The Green Dilemma
The slogan for today’s consumer is “Go Green.” As it seems that the up and coming technologies are almost all based on ideal touted as being “eco-friendly,” the consumer must make a choice as to whether the benefit is worth the added money.
The cost of a certain popular base model hybrid SUV is around $28,850, minus the $750 federal tax credit the purchase price is still $29,110. While the government tax credit sounds great it still passes on an extra $8,000 in cost to the consumer as opposed to buying the same model SUV with a standard gasoline engine.
The hybrid SUV is rated for an estimated 42 miles per gallon, while the standard version only gets around 24 miles to the gallon. This translates to the hybrid driver getting around 120 extra miles per tank of gasoline, and with the price per gallon of gasoline hovering around $2.75 it translates to around $10.30 saved on every 15 gallon tank of fuel used.
That really sounds like an astounding amount of savings and a great buying incentive, but a bit of simple math shows that the hybrid driver would need to consume about 776 tanks of gas, or around 372,000 miles of driving just to break even on the original extra purchase price of the hybrid.
This kind of cost benefit ratio isn’t limited just to the purchase of alternative fuel vehicles. A close investigation of nearly all the present green technology, from electric cars to solar homes illustrates the same kind of debacle. Many times the original added cost of green technology prohibits its widespread usage.
In today’s economy it simply isn’t practical for the average person to outlay a huge sum of cash in the hopes that the investment will pay for itself many years in the future. Not many people have that kind of disposable income.
Market executives, scientists and developers of green energy sources and technology have recognized this as a legitimate problem in getting the green energy movement off the ground. It has finally been realized that the only way to make green energy popular is to make it cost the same as conventional sources.
Is the answer more government intervention? It would seems that the US government has decided to take a vested interest in the problem since recently President Barack Obama promised $2.3 billion in federal subsidies to green energy developers in an effort to allow the development of better and more cost effective energy sources.
In many other countries these subsidies have helped to jump-start the development and distribution of green energy sources. In Germany, for example, the government has subsidized green energy sources in the form of feed-in tariffs which allow the producers of green energy to sell the energy produced at above market prices. This has led to Germany having more solar panels in use than any other country on earth.
These subsidies may assist in getting movement toward green energy started, but the truth is that the only way to make green energy attractive to the masses of to make it at least as cheap as conventional energy sources. Until that happens, the dream of green energy becoming a cornerstone of energy production might remain just a dream.
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