Goldman Sachs: The beginning of "Truth Be Told..."
In several of my blogs I have mentioned how Goldman Sachs and Morgan Stanley, having destroyed the mortgage market and crashed the U.S. economy, have now moved their derivative trade to cap and trade where they will do it all over again.
It disgusts me to have my extreme cynicism proven correct -- politics has always been about moving money around -- rewarding those who help politicians get elected. Goldman Sachs and Morgan Stanley gave over $25m to politicians in the last election. Taxpayers bailed them out with TARP money costing billions.
Enough is enough. No business is too big to fail. Let 'em go down or put 'em down: Goldman or the politicians who support them. Time to punish (read regulate) those who cannot control their greedy impulses!
Showing posts with label Glenn S. Dorfman. Show all posts
Showing posts with label Glenn S. Dorfman. Show all posts
Friday, April 16, 2010
Wednesday, March 10, 2010
What Are We To Make of This?
For a little over two years, I have been fortunate enough to have had the time to carefully examine issues of public importance like global warming. The "science," as the proponents of global warming like to say, is a closed book and those who refuse to accept it are immediately labeled "deniers." Having read most of the "science," I was, until six months ago, mostly convinced that it was settled.
As I have stated in this space previously, I am concerned, and will remain so until convinced otherwise by observation, and the application of logic and reason, that the solutions to the greenhouse gas conundrum need to be carefully scrutinized so that they do not make matters worse rather than better.
So far, national cap and trade, regional cap and trade, and cap and trade, in general, make me nervous because I pride myself on not being fooled more than once. When Goldman Sachs, Morgan Stanley, and other "banks" are major supporters of this solution, like they were of making housing more affordable through the use of "derivatives" and other calculus (that is neither transparent nor particularly well understood 2.5 years into the housing catastrophe!), I remain highly skeptical of cap and trade, of any variety, period, and so should you.
However, putting the half-baked but lucrative for the banks and investors, cap and trade game aside for a minute, what are we to think of the March 5, 2010 SCIENCE article entitled,
Susan Solomon,1 Karen H. Rosenlof,1 Robert W. Portmann,1 John S. Daniel,1 Sean M. Davis,1,2 Todd J. Sanford,1,2 Gian-Kasper Plattner3
2 Cooperative Institute for Research in Environmental Sciences, University of Colorado, Boulder, CO, USA.
3 Climate and Environmental Physics, Physics Institute, University of Bern, Sidlerstrasse 5, 3012 Bern, Switzerland.
"Contributions of Stratospheric Water Vapor to Decadal Changes in the Rate of Global Warming"?
Now this article really does confuse me since, if the "science" is settled, well, read the summary for yourself and, if you have the tenacity read the whole article, and you decide whether healthy skepticism is really denial or, in fact, highly rational and in the general public's best interest. Before we poor billions down the next "housing affordability-type" rat hole, "greenhouse gas amelioration," it would be highly logical if the most prestigious science publication could help us resolve the "science" of the issue more precisely and "permanently."
Originally published in Science Express on 28 January 2010 |
RESEARCH ARTICLES
Contributions of Stratospheric Water Vapor to Decadal Changes in the Rate of Global Warming
Stratospheric water vapor concentrations decreased by about 10% after the year 2000. Here we show that this acted to slow the rate of increase in global surface temperature over 2000–2009 by about 25% compared to that which would have occurred due only to carbon dioxide and other greenhouse gases. More limited data suggest that stratospheric water vapor probably increased between 1980 and 2000, which would have enhanced the decadal rate of surface warming during the 1990s by about 30% as compared to estimates neglecting this change. These findings show that stratospheric water vapor is an important driver of decadal global surface climate change.
1 National Oceanic and Atmospheric Administration (NOAA) Earth System Research Laboratory, Chemical Sciences Division, Boulder, CO, USA.2 Cooperative Institute for Research in Environmental Sciences, University of Colorado, Boulder, CO, USA.
3 Climate and Environmental Physics, Physics Institute, University of Bern, Sidlerstrasse 5, 3012 Bern, Switzerland.
Monday, November 23, 2009
The Senate Wants to Create Jobs: They Should Call Enbridge Pipeline for Advice
Sen. Jeff Bingaman (D-N.M.) wants to make sure that the upcoming "jobs bill" includes the energy sector. Creating jobs is the new political mantra. Most of us are for that since it actually helps people on Main Street rather than Wall Street. However, the private market money sources, lenders and venture capitalists are unlikely to take risks in the alternative energy sector right now. Smart money will stay close to traditional energy so long as we have a weak dollar. Just look at the performance of oil in the past several months for proof.
While oil itself has performed well, the real story in traditional energy is infrastructure. Enbridge Pipeline presents a great example of private sector job creation. Don't believe me, call the Bemidji/Grand Rapids and all in between Chambers of Commerce or read the MPR story below. These are not more government jobs, these are private sector welders, pipefitters, and hardware jobs. With the construction of the Alberta Clipper pipeline from Calgary to Superior, Wisconsin, reliable, friendly Canadian crude is brought to the upper Midwest energy consumer -- you and me. This crude is then refined at the Flint Hills Resources Refinery, just south of the Twin Cities and used by Minnesota outdoorsman in their snowmobiles, four wheelers, snowblowers, ice drills, chain saws, and cars and trucks as well as running Minnesota Main Street business. Minnesota receives approximately 80% of its oil from our Canadian neighbors.
As a result of the pipeline construction, there are no motel rooms available in Bemidji and the surrounding area, restaurants are packed, and food suppliers are running full time as are many ancillary businesses.
Want the real story about how private business is creating jobs and income and taxes right here in Minnesota. Read the details from Minnesota Public Radio at:
Wednesday, October 28, 2009
Let's Trust Science to Fix Climate Change
Ask anyone who knows me and they will tell you that I am, generally, a skeptic/pessimist. Generally, I follow clear thinking, factual analyses of complex issues rather than the media talking heads and the fringe groups making the most noise on the marginal right and left.
So, imagine my surprise and excitement when I read Freeman Dyson's uplifting, optimistic view of climate change some years ago. I was reminded of this optimism last evening when I read "BRAVE THINKERS: A Retrospective," an article in the November issue of THE ATLANTIC MONTHLY.
Here is what was said verbatim:
Name: Freeman Dyson
Job: Professor Emeritus, Institute for Advanced Study, Princeton
Why he’s brave: He’s taking a contrarian view on the Kyoto Protocol.
Quote: “I like to express heretical opinions. They might even happen to be true.”
Dyson, a renowned physicist and pioneer in quantum electrodynamics theory, has lately committed a heresy without equal in modern science: questioning climate change orthodoxy. Dyson doesn’t deny that excess carbon dioxide in the atmosphere is warming the planet. But he predicts that advances in bio-technology—especially the creation of genetically-engineered carbon-eating plants, which he foresees within two decades—will mitigate the damage with a minimum of economic and social disruption. In the meantime, he argues that large-scale carbon-restricting approaches like the Kyoto Protocol are ineffective and disproportionately hurt developing countries like China and India, where the potential to lift millions of people out of poverty now hinges on access to carbon-spewing industries. Such arguments have won him few friends; he describes the interaction between the majority of scientists holding conventional climate change views and the skeptical minority as a “dialogue of the deaf.” But in Dyson’s case, at least those arguments have evolved from a lifetime of scientific rigor and intellectual honesty.
Who do you trust more to solve our world's problems? Politicians and bureaucrats, or esteemed scientists like Freeman Dyson and the rigors of scientific inquiry?
Being a common sense person, like most people, I cast my vote for Freeman Dyson and science.
Tuesday, September 29, 2009
LCFS: Part 1: Status Update Part 2: Analysis
Part 1: CURRENT STATUS OF LOW-CARBON FUEL STANDARD LEGISLATION
FEDERAL LEGISLATION:
According to the Congressional Research Service, the Low-Carbon Fuel Standard Act of 2009, introduced 3/30/2009, proposes the following:
- Amends the Clean Air Act to require the Administrator of the Environmental Protection Agency (EPA) to issue regulations that:
(1) determine the lifecycle greenhouse gas emissions of all transportation fuels;
(2) determine the fuel emission baseline (i.e., average lifecycle greenhouse gas emissions per unit of energy of all transportation fuels sold in the United States in 2005);
(3) apply to refineries, blenders, and importers of transportation fuels;
(4) ensure that, for 2014-2022, annual average lifecycle greenhouse gas emissions do not exceed the fuel emission baseline; and
(5) ensure that, for 2023 and thereafter, transportation fuel providers make specified reductions in the annual average lifecycle greenhouse gas emissions for transportation fuels sold in the United States.
- Grants the Administrator authority to waive emission reduction requirements of this Act to prevent economic or environmental harm.
- Requires the Administrator to study the environmental and resource conservation impacts of the regulations required by this Act and their effect on energy security.
STATE UPDATES:
· The Board-approved Resolution reads: “BE IT FURTHER RESOLVED that the Board directs the Executive Officer to convene an expert workgroup to assist the Board in refining and improving the land use and indirect effect analysis of transportation fuels and return to the Board no later than January 1, 2011, with regulatory amendments or recommendations, if appropriate, on approaches to address issues identified."
· While California has adopted a low-carbon fuel standard, a number of Northeastern states are also looking at the idea, as is the Midwest. Several other states, including Minnesota and Wisconsin, are considering adopting a low-carbon fuel standard.
Part 2: ANALYSIS
· According to the hardly conservative New York Times, Green, Inc., "A low-carbon fuel standard is likely to do little to reduce global warming emissions and can even be counterproductive." This conclusion was based upon an academic paper entitled Greenhouse gas reductions under low-carbon fuel standards by Stephen Holland, Jonathan Hughes, and Christopher Knittel published in the highly-esteemed American Economic Journal: Economic Policy, 2009. The study found that the policy reduces consumption of high-carbon fuels like oil, but “increases low-carbon fuel production, possibly increasing net carbon emissions.”
· While a low-carbon fuel standard requires that the mix of transportation fuels sold to automobiles or trucks include only a limited percentage of carbon-intensive fuels, the idea is to cut carbon emissions from driving, since transportation accounts for more than a quarter of the country’s greenhouse gas emissions.
· The Holland, Hughes, Knittel Economic Journal article starkly concludes that a low-carbon fuel standard “cannot be efficient.”
· One problem with a low-carbon fuel standard is that it could be extremely costly. The research says that a 10 percent reduction in the carbon intensity of fuels could result in abatement costs ranging from $307 to $2,272 for each ton of carbon dioxide.
- That is roughly 100 to 700 times the price of carbon dioxide emissions allowances now traded in the Regional Greenhouse Gas Initiative, a program in 10 Northeastern states to combat global warming by cutting power plant emissions.
· A related problem is that rather than cutting fuel use across the board, such a fuel standard would encourage drivers to increase their consumption of “low-carbon fuels,” and thus theoretically increase the overall amount of fuel consumed.
· Stephen Holland, an assistant professor in the Department of Economics at the University of North Carolina at Greensboro and one of the study’s authors, cited an analogy of a child who eats two chocolate bars but no bananas, and is told he has to increase his banana consumption. The result is that he eats two bananas and two chocolate bars, which increases his overall calories.
· Similarly, the low-carbon fuel standard is “regulating the mix, but not the levels,” he said.
· The easiest way to cut carbon emissions from transportation is to cut the level and “not drive so much,” Mr. Holland said. “Carpool! Take public transportation! Leave the car at home.”
As has been publicly argued about for the past several years, the largest controversy surrounding low-carbon fuel standards involves ethanol, and in particular how to compute the carbon cost of corn ethanol (the issue at hand in California).
· Mr. Holland, who said that ethanol was the primary fuel involved in the study, said that he used a range of assumptions about ethanol, but that since the study had gone to press, he had taken the view that corn ethanol was more carbon-intensive than the paper had accounted for.
· Finally, a low-carbon fuel standard would disallow the importing of Canadian crude from Alberta, making Minnesota and much of the upper Midwest more dependent on crude from political enemies in the Middle East. With all the economic worries our globalized economy confronts each day, deriving oil from our friendly neighbor to the north seems both prudent and reliable.
Tuesday, September 1, 2009
Business Organizes Fight Opposing Waxman Markey
"Those who do not stand up for their own rights will certainly lose them" (theCommonSenseCurmudgeon@blogspot.com).
Despite being a summer dominated by heated public involvement and media coverage of the national health care debate, and relatively cool temperatures for the Upper Midwest, the National Association of Manufacturers (NAM) and the National Association of Independent Businesses (NAIB) have been planning and now have launched a multi-state campaign designed to influence Senate debate of Waxman Markey. Together with state manufacturing associations in Michigan, Indiana, Missouri, Nebraska, North Dakota, Ohio, and Virginia, this powerful business coalition is encouraging small business owners and the public to make sure their collective voices are heard on the devastating economic impact of Waxman Markey on the national economy.
The national advertisement portion of the "Speak Out" campaign will run through September 4 and will include television, radio and the Internet.
Their early August-announced Study of the Economic Impacts of Waxman Markey conducted by NAM and the American Council of Capital Formation (ACCF) produced the following five key findings:
1. cumulative loss in GDP up to $3.1 trillion (2012-2030);
2. employment losses up to 2.4 million jobs in 2030;
3. residential electricity price increases up to 50% by 2030;
4. per gallon gasoline price increases up to 26% by 2030; AND
5. the manufacturing sector would absorb 55-66% of the jobs lost
NAM and NAIB are urging the public to lobby their Senators to oppose any climate legislation that damages job creation or raises consumer and business costs.
Considering the unemployment rate increases and stagnating incomes during the great recession that began in 2006, sounds like good advice to me.
Friday, August 21, 2009
Secretary of State Clinton's State Department Signs Off on Pipeline in Minnesota
http://www.eenews.net/features/documents/2009/08/21/document_cw_01.pdf
On August 20, Secretary of State Hillary Clinton’s State Department took a major step to ensure Minnesota and the Upper Midwest’s energy security by approving the construction of the Alberta Clipper pipeline from Alberta, Canada, through Minnesota to Superior, Wisconsin.
On August 20, Secretary of State Hillary Clinton’s State Department took a major step to ensure Minnesota and the Upper Midwest’s energy security by approving the construction of the Alberta Clipper pipeline from Alberta, Canada, through Minnesota to Superior, Wisconsin.
Indicating that there “is no indication” that the pipeline will worsen the impacts of climate change, the State Department has now removed the final barrier for the continued construction of the 1,000-mile Alberta Clipper pipeline.
Despite a predictable negative reaction from reactionary elements in the environmental community and assurances by President Obama that new technologies for processing the oil sands are on the way, the anti-gasoline lobby threatened lawsuits.
It is interesting to note that a real crack seems to be developing between President Obama’s administration and many environmental groups. The President, Secretary of State Hillary Clinton, and her State Department seem to have decided that energy security and good-paying, ready-to-go pipeline jobs matter in the environmental equation. Good for them.
A State Department analysis (see link below) says the pipeline will help prevent China and other countries from buying Canadian crude, a product valuable to the United States because it is derived without the security complications associated with Middle Eastern nations. So, Minnesota, the Upper Midwest, and the United States benefit and some of our Middle Eastern enemies lose. Sounds logical to me, and I am hardly a military hawk but I am loyal to my country. It is one of my many biases. We are not perfect but this is our country and we have to look out for our collective interests because Middle Eastern oil producers will not!
According to Enbridge Inc., a Canadian oil company, the pipeline will allow them to increase its U.S.-bound flow of oil sands crude by 450,000 barrels a day, beginning next year. Additional pumping stations could be added in the future at "very low cost" to increase the daily flow to 800,000 barrels, the company says.
Next week, part II on oil sands.
Wednesday, July 22, 2009
You want "Scientific Truth" on Biofuels?....
Many of the environmental and agricultural special interests and advocates who supported corn ethanol and the development of other annual-crop-ethanol forgot to carefully examine the externalities of their idealism and/or greed. They seem to be always invoking the veil of "scientific truth." Well here is some scientific truth for all to carefully examine. Maybe this scientific truth will set them free and teach all an important intellectual lesson. Scientific "truth" is dynamic, not static, or based upon political and/or economic expediency!
Science 17 July 2009:ol. 325. no. 5938, pp. 270 - 271DOI: 10.1126/science.1177970
Policy Forum
http://www.sciencemag.org/current.dtl for the full article
Energy: Abstract
Beneficial Biofuels—The Food, Energy, and Environment Trilemma
David Tilman,1,* Robert Socolow,2 Jonathan A. Foley,3 Jason Hill,3 Eric Larson,4 Lee Lynd,5 Stephen Pacala,6 John Reilly,7 Tim Searchinger,8 Chris Somerville,9 Robert Williams4
1 Department of Ecology, Evolution, and Behavior, University of Minnesota, St. Paul, MN 55108, USA.2 Mechanical and Aerospace Engineering, Princeton University, Princeton, NJ 08544, USA.3 Institute on the Environment, University of Minnesota, St. Paul, MN 55108, USA.4 Princeton Environmental Institute, Princeton University, Princeton, NJ 08544, USA.5 Thayer School of Engineering, Dartmouth College, Hanover, NH 03755, USA.6 Department of Ecology and Evolutionary Biology, Princeton University, Princeton, NJ 08544, USA.7 Center for Energy and Environmental Policy Research, MIT, Cambridge, MA 02142, USA.8 Woodrow Wilson School, Princeton University, Princeton, NJ 08544, USA.9 Energy Biosciences Institute, University of California Berkeley, Berkeley, CA 94720, USA.
* To whom correspondence should be addressed: tilman@umn.edu
Recent analyses of the energy and greenhouse-gas performance of alternative biofuels have ignited a controversy that may be best resolved by applying two simple principles. In a world seeking solutions to its energy, environmental, and food challenges, society cannot afford to miss out on the global greenhouse-gas emission reductions and the local environmental and societal benefits when biofuels are done right. However, society also cannot accept the undesirable impacts of biofuels done wrong.
Biofuels done right can be produced in substantial quantities (1). However, they must be derived from feedstocks produced with much lower life-cycle greenhouse-gas emissions than traditional fossil fuels and with little or no competition with food production (see figure, below). Feedstocks in this category include, but may not be limited to, the following:
The best biofuels. The search for beneficial biofuels should focus on sustainable biomass feedstocks that neither compete with food crops nor directly or indirectly cause land-clearing and that offer advantages in reducing greenhouse-gas emissions. Perennials grown on degraded formerly agricultural land, municipal and industrial sold waste, crop and forestry residues, and double or mixed crops offer great potential. The best biofuels make good substitutes for fossil energy. A recent analysis suggests that more than 500 million tons of such feedstocks could be produced annually in the United States (1).
CREDIT: M. TWOMBLY/SCIENCE
Science 17 July 2009:ol. 325. no. 5938, pp. 270 - 271DOI: 10.1126/science.1177970
Policy Forum
http://www.sciencemag.org/current.dtl for the full article
Energy: Abstract
Beneficial Biofuels—The Food, Energy, and Environment Trilemma
David Tilman,1,* Robert Socolow,2 Jonathan A. Foley,3 Jason Hill,3 Eric Larson,4 Lee Lynd,5 Stephen Pacala,6 John Reilly,7 Tim Searchinger,8 Chris Somerville,9 Robert Williams4
1 Department of Ecology, Evolution, and Behavior, University of Minnesota, St. Paul, MN 55108, USA.2 Mechanical and Aerospace Engineering, Princeton University, Princeton, NJ 08544, USA.3 Institute on the Environment, University of Minnesota, St. Paul, MN 55108, USA.4 Princeton Environmental Institute, Princeton University, Princeton, NJ 08544, USA.5 Thayer School of Engineering, Dartmouth College, Hanover, NH 03755, USA.6 Department of Ecology and Evolutionary Biology, Princeton University, Princeton, NJ 08544, USA.7 Center for Energy and Environmental Policy Research, MIT, Cambridge, MA 02142, USA.8 Woodrow Wilson School, Princeton University, Princeton, NJ 08544, USA.9 Energy Biosciences Institute, University of California Berkeley, Berkeley, CA 94720, USA.
* To whom correspondence should be addressed: tilman@umn.edu
Recent analyses of the energy and greenhouse-gas performance of alternative biofuels have ignited a controversy that may be best resolved by applying two simple principles. In a world seeking solutions to its energy, environmental, and food challenges, society cannot afford to miss out on the global greenhouse-gas emission reductions and the local environmental and societal benefits when biofuels are done right. However, society also cannot accept the undesirable impacts of biofuels done wrong.
Biofuels done right can be produced in substantial quantities (1). However, they must be derived from feedstocks produced with much lower life-cycle greenhouse-gas emissions than traditional fossil fuels and with little or no competition with food production (see figure, below). Feedstocks in this category include, but may not be limited to, the following:
The best biofuels. The search for beneficial biofuels should focus on sustainable biomass feedstocks that neither compete with food crops nor directly or indirectly cause land-clearing and that offer advantages in reducing greenhouse-gas emissions. Perennials grown on degraded formerly agricultural land, municipal and industrial sold waste, crop and forestry residues, and double or mixed crops offer great potential. The best biofuels make good substitutes for fossil energy. A recent analysis suggests that more than 500 million tons of such feedstocks could be produced annually in the United States (1).
CREDIT: M. TWOMBLY/SCIENCE
Sunday, July 19, 2009
Rolling Stone and Me
It isn't that often that I read Rolling Stone Magazine and even less often that I agree with any of its positions. But Matt Taibbi's recent article on Goldman Sachs made me laugh because a year or more ago, I started to see the mortgage plot being recreated with cap and trade climate change policy. Most people thought that it was a wild conspiracy theory though few said anything. But last week Goldman demonstrated, once again, its resilience announcing huge profits. So far, no one has questioned where those profits were generated---at taxpayer’s expense---in the worst recession since 1929.
Taibbi excoriates Goldman Sachs for its role in the Internet, oil and housing bubbles, and then identifies their next great scheme.
“And instead of credit derivatives or oil futures or mortgage-backed CDOs, the new game in town, the next bubble, is in carbon credits — a booming trillion dollar market that barely even exists yet, but will if the Democratic Party that it gave $4,452,585 to in the last election manages to push into existence a groundbreaking new commodities bubble, disguised as an "environmental plan," called cap-and-trade. The new carbon-credit market is a virtual repeat of the commodities-market casino that's been kind to Goldman, except it has one delicious new wrinkle: If the plan goes forward as expected, the rise in prices will be government-mandated. Goldman won't even have to rig the game. It will be rigged in advance.”
It is time American’s realize that it's always about the money now and forever. It is one of the great weaknesses of human nature---greed, which, when mixed with the capitalist spirit, too often leads down the same debauched road. Making matters even more amusing is how often the committed advocates are used/manipulated by the powers that be to make buckets of money while ruining the economy.
Taibbi excoriates Goldman Sachs for its role in the Internet, oil and housing bubbles, and then identifies their next great scheme.
“And instead of credit derivatives or oil futures or mortgage-backed CDOs, the new game in town, the next bubble, is in carbon credits — a booming trillion dollar market that barely even exists yet, but will if the Democratic Party that it gave $4,452,585 to in the last election manages to push into existence a groundbreaking new commodities bubble, disguised as an "environmental plan," called cap-and-trade. The new carbon-credit market is a virtual repeat of the commodities-market casino that's been kind to Goldman, except it has one delicious new wrinkle: If the plan goes forward as expected, the rise in prices will be government-mandated. Goldman won't even have to rig the game. It will be rigged in advance.”
It is time American’s realize that it's always about the money now and forever. It is one of the great weaknesses of human nature---greed, which, when mixed with the capitalist spirit, too often leads down the same debauched road. Making matters even more amusing is how often the committed advocates are used/manipulated by the powers that be to make buckets of money while ruining the economy.
Friday, June 26, 2009
CBO CLIMATE CHANGE CONSUMER COST ESTIMATES: JUST WRONG
CBO: Climate Change Consumer Cost Estimates: Just Wrong
After all these years of carefully observing government data and its continuous revisions, now we are being told by the Congressional Budget Office (CBO) that the climate change legislation before Congress for a vote today, championed by Congressman Henry Waxman of California, will cost consumers pennies a day. Common sense says changing an economy from a carbon dependent economy to a "renewable energy" economy will save Americans money in the "long-term." The old common sense quip my grandmother used to say was "in the long-term we are all dead." Who will be around in the long-term to hold the politicians and environmentalists accountable if they are wrong?
Leaving the conflicting analytics on both sides of the debate out for our purposes, I would like you to consider how such a sea change in energy will occur without totally rupturing our already tenuous economy. I am not talking in the abstract but rather about whether there will be "green" fuel to power our cars, boats, snowmobiles, four wheelers, etc.; energy to cool us in summer and keep us cozy in winter with less oil and coal use at virtually no change in price from our current circumstance. Wow, that is a mouthful.
For myself, I do not trust the politicians and special interests any more than I trust the large private sector banks or the same politicians who promised "affordable housing" for all. The difference is, of course, in the private sector businesses fail, greedy people go to jail, there are lawsuits. Where is the accountability in the public sector? With the uninformed and easily manipulated voter?
Affordable housing, affordable energy, affordable health care...government has never demonstrated taxpayer affordable anything when compared to the ability of uncontrolled market competition. Sure, markets have weaknesses but they also have "creative destruction" to purify themselves when they go awry. What does government have to hold it accountable? Uninformed voters who are easily manipulated by hollow political promises driven by special interests. Remember, I am the guy who supports taking away all business subsidies provided by government. In order for free markets to work, they have to be free of all government attachments.
The cost to consumers and the macro-economy of this Waxman Climate Change legislation will be enormous, beyond the comprehension of most people to adapt to. If not, why did Congressman Peterson demand that agriculture, a major emitter of greenhouse gasses, be exempted from the bill by having the fox guard the chicken coop rather than EPA? Our hope is that the Senate sees the coal/nuclear-provided light before unemployment hits 12-15%!!!
According to the EPA, the cap and trade policy has a relatively modest impact on U.S. consumers assuming the bulk of revenues from the program are returned to households.
– Average household consumption is reduced by 0.03-0.08% in 2015 and 0.10-0.11% in 2020 and 0.31-0.30% in 2030, relative to the no policy case.
– Average household consumption will increase by 8-10% between 2010 and 2015 and 15-19% between 2010 and 2020 in the H.R. 2454 scenario.
– In comparison to the baseline, the 5 and 10 year average household consumption growth under the policy is only 0.1 percentage points lower for 2015 and 2020.
– Average annual household consumption is estimated to decline by $80 to $111 per year* relative to the no policy case. This represents 0.1 to 0.2 percent of household consumption.
– These costs include the effects of higher energy prices, price changes for other goods and services, impacts on wages and returns to capital. Cost estimates also reflect the value of some of the emissions allowances returned to households, which offsets much of the cap and trade program’s effect on household consumption. The cost estimates do not account for the benefits of avoiding the effects of climate change.
– A policy that failed to return revenues from the program to consumers would lead to substantially larger losses in consumption.
Think about this last sentence for a minute. If the climate change legislation (Waxman-Markey) "failed to return revenues from the program to consumers would lead to substantially larger losses to consumption." In common sense speak, this is consumer cost increase. So, please ask yourself, if this program generates billions in revenue, what are its costs to implement? Your job? Your family's economic security?
Do you trust the politicians to continue to return the revenue to you to offset the costs for the next 20-30 years? I do not. All of this ignores the fact that if consumers do not feel the cost of the transition from a carbon-intense economy to a less carbon-intense economy what will force them to change their behavior to a more conservationist mode.
Finally, remember, when Medicare was awaiting Congressional vote in 1965, President Lyndon Johnson and most Congressional leaders promised long-term savings by insuring senior citizens. At that time they used the Social Security surplus to pay for the program. Since then, of course, in the "long-term" the medicare tax was imposed at 3% of income. Now Medicare is on the verge of bankruptcy and rather than fixing it, our leaders are inventing another "critical program" that, we are told will create millions of green jobs in the future and save Americans billions of dollars while "saving the planet." Steelworkers, oil drillers will retrain to become farmers, environmental scientists, and entrepreneurs! You betcha. That will happen shortly after I catch the state record crappie!
Remember the old adage, "Fool me once, shame on you. Fool me twice shame on me."
Monday, June 15, 2009
Cap and Trade: YOU, not someone else, are going to pay more, period.
Here is what this Common Sense Curmudgeon has been thinking about this weekend:
Let's think about cap and trade. Start at the bottom - the oil companies get hit with higher costs, so who do they pass that onto? Fuel companies get hit with higher costs on top of that and put the excess onto whom? Trucking companies who bring goods to stores charge more because their fuels are costing more, and that goes onto whom? Stores pay more for their goods to be delivered so the cost increases to protect their profits. Who is going to pay for that? YOU are.
It's pretty simple and easy to think through once you open your mind and think about everything that is going to increase in price for the consumer. Is every company going to absorb their own increases and take lower profits and/or pay their workers less, cut their benefits? Highly doubtful, don't you think? Who would want to do that? Would you want that to happen to you? Are you willing to pay this price for less carbon dioxide in the air?
So YOU are going to pay for it and if you can't figure that out yourself, take a look at the issue yourself and see if you see things differently. Even if you are the most dedicated environmentalist, friend of the earth and all of its creatures, cap and trade will not work because, in the end, most Congresspeople will not vote for something that will damage their state's economy or raise voter costs even if some believe that they can pin the increases on the old tried and true "business did it," it was someone other than us. So, while the politicians may pass something by the end of summer (50-50 chance), it will do nothing for the environment but it will cost most of us thousands in increased consumer costs per year. But I don't think you need someone else to tell you what is going to be happening over the next few years and beyond...but I will...prices are going to rise and rise and rise with little or no reduction in greenhouse gases.
Oh, and I have mentioned this ad nauseum: Wall Street, big business, and some environmentalists will all get rich on this post-mortgage, environmental-ponzi scheme. Remember, my friends on this blog have been telling you these things for months. Soon we will know, unless we tell our Congresspeople to kill this stupid idea while there is till time and the majority of Americans still have jobs and can afford groceries!
Let's think about cap and trade. Start at the bottom - the oil companies get hit with higher costs, so who do they pass that onto? Fuel companies get hit with higher costs on top of that and put the excess onto whom? Trucking companies who bring goods to stores charge more because their fuels are costing more, and that goes onto whom? Stores pay more for their goods to be delivered so the cost increases to protect their profits. Who is going to pay for that? YOU are.
It's pretty simple and easy to think through once you open your mind and think about everything that is going to increase in price for the consumer. Is every company going to absorb their own increases and take lower profits and/or pay their workers less, cut their benefits? Highly doubtful, don't you think? Who would want to do that? Would you want that to happen to you? Are you willing to pay this price for less carbon dioxide in the air?
So YOU are going to pay for it and if you can't figure that out yourself, take a look at the issue yourself and see if you see things differently. Even if you are the most dedicated environmentalist, friend of the earth and all of its creatures, cap and trade will not work because, in the end, most Congresspeople will not vote for something that will damage their state's economy or raise voter costs even if some believe that they can pin the increases on the old tried and true "business did it," it was someone other than us. So, while the politicians may pass something by the end of summer (50-50 chance), it will do nothing for the environment but it will cost most of us thousands in increased consumer costs per year. But I don't think you need someone else to tell you what is going to be happening over the next few years and beyond...but I will...prices are going to rise and rise and rise with little or no reduction in greenhouse gases.
Oh, and I have mentioned this ad nauseum: Wall Street, big business, and some environmentalists will all get rich on this post-mortgage, environmental-ponzi scheme. Remember, my friends on this blog have been telling you these things for months. Soon we will know, unless we tell our Congresspeople to kill this stupid idea while there is till time and the majority of Americans still have jobs and can afford groceries!
Thursday, June 11, 2009
The consumer deserves the whole truth on corn ethanol
Billy DeFrain’s outrageously inaccurate press release on behalf of the Nebraska Ethanol Board released June 10 is just another example of the corn-lobby-governmental disinformation campaign regarding the consumer costs of ethanol-diluted gasoline.
The corn ethanol advocates argue that the two most important points in favor of corn ethanol production are (1) energy independence and (2) fuel switching. Supply and demand microeconomics tell us that adding a new energy supply should reduce prices consumers pay at the pump. A look at the facts reveals something else.
First, it is imperative to understand that if we use corn to produce ethanol, less of it is available to feed the animals that we like to eat which increases pork, beef and chicken prices. Consumers do not win, farmers and ethanol producers do. While that may play in some parts of mid-America, it doesn’t reduce consumer cost, net. And net is what matters to those of us who buy food for our families and gasoline to get them.
Second, the North Carolina Cooperative Extension Service periodical AG-687, hardly the bastion of “big oil”, states, “A gallon of ethanol does not contain as much energy as a gallon of gasoline.” This means that ethanol is not as energy productive as unleaded gasoline (76,000 BTUs per gallon versus 114,000 BTUs).
According to Mr.DeFrain, public information officer for the Nebraska Ethanol Board, in the aforementioned press release, June 10, “If all the fuel sold in Nebraska in the past five years was E-85, Nebraskans would have saved $2.6 billion.” This outrageous, fantasy proclamation, flies in the face of scientific fact: E-85 causes a noticeable drop in fuel economy, meaning that the consumer’s vehicles must use more of it to travel the same distance than when burning 100% unleaded gasoline. The North Carolina Cooperative Extension Service estimates this drop to be in the 20-30% range, “depending upon the vehicle make and model.” Again, this is the result of the fact that E-85 contains 28% less energy than a gallon of regular gasoline.
A comparison of unleaded gasoline versus E-85 fuel economy values for all flex-fueled vehicles can be found at: http://www.fueleconomy.gov/. Check my argument out for yourself. I suspect that you will find the data enlightening.
In conclusion, our economy is suffering because too many of us trusted what we were told about mortgages for our homes from the vested interests who financially benefited from the hype and the government officials, at all levels, touting “affordable housing for all.” Now, the Nebraska Corn Ethanol Board and others would have us believe that corn ethanol will provide affordable energy for all. I, for one, will not be fooled twice!!!
The corn ethanol advocates argue that the two most important points in favor of corn ethanol production are (1) energy independence and (2) fuel switching. Supply and demand microeconomics tell us that adding a new energy supply should reduce prices consumers pay at the pump. A look at the facts reveals something else.
First, it is imperative to understand that if we use corn to produce ethanol, less of it is available to feed the animals that we like to eat which increases pork, beef and chicken prices. Consumers do not win, farmers and ethanol producers do. While that may play in some parts of mid-America, it doesn’t reduce consumer cost, net. And net is what matters to those of us who buy food for our families and gasoline to get them.
Second, the North Carolina Cooperative Extension Service periodical AG-687, hardly the bastion of “big oil”, states, “A gallon of ethanol does not contain as much energy as a gallon of gasoline.” This means that ethanol is not as energy productive as unleaded gasoline (76,000 BTUs per gallon versus 114,000 BTUs).
According to Mr.DeFrain, public information officer for the Nebraska Ethanol Board, in the aforementioned press release, June 10, “If all the fuel sold in Nebraska in the past five years was E-85, Nebraskans would have saved $2.6 billion.” This outrageous, fantasy proclamation, flies in the face of scientific fact: E-85 causes a noticeable drop in fuel economy, meaning that the consumer’s vehicles must use more of it to travel the same distance than when burning 100% unleaded gasoline. The North Carolina Cooperative Extension Service estimates this drop to be in the 20-30% range, “depending upon the vehicle make and model.” Again, this is the result of the fact that E-85 contains 28% less energy than a gallon of regular gasoline.
A comparison of unleaded gasoline versus E-85 fuel economy values for all flex-fueled vehicles can be found at: http://www.fueleconomy.gov/. Check my argument out for yourself. I suspect that you will find the data enlightening.
In conclusion, our economy is suffering because too many of us trusted what we were told about mortgages for our homes from the vested interests who financially benefited from the hype and the government officials, at all levels, touting “affordable housing for all.” Now, the Nebraska Corn Ethanol Board and others would have us believe that corn ethanol will provide affordable energy for all. I, for one, will not be fooled twice!!!
Thursday, June 4, 2009
Supporters of Corn-Ethanol Reeling...
When it comes to the core of environmentalism, there are no sacred cows. After years of support for corn ethanol, many environmentalists have "turned tail" on the corn farmers over land-use impacts.
Supporters of corn-based ethanol are reeling in response to federal climate change legislation that will punish carbon emitters, including the agriculture industry. They worry that policies like cap and trade and low carbon fuel will destroy their tenuous, taxpayer-subsidized market and lead to the corn ethanol industry being permanently put out to pasture. Most scientific data suggest they are well justified in their concerns... There are many outstanding, credible, scientific studies of the benefits of cellulosic ethanol over corn ethanol.
Here are a few more high-quality scientific studies:
http://www.sciencemag.org/cgi/content/abstract/319/5867/1238
Originally published in Science Express on 7 February 2008 Science 29 February 2008: Vol. 319. no. 5867, pp. 1238 - 1240 DOI: 10.1126/science.1151861 Reports Use of U.S. Croplands for Biofuels Increases Greenhouse Gases Through Emissions from Land-Use Change Timothy Searchinger, 1* Ralph Heimlich, 2 R. A. Houghton, 3 Fengxia Dong, 4 Amani Elobeid, 4 Jacinto Fabiosa, 4 Simla Tokgoz, 4 Dermot Hayes, 4 Tun-Hsiang Yu 4
Most prior studies have found that substituting biofuels for gasoline will reduce greenhouse gases because biofuels sequester carbon through the growth of the feedstock. These analyses have failed to count the carbon emissions that occur as farmers worldwide respond to higher prices and convert forest and grassland to new cropland to replace the grain (or cropland) diverted to biofuels. By using a worldwide agricultural model to estimate emissions from land-use change, we found that corn-based ethanol, instead of producing a 20% savings, nearly doubles greenhouse emissions over 30 years and increases greenhouse gases for 167 years. Biofuels from switchgrass, if grown on U.S. corn lands, increase emissions by 50%. This result raises concerns about large biofuel mandates and highlights the value of using waste products.
1 Woodrow Wilson School, Princeton University, Princeton, NJ 08544, USA. German Marshall Fund of the United States, Washington, DC 20009, USA. Georgetown Environmental Law and Policy Institute, Washington, DC 20001, USA.2 Agricultural Conservation Economics, Laurel, MD 20723, USA.3 Woods Hole Research Center, Falmouth, MA 02540–1644, USA.4 Center for Agricultural and Rural Development, Iowa State University, Ames, IA 50011, USA.
Corn-Based Ethanol Flunks Key Test
http://www.sciencemag.org/cgi/reprint/324/5927/587.pdf
Biofuel Researchers Prepare To Reap a New Harvest
http://www.sciencemag.org/cgi/reprint/315/5818/1488.pdf
Use of U.S. Croplands for Biofuels Increases Greenhouse Gases Through Emissions from Land-Use Change
http://www.sciencemag.org/cgi/reprint/319/5867/1238.pdf
On a macro level, the genesis of this government subsidy and preferential treatment program is but one of multi-thousands of examples of how government interference in the private market place has externalities rarely thought through at the time of group-euphoria and enactment. Regardless of what the lead California and Massachusetts politicians and their following say, cap and trade will have huge financial impacts on consumers and producers.
Your thoughtful, reasoned reactions are always welcome.
Supporters of corn-based ethanol are reeling in response to federal climate change legislation that will punish carbon emitters, including the agriculture industry. They worry that policies like cap and trade and low carbon fuel will destroy their tenuous, taxpayer-subsidized market and lead to the corn ethanol industry being permanently put out to pasture. Most scientific data suggest they are well justified in their concerns... There are many outstanding, credible, scientific studies of the benefits of cellulosic ethanol over corn ethanol.
Here are a few more high-quality scientific studies:
http://www.sciencemag.org/cgi/content/abstract/319/5867/1238
Originally published in Science Express on 7 February 2008 Science 29 February 2008: Vol. 319. no. 5867, pp. 1238 - 1240 DOI: 10.1126/science.1151861 Reports Use of U.S. Croplands for Biofuels Increases Greenhouse Gases Through Emissions from Land-Use Change Timothy Searchinger, 1* Ralph Heimlich, 2 R. A. Houghton, 3 Fengxia Dong, 4 Amani Elobeid, 4 Jacinto Fabiosa, 4 Simla Tokgoz, 4 Dermot Hayes, 4 Tun-Hsiang Yu 4
Most prior studies have found that substituting biofuels for gasoline will reduce greenhouse gases because biofuels sequester carbon through the growth of the feedstock. These analyses have failed to count the carbon emissions that occur as farmers worldwide respond to higher prices and convert forest and grassland to new cropland to replace the grain (or cropland) diverted to biofuels. By using a worldwide agricultural model to estimate emissions from land-use change, we found that corn-based ethanol, instead of producing a 20% savings, nearly doubles greenhouse emissions over 30 years and increases greenhouse gases for 167 years. Biofuels from switchgrass, if grown on U.S. corn lands, increase emissions by 50%. This result raises concerns about large biofuel mandates and highlights the value of using waste products.
1 Woodrow Wilson School, Princeton University, Princeton, NJ 08544, USA. German Marshall Fund of the United States, Washington, DC 20009, USA. Georgetown Environmental Law and Policy Institute, Washington, DC 20001, USA.2 Agricultural Conservation Economics, Laurel, MD 20723, USA.3 Woods Hole Research Center, Falmouth, MA 02540–1644, USA.4 Center for Agricultural and Rural Development, Iowa State University, Ames, IA 50011, USA.
Corn-Based Ethanol Flunks Key Test
http://www.sciencemag.org/cgi/reprint/324/5927/587.pdf
Biofuel Researchers Prepare To Reap a New Harvest
http://www.sciencemag.org/cgi/reprint/315/5818/1488.pdf
Use of U.S. Croplands for Biofuels Increases Greenhouse Gases Through Emissions from Land-Use Change
http://www.sciencemag.org/cgi/reprint/319/5867/1238.pdf
On a macro level, the genesis of this government subsidy and preferential treatment program is but one of multi-thousands of examples of how government interference in the private market place has externalities rarely thought through at the time of group-euphoria and enactment. Regardless of what the lead California and Massachusetts politicians and their following say, cap and trade will have huge financial impacts on consumers and producers.
Your thoughtful, reasoned reactions are always welcome.
Thursday, May 28, 2009
The "Money" in Cap and Trade
I apologize, in advance, for being so stuck on "the money" generated by the favored solution to greenhouse gas amelioration---cap and trade. But being both a curmudgeon and having a strong intellectual proclivity against what the sheep think, climate change legislation will generate "green jobs." The problem is the majority of those jobs will be on Wall Street in the next bogus derivative market---carbon credits. Not only will this "solution" create many more public financial problems than the bogus housing finance scheme the market invented in the 1990s, but it will not reduce greenhouse gases.
If, and this is a big "IF", the House passes the Waxman-Markey cap and trade bill and the Senate passes something and they are able to reconcile their differences in conference committee, I predict that there will be so many free credits to favored industries (to get the votes), that the end result will be lots of rich investors (big corporations, a plethora of Congress-people, environmentalists, and of course, Wall Street). What a collection of characters! It inspires fear and reasons for Americans to strongly oppose cap and trade.
Did I mention that since the petroleum industry is not a favored industry, look for higher and higher gas prices at the pump! That is certain to help Minnesota families, generally, during this terrible recession and the recreation market in greater Minnesota more specifically. Have a great summer (sarcasm added)!
POINT CARBON
Carbon market doubled in 2008: World Bank http://www.pointcarbon.com/news/1.1126224
Published: 27 May 2009 10:26 CET
"The value of the carbon market doubled in 2008 to $126 billion (€86bn), the World Bank said.
The total volume of trade rose 61 percent to 4.8 billion tonnes of carbon dioxide equivalent (CO2e), compared to 3.0 billion tonnes in 2007, a report by the bank revealed today."
If, and this is a big "IF", the House passes the Waxman-Markey cap and trade bill and the Senate passes something and they are able to reconcile their differences in conference committee, I predict that there will be so many free credits to favored industries (to get the votes), that the end result will be lots of rich investors (big corporations, a plethora of Congress-people, environmentalists, and of course, Wall Street). What a collection of characters! It inspires fear and reasons for Americans to strongly oppose cap and trade.
Did I mention that since the petroleum industry is not a favored industry, look for higher and higher gas prices at the pump! That is certain to help Minnesota families, generally, during this terrible recession and the recreation market in greater Minnesota more specifically. Have a great summer (sarcasm added)!
POINT CARBON
Carbon market doubled in 2008: World Bank http://www.pointcarbon.com/news/1.1126224
Published: 27 May 2009 10:26 CET
"The value of the carbon market doubled in 2008 to $126 billion (€86bn), the World Bank said.
The total volume of trade rose 61 percent to 4.8 billion tonnes of carbon dioxide equivalent (CO2e), compared to 3.0 billion tonnes in 2007, a report by the bank revealed today."
Tuesday, May 12, 2009
Congressional Hearings on C&T Speculators
I am such a visionary. It turns out that some politicians are waking up to the fact that the much touted cap and trade solution to controlling greenhouse gases is really about the money, not the environment. Imagine that! Who, but a curmudgeon like me, would have thought that all those swell, well-meaning Al Gorites were really interested in creating an issue the solution to which made them billions. Sounds like "affordable housing" for all, the preface to the subprime debacle.
I would cordially invite you to visit my earlier blogs on these matters. The reason market capitalism is the greatest economic system the world has ever seen is that it permits people to be creative, sometimes too creative for the collective good. But maybe the collective good is human speak for what is best for "me."
Legislation & Policy Ernst and Young
Finance Committee Cap-and-Trade Hearing Focuses on Speculators
The Senate Finance Committee hearing on May 7, 2009, on "Auctioning Under Cap and Trade: Design, Participation, and Distribution of Revenues" focused heavily on the potential for speculators to manipulate the price of emissions allowances. In an opening statement, ranking Republican Charles Grassley (R-IA) said one troubling aspect of potential climate change legislation is that speculators "are foaming at the mouth to get at cap-and-trade profits," and hedge funds and private equity funds have been lobbying for a system to be put in effect. He later said Congress needs to keep in mind the public outrage over the price of gas, grains, foods, and alternative energy like biofuels, all of which have been the subject of manipulation by speculators.
"Some of us are going to be very careful about enhancing the role of speculators in this whole process of solving global warming," Grassley said. Similarly, Chairman Max Baucus (D-MT) said talk of auctioning allowances raises concerns about Wall Street wanting to manipulate prices, and asked how auctions could be monitored, what manipulation may or may not have occurred in existing auctions, and what manipulation may occur in a cap-and-trade auction.
Alan Krueger, Assistant Treasury Secretary for Economic Policy-Designate, said enforcement agencies have played a role in monitoring existing treasury auctions. Design features of an auction can have influence on its susceptibility to manipulation and there are ways of designing an auction to minimize manipulation and price volatility, he said.
Later, in response to a similar question from Sen. Bill Nelson (D-FL), Krueger said flexibility in the availability of allowances over time is one way of reducing the ability of speculators to manipulate prices. Krueger said one design issue is how long allowances can last, because a temporary shortfall could create a temporary opportunity to exploit limited supply. Allowing banking and borrowing of allowances over some period of time could limit the role of speculators, he said.
Sen. Maria Cantwell (D-WA) noted that Credit Suisse last November announced it had begun securitizing carbon deals in which bundled credits for 25 offset projects were into three tranches and sold to investors. "To me that sounds a lot like what we just did with the mortgage-backed securities that were at the heart of our meltdown," Cantwell said. She asked what lessons can be learned from the trading experience in Europe. Jos Delbeke, Deputy Director-General of the European Commission Directorate-General for the Environment, said liquidity of the market is very important, and prices in the European system have been relatively stable with normal fluctuations.
Krueger otherwise said, in response to a question from Chairman Baucus, that treasury is qualified to play a role in a cap-and-trade allowance auction because the agency has a tremendous amount of expertise and experience in auctioning and is willing to work with whatever agency is made responsible. Further, the auction theory branch of economics is quite well-developed, he said. "Treasury recognizes the critical importance of maintaining the integrity of, and ensuring investor confidence in, the market for its debt securities, including the proper dissemination of price and yield information," he said in written testimony.
Carbon Tax vs. Cap-and-Trade
The second major focus of the hearing was a carbon tax versus a cap-and-trade system. Sen. Grassley asked which provides more certainty for consumers and businesses, and which is more efficient. Krueger said a cap-and-trade system offers more certainty in curbing carbon emissions because of the certainty involved in the cap, and also offers much more flexibility. Douglas Elmendorf, Director, Congressional Budget Office, said a carbon tax is more efficient in terms of the timing of emissions reductions and because it reduces the volatility of the price of emissions, but there is less certainty in gauging the amount of emissions reduction at a given point in time.
Anne Smith, Vice President, Practice Leader of Climate & Sustainability, CRA International, said a carbon tax is more efficient than a carbon cap, though hybrid schemes to put price ceilings on top of a cap-and-trade system could move such a system closer to the efficiencies of a tax. On the subject of whether to auction emissions allowances or give them away, Smith said a cap-and-trade program with 100% auction of allowances would actually function much like any other cap-and-trade program that relies on free allocations: In the absence of any auction, if all the allowances are allocated to parties with compliance requirements, an allowance market forms naturally.
Member and witness statements from the hearing
For all of it's murk, cap and trade is about the money not greenhouse gases. Yogi was right. It is deja vu all over again.
I would cordially invite you to visit my earlier blogs on these matters. The reason market capitalism is the greatest economic system the world has ever seen is that it permits people to be creative, sometimes too creative for the collective good. But maybe the collective good is human speak for what is best for "me."
Legislation & Policy Ernst and Young
Finance Committee Cap-and-Trade Hearing Focuses on Speculators
The Senate Finance Committee hearing on May 7, 2009, on "Auctioning Under Cap and Trade: Design, Participation, and Distribution of Revenues" focused heavily on the potential for speculators to manipulate the price of emissions allowances. In an opening statement, ranking Republican Charles Grassley (R-IA) said one troubling aspect of potential climate change legislation is that speculators "are foaming at the mouth to get at cap-and-trade profits," and hedge funds and private equity funds have been lobbying for a system to be put in effect. He later said Congress needs to keep in mind the public outrage over the price of gas, grains, foods, and alternative energy like biofuels, all of which have been the subject of manipulation by speculators.
"Some of us are going to be very careful about enhancing the role of speculators in this whole process of solving global warming," Grassley said. Similarly, Chairman Max Baucus (D-MT) said talk of auctioning allowances raises concerns about Wall Street wanting to manipulate prices, and asked how auctions could be monitored, what manipulation may or may not have occurred in existing auctions, and what manipulation may occur in a cap-and-trade auction.
Alan Krueger, Assistant Treasury Secretary for Economic Policy-Designate, said enforcement agencies have played a role in monitoring existing treasury auctions. Design features of an auction can have influence on its susceptibility to manipulation and there are ways of designing an auction to minimize manipulation and price volatility, he said.
Later, in response to a similar question from Sen. Bill Nelson (D-FL), Krueger said flexibility in the availability of allowances over time is one way of reducing the ability of speculators to manipulate prices. Krueger said one design issue is how long allowances can last, because a temporary shortfall could create a temporary opportunity to exploit limited supply. Allowing banking and borrowing of allowances over some period of time could limit the role of speculators, he said.
Sen. Maria Cantwell (D-WA) noted that Credit Suisse last November announced it had begun securitizing carbon deals in which bundled credits for 25 offset projects were into three tranches and sold to investors. "To me that sounds a lot like what we just did with the mortgage-backed securities that were at the heart of our meltdown," Cantwell said. She asked what lessons can be learned from the trading experience in Europe. Jos Delbeke, Deputy Director-General of the European Commission Directorate-General for the Environment, said liquidity of the market is very important, and prices in the European system have been relatively stable with normal fluctuations.
Krueger otherwise said, in response to a question from Chairman Baucus, that treasury is qualified to play a role in a cap-and-trade allowance auction because the agency has a tremendous amount of expertise and experience in auctioning and is willing to work with whatever agency is made responsible. Further, the auction theory branch of economics is quite well-developed, he said. "Treasury recognizes the critical importance of maintaining the integrity of, and ensuring investor confidence in, the market for its debt securities, including the proper dissemination of price and yield information," he said in written testimony.
Carbon Tax vs. Cap-and-Trade
The second major focus of the hearing was a carbon tax versus a cap-and-trade system. Sen. Grassley asked which provides more certainty for consumers and businesses, and which is more efficient. Krueger said a cap-and-trade system offers more certainty in curbing carbon emissions because of the certainty involved in the cap, and also offers much more flexibility. Douglas Elmendorf, Director, Congressional Budget Office, said a carbon tax is more efficient in terms of the timing of emissions reductions and because it reduces the volatility of the price of emissions, but there is less certainty in gauging the amount of emissions reduction at a given point in time.
Anne Smith, Vice President, Practice Leader of Climate & Sustainability, CRA International, said a carbon tax is more efficient than a carbon cap, though hybrid schemes to put price ceilings on top of a cap-and-trade system could move such a system closer to the efficiencies of a tax. On the subject of whether to auction emissions allowances or give them away, Smith said a cap-and-trade program with 100% auction of allowances would actually function much like any other cap-and-trade program that relies on free allocations: In the absence of any auction, if all the allowances are allocated to parties with compliance requirements, an allowance market forms naturally.
Member and witness statements from the hearing
For all of it's murk, cap and trade is about the money not greenhouse gases. Yogi was right. It is deja vu all over again.
Wednesday, April 22, 2009
Priorities Matter...New Research: Aerosols are Back: Black Carbon and Other Short-Term Pollutants Matter
Last week in NATURE GEOSCIENCES, NASA Climate Modeler Drew Shindell published “Climate Change Cool Ozone” research modeling global warming over the past half century and concluded that aerosols are responsible for half or more of the warming in the Arctic!
He and other scientists say that reducing emissions of black carbon and other short-lived pollutants that contribute to global warming could buy the world crucial time while governments begin the slow overhaul of global energy systems that will be required to reduce emissions of CO2, which comprise 77% of all greenhouse gas emissions.
He also makes a very logical, compelling and understandable argument on anthropogenic global warming.
“The large-scale vertical structure of temperature change in the atmosphere is an important characteristic of the forces driving climate change. Increases in greenhouse gases cause warming in the troposphere but cool the stratosphere. Greater output from the sun similarly warms the troposphere, but causes even greater warming in the stratosphere. Observations show that the troposphere has warmed in recent decades whereas the stratosphere has cooled markedly; this is clear evidence for anthropogenic warming rather than natural warming from the sun.”
In a speech given last week, Secretary of State Hillary Clinton made the following statement:
“Short-term carbon forcers like methane, black carbon, and tropospheric ozone contribute significantly to the warming of the Arctic. Because they are short-lived, they also give us an opportunity to make rapid progress if we limit them.”
For a copy of the complete article:
http://www.nature.com/ngeo/journal/v1/n2/pdf/ngeo115.pdf
He and other scientists say that reducing emissions of black carbon and other short-lived pollutants that contribute to global warming could buy the world crucial time while governments begin the slow overhaul of global energy systems that will be required to reduce emissions of CO2, which comprise 77% of all greenhouse gas emissions.
He also makes a very logical, compelling and understandable argument on anthropogenic global warming.
“The large-scale vertical structure of temperature change in the atmosphere is an important characteristic of the forces driving climate change. Increases in greenhouse gases cause warming in the troposphere but cool the stratosphere. Greater output from the sun similarly warms the troposphere, but causes even greater warming in the stratosphere. Observations show that the troposphere has warmed in recent decades whereas the stratosphere has cooled markedly; this is clear evidence for anthropogenic warming rather than natural warming from the sun.”
In a speech given last week, Secretary of State Hillary Clinton made the following statement:
“Short-term carbon forcers like methane, black carbon, and tropospheric ozone contribute significantly to the warming of the Arctic. Because they are short-lived, they also give us an opportunity to make rapid progress if we limit them.”
For a copy of the complete article:
http://www.nature.com/ngeo/journal/v1/n2/pdf/ngeo115.pdf
Friday, April 10, 2009
Corn Ethanol's Unforeseen Externalities: Land Use Impacts
http://www.cbo.gov/ftpdocs/100xx/doc10057/04-08-Ethanol.pdf
A new Congressional Budget Office report released April 9th says the long-term implications of ethanol are not certain in part because of uncertainties regarding land-use impacts and technology breakthroughs in cellulosic biofuels. Both the University of California at Davis and Berkeley researchers concluded the same findings over a year ago. The report was requested by Congressmen concerned that increased demand for corn-based ethanol could drive up food prices.
“If increases in the production of ethanol led to a large amount of forests or grasslands being converted into new cropland, those changes in land use could more than offset any reduction in greenhouse gas emissions--because forests and grasslands naturally absorb more carbon from the atmosphere than cropland absorbs,” the CBO study says. Cellulosic ethanol could reduce emissions from the transportation sector about 6 percent, but the study notes that the technology needed to produce cellulosic ethanol is not commercially available and adds that the reductions “would be realized only if cellulosic ethanol could be produced on a large scale and if the effects of changes in land use did not offset the reduction that producing, distributing, and consuming ethanol could make in greenhouse gas emissions.” According to the study, use of corn for fuel would also add 15% to the price of food, higher in developing countries than developed countries.
Once again, it is imperative that we understand the consequences of "good ideas" before we implement them. Once an interest group forms around government money it is almost impossible to take them off the dole.
http://www.cbo.gov/ftpdocs/100xx/doc10057/04-08-Ethanol.pdf
A new Congressional Budget Office report released April 9th says the long-term implications of ethanol are not certain in part because of uncertainties regarding land-use impacts and technology breakthroughs in cellulosic biofuels. Both the University of California at Davis and Berkeley researchers concluded the same findings over a year ago. The report was requested by Congressmen concerned that increased demand for corn-based ethanol could drive up food prices.
“If increases in the production of ethanol led to a large amount of forests or grasslands being converted into new cropland, those changes in land use could more than offset any reduction in greenhouse gas emissions--because forests and grasslands naturally absorb more carbon from the atmosphere than cropland absorbs,” the CBO study says. Cellulosic ethanol could reduce emissions from the transportation sector about 6 percent, but the study notes that the technology needed to produce cellulosic ethanol is not commercially available and adds that the reductions “would be realized only if cellulosic ethanol could be produced on a large scale and if the effects of changes in land use did not offset the reduction that producing, distributing, and consuming ethanol could make in greenhouse gas emissions.” According to the study, use of corn for fuel would also add 15% to the price of food, higher in developing countries than developed countries.
Once again, it is imperative that we understand the consequences of "good ideas" before we implement them. Once an interest group forms around government money it is almost impossible to take them off the dole.
Wednesday, April 8, 2009
How Future Consumer (Market)-Demanded New Housing Will Help Reduce GHG Emissions
According to the National Association of Home Builders Housing Facts, Figures and Trends, March 2006, the square footage of housing grew from 983 square feet in 1950 to 2,350 square feet in 2004. When the lethargic housing recovery comes (lethargic because interest rates will be rising due to national debt crowding out private and business borrowing and current homeowners will not be moving so fast), baby boom homebuyers will be downsizing from their McMansions toward smaller ranch houses, townhomes and condos.
This recession is sobering consumers like nothing else could other than aging. By 2020 or so, there will be more people over 65 than under 18. Not good for housing or consumables but great for health care and services. Older people consume services, younger people goods. Once again, the baby boom will change everything. Are you ready?
Over the next 10 years, large numbers of people will be stuck owning homes for which there will be few buyers. This return to rationality, “living within our collective means” will reduce consumer energy consumption and cut GHG output. All of this by market forces rather than government mandate.
By the way, the way to recapitalize the banks is to mandate all banks receiving TARP funds to pay 5% passbook savings. While this is not pure market, it does get the taxpayer something for their generous bailout of the irresponsible banks.
This recession is sobering consumers like nothing else could other than aging. By 2020 or so, there will be more people over 65 than under 18. Not good for housing or consumables but great for health care and services. Older people consume services, younger people goods. Once again, the baby boom will change everything. Are you ready?
Over the next 10 years, large numbers of people will be stuck owning homes for which there will be few buyers. This return to rationality, “living within our collective means” will reduce consumer energy consumption and cut GHG output. All of this by market forces rather than government mandate.
By the way, the way to recapitalize the banks is to mandate all banks receiving TARP funds to pay 5% passbook savings. While this is not pure market, it does get the taxpayer something for their generous bailout of the irresponsible banks.
Thursday, April 2, 2009
Politicians Continue to Demonstrate What Really Matters to Them--Keep their Jobs!
Senate Vote De-Fangs Cap and Trade Approach To Climate Change
The Senate has voted to impose a super-majority requirement on future passage of any bill – including carbon cap-and-trade legislation – that would increase the tax burden on the middle class or boost overall federal revenues, a move that will likely shape the upcoming climate change debate expected later this year. The provision, sponsored by Republican Sen. John Ensign (NV), was unanimously approved April 1. The Senate also overwhelmingly approved a measure blocking the use of a fast-track budget procedure known as reconciliation as a means of passing climate legislation with a simple majority.
On March 31, the Senate approved an amendment from Sen. John Thune (R-SD) declaring that any climate legislation considered by the body must decrease GHG emissions “without increasing electricity or gasoline prices.” A “clarifying” amendment offered by Environment & Public Works Committee Chairwoman Barbara Boxer (D-CA) softens the language somewhat by suggesting the Senate may consider legislation that doesn’t increase the economic burden on consumers “through the use of revenues and policies provided in such legislation.”
I do not know why I waste my time railing against Cap and Trade and other foolish government ideas when I know they have no courage to do anything controversial.
Wednesday, March 25, 2009
Who Would Have Thought C&T is about the Money???
US Lawmakers, Fearing CO2 Market Crisis, Drafting Tough Rules http://www.dj.com/ March 24, 2009: 01:24 PM ET
A few titillating tidbits from the article sent to me by a dear friend. Please read the whole article. I have been around politics for 30+ years and it is always about the money....!!@! See my previous C&T blogs and let me know what you think. I have no interest in your feelings. They have, after all, gotten us into this mess!
WASHINGTON - (Dow Jones) - "Fearing another financial meltdown under a proposed multi-trillion-dollar greenhouse gas trading program, U.S. lawmakers are drafting legislation for strict regulation of the nascent market."
Wall Street banks, hedge funds and institutional investors are under a rain of public indignation and regulatory scrutiny for their role in the current financial crisis. Many legislators are concerned that creating a carbon market may simply give the same players a new opportunity for manipulation and hazardous trading.
"This is a disaster in the making," warned Rep. Greg Walden, R-Ore., ranking member of the House energy subcommittee on oversight and investigations. "If you like the bubbles of the technology market and the housing market, I predict you'll love the bubble that will come from the cap-and-trade market."
A cap-and-trade law would create a market - including for derivatives of emission allowances - for carbon emissions and would multiply trading opportunities for emitters, traders, brokers and investors.
Cutting A Fat Hog "I attended a recent meeting of an organization interested in [climate change legislation], and guess who it was," Rep. John Dingell, D-Mich., said at an energy forum last week. "It was a bunch of good-hearted Wall-Streeters ... getting ready to cut a fat hog."
Many of the most exuberant, enthusiastic advocates of cap-and-trade are some of the same major institutional investors that were involved in the housing and commodity markets, said Walden, the congressman from Oregon.
"Take, for example, the Regional Greenhouse Gas Initiative, or RGGI, a cap-and- trade system in the northeastern states. According to the list of qualified bidders, among those who wanted to buy credits were a raft of investors that aren't major emitters - trading units of Barclay's Plc (BCS), Goldman Sachs (GS) , JP Morgan Chase & Co (JPM), Merrill Lynch, now a unit of Bank of America (BAC) , and Morgan Stanley (MS)."
One of the biggest advocates in the U.S. Climate Action Partnership, a group that lobbies Congress for cap-and-trade legislation, had been American International Group (AIG), whose controversial financial products unit precipitated the near-demise of the insurance giant.
"Starting with Enron and now the current financial meltdown, energy markets have been a target-rich environment for people to take advantage of the futures price and the physical price," said Sen. Maria Cantwell, D-Wash.
"We don't need to solve our carbon problems by creating another fiscal crisis because we have a trading platform that has lots of holes and ends up being exploited," she said.
Preemptive Regulation Cantwell, who chairs the Senate energy subcommittee, declined to give details but said she's drafting legislation that would prevent manipulation or cash-rich market participants from cornering the market.
In the House, Rep. system of these markets to the nth-degree," said Inslee on the sidelines of a climate conference.
Henry Waxman, D-Calif., is developing a cap-and-trade proposal that will include prophylactic provisions, said Rep. Jay Inslee, D- Wash.
"We have to have the most aggressive, ambitious, fool-proof regulatory "We're not going to allow derivatives to ruin these markets as they have others," he said.
A few titillating tidbits from the article sent to me by a dear friend. Please read the whole article. I have been around politics for 30+ years and it is always about the money....!!@! See my previous C&T blogs and let me know what you think. I have no interest in your feelings. They have, after all, gotten us into this mess!
WASHINGTON - (Dow Jones) - "Fearing another financial meltdown under a proposed multi-trillion-dollar greenhouse gas trading program, U.S. lawmakers are drafting legislation for strict regulation of the nascent market."
Wall Street banks, hedge funds and institutional investors are under a rain of public indignation and regulatory scrutiny for their role in the current financial crisis. Many legislators are concerned that creating a carbon market may simply give the same players a new opportunity for manipulation and hazardous trading.
"This is a disaster in the making," warned Rep. Greg Walden, R-Ore., ranking member of the House energy subcommittee on oversight and investigations. "If you like the bubbles of the technology market and the housing market, I predict you'll love the bubble that will come from the cap-and-trade market."
A cap-and-trade law would create a market - including for derivatives of emission allowances - for carbon emissions and would multiply trading opportunities for emitters, traders, brokers and investors.
Cutting A Fat Hog "I attended a recent meeting of an organization interested in [climate change legislation], and guess who it was," Rep. John Dingell, D-Mich., said at an energy forum last week. "It was a bunch of good-hearted Wall-Streeters ... getting ready to cut a fat hog."
Many of the most exuberant, enthusiastic advocates of cap-and-trade are some of the same major institutional investors that were involved in the housing and commodity markets, said Walden, the congressman from Oregon.
"Take, for example, the Regional Greenhouse Gas Initiative, or RGGI, a cap-and- trade system in the northeastern states. According to the list of qualified bidders, among those who wanted to buy credits were a raft of investors that aren't major emitters - trading units of Barclay's Plc (BCS), Goldman Sachs (GS) , JP Morgan Chase & Co (JPM), Merrill Lynch, now a unit of Bank of America (BAC) , and Morgan Stanley (MS)."
One of the biggest advocates in the U.S. Climate Action Partnership, a group that lobbies Congress for cap-and-trade legislation, had been American International Group (AIG), whose controversial financial products unit precipitated the near-demise of the insurance giant.
"Starting with Enron and now the current financial meltdown, energy markets have been a target-rich environment for people to take advantage of the futures price and the physical price," said Sen. Maria Cantwell, D-Wash.
"We don't need to solve our carbon problems by creating another fiscal crisis because we have a trading platform that has lots of holes and ends up being exploited," she said.
Preemptive Regulation Cantwell, who chairs the Senate energy subcommittee, declined to give details but said she's drafting legislation that would prevent manipulation or cash-rich market participants from cornering the market.
In the House, Rep. system of these markets to the nth-degree," said Inslee on the sidelines of a climate conference.
Henry Waxman, D-Calif., is developing a cap-and-trade proposal that will include prophylactic provisions, said Rep. Jay Inslee, D- Wash.
"We have to have the most aggressive, ambitious, fool-proof regulatory "We're not going to allow derivatives to ruin these markets as they have others," he said.
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