Was Chicken Little Right?

The doom-and-gloom crowd has been predicting that we’ll run out of oil real soon now for a long time. I can remember articles in the sixties that predicted this would happen by 1990, more articles in seventies that pushed this out another ten years, and current articles that peg the date at 2040. Obviously, at least so far, this hasn’t happened. And I doubt that the 2040 date will be any more accurate that the prior predictions. But what has happened is that the price of oil has now reached the point that alternative energy generation methods are beginning to become cost competitive. Never mind that the current price is probably artificially inflated by speculators and cartels that are only looking to get theirs while the getting is good, in real terms it has become more expensive to find, drill, extract, and refine oil. There truly is less readily available (read: cheap) oil to be found out there, so the current price is unlikely to decline very much.

As our current high-tech society is very much dependent on this energy source, is it perhaps time to really start worrying? The answer to that depends on what the alternatives are, and how diligently we investigate these alternatives. So far, the considered alternatives are wind, solar, hydro-electric, fuel cell, nuclear fission, nuclear fusion, biomass, and tidal. Let’s look at each of these and see just how far they’ll go towards providing the world with both cheap and reliable power.

Wind power: Lot’s of energy available here. Winds are basically generated by two major factors, the solar influx and the Earth’s spin, neither of which are going away anytime soon. Capturing this energy in significant amounts is another story. There are few places in the world that have steady winds high enough to justify the cost of the high tech windmills that can efficiently turn that wind power into electricity. Currently, wind power provides less than 1% of electricity production in the U.S. If all possible sites for wind power were developed, it could provide perhaps 20% of the electricity demand, but there are two problems with this. First is that these wind farms would then occupy something like 300,000 square miles of land area. As the U.S. has only 3.7 million square miles of land, this represents something like 8% of all the land, most of which is used for other purposes right now. Second is the problem that the energy produced is a) highly variable b) not easily stored, meaning it has to used when it is produced.

Hydro-Electric, currently providing about 11% of the electricity demand, has similar problems, along with the fact that most of the available hydro-power sites are already in use, and to add more would cause significant changes to the ecologies of the areas around them.

Fuel cells are not net energy producers. It takes more energy to produce the hydrogen used than the fuel cell will deliver. They are a partial answer to the problem of storing energy, and at least can be considered partially mobile if placed in cars. If we can generate enough energy via other means, then these items would be a possible replacement for all the oil we gobble up as gasoline. However, the distribution channels for hydrogen are not in place, and building up the infrastructure necessary represents a large investment in both time and money.

Bio-mass generation has similar problems as those of fuel cells, as it takes more energy to grow and process the plant material needed than will be generated by the final product. It has an advantage in that it won’t require a whole new infrastructure to distribute the end product, but once again the total land area required to grow the necessary material is a significant fraction of our total land area, and would force out farmland currently used to grow edible crops - something we are already seeing in the price of basic foodstuffs in the grocery store. However, this type of technology also provides us with a way to make the oils we need for things other than power generation: lubricants, ingredients in plastics, and other such uses. If crude oil really does run out or becomes prohibitively expensive to get, this avenue is available, and additional research and technological improvements need to be actively pursued.

Tidal power is a non-starter with today’s technology. While there’s a lot of energy in the tides, in most places of the world this energy is very diffuse. Only in few bays is there enough of a water height differential to make energy generation efficient or possible.

Nuclear fission power is an option. It is possible for us to generated a much larger fraction of our energy needs this way than we currently do, but once again there are significant costs and risks associated with going down this route, not the least of which is the spent material disposal problem, along with the terrorist/crazy factor. Nuclear fusion, on the other hand, just isn’t possible today. We really haven’t solved the technological issues with this one yet, and probably won’t for some time, even though they’ve been predicting it’s advent as 15 years from the present for the last forty years. If it ever does become a reality that can actually produce more power than what it takes to generate the reaction, it might become the ultimate savior of our high-tech civilization, but I wouldn’t count on it.

Which leaves solar power as a possible solution. Solar comes in couple of different flavors: direct electricity generation, and as a heat source to drive conventional generators. The heating method is fairly simple, and can be of great use in relatively undeveloped nations, but it is not terribly efficient. Direct conversion shows more promise, though current solar cell efficiency is really not high enough to make it cost competitive with other generation methods. But calculations of the potential energy available show that, yes, it can provide enough power, assuming we wish to the cover the state of Arizona with solar panels, along with every housetop in America. There is still the problem of variable generation (no power produced at night!), the same problem that plagues some of the other potential generation methods. Some better means of storing energy must be found - battery technology is right now not anywhere near to being able to handle this.

Or there is one other alternative: put your solar generation plant in space, where the sun shines all the time, where there is plenty of room not needed for other purposes, and microwave the resultant power down to the ground. This is the option I’d like to put my money on and into, but so far at least it doesn’t seem as if there is any real work being done to make this happen, even though it’s within our technological capability. It would just take an astronomical (pun intended) amount to build it. Our average citizen complains about the amount of money being used for space exploration, as they see no direct benefit from it (we’re just throwing dollars into space!). Science fiction stories have been touting the benefits available from space for a long time, but those who read the stuff represent a very tiny fraction of the entire populace, and it’s still “Buck Rogers stuff” for most. Perhaps if they could be shown how it would directly affect their pocketbook via their power bill they might be more willing to spend more to make true space industry an economically feasible  reality.

The world’s energy demand is not going down. If we don’t wish to see our way of life collapse into wars over a declining resource, or subside into just making-do, with a lower standard of living for all, real work must be done to find appropriate energy sources, all the while keeping in mind just what is ultimately possible with any particular technology and what its total costs are.

West Virginia - Almost Heaven?

The West Virginia primary results have evoked quite a bit of commentary. Many were somewhat surprised at Hillary’s large majority, which was even more pronounced in places like Mingo County (about 88% voted for her). As Mingo County was where I was born, this has influenced me to do a little web research on what the area is currently like.

This first item that really struck me is the decline in population of some of the old mining towns. Delbarton, where I spent the first couple years of my life, has gone from a population of about 1,300 in 1948 to today’s 474. The reason for this is pretty obvious, namely the decline in coal mining jobs available, although this occupation is still one of the largest in the county.

Delbarton is located about 50 miles southeast of Huntington, about six miles from the Kentucky border, and about five miles from Matewan. Matewan is famous as the area where the Hatfield-McCoy feud was waged, though the actual events were scattered more generally over the entire area, from South Williamson  and Pikeville in Kentucky through what is now Matewan to points north. As a side note, I may be distantly related to some of the participants in this feud via the Mounts family line. This entire area is quite mountainous and not really well suited for farming except in some of the valley bottoms.

The demographics of this area are telling: average income of about $21,000, 30% with incomes below the poverty line, 40% without a high school diploma, an unemployment rate around 7% (this last has been improving lately), with exactly one black person currently residing in Delbarton, and only about 400 in the entire county. This last item I think is significant in terms of the political landscape; West Virginia in general and this area of state in particular has always been very heavily white in composition, with most of its inhabitants originally hailing from Ireland or Germany. While the portrait is not quite the bare-footed hillbilly of the stereotype, the general picture is uncomfortably close, and Hillary’s message of aid for the poor must resonate much more with this population than when contrasted with a black candidate whose very articulateness may be a point against him.

No matter how you cut it, or how much we might wish it to not be true, race is playing a part in this presidential campaign.

Now Hillary’s victory in West Virginia will not materially affect the final results at the Democratic Convention, unless she pulls off some kind of miracle coupled with some back-room deals. But it should be a reminder that the racial problems and prejudicial attitudes of some in this country have not gone away and still need to be addressed. Obama will almost certainly end up as the Democratic candidate, and if he should win the general election, perhaps he will be able to really do something about a thorn that has festered in the American way of life for far too long. If instead McCain should win, I think he also will be driven to pay some real attention to the race problem, as Obama obviously has too many supporters to ignore.

The ‘Whine’ Signal

Whine, whine, whine. Seems like that’s all we hear today when people are talking about the economy. Everyone seems to think that if we’re not in a recession already, we soon will be, and that it’s not going to turn around anytime soon. There are bank problems, housing problems, oil price problems, consumer confidence issues, inflation worries, the dollar valuation effects, the lingering occupation of Iraq,  and whatever other perceived problems you want to add to the kitchen sink.

Now is all this whining about nothing? No, the problems are real, as far too many people can attest who have had their house foreclosed, or those living on minimum wage who are finding it even tougher to keep it together, or everyone finding their wallets all too light after filling up at the gas station.

So what can we do about it? I think most of the necessary actions have already been taken: the Fed has very aggressively cut interest rates, which has already had a definite effect on mortgage rates which will eventually translate into less pressure on current homeowners and make new purchases more affordable. The Fed has also effectively injected a large amount of money into the system so that banks will be more willing to make loans and keep creditor confidence up. New laws and regulations are on the table to provide better oversight of the banking industry so they don’t continue to make loans that are very shaky, while making sure that prospective loan applicants have a better understanding of just what they are signing up to pay. The dollar’s fall has been so severe that it has once again made American made goods very competitive in the global market, and that effect is already showing up in some companies financial statements. The steep price of oil is having multiple effects: more people are opting for fuel-efficient cars, people are driving less and taking other conservation measures, solar cell energy generation is becoming a real force, other alternative energy generation methods are receiving more attention and more research dollars. Now all these things won’t produce any instant cures for the current mess, but looking forward it’s clear that we are now establishing a solid base for future growth.

My take on all of this: it’s time to start aggressively buying stocks. This follows a well known rule about stock market strategy - when everyone is yelling ’sell’, it’s time to buy, and vice versa. All this whining is precisely the signal that if we aren’t at the bottom yet, it’s not far away.

People Helping People - Something that Works

Scalzi is, once more, on his soapbox over on his Whatever blog about what being poor is like and what should be done about it. His original essay on this subject appeared way back in 2005, and has been reprinted, linked to , and discussed in numerous forums, including my own here at Being Poor is Not a Crime. This is one soapbox I hope he never gets off of (and feel pretty sure he won’t), because it’s a real problem here in America that most people blithely ignore and would just rather not hear about.

His latest post makes a strong argument that shaming those who are poor merely because they are poor is not going to help: the great majority of those in that situation don’t need that kind of motivation to get out of their fix (they get more than enough of that as it is, thank you very much, merely from the stupid bureaucratic rules we have imposed for people to receive government aid). Rather, what they need is real help in terms of doing things that allow them to get more education, or ways to allow them to work while their kids are properly cared for (without having the child care cost more than what they can earn), or real help with medical conditions (universal medical insurance would help greatly in this regard) - this list goes on and on. Getting this type of aid to those who need it doesn’t just mean dropping a check in mail (though this helps too) - it means you personally doing things to help: babysitting those kids, driving the person to their medical appointment, helping them fill out some of those nightmare government forms, or giving them some private tutoring. The point of all these types of aid, though, is that they are of the nature of something that Robert Heinlein advocated as ‘Paying it Forward’. Help those who need it, not because you think you might get something back, but merely because it’s the right thing to do, and gain satisfaction in knowing that once those you’ve helped can afford it, they, in their own turn, will help someone else.

The net result of this type of aid (as opposed to those forms which stigmatize and otherwise denigrate the poor merely because they’re poor) will be a stronger, more robust America - the type of place that the whole world can look up to.

A Drop in the Bucket

The economic stimulus package, as currently set by the House, will do darn little to actually improve the US economy. First, the amount of the individual ‘rebate’ is a comparative drop in the bucket - $600 or $1200 is, for most individuals and families, less than one months rent or mortgage payment. Versus the size of the economy, it represents a miniscule percentage of the GDP. Second is the timing. The earliest we can expect these rebates to appear in our mailbox is May, assuming the Senate quickly agrees to this package without significant changes that will cause more wrangling and delays. By the time May rolls around, the first of the interest rate cuts by the Fed will have had time to actually percolate through the economy, and which will probably be more effective than the paltry rebate sums planned. If this scenario plays out, the rebates will merely act as an inflationary impetus, and we’re back on the rollercoaster of loosening and tightening the money supply, trying to tread that fine line between recession and run-away inflation. If, however, the economy has not already started to dig its way out the hole by then we are likely to be facing a full blown recession, and the money slated for these rebates would be more usefully used as funding for federal job creation and unemployment compensation.

About the only really useful part of the currently planned package is raising the amount that can be funded as ‘normal’ mortgages, up from the current $417,000 to $730,000. There are several areas in this country where this small change (which costs the federal government almost nothing) could have a big impact, as the difference in loan interest rates between ‘conforming’ and ‘jumbo’ loans is significant, and often is the make or break item in whether a particular house is affordable by prospective buyers. As almost all urban housing in places like California and Hawaii exceed the $417,000 figure, this one change could help restart the housing market in these areas. This particular part of the stimulus package should be enacted regardless of what happens to the rest of it, as the maximum size of a conforming loan has not been adjusted for inflation or high cost of living areas since 2005.  In addition, this item should be made permanently adjusted for inflation and median local housing prices so that it does not (again!) fall behind the actual need for appropriate loan sources for purchasing homes. And the nice thing about this change is that it could be implemented immediately, and not have to wait till May.

But as far as the rest of the package, it’s too little, too late.

The (Moronic) Thundering Herd

The herd mentality is alive and well. Seems like everyone is stampeding to sell their stocks today. Even as the Fed cuts interest rates by three-quarters of a point, far more than had already been priced into the market. And all the Presidential candidates are talking about some sort of economic stimulus plan.

Now the stock market is supposed to be forward looking, and a drop like today’s seems to be signaling RECESSION.  But is that really in the cards? Sure, there’s some pain on the inflation front, mainly due to the steep rise in oil prices last year, and there’s some more pain on the home mortgage front, which can reasonably be expected to lower consumer economic activity, to at least some degree. But what people seem to be forgetting is that most of this pain has already been priced into the market, and most companies outside of the mortgage lending business are reporting very reasonable earnings. Today’s steep sell-off, with the Dow down over 400 and the NASDAQ over a 100, is not justified by the numbers, but is merely a reflection of the lemming-style mentality that sometimes seems to infect trader’s minds.

So what should you do? Don’t be another lemming. Buy! Now’s the time! Use that old adage of ‘buy low, sell high’ to your advantage. This opportunity won’t last long - just while I’ve been writing this post, the DOW has risen 200 points and the NASDAQ 50.  Sure, it’s a little scary going against the tide, but the big prizes never go to chickens.