broad based generalizations.

 

[ThirstyBarbarian]

I’m good with the new subsidies, assuming they pass — at this point no one has voted on the bill yet, and I’m not even sure a vote is scheduled for the House or the Senate.

I hope it does pass. Our economy is going to have to make a rapid shift in energy usage across the board, not just for vehicles, and incentives and subsidies will need to be part of that.

 

[boatgeek]

I stand by my earlier comment that I am against virtually all subsidies that are specific to favoring one business over another. I don’t believe that politicians should pick winners and losers.

If a guy named boatgeek doesn’t want to believe that, well that’s a you problem.

How about you. Do you favor the subsidies for “Big EV”, a part of your lifestyle?

I'm for a variety of different subsidies that do and don't affect me in various ways. I've actually not had any chance to take advantage of any EV subsidies (the opposite actually*). A short list of subsidies that don't benefit me personally that I support:

Electric vehicle purchase credits
Preferences for hiring veterans
Tuition reimbursement for medical professionals who work in underserved/rural areas
Mortgage interest deductions (I took advantage of this in the past, but since have paid off the loan)
Health care cost deductions

And a couple that directly benefit me/my immediate family
401k/IRA deductions
College cost deductions

All of those could be cast as the federal government picking winners and losers, though in some cases it's more a matter of preventing industries from losing more. The tuition reimbursement one in particular is what keeps small rural hospitals afloat. They can't otherwise compete for doctors and nurses.

* I bought my EV used so couldn't take advantage of any of the tax credits for new EVs. I get penalized on my annual state registration for not having an EV. The penalty is nominally to replace the gas tax that I don't pay by not buying gas, but it's also more than what I would pay in gas tax for equivalent miles driven.

 

[jderimig]

Huge win for clean energy. . . . Clean energy tax credits are the centerpiece. Under the deal, existing renewable credits would be extended. After 2025, they would become technology neutral and based on greenhouse gas emissions reductions.

Is there any deeper thinking behind this than just that wind and solar are “clean” so we should build more of them? Doesn’t look like it. So give us a few years of this, and we’ll be right where Germany is: vast excess capacity of wind and solar panels, none of which is there when you need it, and electricity rates tripled to pay for the redundant excess capacity and subsidies to the people who built it. At least so far we have our own natural gas for the backup, but they’re trying to shut that down too.

 

[smstachwick]

Ah, bu the devil is in the details.

There are different rule sets for how expenses are deducted for mining and oil drilling. The biggest one that I can see on a quick read of the regulations is that oil drillers are allowed to deduct the cost of acquiring the property and/or drilling rights, and miners can't. That's a pretty huge difference when millions of dollars are paid for oil leases.

https://www.law.cornell.edu/cfr/text/26/1.612-5https://www.law.cornell.edu/cfr/text/26/1.617-1
Oil companies can deduct up to 100% of the gross income from the property, and other mining companies can only deduct 50%. There are also differing percentages of what percentage can be deducted. Cobalt, lithium, and nickel have slightly higher percentages, but again I believe these are for mines in the US and relatively little of these minerals are produced in the US.

https://www.law.cornell.edu/uscode/text/26/613
If you do some basic research, you'll find that even though the Big Oil deductions are similar in nature to mining deductions, there are differences in detail that make the oil deductions more profitable.

Somehow, I doubt that you'd advocate for removal of subsidies that benefit your lifestyle.

I always appreciate that you have a firm grasp on these details. Thanks for sharing that.

This is a great example of “emotional hyperbole”. At a minimum it’s lazy to paint Shell, BP, Chevron, etc as evil.

Shell, BP, Chevron, etc provide products that all of us willingly use. From fuel, to fertilizer (yes it’s fossil fuel based), to plastics, to pharmaceuticals, to what generates most of the electricity that EV owners love it’s horrible “Big Oil” that’s providing what we all ask for.

I don’t pretend to have super in-depth knowledge on all of this, but fossil fuels are already demonstrated to cause problems and many jurisdictions are creating pathways to phase them out.

Fertilizer has been manufactured since ancient times through a variety of methods, so petroleum is far from the only available source for it. Replacing petroleum sources is again a question of either developing a suitable alternative or cutting back our usage needs. It may not even have to mean famine, either, given how many everyday products are plant-based that could be produced by other means or done without, along with the food surpluses in the global north.

Plastics produce all kinds of problems on their own, and the effects are immediately obvious. I shouldn’t have to detail how moving away from them, with or without substitution, is a no-brainer.

Pharmaceuticals is the one I’m least qualified to speak on. I would like to think that sourcing could switch and need could be reduced, and that such a sacrifice would be worthy, but I don’t have any knowledge to indicate that with any reliability. Call that “deferred” then?

So basically you have failed to present these companies and their core products or product derivatives in any way that is any degree of compelling.