Predictions For 2011
By Bill Drinkwater, Executive Director of EVMaine.org
 

Well, its that time of year again to squint into my not-so-clear crystal ball and try to ascertain what the future holds for us.

Overview of the Economy in 2011
Overall, it will be an economically declining year mainly because the federal stimulus packages will come to an end and many states and municipalities are nearly bankrupt.

The declining commercial real estate market, along with burgeoning student debt that will eclipse the massive credit card debt for the first time and a middle class under siege will altogether put the brakes on this economy, including the new car market.

Economists (who mostly believe that Wall Street reflects conditions on Main Street) never include the costs from nature into their tallies for a forever-growing U.S. economy. So they will once again cast their optimistic nets far and wide, but they really don’t have a clue about a future with less energy available, instead of more.

Oil Demand
Oil demand rose sharply in 2010 mainly because of growth in China and it is expected to increase further in 2011, although at a slower pace. This headline from MSNBC.com on December  26th 2010 might give us a hint of our collective fate in 2010: ^”OPEC ministers say world can handle $100/Barrel oil” http://www.msnbc.msn.com/id/40811733/ns/business-stocks_and_economy/
An interesting video is this one: “$5 Gallon Gasoline by 2011?”  http://www.msnbc.msn.com/id/21134540/vp/40854459#40854459  
And this quote, “These days, $4 a gallon seems a certainty. The only question is when. A rapid run-up, as we saw in 2008, could send the economy spiraling downward, dragging car sales with it.”  The video containing that quote is here: http://www.msnbc.msn.com/id/40839913/ns/business-autos/   Yikes!

Good News
On the brighter side, much higher gasoline prices will drive many Americans who are in a car buying mood to seriously consider purchasing an electric car, especially if the car makers preface their TV commercials with the words “Never buy gasoline again!”

Peak Oil
Peak Oil does not mean that the world is running out of oil, but that the world has already tapped all of the major ‘low hanging fruit”, the easy and cheap to produce oil from land-based wells in conflict-free areas. All of these massive oil fields around the world are now declining in production. However, ever since the massive BP blowout I am convinced that there’s plenty of oil left under the deep oceans, which cover the majority of the world’s surface. But that oil is considerably more expensive to get in money, time and energy invested, which will raise the price of oil substantially, both at the pump and in environmental costs.

In addition, the U.S. Government’s ‘Quantitative Easing’, the printing of massive amounts of US dollars to benefit Wall Street, and the borrowing of $96 Billion dollars every weekday from mostly foreigners to keep the US economic $uperliner afloat, are reducing the value of the dollar, putting additional upward pressure on the price of oil. Also, as the dollar is losing value and legitimacy many other countries are already running for the exits and trying to find a substitute world Reserve Currency. Iran is only selling its oil for Euros, not dollars, and Cuba is trading rural doctors for oil from Venezuela as two non-dollar oil-buying examples.

China had tens of millions more cars drive onto their roads over the past two years causing a major increase in their demand for oil and gasoline.

Because of all these factors 2011 will force oil prices higher than the current $90 a barrel and the inevitable increasing oil, gasoline and diesel prices are bound to cripple any nascent recovery of the U.S. economy in 2011.

The good news is that several proposals for U.S. gas tax hikes at the pump in the states and Congress are now dead in the water because they would negatively affect any recovery of the U.S. economy. So you can expect no gasoline tax hikes in 2011 in the U.S.

I predict that sales of huge, low mileage pickup trucks will slow to a crawl in the U.S. in 2011 due to the rising fuel costs in this sputtering economy.

The Administration will continue to chase its illusory goal of building energy-gobbling 200 mph supertrains based on the belief that Americans have the right to start commuting hundreds of miles to work, instead of just today’s hundred miles or less. That will surely be touted as a ‘major improvement’ in our profligate lifestyle by Washington’s ‘experts’ who don’t have a clue about reality, or the limits tha will be incurred with future resource shortages. And surely some yahoo will proudly name this new category of long-distance commuters ‘supersuburbanites.’ You betcha!

We will not bring the troops home in 2011 and put them to work upgrading old and building new freight rail lines, which is really what we will need to be able to deliver our food suppy in the future. Later, perhaps today’s freight trains can be replaced by cleaner all-electric trains that can run on the same tracks.
Those two massively corrupt, injurious and bankrupting wars, that are cynically benefitting only war profiteers, are wasting untold billions of the peoples’ tax money. These wars are also, in case you haven’t noticed, an excuse for some members of Congress to call for the elimination of Social Security, after all, “We can’t afford this ‘entitlement’ (even though it pays for itself) because these necessary wars are costing us so much.”

Electric Vehicles
Electric cars and trucks will continue elbowing themselves into the marketplace, as their manufacturers start out by producing the wrong vehicles - large family sedans instead of small, energy conserving electric vehicles. This will result in lower-than-anticipated sales of larger-than-needed vehicles that will consume too much electricity. “Bigger is Better” is one of those American cultural beliefs that won’t fit very well into our resource-poor and energy-scarce future.
The good news for Maine is that both Central Maine Power and Bangor Hydro say they are going to reduce their electric rates 6% in June of 2011. And in California electric utilities have offered a reduced electric rate for home-based electric car chargers.

The formation of a well-organized effort to fight the installation of corporate wind turbines anywhere in Maine where they might ‘interrupt the esthetics for Yuppie hikers’ will turn out to have been a very shortsighted idea. We will need all of the ‘clean’ power that we can muster in the future, and the more ‘distributed power’ (local sources) that are created at the local level, as opposed to running wires for countless miles which wastes most of the electricity, would result in a more stable and reliable electricity supply, especially in the harsher future weather from the effects of Climate Change which will be much tougher on the many thousands of miles of wires in the Maine grid system - considering the unimaginable number of tree limbs waiting to fall.

The Coming Gasoline Tax Equivalent Tax
Eventually many states will adopt a fee per mile for electric vehicles that will be collected annually at the time of reregistration that will punish drivers of non-polluting, alternative fuel vehicles which do not burn any gasoline, and thereby don’t pay any gasoline tax. The Maine DOT also has this plan. Most other countries incentivize electric vehicles to speed up getting their environmental advantages as quickly as possible, but raking in more money as fast as possible is still the only criteria in this country.

Personal Preferences
Most Americans won’t buy an electric car until it looks and drives exactly like their current gasoline-powered vehicle until that paradigm is changed by circumstances. So my advice to electric car engineers ftor now is: “Forget the cute joysticks and funny-sounding horns, most people just want what they are already familiar with. Instead, continue to work on making the batteries better.”

Congestion Charge Redux
Many financially crippled U.S. cities will adopt a ‘Congestion Charge’ for vehicles that enter their downtown areas. Already used by many cities around the world as a way to reduce both traffic congestion and pollution, I predict in the American version even non-polluting electric vehicles will be included because this policy will really just be a way for bankrupt cities to raise more revenue. Cleverly disguised as an environmental cleanup effort however, will make this new user fee (tax) more palatable to the public.

Electric Trucks
With the exception of the very nice Electric Ford Transit city delivery truck (soon to be available), and the Zap three wheeler, electric trucks won’t make substantial inroads merging onto American highways in 2011. The batteries aren’t quite strong enough yet to carry heavy loads long distances, although these small vehicles are already ideal for carrying small loads doing local deliveries. Just ask UPS.
Americans will continue to prefer captaining huge, macho-looking 500+ hp behemoths whenever they drive to the corner store for milk and a loaf of bread for a while longer yet. The problem in 2011 is that most Americans will only be able to buy a new monster truck in their dreams.

The Student Loan Effect 
The lifetime debt trap of today’s student loans (you cannot bankrupt your way out of them anymore) will prevent many young adults from buying a car while joblessly residing in their parents attic after completing a ‘promising’ college degree. That’s another dent in the new car market.
And those parents who co-signed for their offspring’s college loans (as some loaners are now requiring) will likewise be unable to purchase a $41,000 Chevy Volt, even with the government frantically printing up bales of subsidy money to reduce the price for them. 

Small Electric Cars
Small, non-polluting electric cars, both full highway speed and Low Speed models have a much brighter and more practical future, and they should be selling relatively better than the larger electric vehicles as several new brands quietly roll out onto the U.S. asphalt in 2011, especially the one from Norway called the ‘Think’ electric car. 
Speaking of quiet cars, electric vehicles will be required to have some sort of engine-equivalent noise onboard before long, possibly beginning sometime in 2011. This is so that blind people in crosswalks will be aware of them nearby.

The Venerable Toyota Prius
The Toyota Prius Hybrid will continue to emphasize its electric characteristics, and the loyal following that basks in its advantage of 50+ mpg will continue their purchases, as much as possible.
In a few years such dual complexity will be unnecessary, but for now this stylishly beautiful partially electric car remains very popular for all the best reasons. A plug-in version is scheduled for release someday, but only Toyota knows when. It can’t be far off though because they’ve been working on it for several years already. The Prius is THE most popular new car in Japan, by the way.

The Nissan Leaf
The Nissan Leaf is the first worldwide-produced and sold fully electric car. Nissan is betting the farm on electrics, so their production is happening NOW, instead of in the future, like late-in-the-game VW. Available in a few cities in the U.S. already, its wider rollout will come after any initial bugs are quietly worked out in 2011. It will retail for around $31,000, but gov’t subsidies will reduce that cost substantially.

The Chevy Volt
The Chevy Volt has planned limited sales in a few designated cities in the U.S. during this first year of sales - 2011. It will retail for around $41,000, but that price too will be substantially reduced by gov’t subsidies.

10 electric cars you can buy in 2011
http://www.msnbc.msn.com/id/40755105/ns/business-autos

Inflation or Deflation?
The government keeps telling us that it fears Deflation the most, but what consumers will experience in 2011 will be more inflation, especially in both food and fuel prices, the two categories that the gov’t doesn’t include in its calculations of the ‘official’ inflation rate. So although the gov’t likes to talk about Deflation a lot, just don’t pay any attention to them.
Basic food commodity prices will rise in 2011, having a dampening effect on other consumer spending in general, including slowing the sales of new vehicles. So smaller, more efficient and less costly new vehicles, plus used vehicles will sell better in 2011 than big, fancy new SUVs, for instance.
The standard American criteria for buying a vehicle has traditionally been based chiefly on style and appearance, often along with brand loyalty. These criteria will become less important in 2011. As Americans find themselves with less disposable income and some scary prognostications about the economy (“a jobless recovery, increasing inflation, unsustainable national debt, a Greater Depression, etc”) a more careful and prudent mindset about spending by the public is definitely coming about. And that’s a good thing.

My Car
I remember when, in 1993, I went to Wiscasset Ford to buy a new car. Everyone was astonished when after being asked what I wanted, I replied, “The least expensive new car on the lot.” They said, “But why?” and I replied, “Because it will have the best gas mileage.” At that time, the best possible gas mileage was simply not the criteria for hardly any new car buyers. By the way, I purchased a 1994 Ford Festiva and it DID get its rated 46 miles per gallon/highway. I couldn’t have been happier for the next 11 years until I sold it, and it is still running today with a happy new owner. I predict that more buyers will develop that sort of more practical mentality concerning rated miles per gallon in 2011. 

Cargo Bicycles - Good Idea!
Cargo bicycles will finally make some real inroads into the American market in 2011, and a few dealers will also offer electric cargo bicycles, an even better idea for when the leg muscles start burning.

Best of luck to all in 2011.

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