On Friday’s broadcast of CNBC’s “Squawk Box,” Energy Secretary Jennifer Granholm responded to concerns that emulating some of California’s policies will drive gas prices higher by stating that it’s “less expensive to operate an electric vehicle” and people get tax benefits “if they are able to take it up, and if they’re able to afford a lease.”
After Granholm mentioned that refineries are being converted to biofuels due to policy incentives, co-host Becky Quick said, “[T]o see some of these policies embraced in California where they say we want to be at peak gasoline usage, and, as a result, we’re going to make more and more strict laws that require all of these other things that make it less and less likely for companies to want to invest in the refineries there, what you’ve seen is gas prices are much higher there than anywhere else in the nation — with the exception of potentially Hawaii and Alaska. But what you see are these California prices that are significantly higher. If you see that carried out throughout the rest of the country, you will probably have a very unhappy electorate, because every time they see gasoline prices up $1, they scream.”
Granholm responded, “Of course. And I don’t think you’re going to see California taxes or prices carried out through the rest of the country, because these are all done, as you say, on a state-by-state basis. California is unique –.”
Quick then cut in to say, “But they’re talking about the same things that you just about with biodiesel and other issues. If you spread those on a national level, you will have probably similar reactions.”
Granholm countered, “Well, but a lot of the increase, a lot of price gap for California, the significantly more expensive price per gallon, does have to do with gasoline taxes too. So, I think everybody knows, Becky, we are in this transition right now. It is, for consumers, significantly less expensive to operate an electric vehicle than an internal combustion engine vehicle –.”
Quick then cut in to say, “With tax incentives that taxpayers pay for.”
Granholm then said, “Well, it’s — on federal — there [are] federal tax credits that they benefit from if they are able to take it up, and if they’re able to afford a lease. And a lease, of course, is cheaper than perhaps a monthly payment for a purchase. And these tax credits, $7,500 off of a lease, you can really have an affordable vehicle. It’s much cheaper for somebody to operate that. So, we’re in this transition. It is not going to always be smooth and easy, but on the other side of this transition, I think that people will come to love, as people who drive electric vehicles have — 95% according to the J.D. Power survey, [are] extremely happy with their electric vehicles because of cost and because they’re fun to drive. I think you’re going to see this transition continue to increase. It is at about 10% of the fleet right now, but that is going to continue to increase at the same sort of pace that we’ve been seeing it increase.”
Quick added, “[I]t’s not just gas taxes. There’s an awful lot more there.”
Granholm responded, “There is, there is, the refinery — there’s no doubt that there are other policy issues in California that are affecting prices. And that’s their choice. And that’s why they have such a massive uptake in electric vehicles in California. But I just don’t see a massive rolling of the California policy framework in the other 50 states. That’s just not going to happen.”
Later, Granholm added that electric vehicle prices will drop as production is scaled up.
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