Business and industry – Page 89

Shining the light on solar (and its subsidies)

In an interesting bit of happenstance, last weekend’s Maryland Republican Party Fall Convention was held at the same time and same venue as the MDV-SEIA Solar Energy: Focus 2009 Conference & Exhibition, which brought together exhibitors and those interested in solar energy around the capital region. (We kicked them downstairs for Saturday, which shows me Doubletree has its priorities correct. Capitalism before wackoism.) Since the mission of the MDV-SEIA is to “speak out on solar legislation, codes and standards issues in Richmond, Annapolis and the District, seeking better financing and broader consumer awareness,” I thought it would be a good idea to see just how much “better financing” they’re getting now. (Emphasis mine.)

Obviously there are a number of businesses which deal in solar energy, and the bulk of the exhibitors (I’m guessing there were around 20) were companies who sell or install solar panels. Probably the most known, and one who actually has a solar panel manufacturing facility in Frederick, Maryland, is BP Solar – obviously a subsidiary of British Petroleum (corporately known as BP plc.) They’re quite helpful in the “better financing” regard, with a area on their website devoted to rebates and incentives for installing solar panels (read: redistribution of tax money as subsidies.) Maryland is one of 24 states who have enacted financial incentives to install solar panel systems; surprisingly to me we were one of the most miserly in that regard – only Utah had a smaller allowance than Maryland’s $3,000 while Wyoming’s was equal. (By comparison, Delaware’s incentive as listed is fifth highest at $20,000.) BP’s information is a little out of date, though, as I’ll detail later.

While BP is pleased to share the costs borne by government of its solar program, it’s much more difficult to determine its impact on the corporate bottom line. Effective in 2008, BP placed its alternative energy subsidiaries in a grouping with overall corporate operations, and through the third quarter this area was their lone loser among BP’s various businesses. (You can find the breakout on Page 10 of this document. Notice U.S. operations take the biggest toll.) Not being an accountant by trade, I’m still led to assume that the alternative energy portion of BP’s business is the loss leader, but serves them a little bit of a shield against criticism from the extreme environmental left.

However, BP itself hasn’t been left off the subsidy train. A pamphlet I picked up at the event glowingly notes, under “Investing in Communities”:

BP Solar has been awarded a U.S. Department of Energy grant under the Solar America Initiative (SAI) to accelerate the path to grid-parity (bringing the cost of solar on par with traditional brown power). This ~$40 million effort encompasses all levels of the manufacturing and deployment steps for residential and commercial applications.

The SAI is part of the laundry list of programs for energy independence President Bush outlined in his 2006 State of the Union Address, and that $40 million is a big chunk of the $148 million he proposed in FY2007. Fiscally conservative that’s not.

As you can tell already, many of these exhibitors wouldn’t be there if not for a large heap of federal money. But the state of Maryland, and at least one locality within, is not immune to shoveling tax money toward homeowners who believe solar energy may be right for them.

One bill (HB377) which passed the 2008 General Assembly increased Maryland’s former $3,000 cap on solar grants to $10,000, divvied out as $2,500 per installed kilowatt. But according to the Maryland Energy Administration, the full budget allocation for these grants was wiped out in one day of applications, and they’ve stopped taking applications for the FY2009 waitlist for money to replenish the grants extorted from utility companies and others who participate in the Regional Greenhouse Gas Initiative cap-and-trade program. They’re now starting to take applications to wait for reimbursement in 2010.

If that’s not enough, residents of perhaps the greatest socialist’s paradise in America – Montgomery County – have the opportunity to participate in their “Clean Energy Rewards” program. Of course, it comes at a cost to the consumer:

County residents, businesses, and other organizations will receive a half a cent ($0.005) for each kilowatt-hour (kWh) of program eligible clean energy used. Depending on the product selected the cost of clean energy through the program ranges from 1.5 to 3.5 cents more than standard electricity (10/14/08).

There’s also a cap to the program of 20,000 kWh annually for residences and 400,000 kWh annually for businesses. All this does then is subsidize a small portion of the out-of-pocket cost to those who feel guilty enough after being browbeaten by the radical environmentalists out there to decide to fork over a premium price for the same exact form of energy that the most polluting coal-fired plant produces at a much better price. Even in a best-case scenario for a homeowner who uses 20,000 kWh, they’re paying a $300 premium to get a $100 check from the government.

Clean Energy Rewards is not the only scam Montgomery County promotes, they also encourage the purchase of renewable energy certificates as well. Once again, this is done to create a market for alternative energy where none exists, and again taxpayers pay for a reward that’s a pittance compared to the actual costs. (But it also keeps a few pencil pushers employed too.)

Job creation is a good place to finish my look at this subject. Many claim that green-collar jobs are the wave of the future, and there was one start-up business present at the trade show with a mission to “create permanent green-collar jobs that support an environmentally sustainable locally-based economy.” Another little handout I picked up last weekend was from a group called the Worldwatch Institute, who claimed that “(b)y 2006, the U.S. renewables industry had created 386,000 jobs compared to 82,000 jobs in the coal industry.” Perhaps that’s true, but the renewables industry pales greatly in comparison to the over 1.6 million jobs currently held by those working in the oil and gas industry. Nor does the Worldwatch Institute give a time frame for that job creation purportedly in the renewable energy field.

As a whole, I have nothing against those who wish to invest in solar power for whatever reason – if they have the resources to do so and feel it’s right for them, go for it. The same goes for companies who have a better idea in that realm of technology. But it should be up to the market to determine winners and losers, and my biggest problem with the heavy government involvement and subsidy of that industry for the dubious purpose of preventing climate change is that there are so many other priorities our federal and state governments should be funding first, well before engaging in corporate welfare of this type.

While the nation argued for days about a $15 billion bailout of the Big Three, we seem not to notice the billions in subsidies and tax breaks that go to make renewable energy cost about the same as those fossil fuels we hold in abundance, but which may not be as politically correct to use. Someday solar energy will have its place, but the economics of today suggest that day isn’t here yet.

Odds and ends no. 15

It’s time once again for another compilation of items that aren’t necessarily worth a full post but sparked my interest nonetheless, a post I call ‘odds and ends.’

First of all, this is from a group I’ve supported before, the pro-troop group Move America Forward. I’ll allow spokesperson Kristen Schremp to pick things up from here:

Move America Forward, the nation’s largest pro-troop grassroots organization, is conducting a nationwide tour to support sending care packages to the troops in Iraq and Afghanistan.

“With Americans focused on the economic problems facing our country, we have to ensure that our troops in harm’s way are not forgotten during the Christmas and Hanukkah holiday season,” said Melanie Morgan, Chairman of Move America Forward.

Traveling on the tour will be Gold Star Mom Debbie Lee, – whose son Marc Alan Lee was the first Navy S.E.A.L. killed in Iraq. Lee said, “I remember his feelings of pride for serving our country, but also the loneliness troops endure during the holiday season. Instead of celebrating Christmas and Hanukkah with their families, many military men and women will be spending the holidays this year protecting our freedom in far off lands.”

To show the nation’s gratitude and support, Move America Forward’s Debbie Lee and singer/songwriter Diana Nagy (who will perform her hit song “Where Freedom Flies” at each stop) will be on the road encouraging people to send care packages from December 13 – December 19.

In their case, the tour itinerary runs through the southern part of the country, but readers can still donate regardless of where they live by going here.

The next little item is a method to rate bills before Congress from a fairly new group to me called the Sunlight Foundation, a group whose goal is to make Congress more accessible. Blogger Ellen Miller explains:

OpenCongress has just launched Battle Royale, their new feature that collects all the data about Congress generated by users of “My OpenCongress” since January 2008. David Moore, OpenCongress’ director, describes it as a “Billboard Chart” for legislation or a “Digg” for Congress. Battle Royale lets you see what bills people are loving or hating. It will gauge their user community’s views on legislation by stacking up all the bills, issues, and members of Congress. “This new tool is a key part of our work to harness the social wisdom created on OpenCongress and make it accessible and useful across the Web,” David wrote in an email. One purpose of Battle Royale is to give a bird’s eye view for researching the public’s opinion of Congress. Check it out and you’ll find a list of the top ten most supported and most opposed bills of the past 30 days on OpenCongress.

Perhaps the only thing I don’t care for about Battle Royale is having to log in to express your views; it’s probably holding participation back to some extent. We’ll have to see where the concept goes in the 111th Congress that begins come January.

At this time of the year, there’s a whole lotta listing going on. Yesterday, even with 20 days left in 2008 to come up with a real doozy like the auto bailout, The Business & Media Institute (which is an arm of the Media Research Center, for those of you keeping track of the myriad organizations lobbying inside the Beltway) came up with the Media’s Top 10 Worst Economic Myths of 2008. What surprised me was the amount of depth and linkage placed in most of the categories (all but one had three or more outside links to either their own blog posts or “mainstream” media outlets.) I may have flip-flopped #1 and #2 for starters since the #2 myth affected the election more, but on the whole I can’t quibble a lot with their picks.

Now I’ll shift from the biggest issue of the recent election to one which was predicted to be a much bigger issue a year or so back, and one that could have sank John McCain’s bid had the debate occurred a little later: immigration. This item is a couple weeks old, but the information the Center for Immigration Studies put out is still valid unless and until the laws regarding this change:

Each year, tens of thousands of United States citizens and Legal (LPR), at both home and abroad, meet and marry foreign nationals. Spouses of American citizens have priority over most other immigration categories, making marriage the quickest way to receive a green card. As the new Obama administration prepares to take office, the long dormant debate over levels of legal immigration is sure to resurface, but that debate is unlikely to include discussion of fraud amongst the most common path to American residency. The prevalence of such fraud contributes to illegal immigration, poses potential national security vulnerability, and clogs the system for legitimate applicants.

The Center for Immigration Studies, a non-profit research organization, has released a new Backgrounder detailing the ways the marriage-based green card categories are exploited and offers recommendations to protect the system from fraud. “Hello, I Love You, Won’t You Tell Me Your Name: Inside the Green Card Marriage Phenomenon,” was written by David Seminara, a former Consular Officer with the U.S. State Department who has adjudicated thousands of marriage-based green card applications in several countries. (Emphasis in original.)

Being a single man, I’ve actually had experience with women finding my Yahoo profile and sending me instant messages wanting to get to America. But as Seminara (whose work I’ve discussed before on this website) notes, while there are thousands of cases where love was found across oceans or continents, in too many cases the marriages are a scam designed to bring someone to America for whatever reason.

On another side of immigration, a group who I regularly get e-mail from but generally don’t use sent me this piece regarding a pair of Border Patrol agents who are a cause celebre amongst immigration hawks and pro-law enforcement citizens, Ignacio Ramos and Jose Antonio Compean:

Gun Owners Foundation (GOF) already has filed not one, but two friend of the court briefs (here and here) for Ignacio Ramos and Jose Antonio Compean. In those briefs, GOF has pointed out to the Fifth Circuit Court of Appeals that the 10-year conviction of the two agents is for a crime which doesn’t exist.

(snip)

The two agents were convicted of the “Discharge of a Firearm in Relation to a Crime of Violence” — something which is not an offense, rather it is a sentencing enhancement after the government has established illegal gun possession, use or carrying.

Of course, if the Feds had gone for that kind of charge, they would have run into the problem that the agents were required to possess, use and carry guns on them while on duty. That is why the US Attorney, Johnny Sutton, went for, and succeeded, in making up an offense that would not force him to explain away that the agents are required to be armed.

One of the reasons the Border Patrol requires agents to be armed is so they can use their guns against armed drug smugglers such as Osvaldo Aldrete.

Even if the Supreme Court reverses this injustice done to Ramos and Compean, they could expect to sit in jail for upwards of another two years — for a crime that was impossible for them to commit.

GOF was a friend of the court in a similar case before the Supreme Court. Our position was upheld nine-to-nothing. It involved a drug dealer who took a gun in payment for a bag of dope. The Feds gave him many extra years because he supposedly had “used” a gun in a crime. The Supreme Court agreed that such a view was ridiculous and clearly not the intent of the law. The Fifth Circuit has simply overlooked these fatal flaws in the government’s case.

George Bush is thinking about his legacy. We have a chance to convince him that his legacy is on the verge of staining his reputation with the miscarriage of justice perpetrated by the federal prosecutor, Johnny Sutton. Keep in mind that Sutton lied to the trial court and to the appeals court about Aldrete’s connections with the drug trade. He also concealed from the jury that he was paying Aldrete for his testimony against the agents.

Hopefully, President Bush does not want to be known as one who stood by while innocent men — and the wives and children — suffered because of a blatant injustice.

All gun owners should be alarmed at what the government has done to these two agents. If they will do this to police officers, we cannot assume they will treat the rest of the population any better.

While I do happen to think, along with the GOA, that this pair should be pardoned for a so-called crime committed in the course of doing their assigned tasks, the question I have is open to other bloggers who may be on the mailing list of the entity called Special Guests, or to the company itself.

In looking at their site and their “about us” section, it appears the focus of their operation is placing clients on radio and television as “special guests” – hence the name. Fair enough. SG’s clients pay a fee to get their word out, such as a book to promote. In the case of this e-mail, the client is GOA Executive Director Larry Pratt, who is promoting a new book he’s written.

As readers have probably figured out, one thing I enjoy doing is a short-form interview (Ten Questions.) What I wonder is whether Special Guests is pondering doing the same in the blogosphere, or if I’m just the lucky one who gets their e-mails? Obviously they wouldn’t need to charge a client as much to secure an interview with a website like mine (which is small, but seeks to grow in readership and stature) as they would for a larger, more read website.

There’s times where I get e-mails from people who want to get their word out soliciting interviews with bloggers – this is how I got the last two I’ve done, I just responded to their offer nicely. The good thing for me is that these provide a basis for securing more and better interviews, because I’d like to make Ten Questions at least a monthly feature. You need to start someplace!

It’s a question I thought I’d ask and a good way to wrap up this method I use to clean out my “blog ideas” mailbox.

Fighting words to Big Labor

Dan Ikenson of the CATO Institute asks a valid question: why do we need a Big Three?

This video is a compilation of the longstanding libertarian group’s argument that the bailout isn’t necessary:

In a minute and a half there’s several compelling arguments that there’s more wrong with the Detroit automakers than billions in federal aid can fix. After all, if the Big Three are collectively losing billions a quarter doing things as they have, how long will it be before they’re either back asking for more from the taxpayer or the companies become fully-owned subsidiaries of the federal government? Or both?

Perhaps a better question is why are several other automakers succeeding in manufacturing good-quality cars and trucks at a profit for their respective corporations? It’s not just venerable American nameplates like Ford, Chevrolet, and Dodge being manufactured in America – over the last couple decades they’ve been joined by Honda, Toyota, Nissan, BMW, and soon Kia will open a plant in Georgia. Most of these plants are in the southern part of the country and pay wages which are a fraction of their UAW-organized competitors but still provide a solid living for their workers. And that seems to be where the answer lies.

While it is important to note that the United Auto Workers union has relented to some degree on wages for workers just starting out, the trouble is that with shrinking sales and fewer plants remaining open for more than one shift (if at all) the seniority-laden union work rules simply mean that the newer workers are the ones being laid off; this means wages on the average aren’t dropping significantly. Thus, in order to compete with imports the Big Three has to skimp on some aspect of their lineup. Perhaps the quality is one to two degrees less than their Japanese or Korean counterparts or the items found standard on the imports become expensive (read: profitable) options on the American models. They also may run a year or two behind on design trends, and let’s face it – there’s too many similar models in the Big Three lineups to pique interest.

In years past, automakers expired with nary a peep from Washington. In my youth Detroit actually had the Big Four but the former American Motors Corporation went out of business in the 1980’s leaving the Jeep nameplate the lone survivor as it was absorbed by Chrysler. (They first attempted a merger with the French automaker Renault. We see how well that worked.) AMC was a victim of tough competition from Japanese imports, shoddy workmanship (we used to call them AlMost a Car), and generally odd design – while I think the AMC Javelin is/was a cool-looking car, the appropriately-named Gremlin, Hornet, and Pacer only drew snickers and not buyers. The more senior among us probably remember well the DeSoto or Studebaker, two other long-time nameplates that ran out of buyers and folded their tents decades earlier.

While Detroit thinks that the Big Three are collectively “too big to fail”, the market seems to be dictating otherwise. And without the government bailout, it may be that bankruptcy and merger looms for at least one of the Detroit automakers – however that may also bring a dose of sanity to the labor market and bring the costs for the revamped survivor(s) down to be more competitive with the American-built import nameplates. Let’s allow the market to run its course; yes, there will be some bitter medicine to swallow but that may be the only long-term cure.

Crossposted for my Delaware friends at That’s Elbert With An E.

Answer to the question

If you saw this post right after it went up, my apologies for not having the charts come up. I forgot the source was a transient website address, now I’ve corrected the oversight. I also put in a short explanation of what the charts represent.

I told you Jane Van Ryan reads my site. Yesterday I received an e-mail in my box regarding a query I had in Wednesday’s post about gas prices and other oil-related news. In getting the answer, I found out that I misread the chart but lucked into asking the right question anyway. The date in question for the huge marketing/manufacturing bump was September 5, 2005 – not 2006. As most recall, September 2005 was the period immediately after Hurricane Katrina wreaked havoc on the Gulf Coast. Naturally I would have realized the reason had I seen the date correctly – ah! right after Katrina!

But here’s her answer:

I’ve got the answer to the question posed in your blog post, and it’s is precisely as I expected. Here’s how one of our economists explained it:

First, it is important to remember that the 9/5/05 figure is a one-week snapshot in time…right after Katrina.

Second, the figure is for manufacturing and marketing (and transportation, margin (both wholesale, retail, and distribution), and all other costs.

This figure is very volatile—tending to broaden as prices go up (widening out the most when prices are spiking) and narrow as prices go down (shrinking the most when prices are plummeting). This is partially because it includes the expected costs of the next shipment. When refineries are offline it tends to rise as well (as with Katrina/Rita) and different product formulations also affect the price (higher costs for summer blends vs non-summer blends).

It is better to look at the numbers over longer periods of time instead of a weekly snapshot—over a month or a year, for instance…and better to look at same-month comparisons vs different months (with different product formulations).

For September 2005, the cost was $1.119, for September 2008 it was 82.7 cents.

Annual averages (inflation adjusted): from 1980’s peak of $1.1509, the manufacturing/marketing/transportation/margin component fell to 39.46 cents in 1999, rising back to 74.06 cents in 2007. For the first 10 months of 2008 it is estimated at 55.04 cents.

So far for 2008, the monthly averages have been well below 60 cents (with the exception on September and October in the aftermath of Gustav and Ike).

I hope this helps.

By the way, another interesting data point not in the Pump Price Update is the “Refiner Margin” (the difference in price from crude and gasoline in the spot/futures market). It is out of this number that the actual cost of manufacturing gasoline is taken…it has been NEGATIVE since October 3.

So far in 2008 it has averaged 11.05 cents…down from 2007 (27.58 cents), 2006 (22.13 cents), 2005 (26.77 cents), 2004 (21.62 cents), 2003 (16.48 cents), 2002 (13.77 cents).

Please let me know if you have any questions.

Best,

Jane

Can you tell an economist answered this? Holy smokes, that’s a lot of data – and all because I misread a number!

But Jane does bring up another good point, one that is often missed when talking about gas prices. The price at the pump isn’t set by what was paid for the gasoline that’s in the station’s storage tanks but rather by the next tankful the station owner has to buy. This tends to explain the phenomenon where prices seem to spike upward quickly but take their sweet time to decline. And the formulation aspect is also important around here because there’s a certain time of year (we just passed through it) where gasoline in Delaware runs cheaper than it does in Maryland – I’m told that is because of formulation differences between the two states. Now that both states are back on a level playing field the prices have reverted back to the norm of Delaware being a few pennies more than Maryland.

I don’t know if I can give you a college semester’s credit for reading this post, but I certainly imparted a lot of data to my readers and managed to get all the charts to come out. All told, I’m just pleased that the price of a gallon is back down to a level more in line with sanity – and I’m sure Jane and her cohorts would agree that now’s the time to work on keeping it that way!

The never-ending campaign continues

It was noted after the successful campaign by Barack Obama that he had an e-mail list of some 3 million people, of whom I happen to be one. Obviously I wasn’t exactly his staunchest supporter since the incoming President and I operate on completely different political wavelengths.

Much as Bill Clinton went about his terms in office, it appears the Obama presidency may be one of perpetual campaigning. I got a hoot out of the e-mail which showed up in my inbox yesterday:

This holiday season, celebrate the historic accomplishment of our movement for change. Treat yourself or a loved one to a limited edition Obama coffee mug.

Make a donation of $15 or more right now and get an official Obama mug to mark an amazing year:

Items purchased by December 15th are guaranteed to be delivered before December 25th.

When you make your donation, you’ll be supporting the Democratic National Committee. The resources they invested in the 50-state organizing strategy made this movement possible — help us build for future victories together.

Share this amazing moment with your friends and family. Thanks to supporters like you, we all have the opportunity to bring real change to America.

(Emphasis in original, modified to eliminate link.)

I suppose it’s par for the course since President Bush certainly made his share of pitches asking me to donate to the Republican National Committee. But it just seems a little, well…tawdry to receive a mug. (Then again, a coffee mug was my one of my premiums when I renewed my Limbaugh Letter subscription a couple years back. But my black-on-white EIB mug would clash with the Obama model, and in any case I’m not a coffee drinker.) Next thing you know, for a $100 donation people would receive a lovely tote bag made from recycled soda bottles or woven all-natural hemp. (And what is the carbon footprint on that coffee mug?!?)

But with even a 1% success rate on 3 million e-mail addresses, at $15 a pop that would be nearly another half a million dollars to the DNC for perhaps a $60,000 investment – I’m figuring $2 a mug and that may be a lot. That’s the beauty of having a large e-mail list; also by making the beneficiary the Democratic National Committee I believe the donation limits are larger so tapped-out Obama contributors can reach a little deeper in their pockets. Hey, I thought we were in a recession.

A week or so ago, I briefly brought up the name Richard Viguerie, best known as the man who pioneered the concept of direct mail solicitation for political purposes in the 1970’s. Say what you will about his ill-fated Presidential run in 2004, but Howard Dean may have done more damage to the conservative cause in running the DNC than he ever would have as President. This latter-day Viguerie was among the earliest to use the internet to fund a campaign and I’m sure his e-mail list was the kernel for Obama’s much larger e-mail list. While there is a percentage of e-mail addresses that become non-functional over time, there’s nowhere near the cost in e-mail distribution that sending out snail mail entails.

(Not only was that a complete sentence with sound thinking, I truly enjoyed rhyming three words in a row there.)

It will be interesting and perhaps worrisome to find out just how good of a marketing tool this will be for the Obama agenda. While the individual Congressmen may see this as so much spam, diligent and motivated people are valuable in any campaign and just by the sheer number on the Obama list it’s likely that he’ll have a lot of helpers in enacting his agenda – a point made clear by this most recent e-mail is that Obama and the Democrats are going to ask a lot of favors.

On the whole, while a coffee mug doesn’t stoop to the level of the “Yes We Can Opener” perhaps P.T. Barnum was more right than we know.

Still drilling here, drilling now, and paying less

Just imagine how we could do if there were more oil exploration opened up!

Every so often I get little nuggets from my friend Jane Vane Ryan at the American Petroleum Institute, and today was one of those days. She actually sent me two items, and I can distill both into one high-octane post. (I thought about adding a couple more oil-related metaphors and terms to that sentence, but I’d be fuelish to do so. You have my permission to groan.)

What’s quite serious of late is the precipitous drop in the price of crude oil, which begat the unprecedented slide in gasoline prices since July. Today the API put out a Pump Price Update based on information obtained from the federal Energy Information Administration. We are now back to the pump prices in non-inflation adjusted terms we paid back in 2005, but there were two charts in the API document which truly piqued my interest.

If you look at the chart on the first page of the API report, it graphically shows the average inflation-adjusted price of gasoline from 1918-2007. At the moment, our average price is near the bottom of the charts, although there was a long and recent period where we were doing even better compared to the overall term. The spike over the last half-decade seems to coincide with the Long War, and probably began shortly after 9/11 with the uncertainty created by Islamofascist terrorism originating in an oil-rich area. Obviously the API-member oil companies made a lot of profit over that timespan as well, but for all the maligning they’ve received in the press over these supposedly ill-gotten gains, the item I’ll get to toward the end of the post will be instructive.

The other chart that I found intriging was the bar chart below the gasoline price graph, which sorted the price of a gallon of gasoline by each component. As you can see, the one constant is the tax bite, which now consists of about 26.7% of the pump price. (Yet the federal and state governments want more because they have potholes to fill, not to mention budgetary holes.) Since I can be almost certain Jane is a monoblogue fan, she may be able to answer a question I have in seeing that chart: how do you or your friends at API explain the huge share of cost for manufacturing and marketing just two years ago ($1.30 per gallon) declining to just 20 cents per gallon now? Is that a component of hurricane damage being repaired, more efficiency at the refinery level, less profit on the books, or some combination of those and other factors?

We know that crude oil is now running south of $50 a barrel when it was nearly triple that just this past summer. Yet those oil companies haven’t exactly been placing their profits in the bank and collecting the interest (which may be a good thing seeing the condition of many of our major financial institutions); instead they do things like drill a really long way down, as this AP story by John Porretto relates.

Folks, we’re talking nearly two miles deep just to get to the bottom of the water, let alone through what’s under it.

Royal Dutch Shell isn’t talking specific numbers on this exploration bid, but Porretto notes that these efforts can run into the billions of dollars. Certainly that’s not just investment in the actual oil rig and drilling down through thousands of feet of water depth, but in all the planning and permitting that’s needed to occur since they (along with partners Chevron and BP) secured the lease twelve years ago. Half that time had elapsed before they determined hydrocarbons were there – imagine if they’d started the work and found a dry hole.

This is the point those who whine about the 68 million acres or whatever is leased by oil companies but not in production don’t seem to understand; much of that area has been explored on at least a cursory basis and found to be most likely lacking enough product to make the area worth further exploration. And if you return to the API data I cited above and refer to the 1918-2007 gasoline price graph, you’ll notice that back in 1996 we were in the midst of that pricing valley. Still, Shell and its partners were interesting in seeking more domestic oil because the infrastructure was available – even with a less-than-friendly President in office at the time. (However, we had a much business-friendly Congress at the time, which provided some balance.)

The other argument drilling opponents make is that getting new oil would take years, and surely they could point to this as an example. However, it’s obvious that the technology has advanced enough to continue exploring in deeper and deeper water if that’s where the oil can be found; on the other hand the technology for many other areas of “alternative” energy and associated products would need government subsidies for a decade or more before they could reach an affordable price point for the market. Witness the Chevy Volt – a mid-size car that could well run $40,000 but qualify for a $7,500 subsidy from the federal government when (or maybe if, given GM’s current state) it comes out in 2010.

Oil companies play a high-stakes game. If the Perdido field can come through on the potential 130,000 barrels a day of “oil equivalent”, daily revenue at even just $40 a barrel would run over $5 million. Shell and its partners would surely make up a $1 billion investment fairly quickly (now THAT would be an acceptable payback period to me.)

Not only that, the federal government also collects its share in taxes and lease payments – and do you notice the oil companies aren’t in the bailout line? If anything I say makes the argument that we should drill here, drill now, and pay less, it’s my prior questioning sentence.

The blackest of Fridays

Chalk another one up for what is quite possibly the most insane day on the calendar. Perhaps this victim spent his last day on this Earth with his family and friends celebrating a holiday that values being with the ones you love, only to be killed early the very next morning amidst a throng of shoppers whose motto seemed to be “every man for himself.”

While there’s also my sneaking hunch that the so-far unidentified man’s family will be receiving solicitations from the trial lawyers who wish to pick Wal-Mart’s deep pockets by claiming negligence, the sadder truth is that the incident on Long Island only serves to prove my contention that the holidays are rapidly spinning out of hand – all over whatever heavily discounted item these shoppers were looking for. (They took the retailing term “doorbusters” literally and the unfortunate worker was apparently trampled or crushed by the surge of customers, along with four others who were also injured.)

To put it mildly, I’m a typical guy who doesn’t like shopping*. I’ve never had the desire to drag my tryptophan-addled behind out of bed at 3 a.m. the morning after Thanksgiving just to buy a $49 DVD player or whatever loss leader was being sold “first come, first served…while supplies last” at the local Wal-Mart, Target, Best Buy, or wherever.

What’s also confusing to me is that I thought the economy was in the tank and mall traffic was down. Somehow I’m not completely surprised that retailers would have good traffic when they sell items the public wants at prices they’re willing to pay. But now people have become accustomed to the idea of buying their big-ticket items on Black Friday then waiting out retailers in a bizarre Chinese auction of sorts to see who blinks first – will the retailer slash the price before Christmas or wait until afterward?

Retailers aren’t stupid, though. By limiting the quantity of these loss leaders they’re drawing people to the stores like flies to a chicken farm but not losing a whole lot on the particular item the shoppers are seeking. If 200 people are trying to break into a store that has only 80 of whatever hot item they’re after, you’ll have 120 disappointed shoppers who will be too late to get to the next store for Plan B. If half of those unfortunate enough to not get the prime mover stay regardless and buy other, more profitably priced items while those who bought the loss leader also stock up on stuff, then the loss leader is well worth it. The Long Island shoppers certainly sensed this and wanted to jump the gun as much as they could, with tragic results.

There was another item mentioned on today’s ABC Radio news that brought back memories and may have been the pioneering “must-have” item to start this retailing trend. It was 25 years ago that Cabbage Patch dolls came on the market and hopeful parents swamped stores looking to buy one. In those pre-eBay days the aftermarket bidding was pretty fierce as well – surely some entrepreneurs who put ads in their local paper made a princely sum from parents who couldn’t bear to not have a Cabbage Patch doll under the tree for their little girl. This year there doesn’t seem to be that sort of item; instead shoppers are simply being price-conscious. Unfortunately in this morning’s instance they were far less conscious of being kind to their fellow man.

If you were one of those who was standing outside the local retailer at 4:30 in the morning, well, I hope you got what you came to get. Just spend the time you saved in getting your gifts early thinking about what this holiday season really means.

*There is one exception. I can spend hours at a used CD store, and part of my agenda whenever I return to Ohio is a stop of one of The Exchange’s stores. But I still wouldn’t wake up at 3 a.m. to get to one.

A gathering force

I’ll be fairly brief this afternoon, but there are two things I wanted to call attention to as the Republican Party and conservative movement in general seem to have stopped the finger-pointing which tends to happen to any political group after an electoral defeat and now begins the process of hopefully learning from where it went wrong and how they can change it.

I’m going to begin with an interview one of the newer Red County contributors, Michael Patrick Leahy, secured with longtime conservative activist and direct-mail pioneer Richard Viguerie. What I found most interesting on Viguerie’s part was his contention that the most recent conservative movement which began in the 1994 Contract With America elections went off track in just two years because Newt Gingrich “blinked” in that year’s budget standoff with President Clinton.

But Richard also made a good point about how the GOP learned from Democrat success in the era prior to Ronald Reagan. By “reverse engineering” what the liberals did the conservatives found a way to not only match the success of the Left but beat them at their own game.

To that end, many political pundits have come to a conclusion in their electoral post-mortems that one key ingredient in the success of Barack Obama and his Congressional minions was their dominance over the internet. I think of it as a sort of vicious cycle – Obama already had an appeal to the younger generation which is more internet-savvy and the brightest among that generation in turn created ways to appeal further to that target group, and so on. And while I know it’s a difficult task because conservatism doesn’t have nearly the emotional appeal that liberalism does, the internet certainly can’t be abandoned by the Right as a tool to educate and inform.

One of those thing which popped into my inbox yesterday was the announcement of a new website which promises to unite thousands of conservative bloggers into a news and information force to be reckoned with. It’s a site I was already familiar with but is now launching an effort to place itself on similar footing to those liberal sites with multiple contributors – to use a Maryland example, sort of like the battle between Red Maryland and Free State Politics. (By the way, if you go by readership we’re winning.) In looking at the newly relaunched NetRightNation, I saw a number of familiar blogs already listed as members; hopefully mine will be among them soon since I applied to join too. (Obviously a goal of mine would be to have my posts prominently featured there on a frequent basis.)

The trick now is to build readership, and the NetRightNation model is a little different than the model used at the Red County site I also post to simply based on the vast number of contributors. In either case, it’s good that we on the Right are trying to beat the Left at its own game because we have to do a lot of education to overcome the emotion!

This evening I’m looking to do a post on a topic with youthful appeal and emotion: the green movement. How much does it really cost?

We’re past bailout – now it’s a handout

If there’s one thing which aggravates me about the state of government circa 2008, it’s their practice of complete interference in the free market.

Almost a month ago I came across this story in the Gazette by Lindsey Robbins which talked about Maryland-based solar energy businesses being excited because some of the pork slathered on the bailout bill was an extension and enhancement of certain tax credits related to the use and installation of solar energy equipment.

Quite honestly, I could probably write several hundred words on why this isn’t such a good idea, but to me it wasn’t really enough to do a story on by itself. Solar energy has its uses, but I happen to believe the industry needs to sink or swim on its own merits and not rely on incentives placed in the tax code to gin up a market for the items.

What the story did provide for me though was a nice lead-in to another large handout to an industry which somehow can’t seem to compete in the marketplace without federal help, or at least that’s what they claim. In their case though, some of the problem does have to do with overregulation and gaming of the market by the federal government.

Detroit has come to Washington hat in hand looking for $25 billion to retool and make themselves more competitive with automakers from around the globe. And unlike their city’s football team, who is 0-21 in Washington all-time, these guys have a very good chance of winning this game. They definitely have the pundits on their side and surprisingly to me have an ally in conservative firebrand Pat Buchanan.

Unfortunately, while Buchanan does have somewhat of a argument, the key point has been missed by many of the pundits. No amount of money is going to help Detroit automakers in the long run because their business savvy is the problem. They have allowed their unionized workers to absolutely run roughshod over them (sort of like the Lions’ opponents over the last decade) with one exception: as of the latest set of auto industry contracts ratified last year, the UAW is now going to take a larger share of responsibility for their members’ and retirees’ health care expenses. But even that came at the cost of much of the Big Three’s treasure as they had to establish a fund for the UAW to tap into and defray the initial costs.

If the federal government truly wanted to help Detroit automakers, there are two things it could do. Sadly, neither of these has a chance in hell given the party in charge inside the Beltway.

One would be to not just roll back but rescind the CAFE standards. Let Detroit build the cars as the market desires, because fuel economy will still be a selling point – it just doesn’t need to be regulated.

The second is to bring the tax burden on businesses down. Not only would this help the Big Three but thousands of other large-scale employers by reducing their costs. In turn, a better profit outlook should help the ailing stock market.

Without CAFE standards, Detroit doesn’t need the $25 billion to retool. (They may still ask for it, but at that point we know for sure it’s a simple money grab.) They’ll also save billions more if business taxes are restructured and simplified. As things stand now, the scenario we’re probably heading for is eerily similar to that which many financial institutions are facing: their primary stockholder is the federal government and regardless of actual number of voting shares Fedzilla calls the tune.

As a nation we’re seeing that long slide down a more and more slippery slope and the sled is careening ever-closer to the forest of fascism. By the time we as a public can get to the corrective action necessary in two years it may be far too late to change course.

Drilling isn’t off the table…yet

Despite Barack Obama’s threats to overturn a Bush Administration executive order allowing oil exploration on 360,000 acres in Utah, thus far Congress isn’t showing interest in reinstating their offshore drilling moratorium…yet.

In response to a question today following remarks at the National Press Club, House Majority Leader (and Maryland 5th District Congressman) Steny Hoyer noted (h/t CQ Politics.com and Bob McCarty):

We believe it is absolutely essential to have an energy policy which is, as I said in my speech, not driven by the temporary reduction of prices at the pump, which are hard to explain, hard to explain how you go down about half within a very short period of time and spike up in that short period of time, as well.

Now, as it relates to the moratoria, which was not renewed, as you know, in the continuing resolution which was passed in the latter part of September, I think there will be efforts to look at further ways to delineate areas available for drilling.

I do not believe at this point in time that there are any proposals being made to reinstate the moratoria across the board. (Emphasis mine.)

Hoyer then answered a follow-up:

I think I answered both those questions in response to your question. But having said that — that’s all right.

Having said that, I don’t think there is any intent at this point in time — there are no — nobody is suggesting that we return to the same position we were in on September 28th or 27th or 26th.

But I think there will be real discussion on the parameters in which drilling will be pursued.

There was a GAO report out, by the way — I think maybe some of you saw it not too long ago which raised the same question that we had raised about the 68 million acres that are currently authorized. Now, of course, all the acreage is open over — outside the 3-mile or 12- mile limit.

So I think the answer to your question is, we’re going to be looking at parameters, not necessarily reinstatement of the existing moratoria prior to the president’s lifting it and then the restriction that was in — in the interior appropriation bill of ‘08.

There was a lot more to Hoyer’s speech and I will come back to touch on another part later this week. But I can parse through words reasonably well for a guy with a public-school education and I smell a rat. I believe there are two possible outcomes with Hoyer’s statements: one is where they bring back the idea of offshore drilling but only on sites over 100 miles out (the so-called “Gang of Sixteen” plan), the other attuned to my emphasis on his “at this point in time” comment. Right now the Democrats are more interested in bailing out the Big Three and probably figure correctly that their environmentalist allies can wait another month or two to get a Congress and President much more friendly to their interests. Let’s face it, there’s a lot less interest in “drill here, drill now, pay less” when gas is $1.90 a gallon than there was when the price at the pump was double that. And oil companies haven’t been moving on exploration despite the lifting of the ban because it’s foolhardy business to begin the process when a majority of Congress (but not the public as a whole) favor rescinding the open season. Despite the Democrats’ anti-drilling views, voters still placed them in the Congressional majority.

The American Petroleum Institute also weighed in on Hoyer’s remarks (h/t Jane Van Ryan of API):

We believe the position outlined to news reporters by House Majority Leader Steny Hoyer – that the Democratic leadership would not seek to re-impose the ban on oil and natural gas leasing in federal waters – is the right approach. The American public has made clear its strong support for increased access to untapped domestic oil and natural gas resources. At least two-thirds of Americans in recent exit polling said they supported offshore drilling. Neither Congress nor the next administration should set unreasonable, arbitrary limits on leasing because such restrictions could remove some of the nation’s most promising oil and natural gas prospects for development, and the industry has proven it can develop these resources in an environmentally safe manner. The industry stands ready to help put America’s vast energy resources to good use to strengthen our nation’s economy and energy security, generate billions of dollars for the benefit of our federal and state treasuries and provide good jobs for Americans across the country.

Now I’ve never met Congressman Hoyer; perhaps he’s a nice guy. But when he says there’s no intent at this point in time to restore the exploration ban I trust him about as far as I can throw him. Nothing personal, but he is a liberal Democrat and for whatever reason they put environmental concerns and the phantom idea of global warming ahead of our energy and transport needs and job creation. (Given that it’s 33 degrees out right now and we’re only supposed to hit maybe 45 tomorrow – January weather in the middle of November – global warming doesn’t sound so bad to me “at this point in time.”) And while Democrats and the Bush Administration argue over where the $25 billion requested as a bailout by the Big Three comes from, it’s worth noting that Exxon/Mobil’s yearly tax bill covers that sum with plenty to spare.

I can’t say when it will happen, but sooner or later the price of gasoline is going to edge up toward the $3 and $4 mark again, and once again we’ll be able to place the blame squarely where it’s belonged – on the shoulders of the Congressional majority who takes more notice of Al Gore’s inconvenience than the inconvenience of the American public.

Something for Congress to do

Since it appears we’re going to have a lame-duck Congressional session, it’s possible to clean up a little bit of unfinished business while they’re at it. According to the Center for Immigration Studies, the future of the E-Verify system is in doubt:

The E-Verify program, which allows employers to check the immigration status of new employees, has been steadily improving and is now 99.5 percent accurate, according to a new paper by the Center for Immigration Studies. This voluntary program is already screening more than one in ten new hires nationwide, and as of September 13, 2008, has processed 6.21 million queries.

E-Verify is set to expire on November 30, 2008, unless it is re-authorized by Congress. The House of Representatives has already passed a reauthorization bill by a vote of 407-2, while the Senate has not yet taken action.

To help inform debate over E-Verify, the Center for Immigration Studies has produced a thorough evaluation. The Backgrounder, entitled “If It’s Fixed, Don’t Break It: Moving Forward with E-Verify,” is authored by Janice Kephart, Director of National Security Studies at the Center and a former counsel to the 9/11 Commission. The report covers the many facets of the E-Verify debate: statistics regarding usage, cost, and effectiveness; legislative history; executive orders affecting the program; the relationship of E-Verify to worksite enforcement; and past improvements to the program as well as future goals.

Among the report’s findings:

As of the first half of FY 2007, only one-half of one percent of eligible employees screened had to take additional steps to obtain work authorization; overall, the system is 99.5% accurate.

More than 93 percent of employees are verified within five seconds; another 1.2 percent are verified within 24 hours. A new Photo Screening Tool and a streamlined procedure for naturalized citizens to receive authorization are increasing accuracy and efficiency for employers and employees; naturalized citizens no longer need to take remedial action at Social Security.

About 5 percent of new employees are not confirmed as work authorized, mirroring the same percentage of illegal aliens estimated to be in the labor force.

When E-Verify became web-based in 2004, 1,533 employers had signed up. As of September 13, 2008, there are 85,816 employers representing over 446,000 sites and over 6.21 million queries processed. Currently, about 1,000 new employers join per week.

Eleven states require use of E-Verify in certain circumstances (AZ, CO, GA, ID, MN, MO, MS, NC, OK, RI, and UT). (Emphasis in original.)

Generally I’m one who falls on the side of state’s rights but in this case the national security aspect of the program outweighs the concerns of those who think each state should do its own thing. Since the program is a joint operation of the Department of Homeland Security and the Social Security Administration, as long as we have Social Security there’s good reason to continue the program.

As the CIS noted above, the program is still languishing in limbo but the lame-duck session will give Senators an opportunity to correct the oversight. Normally I’m foursquare behind those items the national Chamber of Commerce desires but not in this case – they’ve been fighting E-Verify tooth and nail.

It’s bad enough the federal government does little to nothing about all the duplicity found in Social Security records – one who has their personal identity stolen will likely see their Social Security number used by a number of others who wish to maintain their residence in the country. But not keeping a program that serves as a disincentive for employers to hire those in the country illegally (generally at the expense of those citizens on the lowest rungs of the economic ladder) seems a poor way to help the working man. Ironically, it’s a Democratic Senator (Robert Menendez of New Jersey) who’s holding up progress on this reauthorization – is he beholden to his country or what I assume is his ancestry?

We have 17 days to act on this, or at least until the 110th Congress comes to an end. Let’s keep E-Verify in place and protect honest, hardworking Americans.

Off limits again

An AP story yesterday by Stephen Ohlemacher detailed some of the items Barack Obama will quickly adopt once his takes the oath of office in January. Not surprisingly, a number of items which have ping-ponged back and forth between Republican and Democrat administrations over the last two decades will be brought back online once Obama takes office, such as embryonic stem cell research and abortion funding.

The item that brought up my blood pressure slightly (because I’m irked but certainly not surprised) is where Obama will shelve a Bush Administration plan to open 360,000 acres in Utah to oil exploration and drilling. (For sake of comparison, the area would be roughly 24 miles square, or, for Midwest natives like me that’s the approximate area of sixteen townships.) It’s a probable precursor to President-elect Obama reinstating the offshore drilling ban President Bush lifted last summer unless the Democrat-controlled Congress beats him to it by restarting their ban which was allowed to expire in October – this may occur in the lame-duck session Democrats want in order to pass yet another economic stimulus package.

Just because oil has backed far off its historic per-barrel price from this summer is no reason to abandon the “drill here, drill now, pay less” mantra. Obviously the domestic oil producers hadn’t placed any major exploration in motion on areas previously off-limits because of the prospect of the ban being reapplied. Instead, their search for cheaper and more easily accessible product will again lead outside our borders and America will see its share of domestic vs. foreign oil consumption decrease below the approximate 1/3 slice domestic oil holds now. While Obama spoke in August about possibly keeping the prospect of offshore drilling on the table in return for alternative-energy investment and stricter CAFE standards, at least one analyst dismissed that proposal as “total lip service.”

Also noted in that Bloomberg.com story by Daniel Whitten was the looming prospect of a windfall profits tax on oil companies; considering the drilling restrictions and the likelihood of an Obama presidency imposing a tax for simply selling a product Americans desire the next four years probably will be a minefield for an industry which employs over 1.5 million Americans. Triggered by oil prices exceeding $80 a barrel in the Obama plan, any supply shock could push prices back over the windfall profit threshold.

The question then becomes not if but when will the price at the pump edge back upward toward the $4 a gallon we were hammered with over the summer. Regardless of the hype or the market gaming the federal government has tried to achieve at an ever-accelerating pace since Democrats regained control of Congress in the 2006 elections, for the foreseeable future America is going to transport itself via the automobile, and those cars will need gasoline to power them.

Again the question is worth asking: why should we not be able to recover resources which are useful to us, can be extracted in an environmentally sound manner, and allow Americans the freedom to transport themselves and their goods at reasonable convenience and cost? We seem to be trading proven energy producers like coal, oil, and natural gas for the schemes of creating the electricity we need through vast arrays of solar panels, windmills, or other so-called “green” sources. Yes, they do have a place and someday the technology will bring down their price point to make these sources competitive for large-scale use. I’m all for that occurring but not with my tax dollars making up the difference.

Switchgrass isn’t going to fill up my gas tank the next time I stop at the station. While it’s not a right to have gas be inexpensive, the incoming Obama Administration is likely to forsake the interests of the middle-class Americans it purports to cater to in order to appease the radical environmentalists and alternative energy rent-seekers.

Thinking Americans need to make their voices heard. Let’s keep oil drilling unabated and on the table.