Governments Have Spasms in Their Knees

It seems that Governments need to visit their doctors – they have spasms in their joints that are causing knee jerk reactions! One of them is the politically correct “decision” to ban all cars using petrol or diesel and to only allow cars fitted with electric motors to be sold or operated in their regions. Remember, it was the same Governments that heavily promoted diesel as the wonder fuel by reducing taxes on its purchase thus encouraging car owners to buy diesel cars. They made this latest decision with what appears to be little research to back up their reasoning.

Economic Fallout
With the reduction in consumption of petrol and diesel comes the reduction in tax revenue from various sources including retail sales, export duties etc. A reasonable person would then have to consider where the future revenue comes from: higher sales taxes across all other products, higher income tax rates, increased taxes on electricity consumption? Somebody will have to pay more, that is a certainty.

Electricity Usage and Creation
There is a view that with all the vehicles going electric, there will need to be more electricity produced and the world is not yet geared up to abandoning fossil fuels as a source of power conversion. Would we see all the petrol and diesel be used to generate electricity – and then the question will be: how efficient is that?

Maybe in 20 years time when these bans are supposed to take effect, more solar, wind and hydro will be used to create the electricity and many houses, office blocks, apartment blocks and car parks will have battery stations fitted that are fed by sustainable sources. Perhaps solar panels will be fitted to car bodies and act as a trickle charger.

Bio-Diesels
So have Governments around the world just killed the bio-diesel industry? Clearly sustainably produced bio-fuels from recycled oils, algae and other cellulose materials are better for the ecology than old-time carbon based diesel, however, the cars that can use them are going to be banned.

Germany is a big producer of diesel cars and I would expect some serious lobbying by their Government to change these bans and refine the wording. They have succeeded in the past – lobbying the UK Government to delay stricter emissions policies, which in turn backfired with the diesel testing debacle that centred on the VW Group.

Expect to See the Bans Evolve
There is plenty of time for these bans to evolve into “good” and “bad” diesel where Governments will subsidise owners to convert to a “good” fuel. Again, they have been down this path before! I think we will see the evolution of biofuels in rail and aircraft usage. Richard Branson’s Virgin Atlantic has been at the forefront of testing biofuels with Boeing.

At the same time, it is interesting to see what happens with the refineries – do they convert to a bio-diesel, become highly efficient solar storage sites or slowly shut down across the globe. What would this mean for employment statistics? Perhaps not as bad an issue as from other policies in play now.

Economically, the Middle East will suffer first if they do not switch quickly to solar and wind power creation. Russia and other oil producing countries (including Britain) will also be hit hard as their revenues literally dry up. Would this then cause political issues to fester more and tensions rise due to a clear delineation of “new” wealth?

My main concern with Governments imposing bans like the ones we are now seeing is that they typically create bigger problems in the future. Now, for many politicians, do they care? They’ll probably be out of a job by the time the problems surface – or they’ll blame subsequent Governments for changing their policies!