10 dirt-cheap housing markets

Youngstown, Ohio. Median price: $55,400
1 of 10
Youngstown, Ohio. Median price: $55,400
A Youngstown mansion costs just $150,000
• Where is America's cheapest real estate?

If you're hunting for a real estate bargain, look no further: Here are 10 cities where the typical home costs less than $82,000.

The nation's cheapest major housing market is the area in and around Youngstown, Ohio. There, the median home price barely breaks $55,000, according to the National Association of Realtors. We're not talking about hovels in slums; these are well-kept homes in nice suburban or city settings priced at levels to make consumers in pricey coastal markets ache with envy.

Want something even nicer. There is a seven bedroom, 4,800 square foot home -- 19 rooms total -- well kept and in the historic district on the market for $150,000. That's not a misprint.

Take your time house hunting: That could save you some dough. Fiserv, the provider of real estate information and analysis, is forecasting a further home price decline in 2011 totaling nearly 12% for the year.

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Europe Pushes to Revive UN Resolution Condemning Syria’s Assad

August 01, 2011, 1:28 PM EDT
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By Flavia Krause-Jackson and Bill Varner

Aug. 1 (Bloomberg) -- U.S. and European allies today are seeking to resuscitate efforts at the United Nations to pressure Syrian President Bashar al-Assad to halt the bloodiest crackdown yet on anti-government protesters.

In response to a German call, the UN Security Council will meet today at 5 p.m. in New York to discuss the escalating violence in Syria, where security forces killed more than 150 people over the last two days. China, Russia, Brazil, South Africa and India -- which has taken over the council’s rotating monthly presidency -- have blocked adoption of a draft resolution first circulated on May 25.

The attack on Hama, accounting for the bulk of the deaths, is among the most vicious episodes in the uprising that began more than four months ago and was unleashed at the start of the holy Muslim month of Ramadan. The Security Council must urgently respond to the ongoing crackdown by referring the situation to the International Criminal Court, Amnesty International said today in a statement.

“I would like to see a UN Security Council resolution to condemn this violence,” U.K. Foreign Secretary William Hague told BBC Radio 4. Still, getting the UN’s decision-making body to act will be “difficult work,” he said.

French Foreign Minister Alain Juppe said that “in these horrifying circumstances, France hopes more than ever that the United Nations Security Council will shoulder its responsibilities by speaking out loud and clear, as the United Nations secretary-general has done several times.”

President Barack Obama, in a strongly phrased criticism of Assad, said yesterday that the U.S. will “increase our pressure on the Syrian regime, and work with others around the world to isolate the Assad government.”

Russia Toughens Stance

In a sign of that Russian opposition to some form of UN action may be thawing, the Foreign Ministry in Moscow put out its toughest statement yet on Syria, saying the use of force against civilians and government representatives is “unacceptable” and “should be stopped.” Officials in Moscow have been reluctant to speak on what they see as a domestic matter.

“There is no real change in the Russian position on Syria, but this statement serves as a kind of insurance policy for Moscow to take further steps at the UN,” Fyodor Lukyanov, an analyst at the Council on Foreign and Defense Policy in Moscow, said by telephone.

Ramadan

Government forces resumed their assault on Hama today on the first day of Ramadan, shelling it early this morning and destroying four buildings, while also attacking the eastern city of Deir al-Zour and the town of Bukamal, Mahmoud Merhi, head of the Damascus-based Arab Organization for Human Rights, said by telephone.

At least 10 people were killed today, Merhi said, while Syrian state television said yesterday that an army colonel and two other soldiers were killed by armed men in Deir al-Zour.

The latest assault came as opposition forces vowed to step up their campaign against Assad during Ramadan. Family and community groups typically gather for evening meals during the month to break their fasts and more people attend special services at mosques. That may make it easier for opposition leaders to organize daily rallies along the lines of those held for the past four months after Friday prayers.

The government “has been very frightened by Ramadan’s onset,” Joshua Landis, a Syria specialist who directs the Center for Middle East Studies at the University of Oklahoma in Norman, said in a telephone interview. “The unfolding crackdown is going to fuel people’s anger.”

No Military Intervention

German Foreign Ministry spokesman Martin Schaefer told reporters in Berlin that it remained to be seen whether the violence over the weekend will prompt reluctant partners to change their position.

“There is no prospect of a legal, morally sanctioned military intervention; therefore we have to concentrate on other ways of influencing the Assad regime and trying to help the situation in Syria,” Hague told the BBC. “It is a very frustrating situation.”

At least 2,000 protesters have been killed since the demonstrations began in mid-March, according to Merhi and Ammar Qurabi of the National Organization for Human Rights.

The unrest poses the biggest challenge to Assad’s rule since he inherited power from his father, Hafez al-Assad, 11 years ago. Assad has blamed the protests on foreign-inspired plots, while conceding that some demonstrators have legitimate demands and pledging political changes.

The European Union imposed an asset freeze and travel ban on five Syrians “responsible for and associated with repression,” Catherine Ashton, the EU’s foreign-policy chief, said in an e-mailed statement, without identifying the people.

--With assistance from Brian Parkin in Berlin, Massoud A. Derhally in Dubai, Ilya Arkhipov in Moscow, Patrick Henry in Brussels and Gregory Viscusi in Paris. Editors: Terry Atlas, Leslie Hoffecker

To contact the reporters on this story: Flavia Krause-Jackson at the United Nations at fjackson@bloomberg.net; Bill Varner at the United Nations at wvarner@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net

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‘Dire’ Finances Forces Rhode Island City Into Bankruptcy

August 01, 2011, 1:00 PM EDT
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By Michael McDonald and David McLaughlin

(Updates with Moody’s report in fifth paragraph.)

Aug. 1 (Bloomberg) -- Central Falls, Rhode Island’s poorest city, filed for Chapter 9 bankruptcy protection as it struggles to meet its pension obligations.

The petition was filed today after state officials failed to persuade unionized police, firefighter and municipal retirees to accept voluntary benefit concessions, according to a statement from Robert Flanders, a judge appointed to oversee the city’s finances. Flanders said he asked the court to reject existing collective-bargaining agreements with the unions.

“The current situation is dire, and necessitates decisive steps to put the city back on a path to solid financial footing and future prosperity,” Governor Lincoln Chafee, who joined Flanders in announcing the bankruptcy petition today, said in the statement. “We will be exploring all options to provide quality services at an affordable cost to all taxpayers.”

Central Falls, a city of about 18,000 located about 6 miles (9.7 kilometers) north of Providence, is the fifth municipal entity to file for bankruptcy this year, compared with six in all of 2010, according to data compiled by Bloomberg. The filing followed last week’s move by lawmakers in Jefferson County, Alabama, to postpone a vote on proceeding with what would be the biggest U.S. municipal bankruptcy.

Out of Assets

The Central Falls pension plan was expected to run out of assets by October without additional funding or significant concessions from both current employees and retirees, according to a June 17 report from Moody’s Investors Service. The rating company at the time lowered the city’s credit grade one level to Caa1, its 17th-highest of 21, from B3.

The pension’s obligations were $48 million greater than the fair value of its assets as of June 30, 2010, according to data compiled by Bloomberg. Central Falls in fiscal 2011 continued its practice of not making its required contribution to the municipal pension and drew on existing plan assets to pay benefits, Moody’s said.

Central Falls has about $21 million of outstanding debt, New York-based Moody’s said. The city’s per-capita income is 50 percent of Rhode Island’s, according to the company.

Gina Raimondo, the state’s treasurer, released a statement today saying she doesn’t expect the bankruptcy filing “to hinder the state’s ability to access the bond markets in the coming months.”

Frank Bailey, a U.S. bankruptcy judge in Massachusetts, will oversee the bankruptcy for the city, according to a court filing.

The case is In re City of Central Falls, 11-13105, U.S. Bankruptcy Court, District of Rhode Island (Providence).

--With assistance from Martin Z. Braun in New York Editors: Mark Tannenbaum, Andrew Dunn

To contact the reporters on this story: Michael McDonald in Boston at mmcdonald10@bloomberg.net.

To contact the editor responsible for this story: Mark Tannenbaum at mtannen@bloomberg.net.

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‘Embarrassed’ Corporate Leaders Quiet on Debt-Ceiling Fight

August 01, 2011, 12:44 PM EDT

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Congress Heads Into Weekend Deadlocked on Plan to Avert Default

By Mark Drajem

(Updates with comment from Donohue in 19th paragraph.)

Aug. 1 (Bloomberg) -- With the U.S. government on the verge of a historic default, the country’s largest business lobbying group took to the halls of Congress last week to press lawmakers to support the Panama Free-Trade Agreement.

The U.S. Chamber of Commerce sponsored a “door knock,” with 80 members handing out Panama hats to tout a trade deal with a nation that has a smaller economy than Akron, Ohio. To critics, the Chamber event illustrates what has been a deafening silence from U.S. executive suites on the gridlock in Washington over raising the federal $14.3 trillion debt ceiling.

“They haven’t done nearly enough to sound the alarm,” said Jim Kessler, vice president for policy at Third Way, a Washington research group that describes itself as advocating “moderate policy” and has executives from Morgan Stanley and Goldman Sachs Group Inc. on its board. Executives “think this is all Washington theater, and it will all get done in the end.”

The Chamber, which last week began to issue almost daily pleas for the debt ceiling to be raised, today urged lawmakers to approve the package worked out by President Barack Obama and congressional leaders over the weekend. In the months leading up to the crisis, company lobbyists and executives had mostly steered clear of the fight.

At a closed-door meeting with Chamber lobbyist Bruce Josten last month, Democratic Senators Mark Begich of Alaska and Mark Warner of Virginia upbraided the group and its member companies for not twisting arms hard enough to get a compromise package worked out, according to two people familiar with the discussion who spoke on condition of anonymity because the meeting was private.

‘Wishy-Washy’

Begich contrasted the lobbying, television advertisements and political giving the Chamber invested fighting off health- care legislation in 2009 and 2010 with its “wishy-washy” approach on the debt ceiling.

“I’m amazed,” Begich said in an interview July 27. “They spent millions saying that health care would be the end of all business in America, but the end of all business in America is in five days from now.”

On the debt debate, corporations have kept their lobbying money on the sidelines. Of the 10 companies with the largest lobbying expenditures in 2011, two said they were lobbying on the debt ceiling during the first six months of this year, according to disclosure forms filed with the Senate: insurer Blue Cross/Blue Shield, the third-largest lobbyist, and drugmaker Pfizer Inc., the ninth-largest.

Buffett, Cote

None of the other companies mentioned the issue. Together those 10 spent more than $90 million on lobbying from January through June, according to data compiled by the Center for Responsive Politics, a Washington research group.

With notable exceptions such as Warren Buffett, the billionaire chairman and chief executive officer of Berkshire Hathaway Inc., and David Cote, chairman and chief executive of Honeywell International Inc., CEOs generally have shied away from speaking out individually on the issue.

“It’s unfortunate that the business interests have not stepped forward as loudly as they should have,” Bill Daley, the White House chief of staff, said in an interview with Bloomberg Television July 26. “You’ve had a silence from the business community to the political establishment over the last number of years that’s been unfortunate.”

Warren Bennis, a professor of business at the University of Southern California who has written about corporate leadership for four decades, says CEOs may have been silenced by positions advocated by some Republicans, such as Tea Party enthusiasts who support an increase in the debt limit only if it’s accompanied by greater spending cuts than the increase and doesn’t raise taxes.

‘Embarrassed’ by Republicans

“They’re caught,” Bennis said in an interview July 29. “They tend to be Republican and they are embarrassed by what they see from Republicans,” Bennis said. “It’s a real stalemate and CEOs want to stay clear of it.”

After negotiations between Republicans and Obama broke down, chief executives of companies such as General Electric Co., BlackRock Inc. and Citigroup Inc. started to push harder for a breakthrough last week, mainly by signing group letters sent to Congress and the administration.

Goldman Sachs Chairman and CEO Lloyd Blankfein and JPMorgan Chase & Co. chief Jamie Dimon were among 14 financial executives who signed a July 28 letter by the Financial Services Forum, a Washington trade group that represents the largest banks.

On July 27, the Business Roundtable sent House lawmakers a letter supporting a bill pushed by Republican Speaker John Boehner that would cut $915 billion in spending over 10 years in exchange for a two-step process of raising the debt ceiling and considering a balanced-budget amendment. Today, the Washington- based group backed the compromise package as well.

115 Associations

Some 115 associations, but no individuals, were listed as signees. The Washington-based Roundtable says on its website that it was “founded on the belief that businesses should play an active role in the formation of public policy.”

The Boehner bill passed the House on July 29, only to fail in the Democrat-controlled Senate later the same evening. After weekend negotiations, Obama said last night that leaders of both parities in the House and Senate reached an agreement to raise the debt ceiling and cut the deficit. The Senate and House may vote as early as today on the compromise.

“We have a great deal of hard work ahead of us to restore our economy and put our nation’s finances on a sounder footing,” U.S. Chamber President Thomas Donohue said today in a statement. “This agreement takes us a step in the right direction and is the right thing to do.”

‘Shaking Their Heads’

Some corporate leaders interviewed by Bloomberg reporters before the weekend talks that produced the compromise said lawmakers should just agree to raise the limit and move on.

“When I talked to my colleagues, they’re all shaking their heads basically in dismay,” Albert Stroucken, CEO of Owens Illinois Inc., the world’s largest producer of glass bottles, said in an interview.

“I am surprised we’ve gotten this deep and it’s unresolved,” Rockwell Automation Inc. Chief Financial Officer Ted Crandall said in an interview as negotiations intensified last week. He declined to say which plan under debate the company may prefer.

Walter Robb, co-CEO of Whole Foods Market Inc., also lamented that “the atmosphere is so hyper-partisan” in Washington. He hasn’t spoken out publicly on the debt issue himself, he said in an interview, because “we’re grocers and we’re really just concentrated on growing the business.”

At United Parcel Service Inc., CEO Scott Davis and Chief Financial Officer Kurt Kuehn wouldn’t discuss which debt reduction approach they might prefer, said Norman Black, a spokesman for the world’s biggest package-delivery company.

No Interest

“Neither Scott nor Kurt have any interest at this point in addressing specific plans, nor have they tried to study all the specifics of some of the proposals that are out there.” Black said in an interview. Executives at 18 other companies contacted by Bloomberg declined to comment or didn’t return phone calls and e-mails seeking comment.

Berkshire Hathaway’s Buffett, one of the CEOs quoted most often on the debt issue, spoke out on the matter as early as last April, saying at the company’s annual shareholder meeting that it was “most asinine” for lawmakers to consider not raising the debt limit.

“If you don’t get a deal you are putting a gun to your head,” Buffett said in a Bloomberg Television interview July 8. “Nothing may happen, but we don’t have a parallel with it in the past.”

Cote, Honeywell’s CEO, served on Obama’s debt commission and has called for reducing the deficit through tax increases as well as spending cuts in interviews on NBC’s “Meet the Press,” Bloomberg Television and other programs and in op-ed articles.

‘Job Destruction’

“For a bunch of people down there who spend all their time talking about job creation, they’re actively on a path to job destruction right now,” Cote said in an interview with Bloomberg News on July 28.

The Chamber of Commerce says it has been pushing in a series of letters this year for Congress to agree to raise the cap. Chamber President Thomas Donohue in April warned that the debt ceiling was a bigger risk to the economy than a possible government shutdown, and vowed to press lawmakers to act.

What the group hasn’t done is mobilize local members to knock on doors in the Capitol, the kind of retail-level pressure for which it is famous in Washington.

“It is almost impossible to do things like that when there is no proposal to rally behind or oppose,” Blair Latoff, a spokeswoman for the Chamber, said in an e-mail. Comparing the debt ceiling to the lobbying on the trade deals with Panama, South Korea and Colombia is comparing “apples and oranges,” she said.

There is still “the expectation by the business community that Washington is going to figure this out,” said Ron Bonjean, a lobbyist who was an aide to Dennis Hastert when he was House speaker.

Unlike the lobbying frenzies over health-care legislation and overhauling the financial system in the previous two years, companies just want a deal, Bonjean said in an interview.

“How they get it done, they don’t care.”

--With assistance from Rachel Layne in Boston, Thomas Black in Dallas, Leslie Patton in Chicago, Natalie Doss in New York and Jack Kaskey in Houston. Editors: Joe Winski, Steve Geimann

To contact the reporter on this story: Mark Drajem in Washington at mdrajem@bloomberg.net

To contact the editor responsible for this story: Larry Liebert at lliebert@bloomberg.ne

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U.A.E., Qatar, Bahrain and Saudi Arabia Cut Rates

The Gulf Cooperation Council The United Arab Emirates decided to cut their bank repository rate by 0.25% to 5.25%; Saudi Arabia decreased its benchmark rate for deposits also by 0.25% to 4.0%; Qatar and Bahrain reduced their deposit rates by the same amount — 0.25% to 4.0%. Kuwait refrained from changing the country’s interest rate, because they’ve already removed their currency’s peg to dollar back in May 2007.

This rate change followed the cut by U.S. Federal Reserve decision to lower the rate from 4.50% to 4.25% yesterday on December 11. Gulf countries, such as Saudi Arabia and U.A.E., started to peg their national currencies to dollar decades ago, and they have to maintain the similar interest rates to keep this peg up.

Lowering the interest rates goes against the general monetary policy of the Gulf countries in the way that it stimulates inflation, which is already very high due to the devalued dollar. Fighting inflation is an important task stated by the government of U.A.E. and this rate cut can only boost up the prices growth.

Although this step contradicts anti-inflation policy, it is almost doubtless that such a small rate change won’t hurt a lot. The possibly better side effect of this change would be another reason for consideration of the dollar peg abandonment by these oil countries.

This entry was posted on TopForexNews on Wednesday, December 12th, 2007 at 9:16 pm and is filed under Economic Indicators. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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O.K., Smart Guys: Fix the Energy Problem How should the U.S. solve its energy problems? The experts brainstorm

Norman Pearlstine, Thomas Kuhn, Bob Shapard, Carol Browner, Jigar Shah, and T. Boone Pickens Henry Leutwyler
This Week

August 1, 2011
Why the Debt Crisis Is Even Worse Than You Think

The U.S. first became a net importer of oil in 1948. The intervening decades have led Americans down a steady path of price spikes, shortages, and compromised foreign policy decisions. Imported fuel means expensive gasoline, lost jobs, and hobbled industries, while climate change poses risks as dramatic as they are difficult to assess. So how do we fix our fuel and energy problems? To answer that question—the first in a quarterly series called Fix This—Bloomberg Businessweek Chairman Norman Pearlstine gathered BP Capital Management’s T. Boone Pickens; Bob Shapard, chairman and chief executive officer of Oncor Electric Delivery and chairman of GridWise Alliance; Carol Browner, former director of the White House Office of Energy and Climate Change Policy for President Obama and EPA administrator for President Clinton; Jigar Shah, CEO of the Carbon War Room; and Thomas Kuhn, president of Edison Electric Institute. Their conversation has been condensed and edited.


What do we mean when we talk about an energy crisis? Is that an appropriate term for framing this discussion?

Shah: The word energy is very confusing. Energy includes both transportation fuel—which I think people are very concerned about—and coal, solar, wind, and other things that produce electricity. People confuse the two, and while we have fast-rising prices of electricity—5 percent rate increases per year since 2000—the fourfold increase in oil prices since 1999 is a much bigger problem in terms of economics than our electricity problem.

Shapard: People perceive there to be a crisis in this country environmentally with carbon and other emissions. I think transportation is the place you go for the biggest impact, and I think it’s a combination of natural gas and electricity that can solve our transportation problem. You can convert a significant portion of our fleet to natural gas and/or electricity. It addresses our dependence on foreign oil, but just as importantly it addresses the environmental issues. While coal plants and power plants are viewed as the villain when it comes to carbon, [giving off] 39 percent of the emissions, 31 percent of the emissions are [from] cars, and the important point is we know the solution on cars.

Kuhn: Never in the history of the world have we been so dependent upon one commodity as we are on oil right now, and every recession has been preceded by a spike in the price of oil. A $10 increase in oil causes $75 billion to come out of this economy. There are a lot of electric cars that are going on the road all over the world, in India, China, and elsewhere. I drive a Chevy Volt. I haven’t visited a gas station in three months. I plug in, I drive at 2¢ a mile compared with 10¢ to 12¢ a mile—that’s about $1 a gallon equivalent.

Browner: One of the first things we did when [President] Obama came to office was set the first fuel-efficiency standards in almost 20 years. We said we can make cars more efficient, and that’s been making our automotive industry stronger.

Pickens: If you remember, President Obama, when he got the nomination, said in 10 years we will not import any oil from the Mideast. I was impressed with that. It’s different than all the other people that ran for President. They said elect me, and we’ll be energy independent. So I thought he’s got a plan, and I hope that he does have a plan.

If there’s a consensus here that we don’t have to be reliant on imported oil, why are we?

Browner: Some of these changes will require congressional action, because what we need to do is give the private sector the certainty and the predictability so that they’ll make the large-scale investments in these changes. They don’t want to start making investments where they think I’m going to build something but I’m not able to sell it.

Shah: Just to be slightly argumentative, I think we were in exactly the same place for both electricity and transportation in the 1970s. For electricity, we opened up that market. I started one of the largest solar companies in the U.S. We had that opportunity because we had net metering, we had streamlined interconnection standards, we had all sorts of ways for us to connect to the grid and actually provide [a new service to] customers who were dissatisfied with the services they were already being provided. Today if you own a gas station, you’re most likely under a franchise agreement with a large oil company that doesn’t allow you to add an alternative fuel station without their permission.

You talk to people in Washington all the time, Boone. Does anybody understand the problem well enough to know how to address it?

Pickens: Get yourself a crisis, and then something will come out of Congress. But we’re sitting here with a bill ready to go in the house, HR1380. [Editor’s note: HR1380 would amend the tax code to encourage investment in alternative energy.] There are 250 million vehicles in America: All I’m trying to address is 8 million 18-wheelers. Go to the past 10 years, and look at our costs with OPEC—$1 trillion in 10 years. The largest transfer of wealth from one group to another. Now go forward 10 years and take [the price of] $100 a barrel forward, which I think is being extremely conservative. That’s $2.2 trillion. Just take the 18-wheelers, that’s 2.5 million barrels a day. Now the $2.2 trillion that we’re going to pay 10 years in the future. … You cut OPEC in half with 8 million vehicles.

Browner: Between what Mr. Pickens has been talking about in terms of the long-haul vehicles and the commitment on electric cars, it would be a huge change in our fleet in this country.

Pickens: Don’t call me Mr. Pickens, O.K.? It makes me feel old when you do that.

Browner: Well, it’s respectful.

Is technology a place that can give us clean or cleaner coal or allow us to do more aggressive fracking for natural gas?

Browner: I personally think the natural gas industry needs to be fully transparent. What scares people is what they don’t know. Right now [fracking] is regulated differently in different states, and I think if the industry would join together and say we’re going to disclose exactly what we’re doing, we’re going to take a giant step forward.

On energy, we certainly know a lot of things that we could do very, very quickly. Energy efficiency is not complicated. There’s a nice little company in Washington, Opower, that works with utilities to send the customer an explanation of how much electricity they’re using in comparison to their neighbors, and you know what the effect of that is? People stop using as much electricity. They don’t want to be less efficient than their neighbors are, and they’re able to achieve a 1 percent to 3.5 percent reduction.

Shapard: If we could reduce electricity consumption by 10 percent, you’d save $25 billion a year in energy costs, you’d reduce CO₂ by about what you get in 10 percent electric vehicle penetration. The problem is people don’t know how to do it. Think about the way you buy electricity today. It’s like going to the grocery store, throwing groceries in your bag, walking out the front door, and once a month the grocer sends you a bill for $800. You didn’t break down eggs from milk from bacon. That’s the way you get electricity, just a big lump bill. If we can give you real-time feedback, studies have shown you’ll use less, you’ll use it smarter.

Shah: I love Opower, but ultimately energy efficiency through individual action is just people spending money out of their own pocket. [It] hasn’t worked for 35 years. I really don’t believe it.

Browner: People make wise decisions when they have access to information. Do you know what percentage of people now use a seat belt? It’s over 90 percent.

Shah: But it’s mandated. There’s a law.

Browner: We got there by educating people.

When we talk about the automotive industry, is the change going to come out of Detroit?

Browner: It’s going to come through the regulators. What regulations do is they create market opportunities for the capital investments, because they create predictability and certainty. When the President said all cars are going to be 35 miles per gallon for the average fleet by 2017, the automotive industry knew what kind of investments they needed to make.

Shah: Here’s one thing that we don’t have in transportation, which I think is critical: There is almost no way in hell that you’re going to get an entrepreneur into transportation. There’s at least 15 different engine technologies that have been invented since the 1960s, but only someone with 50 full-time regulatory affairs people can actually get through the National Transportation Safety Board, through all the EPA regulations, and all of the other things to actually bring a new car to market. Like the group that won the X Prize, right? That’s an actual gasoline-powered vehicle that goes 120 miles to the gallon, and it’s an extraordinary engineering feat. I guarantee you that thing is never going to come to market.

What can we look to that can change the equation in terms of electric vehicles?

Kuhn: Battery technology is making major advancements. Lithium ion batteries [are] coming from a lot of government-supported research with the automobile companies and other companies around the world.

Pickens: Well, don’t end up on a Chinese battery.

Shapard: Even the auto companies are telling us that within five years the price of these batteries could drop in half and the functionality grow.

Shah: But the beauty of the electric vehicle is the business model innovation. There [are] 17 things that you can do that I’ve counted, and you might be able to do more, with an electric battery as an electric utility. The grid’s got to stay at 60 hertz to keep everything running well, and you can use batteries to do this instead of spending reserves with natural gas, which is far more expensive.

Browner: So what you’re saying is when I’m not driving, my car would become part of the electric utility system?

Shah: In California their peak demand for electricity is roughly 60,000 megawatts. If you have 250,000 electric cars, just 250,000 out of 30 million cars they probably have over there, at 20 kilowatts a piece, which is what a lot of these full electric cars are, that’s 5,000Mw. So you now have one-twelfth of the entire grid of storage.

The problem is people go to the dealership and will never buy an electric vehicle. So what you have to do, and entrepreneurs are doing this now, is convert these into vehicle services contracts. You say here’s a free car, just pay me $400 a month, which is what you would have paid for your lease payment, and I’ll get the $4,000 a year out of the utility because you don’t want to deal with the paperwork.

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