Thursday, July 29, 2010

Income Distribution and Big Time Wind Energy

Introduction
It does not take a lot of research to find evidence of a disturbing trend in the U.S. (and probably the world, for that matter) - the increasing concentration of income and wealth in a small percentage of our population. We now have the greatest mal-distribution of income in America since the Great Depression as far as both income and wealth go. For example, 43% of the wealth in this country is owned by 1% of the people, while the bottom 60% have all of 1% of the wealth. For more details/reference, see the following awesome article (good graphics, too):
http://www.docudharma.com/diary/22046/what-is-really-going-on-with-the-economy

Of course, wealth gets accumulated when some net retention of income happens. That is, if more money is taken in than is spent, then the savings become wealth. Keep this trend up for a while, and wisely re-invest those savings, and the stash of money/assets convertible into money keeps getting bigger and bigger, especially if the rate of return on the savings/profits on the saved money (actually called "unearned income") exceeds the inflation rate. This is where the growth equation comes in handy:

A = A1 + A0 * Exp[rt] where A is the new value of the stash after t years, Ao is the initial stash, A1 is the amount added in in the previous year and Exp is Euler's favorite number, e (2.718...).

In theory, A can go towards infinity for a long enough time t. If r is 6.931% per year, then in 10 years the value of rt is 0.6931, and e^0.6931 = 2, thus that money doubled in value in 10 years. In 10 more years it will double again, so after a total of 20 years, the value of A would be 4 times the value of A0, even if no extra money were added (A1 = o). Nice work (or lack thereof) if you can get it....

Discussion
But, since most people seem to live paycheck to paycheck, and over time, tend to have very little saved up to show for their efforts, well, that growth equation tends to just be a fantasy. In many cases, people tend to be going backwards (this happened early in the Bu$h 2 administration, where the national savings rate went NEGATIVE). When people tend to get behind on debt payments...the result is that the unpaid interest on any debt just gets added to what is owed, and in fact, the debt increases at an exponential rate. In theory, that too could go on until infinite indebtedness occurs.... But things tend to crash and burn before that occurs.

For the vast majority of people in the U.S. (that is, the non-wealthy), real incomes stopped growing around 2001, and greater indebtedness was used to maintain incomes/standards of living or probably more properly stated, standards of consumption, or in many cases, some modicum level of consumption. Unfortunately, the greed of those doing a lot of the loaning out the money became greater and greater - and they also became more clever how they went about loaning money and then extracting the desired returns - notably by Ninja Loans (No Income, No Jobs or Assets) and by those "sub-primes", followed by collateralized debt obligations (CDO's), Swaps, and then bets on loans, not to mention bets on the value of stocks, bonds, commodities (grains, oil, natural gas) and also bets on the values of bets, and pools of bets. Until the bubbles burst, there was lots of money being made as fees for setting up such bonds and debt obligations/bets, as well as lots of Ponzi schemes (Bernie Madoff (with the money)). See http://www.dailykos.com/storyonly/2010/7/19/885573/-Why-the-economy-isnt-recovering.

So, huge quantities of money were extracted from poor and middle class people, and shoved to those further up the income scale. At the same time, decent paying industrial jobs in the U.S. were being automated away or being shipped to low cost labor/psuedo-slave labor countries like China, where workers could barely afford their survival, let alone be able to purchase anything. Next went some service jobs ("tech support"), often to India. Unemployment rates kept going up and up and up, even in good times until we arrive at the present day, where real unemployment rates are more like 20%- see http://www.dailyfinance.com/story/careers/what-is-the-real-unemployment-rate/19556146/. With less and less money being earned by those who were supposed to pay off debts on cars, houses, credit cards, TV's, etc, and higher payments (especially balloon arrangements using teaser rates to get the unwitting or unlucky hooked) - something had to give. And when so many "rushed to the exits" and tried to sell off assets in 2007-2008 (like houses), the value of those also crashed (too much supply, not enough demand, and prices have to drop). There then arose various "asset stripping" behaviors, like stealing all the copper wire/pipe and then iron pipe/fixtures from old house (60,000 houses got "stripped" in one Cleveland neighborhood, as an example). Lots of people went into the "recycling biz"....

At the core of this redistribution of income and wealth lies Corporate America, and of course, the legislation and politicians that they rented and/or purchased and/or conned into believing that trickle down economics actually might not redistribute wealth equitably, not inequitably. The income (unearned in more ways than one) pouring into the upper crust and the political power that purchases for a tiny minority of well off, left most slightly, and some extremely, worse off, as seems to be typical of recessions these days. Corporations are, more or less, mostly in business to deliver profits to the owners (often shareholders), though sometimes they seem to be more intent on padding the wealth, income and influence of senior level management (who are often minor owners, but sometimes significant owners). Ownership is often clustered into funds whose managers exert significant clout. For example, there are large chunks of the ownership of Transocean via hedge funds (several billion dollars worth); for example, Marsico Capital owns 17.65 million shares of Transocean (@ $46/share = $816 million). Marsico owns $37 billion in various stocks. These hedge funds in turn were often owned by other hedge funds and companies, and eventually individuals, but in this case, Marisco is now totally owned by Bank of America. And of course, B of A is owned by all kinds of other institutions - so "ownership" gets nice and convoluted. Then there is also "corporate cash". Here are a couple of additional articles (from Bob Herbert of the NY Times and Jia Yang of the Washington Post) documenting the Stash of Cash, and how much of it was obtained by paying workers less for increased productivity, or firing workers, and also by going out of their way NOT to invest that money into long term productive uses, new products, etc.

Anyway, this all leads up to the Crux of the Biscuit. If the vast majority of the population in the U.S. gets less and less money either from no jobs or for those lucky enough to have jobs working more hours and/or working at lower real wages and benefits, they will have less money to spend as consumers of goods and services. As it turns out, expenses for MOST people are still going up (especially energy, food, local taxes). For example, check out this graph on how the percentage of total U.S. Gross Domestic Product (GDP) has been on quite the upward trend (up to 10% in 2008) during the last decade: http://www.theoildrum.com/files/United-States-Energy-Expenditures-as-a-Percent-of-GDP-1999-2008.jpg.

With domestic consumer demand for stuff clobbered due to the vast majority of the population now having less money (or no money) after all the essentials have been (or assuming they can be) procured, and a sea of excess supply provided by potential imports from psuedo-slave labor countries like China or India (so that workers in those countries can't afford to buy reciprocal items from the U.S., which would actually stimulate employment in the U.S., and thus demand by U.S. workers, too), no company with a few functioning brain cells in the management ranks would invest in extra production capacity at the present time. That would be a prime case of stupid, and "Dumb and Dumber" in practice.

So, if most companies are not going to use the $1.87 TRILLION fabulous Stash of Cash, how will people get hired? Odds are, as long as this stalemate continues, hiring won't be increased, and only firings will be increased. And neither will sales increase. Instead, companies will continue slashing the number of employees, getting higher productivity, and since higher productivity with constant output means less workers are required, more will get fired. Meanwhile profits will soar as the same amount of stuff is made with fewer people who also cost less to employ, further cementing this untenable situation into place, until Great Recession #2 comes rolling into town. And more tax breaks to Corporate America (at this time, more properly called Corporate Earth) will just deprive governments of more money via taxes, causing them to fire more people/buy less stuff, also contributing to a slack demand, and weaker prices for goods often supplied by Corporate America. It won't increase the likelihood of further investments in productive capacity, since that complete capability is not being presently utilized.

But remember, corporations and other owners of companies are not in the business of hiring people because it is the right thing to do by our country - they are in the business of making money. In general, there is a long history of hatred of labor by many companies and/or their rich owners - hired labor is generally viewed as a necessary evil, and if it can be done without (or at least American labor), so much the better. Of course, this has a glaring internal contradiction - without paid labor, there will be a dearth of customers, leading to business failures en masse. Oh well, it's not like they weren't warned.

One way to make money and avoid the messy complications of making stuff and dealing with the human beings who tend to make up the work force is to morph into "virtual corporation" mode, where maybe R & D/finance/accounting/marketing/advertising is done in the U.S., but nothing else is (Nike is a classic example of this). But, why stop there - next is to evolve into a hedge fund, venture capital (also sometimes called Vulture Capital) firms or an investment house by taking the proceded from selling all the assets/take the money and gamble it on stacks, bonds, commodities, etc. For example, see this article - http://firedoglake.com/2010/08/01/why-do-conservatives-loathe-keynes/. Here is the money quote form Mr. Keynes that seems so relevant as to why most Americans are not benefiting by today's so-called modest recovery:

“When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done.”

from "The General Theory of Employment, Interest, and Money", Prometheus Books, p. 157.


So what would increase the demand for goods and services for things in the U.S., and most especially, things made by U.S. workers, and thus increase the demand for domestic labor? Well, there would be the traditional purchase of goods and services, and the disbursement to those in need by the U.S. government via more debt (since states can't do this, since they can't go into debt much, and they are already less than broke)? Or, less could be spent buying imported crap, since that just bleeds income and wealth from this country. We could always quit wasting so much money defending our corporate empire/oil countries via a very expensive Navy and Air Force, and via military bases. Or, the U.S. government could create a demand for, say, renewable energy, via approaches like allowing states to use Feed-In Laws for renewable electricity, or else via the less effective Renewable Energy Standard (RES) approach. Or, imported oil could be taxed via tariffs to the point where supplying domestic fuels (especially biomass derived) starts to be economically viable and finally profitable without subsidies. Hey, maybe some or all of the above....

It turns out that the renewable energy approach has proved to be a successful way for many European countries (also China and India) to employ lots of people and also export less money for imported fossil fuels, get new export income from exporting these systems. In China, the production of photovoltaic panels made using psuedo-slave wage labor has provided them with another mercentilistic way to generate export income (China does not install that many PV systems, because even with psuedo-slave labor, the electricity made from them is just too expensive for them). However, with wind turbines, most of the made in China units are installed in China, because domestically made units can supply electricity (when they work) at between 6 to 8 c/kw-hr from very windy regions like Mongolia.

The U.S. has one of the the most phenomenal wind resources of any country (a capacity of something like 10 to 20 times the current US electricity production rate, depending on the price of that wind derived electricity), and a huge capability to store electricity via approaches like pumped and deferred hydroelectricity, or via compressed air (which can also be used to "co-generate cool" via the cooling that happens when compressed gasses are expanded through turbines) for those regions without the combination of water and hills. However, at the current prices for electricity made via old (and thus, fully paid for, fully depreciated) coal burning facilities and with essentially no cost for particulate or CO2 pollution, there is very little via wind resource that can be made "competitively", especially in highly populated areas. And while natural gas burning units use more expensive (and not too reliably priced) fuel, the facilities themselves are relatively cheap to build. This is why almost all new fossil fuel based facilities are natural gas users - the facilities are at least 3 times cheaper, and they can get paid off rapidly in "good times" - often in less than 2 years. Of course, if gas prices rise and electricity prices stay constant (due to old coal burners/old nukes), that can be a rapid road to bankruptcy.

But, replacing old, polluting electricity generation facilities with new non-polluting ones is a great way to stimulate an economy, via the enhancement of the manufacturing sector. And since manufacturing jobs have a very high job multiplier effect (the auto and steel industry job multiplier numbers are between 4 to 5), a massive push for wind turbine production and installation would in turn create a massive number of jobs - sort of like a new automobile industry, but one which uses many of the same skills/technologies (metalworking, materials science, construction, etc).

Conclusion
In fact, the job creation potential and who gets those jobs of the wind turbine manufacturing industry in the U.S. may be one of the reasons that conservatives and Republicans oppose wind turbine installations. They have been trying for decades to remove working class people from any sort of political and social relevance in this country by separting workers from money and jobs, and doing a darn fine job at it, too. And now to recreate that which has been stomped out... Talk about "de-funding the progressive movement"... after all, it's hard to lobby with no money, and the unemployed or minimally compensated can't afford lobbyists.

Of course, there are other reasons, including the fact that in many places (ESPECIALLY NY State, with it's "deregulated" electricity market system), adding wind derived electricity lowers average electricity prices via the Merit Order Effect (MOE). In effect, this deprives oligopolistic and/or monopolistic big corporations which operate paid off pollution based generation facilities of extraordinary profits whenever natural gas prices rise a bit, or when electricity demand spikes and/or peaks. They still make profits, just not extremely huge profits (when you make make electricity at a profit at 3 c/kw-hr but can sell it at 10 c/kw-hr ....whoppee, even if it is for only part of the year). See this article for a summary and link to a great New Scientist explanation of how this can happen.

So, next time some astroturfing fisherman's group, or a confab of yachters and boaters or a group of bird watchers gets a fancy website and speaks as if well coached...well, the odds are, that is cleverly and discretely paid for by some really grumpy polluters who don't like how wind power lowers average electricity prices EVEN if the wind turbine electricity cost/price paid to the wind turbine owners is greater than the average electricity price. Gotta love that MOE. Oh, this moe, too.

DB

Wednesday, July 7, 2010

July 4 - Buffalo's Coastline

July 4, 2010 was a warm one - at least by North Coast standards. Away from Lake Erie, it was sunny and warmer (4 pm air temp at the Buffalo airport was 82 F, 51% humidity), and not that windy unless you were above the tree tops/on a hill with no trees, which is difficult in our VERY GREEN summertime, since trees are the dominant life-form around the Great Lakes, unless they get cut down. Of course, it got warmer as the week went along.

So, looking for some cooling, I went down to the waterfront, and went for a walk along the new path to the Bell Slip and then back to Dug's Dive, currently one of the few viable tourist businesses along the waterfront. The air temperature was a cooler 73 F and 74% humidity, with nice breeze from the WSW (218 degrees) (data from the US Coast Guard station 1.75 miles up the peninsula):

Meteorological Observations Form station 9063020
Station Date      Time Wind Sp Wind Dr Wind Gt Air Tmp H2O Tmp Baro Pr Rel Hum
DCP#: 1 1 1 1 1 1 1
Units: Mtr/Sec Degrees Mtr/Sec Degr C Degr C mbars Percent

9063020 20100704 15:00   4.366 226.664   6.661  22.988  22.673 1017.12  71.098
9063020 20100704 16:00 5.142 218.496 6.598 22.870 22.639 1016.75 73.701

Note: 23 C is 73.4 F, for those of you who are not "ambi-thermal".

It was also quite windy - a great example of the local lake effect working in conjunction with the main weather pattern that day. Those winds were averaging 4.8 m/s at 10 meters above the ground, or about 10.6 mph, with gusts of almost 15 mph. Not exactly a raging gale, but very comfortable, especially in the shade. And with these very decent winds, the First Wind owned Lackawanna wind farm was chugging out electricity at a decent clip.

Actually, since those units are situated 80 meters above the slag bluffs, which themselves are 15 to 20 meters tall (total height above Lake Erie would be near 100 meters, or 328 feet). Odds are, the winds at the turbine hub heights were about 7 m/s.

A Clipper 2.5 MW wind turbine with 96 meter rotor diameter has an output of about 630 kw at 20 C and 173 meters above sealevel with a 7 m/s hub height wind speed. All 8 of them were spinning, all facing towards Toledo, and none of them getting in the way (stealing the wind) of any of the others. So the wind farm would have been displacing about 5 MW of polluting (probably natural gas based) generation. That would have been replacing about 38 MBtu/hr of methane combustion at an average efficiency of about 45% (NY State average, according to a Consolidated Edison engineer who should know). While this "saves" about 38,000 standard cubic feet of natural gas (for other people to use), it also avoids about 2.3 tons/hr of CO2 pollution. Nice.

I was located about 1.6 miles from the closest wind turbine, but could detect NO sound coming from these units. Of course, even if you were down on Rte 5 at the Buffalo-Lackawanna border, and even if traffic noise amazingly vanished. Actually, given the distance from Dug's Dive (2450 meters), the closest turbine's sound would be attenuated by 88 decibels (= dB(A)), so that the sound contribution for that unit would only be around 18 dB(A) above an absolutely quiet background (never happens outside - something or someone is always making noise, including air movement). Most people have trouble hearing 40 dB(A), and even 50 dB(A) is considered quiet. Obviously, the elevated monstrosity that is Rte 5 (better than it used to be still does not cut it - it needs to be made to go away) is far noisier than are the wind turbines.

So, if you want to get a good perspective of how loud the proposed offshore wind turbines would be, go on down to the Union Ship Canal off of Furnham Blvd on a dedntly windy day. Odds are, the sound of the wind moving across the water will outweigh any kind of noise you might hear from a wind turbine 1/2 mile or more away form the water's edge. So all of the vocierous and overwrought "noise" from the "anti" people (those opposed to wind turbines in the American portion of the Great Lakes - as there will be lots of them on the Canadian side, along with the jobs to manufacture the turbines and turbine components, as well as to install them) - that is probably "louder" than those proposed turbines are ever going to be.

So if noise isn't the issue (and it isn't), what IS the issue?. Is some evil coproate polluter or organization fronting for a whole bunch of evil corporate polluters buying these people beer, and bribing these gullible folks with cold brewskis? Are they afraid the mere sight of these will so stimulate their teenage daughters to get really horny and avail themselves of the local or not-so-local "talent"? Or are they outraged that the view they thought they "owned" really can't be had, especially for free?

It's hard to say. But, if all of the coal burners around the lakes were replaced with wind turbines and pumped hydroelectric storage systems, there would be a lot less mercury being deposited into the Great Lakes watershed, and/or waters. As you may know, bacteria in the water or in the mud underneath the water convert mercury into methyl mercury, which is fat soluble. And that's why all the top predators in the lakes (trouts, walleyes, salmons, etc) have high mercury levels - the methyl mercury bio-accumulates from algae and diatoms all the way up the food chain, concentrating by several orders of magnitude. If you want to be able to eat the fish in the Great Lakes, getting the heavy metals out of the water column would be a start. Or, there fish could graze on zbra muscles, or fish that eat zebra muscles, and load up on "regular mercury" that way

Of course, coal derived trace metal poisons are not the only way to trash the edibility of fish in Lake Erie. This almost got accomplished with a leak of strontium 90 from West Valley via the nearby creek, but luckily a temporary fix was found. Sr 90 is a nasty poison - Sr has very similar chemical properties to calcium, and it tends to get fixed into bones. While non-radioactive Sr in traces is not a problem, Sr 90 has a half life of about 20 years, and it decomposes by emitting an beta particle (energetic electron). People poisoned with Sr-90 have a very great probability of developing leukemia (cancer of the blood), because new blood cells get made in the bone marrow. Then there are also bone caners to worry about. Sr 90 integrated into bone is the cancer causing equivalent of turning a nasty maniac loose with several fully automatic AK-47's at the busy mall during shopping season. But where did all that Sr 90 (and cesium 137, etc) come from? Nukes - nuclear reactors, and the ill-fated experiment known as fuel reprocessing (a necessary step if you want to operate lots of nukes, since most of the usable fissionable "fuel" in a nuke never gets used, for complicated reasons). Of course, there is also tritium leaks (a big topic in Vermont); tritium is a radioactive isotope of hydrogen, with a 12.3 year half-life) that all nukes seem to have, and then the problem of radioactive contaminated water leaks/emanations (TMI, Bruce complex, Fermi 2), or of the Chernobyl style potential (for example, what if the 6" deep football sized-hole in the steel shell of the reactor at Besse-Davis was not discovered by luck in the nick of time). Boiler explosions resulting from a slight pressure decrease (caused by a big leak) would just not be readily containable....

So, coastline located or offshore situated wind turbines seem so risk free by comparison. They don't make CO2 pollution once they are built. Onshore ones get twice as many jobs created per dollar invested as coal burners and nukes; for offshore, the same job ratio holds, but in terms of jobs per MW-hr delivered, more jobs are created (more investment per unit of energy delivered). In these days of horrendous real unemployment rates (close to 40% in Buffalo, and more like 20% throughout NY State), automating the manufacturing of electricity making systems (that is, making coal burners and nukes, where less jobs are created per MW-hr delivered AND per MW of generating capacity) seems less than wise.

Of course, with the current "debate" about Great Lakes located (near or in) wind turbines, wisdom seems to be in short supply. Too bad, and so much for our "knowledge based economy". Instead, it seems to be a "lack of knowledge" society and associated economy.

DB

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