Art Diamond's web log
Wolf Blitzer, the host of CNN’s "Situation Room" program. Source of photo: http://www.mediabistro.com/tvnewser/cnn/inside_the_situation_room_24403.asp
Yesterday afternoon (2/14/07) on CNN’s "Situation Room" program, host Wolf Blitzer reported something close to the following:
‘A House of Representatives hearing on global warming was canceled today, because of the severe winter weather.’
Al Gore. Source of image: http://drinkingliberally.org/blogs/louisville/archives/2006/01/
For the past couple of weeks, much of the country has been suffering from non-stop frigid weather. So on "Weekend Update" on NBC’s Saturday Night Live (2/10/07), something close to the following was reported:
‘And in an ironic note: this week while lecturing on global warming, Al Gore froze to death.’
Real-time electricity meters in a building in Central Park West behind resident Peter Funk, Jr. Source of photo: online version of the NYT article cited below.
The article excerpted below gets some of the story right. It should emphasize more that the main benefit from real-time pricing would be that it would reduce the peak load. Generation plants need to be built to handle peak-load. The last generating plants to go on line are the least efficient. if the need for such inefficient, peak-load, plants can be reduced, the costs of generating electricity can be enormously reduced.
There is talk of market competition in the states that have deregulated their electric utility industries. But it should be remembered that even where most deregulated, the result is a long way from a paradigmatic free market. The main point is hinted at in the article below. The ultimate suppliers of electricity to the home remain government-protected monopolies.
If we wanted a truly free market, maybe we should actually allow multple companies to connect to homes, the way we allow multiple television and internet companies to connect their cables to the home. Then some low-cost Wal-Mart of electricty would arise, and blow the stick-in-the-muds away.
(p A1) Ten times last year, Judi Kinch, a geologist, got e-mail messages telling her that the next afternoon any electricity used at her Chicago apartment would be particularly expensive because hot, steamy weather was increasing demand for power.
Each time, she and her husband would turn down the air-conditioners — sometimes shutting one of them off — and let the dinner dishes sit in the washer until prices fell back late at night.
Most people are not aware that electricity prices fluctuate widely throughout the day, let alone exactly how much they pay at the moment they flip a switch. But Ms. Kinch and her husband are among the 1,100 Chicago residents who belong to the Community Energy Cooperative, a pilot project to encourage energy conservation, and this puts them among the rare few who are able to save money by shifting their use of power.
Just as cellphone customers delay personal calls until they become free at night and on weekends, and just as millions of people fly at less popular times because air fares are lower, people who know the price of electricity at any given moment can cut back when prices are high and use more when prices are low. Partici-(p. A14)pants in the Community Energy Cooperative program, for example, can check a Web site that tells them, hour by hour, how much their electricity costs; they get e-mail alerts when the price is set to rise above 20 cents a kilowatt-hour.
If just a fraction of all Americans had this information and could adjust their power use accordingly, the savings would be huge. Consumers would save nearly $23 billion a year if they shifted just 7 percent of their usage during peak periods to less costly times, research at Carnegie Mellon University indicates. That is the equivalent of the entire nation getting a free month of power every year.
. . .
Under either the traditional system of utility regulation, with prices set by government, or in the competitive business now in half the states, companies that generate and distribute power have little or no incentive to supply customers with hourly meters, which can cut into their profits.
Meters that encourage people to reduce demand at peak hours will translate to less need for power plants — particularly ones that are only called into service during streaks of hot or cold weather.
In states where rates are still regulated, utilities earn a virtually guaranteed profit on their generating stations. Even if a power plant runs only one hour a year, the utility earns a healthy return on its cost.
In a competitive market, it is the spikes in demand that cause prices to soar for brief periods. Flattening out the peaks would be disastrous for some power plant owners, which could go bankrupt if the profit they get from peak prices were to ebb significantly.
. . .
The smart metering programs are not new, but their continued rarity speaks in part to the success of power-generating companies in protecting their profit models. Some utilities did install meters in a small number of homes as early as three decades ago, pushed by the environmental movement and a spike in energy prices.
For the full story, see:
(Note: ellipses added.)
Graph showing the range of variation in hourly electricity rates in different months. Source of graphic: online version of the NYT article cited above.
Screen capture from the MSN web site whose link is given below.
Several weeks ago, when much of the nation was experiencing above-average temperatures, network reports intoned how the warmth was a sign of global warming. So using consistent reasoning, should they not now intone that the bitter cold is a sign of global cooling?
Note that there is no mention of global warming (or cooling) in the Today Show report mentioned below.
On one of the NBC web sites, the Today Show report was described this way: "Deep freeze Feb. 5: Midwest and Northeast residents hunker down for a deep freeze expected to last most of the week. NBC’s Kevin Tibbles reports."
Here is the link to the report:
In Mexico City, protesters complain about the high price of tortillas and other corn-based food staples. Source of photo: online version of the NYT article cited below.
Support for the free market is very fragile in places like Mexico. Calderón won a close election, and is, by all accounts, an advocate for the free market. So it is sad that United States government subsides for ethanol result in pain in Mexico that makes it harder for Calderon to effectively move Mexico toward the free market, and a better life for the Mexican people.
So do we blame Bush for coming out for ethanol in his State of the Union address on Tuesday (1/23/07)? Well maybe Bush can only afford to fight the political trends on one or two issues. And he has seen the war against terrorism as the big issue of our time. On that he is right.
So while we can see why political survival may force Bush into support of ethanol, and Calderón into support for price controls on tortillas, we still need to identify policies that are inefficient and wrong.
Subsidies on ethanol, and price controls on corn, are inefficient. And inefficiency means that the economy produces less, and grows more slowly, and lives are lived less well.
MEXICO CITY, Jan. 18 — Facing public outrage over the soaring price of tortillas, President Felipe Calderón abandoned his free-trade principles on Thursday and forced producers to sign an agreement fixing prices for corn products.
Skyrocketing prices for corn on the world market have pushed up the price of the humble tortilla, the mainstay of the Mexican diet, by nearly a third in the past three weeks, to 35 cents a pound in Mexico City and even higher in other parts of the country.
Half of the country’s 107 million people live on $4 a day or less, and many of them survive largely on tortillas and beans. The price increases have riled the public to such an extent that it has created a political storm that threatens to swamp Mr. Calderón’s fresh presidency.
This month, the president, who took office in December, was booed and heckled at events around the country over food prices. Mexican lawmakers called on him to impose price controls, while leftist opposition leaders suggested that he was protecting giant corn companies.
. . .
There is a continuing debate here about what caused the price of tortillas to shoot up so quickly. Some economists blame the increased demand for corn from ethanol plants in the United States, and it is true corn prices in the States last week reached their highest point in a decade, the United States Agriculture Department said. At the same time, the cost of white corn has risen about 13 percent here over the past year, Mexican government figures show.
. . .
The spike in corn prices has hurt small storefront tortilla makers, a hallmark of the Mexican street. José Solano, a 27-year-old tortilla maker in Mexico City, said he had lost about 40 percent of his business since early January, when he was forced to start raising his prices.
“People are still buying tortillas, but many of them buy less,” he said. “Look, we can’t give our product away because we need a profit, and if they raise the cost of corn, there’s no other way.”
The crisis has hit hardest for the poorest Mexicans, who may spend more than a quarter of their daily salaries on tortillas.
“This really affects my budget, the expenses of my family, because I cannot tell my kids to eat less,” said Ruth Soria, a 37-year-old housewife, who was buying four pounds of tortillas for her six children on Thursday. “This is something that they must control well. The tortilla is something basic for us. What the government did today is the least they could do.”
Calderón on right shakes the hand (and picks the pocket?) of Roberto González, who is the head of Gruma, one of Mexico’s large tortilla and corn flour distributors. Source of photo: online version of the NYT article cited below.
THE recent warm weather in the Northeast might not have been great for makers of winter coats, but the economy and markets could be poised for a small fillip.
. . .
Putting agriculture aside, there are other potentially important macroeconomic effects, said Michael Greenstone, a professor of environmental economics at the Massachusetts Institute of Technology. “The basic idea is that extremes of temperatures, really hot and really cold, are dangerous for human health,” he said. “To the extent that the recent warm weather on the East Coast moved us from cold days to more moderate days, that’s likely to reduce mortality rates. Having more people around is obviously good for consumption and economic activity.”
. . .
The temporary warm weather does have very real benefits for poor families.
A warm winter can relax their financial constraints by requiring less spending on heating, said Steven J. Haider, an associate professor of economics at Michigan State University.
“They often are making very tough decisions, whether those decisions are paying bills, child care, clothes or food during a particular month,” he said. “If there is a cold-weather shock, and their heating bill goes up in a particular month, there are poor people who struggle.”
Professor Haider and three colleagues researched the effect of weather on poor families’ budgets and found that there were substantial effects from extreme temperatures.
“For the short-run effects that we’re seeing this year, the answer is, yes, the poor families are feeling a little less constrained,” he said. “I’m sure the families have other important uses for that money.”
Indeed, lower demand for heating oil in the United States, along with rising inventories for other refined petroleum products, has helped to push crude oil prices down— a boon for the rest of the world, too.
For the full commentary, see:
(Note: ellipses added.)
Forests are burned on plantations in Indonesia to clear land to produce palm oil which is "a key ingredient in biodiesel." Source of caption quote and photo: online version of WSJ article cited below.
(p. A1) PONTIANAK, Indonesia — Investors are pouring billions of dollars into "renewable" energy sources such as ethanol, biodiesel and solar power that promise to reduce the world’s reliance on petroleum. But exploiting these alternatives may produce unintended environmental and economic consequences that offset the expected benefits.
Here on the island of Borneo, a thick haze often encloses this city of 500,000 people. The cause: forest fires that have blazed across the island. Many of them were set to clear land to produce palm oil — a key ingredient in biodiesel, a clean-burning diesel fuel alternative.
The bluish smoke is at times so dense that it leaves the city dark and gloomy even at midday. The haze has sometimes closed Pontianak’s airport and prompted local volunteers to distribute face-masks on city streets. From July through mid-October, Indonesian health officials reported 28,762 smog-related cases of respiratory illness across the country.
"I feel it in my breath when I breathe," said Imanuel Patasik, a 26-year-old delivery man, as he sat in one of Pontianak’s many open-air coffee shops on a recent evening. When the smoke is really bad, he wears a mask to work, but still wakes up the next morning feeling sick. "It’s part of life here," he sighed.
Seasonal rains have helped quell the fires over the past few weeks. But the miasma of smoke from Borneo and the island of Sumatra — an annual phenomenon that blankets large parts of Southeast Asia in smog — underscores a troubling dark side of the world’s alternative-energy boom. Among other problems, the fires in Indonesia spew millions of tons of carbon dioxide and other greenhouse gases into the atmosphere, experts say. In doing so, they exacerbate the very global-warming concerns biofuels are meant to alleviate.
Such side effects are not an isolated problem. In Indonesia, Malaysia, Canada and elsewhere, forests are being slashed for new energy-yielding crops or other unconventional fuels. In India, environmental activists say, water tables are dropping as farmers try to boost production of ethanol-yielding sugar.
For the full story, see:
Midday in Pontianak the smoke haze from palm oil is dense, and causes respiratory problems. Source of caption quote and photo: online version of WSJ article cited above.
"The Canadian Coast Guard icebreaker Amundsen met a plate of "new ice" on the Northwest Passage, but it was easily traversed." Source of caption, and photo: online version of the Washington Post article quoted and cited below.
ICEBREAKER CHANNEL, Northwest Passage — The Amundsen’s engines growl low, as if in warning. The ship steals ahead; its powerful spotlights stab at fog thick with the lore of crushed ships and frozen voyagers. Ice floes gleam from the void like the eyes of animals in the night.
The Canadian Coast Guard icebreaker Amundsen weaves in graceful slow motion through the ice pack, advancing through the legendary Northwest Passage well after the Arctic should be iced over and shuttered to ships for the winter.
The fearsome ice is weakened and failing, sapped by climate change. Ultimately, this night’s ghostly procession through Icebreaker Channel will be the worst the ship faces on its late-season voyage. Much of the trip, crossing North America from west to east through the Northwest Passage, will be in open water, with no ice in sight.
The Amundsen is here to challenge the ice that has long guarded the legendary Northwest Passage across the roof of the Earth, and to plumb the scientific mysteries of an Arctic thawing from global warming.
A relentless climb of temperature — 5 degrees in 30 years — is shrinking the Arctic ice and reawakening dreams of a 4,000-mile shortcut just shy of the North Pole, passing beside the Arctic’s beckoning oil and mineral riches.
"Shipping companies are going to think about this, and if they think it’s worth it, they are going to try it," says the captain of the Amundsen, Cmdr. Alain Gariepy, 43. "The question is not if, but when."
For full story, see:
Source of map: online version of the Washington Post article quoted and cited above.
(p. A12) The report on climate change by Nicholas Stern and the U.K. government has sparked publicity and scary headlines around the world. Much attention has been devoted to Mr. Stern’s core argument that the price of inaction would be extraordinary and the cost of action modest.
Unfortunately, this claim falls apart when one actually reads the 700-page tome. Despite using many good references, the Stern Review on the Economics of Climate Change is selective and its conclusion flawed. Its fear-mongering arguments have been sensationalized, which is ultimately only likely to make the world worse off.
. . .
Mr. Stern is also selective, often seeming to cherry-pick statistics to fit an argument. This is demonstrated most clearly in the review’s examination of the social damage costs of CO2 — essentially the environmental cost of emitting each extra ton of CO2. The most well-recognized climate economist in the world is probably Yale University’s William Nordhaus, whose "approach is perhaps closest in spirit to ours," according to the Stern review. Mr. Nordhaus finds that the social cost of CO2 is $2.50 per ton. Mr. Stern, however, uses a figure of $85 per ton. Picking a rate even higher than the official U.K. estimates — that have themselves been criticized for being over the top — speaks volumes.
. . .
Last weekend in New York, I asked 24 U.N. ambassadors — from nations including China, India and the U.S. — to prioritize the best solutions for the world’s greatest challenges, in a project known as Copenhagen Consensus. They looked at what spending money to combat climate change and other major problems could achieve. They found that the world should prioritize the need for better health, nutrition, water, sanitation and education, long before we turn our attention to the costly mitigation of global warning.
We all want a better world. But we must not let ourselves be swept up in making a bad investment, simply because we have been scared by sensationalist headlines.
For the full story, see:
BJORN LOMBORG. "Stern Review." Wall Street Journal (Thurs., November 2, 2006): A12.
(Note: the ellipses are added.)
The Flagler Memorial obelisk was erected in on a man-made island in 1920, when Miamians still remembered the accomplishments of Henry Flagler. Source of image: http://www.miamibeachfl.gov/newcity/depts/arce/art_public/rw_flagler_monument.asp
The Standard Oil "monopoly" is often lambasted as a sorry episode in our economic history. And yet a strong case can be made that the Standard Oil wealth was created mainly by efficiently providing consumers with a commodity they valued. In addition, mention is often made of the Rockefeller philanthropic activities. Less known, is that others who became rich from Standard Oil, also engaged in productive entrepreneurship, and philanthropy, with their wealth. One of these was Henry Flagler.
In a region that prizes showy monuments to wealth, the lone monument to the man who made it all possible has languished in isolation for decades.
A soaring concrete obelisk dedicated to Henry Flagler, the oil tycoon who hastened South Florida’s development by building a railroad all the way to Key West, it sits on a tiny man-made island in Biscayne Bay, reachable only by boat or, more typically, Jet Ski. Almost everyone here has glimpsed the Flagler Memorial, but few know what it is called, why it exists or how battered it looks up close.
”I’m telling you, it’s a beautiful work of art,” said Paul Orofino, a board member of the Environmental Coalition of Miami Beach, a nonprofit group that occasionally tidies up Monument Island, the memorial’s scruffy, overgrown home. ”It’s a tragedy that nobody pays attention to this thing.”
It is not the kind of South Florida tribute one might expect for Flagler, who extended his railroad from St. Augustine to West Palm Beach in 1894, Miami in 1896 and Key West — a segment that lasted only 23 years until a hurricane demolished it — in 1912.
Flagler was the state’s original megadeveloper, after all, creating its tourism industry by turning swampy pioneer settlements into the world’s grandest resorts. He was also, perhaps, its first huckster, advertising the nascent Miami as ”the most pleasant place south of Bar Harbor to spend the summer.”
His over-the-top winter home in Palm Beach, awash in gold, is now a museum, but most of its visitors come from out of state, said John Blades, the museum’s executive director. Mr. Blades has tried to get a statue of Flagler erected in Palm Beach, which owes its sumptuous existence to the man, but has so far failed.
”Flagler,” Mr. Blades said, ”is probably the most unappreciated titan of the Gilded Age.”
For the rest of the story of the impressive, but deteriorating, Flagler Memorial in Miami, see:
(Note: the hurricane destroyed the Key West link of the railroad in 1935.)
Henry Flagler. Source of image: http://flaglermuseum.us/html/flagler_biography.html