By John W. Schoen Senior producer
msnbc.com
updated 1/19/2009 12:54:47 PM ET 2009-01-19T17:54:47

With all the talk about a new fleet of electric cars coming down the pike, Jacob in Denver is wondering: Is the nation's power grid really ready for all these vehicles?

What will be the electric companies’ response as thousands of vehicles are being plugged in and being charged? It reminds me of when corn was being harvested at extreme amounts for energy in the last couple of years and farmers could not afford to feed their livestock and everything farm- and corn-related jumped in price. Is our electricity bill going to go up even more?
Jacob F., Denver, Colo.

Despite the breathless hype surrounding the coming wave of electric cars, the shift away from gas-powered transportation is not likely to overwhelm the nation’s power grid — even given the legitimate worries that this critical infrastructure is badly in need of an overhaul. There are a couple of powerful reasons, according to industry researchers.

The first one is that widespread use of electric vehicles is still years — or decades away. President-elect Obama’s energy policy, for example, targets 1 million plug-in hybrids by 2015.

Even if car makers switched their entire production runs to electric cars, it would still take many years to turn over the existing fleet of 220 million cars and trucks. The average age of cars on the road today is nine years — and rising. So the power industry has plenty of time to get ready.

Because they generate much of their power from onboard gasoline engines, plug-in hybrids aren’t big consumers of electric power from the grid. You can run a plug-in hybrid with about the same amount of power it takes to keep your two, 42-inch plasma TVs fired up (with set top converters), according to the Electric Power Research Institute. Keeping up with the installation of new air conditioning units is a bigger challenge, according to an EPRI spokesman.

There’s also a major difference between the supply of electric power and, say, the corn needed to make ethanol. Because large quantities of electricity can’t be easily stored, power companies have to build enough capacity for the peak load on the hottest day in August. But even on those hottest days, power demand falls sharply at night. Since most electric car owners will probably charge their vehicles overnight, when power is plentiful and rates are lower, the impact on your electric bill will probably be less than the latest video game player you’ve got in your den.

Of course, the capacity of the nation’s power grid will also have to continue grow to keep up with demand from a growing economy — once the economy gets going again. Lately, demand has been growing at about 2 percent a year — or a little less than the overall growth of the economy.

But before committing to building more coal- or nuclear-fired power plants, power companies today are looking at how they can serve the same number of customers more efficiently. Every megawatt of electricity saved (call it a “nega-watt”) is just as useful as a mega-watt of new capacity. New technologies — if widely adopted — could cut the growth of electricity consumption by 22 percent over the next two decades, according to an EPRI study. Some of the cheapest fixes — like replacing incandescent light bulbs with those squiggly compact fluorescents — can provide some of the biggest savings.

That’s not to say the nation’s power grid isn’t due for major overhaul. Unlike the technology now being engineered into the next generation of electric vehicles, large parts of the electrical distribution system operate on technology that’s been around for decades. By encouraging an upgrade to a so-called “smart grid,” the government could even save consumers money.

Competition among power producers, for example, was stymied in the 1990s in part because we don’t really have a national power system — just a series of “interconnected” regional grids. Until you can easily shop for power from providers around the country the way you pick a long distance phone provider, you’re pretty much captive to your local power company.

That smart grid could also help you save money with your plug-in hybrid, too. After tooling around town and topping off your car’s batteries, you could hook them up to the gird and sell power back to your local electric company — and make your electric meter run backwards. It could be that some of the extra power we’re going to need in coming decades will come from generators in millions of American garages.

What is the difference between disinflation, deflation, reflation and stagflation?
Fawad, Lahore, Pakistan

When used in connection with the economic term inflation, which is a steady rise in prices over time, the other four "flations" are:

Disinflation is the shift from high inflation, when prices are rising rapidly, to lower inflation, when those price increases are more contained. There are several causes for this — one of the most common is a sharp tightening of credit, often the result of a shift in policy by a country’s central bank. A boom earlier in this decade tightened supplies of natural resources like oil and metals, accelerating the rise in prices of those commodities. The recent global slowdown has reversed that trend, touching off worries that falling prices may lead to deflation.

Deflation is the opposite of inflation: prices fall steadily, which can produce widespread economic harm if it persists. The problem is that consumers and businesses get used to the idea that prices will be lower in the future, so they postpone spending and investing, which causes the economy to contract, which forces business to lay off workers and cut prices to generate new business. If this downward spiral takes hold, as it has occasionally in the past, it can be difficult to break.

Reflation is the process of breaking that spiral — typically through government efforts to lower interest rates, cut the cost of borrowing and pump money into the system. Those measures are now being taken in the United States and other countries around the world to stop the current global recession and get the economy started again. Even if the economy responds relatively quickly though, there is a risk that the trillions of dollars that have been pumped into the system will touch off another round of inflation down the road.

Stagflation is the worst of all possible worlds: Inflation takes hold in an economy that’s not growing. This presents government policy makers with an impossible choice. If they try to revive the economy by pumping more cash into the system, they run a major risk making the inflation worse. If they try to tame inflation by tightening up on credit and the supply of money, they risk making it harder for the economy to grow.

The last time inflation was a severe, sustained problem in the U.S. was the 1970s, when the government made a series of failed attempts to contain it — including wage and price controls during the Nixon administration. After a decade of stagflation, the ultimate cure was a government-induced recession in 1980 (and again in 1981) that sent interest rates peaking at 20 percent and the unemployment rate to just above 10 percent.

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