Nov 28

As I passed a few gas stations this week and saw $1.89 regular, less than half the cost just a couple months back, and after the initial sense of relief that a tank will less than $30 and not nearly $60, I can’t help but wonder of the longer term impact of this dramatic fall in prices.
One of the unintended consequences of this drop is that the talk of finding alternative energy sources has dropped from being a huge issue early in the recent election campaign to a topic barely discussed. There was also talk during the campaigning of creating ‘green’ jobs based on these alternative energy sources. I understand that there’s a delicate balance, that, at least in the short term, the high gasoline prices was doing far more harm than any future good that would come of it. I just hope we don’t become complacent and assume these low prices will continue indefinitely.

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Jul 25

As I hear more people talk on this topic, I grow more hopeful that the pain we are feeling in our wallets at the gas pump will pave the way toward a better future.
In an interview with the former mayor of New York, Ed Koch, I heard him call for a “Manhattan Project” for alternative energy. Let’s hope other politicians share his view. Al Gore seems to be on a similar path, he calls for a ten year plan to produce 100% of our energy needs from renewable resources within the next 10 years. T Boone Pickens (whose site I added to my link list, right) also proposes a plan for renewable energy. His plan differs slightly from Gore’s in that he feels it would be faster to introduce the widespread use of natural gas powered vehicles as an interim step to the electric car.
In the end, I look forward to a world where our children breathe cleaner air and see a clearer sky. More to come.

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Jun 02

Sometimes I struggle to choose a title for my posts. You see, there are many times that a potential reader will glance at a title and read or skip the post based on those few words. Other titles I considered for todays were, “Did Congressman Hinchey cut class that day?”, “Stupid Congressional Tricks”, “Repealing the Law of Supply and Demand”, and “Hinchey is a @#$%’ing moron”. That last one was a bit harsh as I have no other experience with this Gentleman from New York, and this post is regarding this one story that came to my attention.

Straight from WBNG (Binghamton, NY) news comes this news soundbite; “In the short term, Hinchey will outline a variety of new legislative steps on which he is working, including a bill that would give the president the authority to cap gas prices at $2.49 per gallon.”

Let me offer a simple, but illustrative, image to help explain the absurdity of this proposal;

supply/demand curve

I first presented this last August in my post “Anti-Gouging sounds like price controls to me“. This chart is the classic supply and demand curve. The two lines intersect at point B, the point at which the amount demanded is the same as the amount supplied. If we were to lower the maximum price allowed, the demand of course would go up, yet at the same time the seller is less willing to offer as much product at that lower price. As an article on price control from The Concise Encyclopedia of Economics offers,”When the U.S. government set maximum prices for gasoline in 1973 and 1979, dealers sold gas on a first-come-first-served basis, and drivers got a little taste of what life was like for people in the Soviet Union: they had to wait in long lines to buy gas. The true price of gas, which included both the cash paid and the time spent waiting in line, was often higher than if prices were not controlled at all.” Short term, I don’t have the answer for the current problems we are facing. I do know that oil has limited supply at a given price. At a higher price, old wells can be reopened and deeper wells can be dug at a higher cost. I also know that not nearly enough has been done to improve the efficiency of alternative fuels, specifically, wind and solar. While Congressman Hinchey is at it, he may as well propose that President Bush repeal the law of gravity. That proposal is no more absurd than interfering with the law of supply and demand, and no more chaotic in whatever the results.


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Apr 18

In the scramble for solar related plays on words, Barron’s beat me to this one. They used it in the index of this week’s issue to reference their article on Applied Materials efforts in this market (solar power).

The pricing and discussion of cost of solar power can be a bit confusing. The typical benchmark used is dollars per KW. Currently, there are systems priced at $4.75/W or $4750/kW. (But this is for the Solar Panel only, the installed system will cost nearly twice this or about $9500. Now, for this to make sense, you need to ask how much power this really is. A 1KW system will produce about 1800 KWh/yr in Southern California. If 1 kWh costs about 20 cents, this is $360 worth of power, and a return of 3.8%/yr. Now, this isn’t great, admittedly, but as I’ve discussed prior, even with modest cost improvements, that number (the return on investment) will rise over time, and soon be a compelling alternative to buying off the grid. A site called solarbuzz offers much data on the progress of solar technology.


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Apr 11

Some time ago, I read a book titled “Pop!: Why Bubbles Are Great For The Economy.” This is not a summary of that book, but I recommend it as it made for some interesting reading. Its premise was that bubbles leave in their wake some new infrastructure (telegraph lines or railroad tracks, as an example) or technology leap (as in the late 90’s ‘dot com’ boom leaving a huge amount of dark fiber and active bandwidth). Now, I put that book down wondering what the next bubble would bring, and perhaps I couldn’t see the forest through the trees. Regular readers know I’m excited about the prospects of alternative energy, specifically, solar energy. Sure enough, Harper’s recently ran an article titled “The next bubble: Priming the markets for tomorrow’s big crash.” In this article, Eric Janszen, the founder and president of iTulip, Inc. speculates that alternative energy may be the next bubble forming, and if his forecast is right, we have years ahead of us to take advantage of the opportunity this presents. This chart offers both historical numbers on Tech and Housing, as well as forecasts for the housing downturn and the Alternative energy bubble.



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