While we are digging out from another big snow storm on the east coat of the US and the West is facing another wet wintry mix, South America is in the middle of a heat wave. This is cutting into the harvest forecasts, which is pushing up crop prices to two year highs. Global food prices have been somewhat elastic even with the crop shortages from Russia this summer. This latest crop reduction may test this price elasticity. The dry weather in South America is caused by the La Nina weather pattern, which has already damaged the corn crops in Argentina. Argentina is the world's second largest exporter of corn and third largest exporter of soybeans. Both Brazil and Uruguay have declared a state of emergency with rising temperatures and small amounts of precipitation. Ironically, California has been experiencing an enormous amount of rain and snow during a La Nina season; however, many forecasters believe that California will soon be experiencing a dry winter.
Currently, the prices of corn, wheat and soybeans remain well below the peak prices in 2008. However, some analysts see a rise in prices of these crops in the near future, which means an increase in food prices at the supermarket. This may have a bigger impact in emerging markets where food inflation can have a significant impact on its population became more of their disposable income goes to food than in developed countries. A way countries may address this potential inflation is limit exports of its own crops like Russia did this summer. Countries like India are offering other alternatives, such as food subsidies, where the country is already dealing with food inflation surging to 12.13% from 9.46%.
In fact, corn and soybean futures contracts have already increased this month by 18% and 9%, respectively, to their highest prices since the financial crisis undercut commodity prices in 2008. Corn is up 51% since then and soybeans are up 31%. Also, wheat prices this month have increased 23% because of the significant amount of rain in Australia, which has ruined wheat crops there.
So in the end for Americans, this means that the lovely Chilean grapes that you have in the dead of winter might be a little more expensive this year. Unfortunately, this might have a great impact to a family in Haiti or India.
Friday, December 31, 2010
Friday, December 24, 2010
Is this a lot of hot air? And it is not always sunny in Spain.
The continuous battle between China and US in the WTO continues; however, this time it involves renewable energy. The US has requested to talk to China at the World Trade Organization to end the hundred of millions of dollars of subsidies China is spending to build up its wind-power production. Most of us would say, "What is wrong if China wants to build its own wind technology and spend government money on that?" The answer is that China is not just building technology for its own wind production. It is building technology for export to other countries. The US is already falling behind to China in renewable technology. Right now, China ranks among the top ten producers globally in wind-turbine production. So what is the American government's beef here? Actually, it is not just our government complaining. It is also the United Steelworkers complaining too.
The Chinese government is providing wind-power manufacturing grants to this Chinese producers using parts made domestically, which such grants ranges from $6.7 million to $22.5 million. This is a form of import subsidization that creates less incentive for Chinese wind turbine producers to use imported parts, such as US parts, because they will less likely get a grant from the Chinese government to operate their business. Thus, it creates an indirect barrier for US imported parts to get into the Chinese market.
Ironically, one way to mitigate this would be for the US government help develop its own wind-energy program and wind producing technology. Unfortunately, with a push for austerity in government, that is most likely not going to happen.
Solar Side Note: Spain is in the middle of a debt crisis and the Spanish government is looking to cut certain subsidized programs. It looks like Spain's solar energy program is one of the victims of the Spanish debt cutting. The Spanish government is expected to adopt a proposal within the next few days to cut solar-PV subsidies by as much as 30%. There is, however, some push back here. Many investors, including a foreign hedge fund investors in the UK, are pushing back arguing that this was never communicated to them when the invested in the first place. They view this as a "breach of trust." Ironically, some of this view that this action will cause solar producers to default on their loans with the banks without these subsidies. Which is worse, a business defaulting on it loans or the Spanish government? I believe most people in the EU, the US and IMF would say that the Spanish government defaulting would be worse as we saw the chaos created in Ireland and Greece as both countries were on the precipice of such default.
The Chinese government is providing wind-power manufacturing grants to this Chinese producers using parts made domestically, which such grants ranges from $6.7 million to $22.5 million. This is a form of import subsidization that creates less incentive for Chinese wind turbine producers to use imported parts, such as US parts, because they will less likely get a grant from the Chinese government to operate their business. Thus, it creates an indirect barrier for US imported parts to get into the Chinese market.
Ironically, one way to mitigate this would be for the US government help develop its own wind-energy program and wind producing technology. Unfortunately, with a push for austerity in government, that is most likely not going to happen.
Solar Side Note: Spain is in the middle of a debt crisis and the Spanish government is looking to cut certain subsidized programs. It looks like Spain's solar energy program is one of the victims of the Spanish debt cutting. The Spanish government is expected to adopt a proposal within the next few days to cut solar-PV subsidies by as much as 30%. There is, however, some push back here. Many investors, including a foreign hedge fund investors in the UK, are pushing back arguing that this was never communicated to them when the invested in the first place. They view this as a "breach of trust." Ironically, some of this view that this action will cause solar producers to default on their loans with the banks without these subsidies. Which is worse, a business defaulting on it loans or the Spanish government? I believe most people in the EU, the US and IMF would say that the Spanish government defaulting would be worse as we saw the chaos created in Ireland and Greece as both countries were on the precipice of such default.
Wednesday, November 24, 2010
Business and the US Energy Policy- What a beautiful relationship
The Wall Street Journal had its Annaul CEO Council Meeting. Among many issues discussed at this summit was energy. The following five recommendations came out of the those discussions:
1. Develop Domestic Energy: Clearly, this is a no-brainer. They want to promote development of domestic resources with appropriate environmental safeguards and a regulatory system that is timely and predictable and avoids a back-door, de facto moratorium. They also do not want to develop a system that picks winners. Instead, the business sectors prefers a diversified solution.
I believe we are all in agreement that we need to develop our own domestic energy resources; however, it seems to me our business leaders have contradictory policy. They say they want environmental safeguards, but want to limit the government's the ability to put in place moratorium in situations, such as off-shore drilling. We still need government to quickly intervene where we do not have time to hash out issue until Congress has multiple panels to discuss whether or not a new environmental or existing method is more detrimental to the environment than it is positive to our energy solution. This is an issue that Pennsylvania is facing with shale gas drilling where the methods of drilling have raised questions on the negative impact the drilling is having on the enviroment and in some cases in releasing natural gas into the water system where a person can litterally light on fire his or her running water from the sink faucet. The governor of Pennsylvania initiated a moratorim on this drilling until it can be further analyzed with respect to the level of safety. Most likely, that moritium will end with the new addministration coming into office next year. That administration was heavily supported by the US Chamber of Commerce in the most recent election. I wonder if part of their support was due to the newly elected adminstration's unwillingness to issue these type of moritoriums. In fact, one of it biggest supports were companies doing this shale gas drilling.
2. Support R&D: Business is requesting government involvement in promoting research and development in carbon capturing technology and new energy storage devices, which is something that we need if we really want to expand solar energy on a massive scale. They prefer R&D to reduce cost over mandates and subsidies.
Unfortunately, I believe you need a balance between the two in order for the US to quickly enter into this green technology revolution similar to the same way we did with the Internet.
3. Consistent Federal Regulation: They want a uniform federal policy on energy and setting certain standards, such as fuel cell efficiency in cars. They want to avoid the patchwork state by state solution. At the end of the day, they do not want states like California dictating the country's energy policy in the same way it has done setting certain car standards and other requirements.
I believe one way to solve this is for Congress to pass a comprehensive energy bill, which currently has been passed in the House and not sits in the Senate where it most likely flicker out at the end of this year. This is going to be a more difficult achievement at this time and the solution will be at the state level with the most innovative and job creating and business promoting states setting forth our future energy policy.
4. Competiviness: They want us to be the leaders in energy technology and export this technology to other countries. Unfortunately, we are way behind in this technology. Countries like Germany, South Korea, Japan and China are the current leaders in this technology. Ironically, back in the seventies the US was the leader in solar technology. In fact, President Carter put solar panels on the White House roof. Unfortunately, our competiveness edge in this technology disappeared when the Regan administration came in and removed those solar panels. That action was a message to the business world that the Government had no real interest to invest in this technology, which meant business concentrated on other potential opportunities, such as desktop computers, walkmans and the Delorian. Well, two out of three were good investments. And America continued its dependence on foreign oil. We lost ground over 30 years to Asia and Europe so it is going to take some time to catch up.
5. Energy Efficiency: They want to US to be leaders in energy efficiciency technology. This should include development of building codes, appliance standards and incentives to employ new energy efficient technology.
Actually, I believe this is a real winner. The US has become a leader in this technology and it continues to grow. Also, Americans are demanding this type of technology. We want to be able to consume more without suffering the cost for it; therefore, energy efficiency technology is the solution. This technology is the diet food for the voracious American energy appetite. There is nano technology out there now that will enable cellphones to be used for an entire month with only one charge. Furthermore, there is a big push to promote energy efficient buildings. Cable channels like HGN, DIY and Planet Green are making it trendy to have an eneregy efficient homes with the I-Pad that runs on one monthly charge. There is the drive and, more importanlty to the business sector, there is strong domestic demand for this technolgy.
The end result of this summit is that the business sector has good ideas, but they still have some steadfast contradictory principals, such as less government involvment, that may make it difficult for the US to have a comprehensive and competive energy policy. We might have to rely on the free-market to dictate the policy. I think for the most part that having the free market set policy has been a good thing. That is if you just exclude the little hicup we had with the financial meltdown in which we turned the financial regulatory reins over to the free market to set our policies. It was not too bad. It just cost us about One Trillion Dollars to get out of that mess.
1. Develop Domestic Energy: Clearly, this is a no-brainer. They want to promote development of domestic resources with appropriate environmental safeguards and a regulatory system that is timely and predictable and avoids a back-door, de facto moratorium. They also do not want to develop a system that picks winners. Instead, the business sectors prefers a diversified solution.
I believe we are all in agreement that we need to develop our own domestic energy resources; however, it seems to me our business leaders have contradictory policy. They say they want environmental safeguards, but want to limit the government's the ability to put in place moratorium in situations, such as off-shore drilling. We still need government to quickly intervene where we do not have time to hash out issue until Congress has multiple panels to discuss whether or not a new environmental or existing method is more detrimental to the environment than it is positive to our energy solution. This is an issue that Pennsylvania is facing with shale gas drilling where the methods of drilling have raised questions on the negative impact the drilling is having on the enviroment and in some cases in releasing natural gas into the water system where a person can litterally light on fire his or her running water from the sink faucet. The governor of Pennsylvania initiated a moratorim on this drilling until it can be further analyzed with respect to the level of safety. Most likely, that moritium will end with the new addministration coming into office next year. That administration was heavily supported by the US Chamber of Commerce in the most recent election. I wonder if part of their support was due to the newly elected adminstration's unwillingness to issue these type of moritoriums. In fact, one of it biggest supports were companies doing this shale gas drilling.
2. Support R&D: Business is requesting government involvement in promoting research and development in carbon capturing technology and new energy storage devices, which is something that we need if we really want to expand solar energy on a massive scale. They prefer R&D to reduce cost over mandates and subsidies.
Unfortunately, I believe you need a balance between the two in order for the US to quickly enter into this green technology revolution similar to the same way we did with the Internet.
3. Consistent Federal Regulation: They want a uniform federal policy on energy and setting certain standards, such as fuel cell efficiency in cars. They want to avoid the patchwork state by state solution. At the end of the day, they do not want states like California dictating the country's energy policy in the same way it has done setting certain car standards and other requirements.
I believe one way to solve this is for Congress to pass a comprehensive energy bill, which currently has been passed in the House and not sits in the Senate where it most likely flicker out at the end of this year. This is going to be a more difficult achievement at this time and the solution will be at the state level with the most innovative and job creating and business promoting states setting forth our future energy policy.
4. Competiviness: They want us to be the leaders in energy technology and export this technology to other countries. Unfortunately, we are way behind in this technology. Countries like Germany, South Korea, Japan and China are the current leaders in this technology. Ironically, back in the seventies the US was the leader in solar technology. In fact, President Carter put solar panels on the White House roof. Unfortunately, our competiveness edge in this technology disappeared when the Regan administration came in and removed those solar panels. That action was a message to the business world that the Government had no real interest to invest in this technology, which meant business concentrated on other potential opportunities, such as desktop computers, walkmans and the Delorian. Well, two out of three were good investments. And America continued its dependence on foreign oil. We lost ground over 30 years to Asia and Europe so it is going to take some time to catch up.
5. Energy Efficiency: They want to US to be leaders in energy efficiciency technology. This should include development of building codes, appliance standards and incentives to employ new energy efficient technology.
Actually, I believe this is a real winner. The US has become a leader in this technology and it continues to grow. Also, Americans are demanding this type of technology. We want to be able to consume more without suffering the cost for it; therefore, energy efficiency technology is the solution. This technology is the diet food for the voracious American energy appetite. There is nano technology out there now that will enable cellphones to be used for an entire month with only one charge. Furthermore, there is a big push to promote energy efficient buildings. Cable channels like HGN, DIY and Planet Green are making it trendy to have an eneregy efficient homes with the I-Pad that runs on one monthly charge. There is the drive and, more importanlty to the business sector, there is strong domestic demand for this technolgy.
The end result of this summit is that the business sector has good ideas, but they still have some steadfast contradictory principals, such as less government involvment, that may make it difficult for the US to have a comprehensive and competive energy policy. We might have to rely on the free-market to dictate the policy. I think for the most part that having the free market set policy has been a good thing. That is if you just exclude the little hicup we had with the financial meltdown in which we turned the financial regulatory reins over to the free market to set our policies. It was not too bad. It just cost us about One Trillion Dollars to get out of that mess.
Thursday, September 16, 2010
Coal has not burned out yet
As much as there is growth in alternative resources, coal still remains the number #2 energy resource. According to experts, it still will remain a primary supplier of energy for at least the next two decades. What are the reasons for this?
1. Coal is cheap. It still is much cheaper than natural gas and oil. Clearly, it still remains cheaper than solar, wind, bio fuels when you add up the infrastructure cost to harness that energy.
2. It is easily transportable.
3. It is the supplier of energy for two of the largest growing economies, China and India. China accounts for 1/2 of the global demand for coal and India represent 7.5%.
4. U.S. has not put in place a carbon emissions tax or cap. At this point, it does not look like this will happen in the near future, especially if the Republicans gain some control of Congress. Also, too many states have some connection to coal economically, which reduction of coal usage will have an huge economic impact. In this economic environment with a high unemployment rate, it will be difficult for people to give up their jobs that will impact with the immediate future, their livelihoods, in order to protect the distant future, the planet's livelihood. I person is more concerned about putting food on the table now than what will happen is some hypothetical future created by scientists, who have recently had less credibility with the general public.
The US has stated that it is addicted to oil; however, there is a greater addiction for the global economy, coal. Like any addiction, it takes time to got off of that "drug." At least for now, coal will continue to burn that red glow to meet the energy needs of us.
Hey, at least, we will continue to get the latest upgraded ipod from China at a cheaper price because it was created using the cheap energy resource, coal. I just hope that ipod is waterproof when the sea rises twenty years from now. Then again, I guess we will have time to create one of those too.
1. Coal is cheap. It still is much cheaper than natural gas and oil. Clearly, it still remains cheaper than solar, wind, bio fuels when you add up the infrastructure cost to harness that energy.
2. It is easily transportable.
3. It is the supplier of energy for two of the largest growing economies, China and India. China accounts for 1/2 of the global demand for coal and India represent 7.5%.
4. U.S. has not put in place a carbon emissions tax or cap. At this point, it does not look like this will happen in the near future, especially if the Republicans gain some control of Congress. Also, too many states have some connection to coal economically, which reduction of coal usage will have an huge economic impact. In this economic environment with a high unemployment rate, it will be difficult for people to give up their jobs that will impact with the immediate future, their livelihoods, in order to protect the distant future, the planet's livelihood. I person is more concerned about putting food on the table now than what will happen is some hypothetical future created by scientists, who have recently had less credibility with the general public.
The US has stated that it is addicted to oil; however, there is a greater addiction for the global economy, coal. Like any addiction, it takes time to got off of that "drug." At least for now, coal will continue to burn that red glow to meet the energy needs of us.
Hey, at least, we will continue to get the latest upgraded ipod from China at a cheaper price because it was created using the cheap energy resource, coal. I just hope that ipod is waterproof when the sea rises twenty years from now. Then again, I guess we will have time to create one of those too.
Wednesday, September 1, 2010
A Hot Summer at home and in Russia
I took a hiatus from my blog postings to enjoy the summer. Of course, like many of us, I experienced the hottest summer in history on the east coast. Where I lived, we had 8 heat waves, meaning temperatures above 90 degrees Celsius for three consecutive days. It is September 1st and the temperature today will reach close to 100 degrees. What does it mean? Can all of the global warming pundits shout out in unison, "I told you so"? Of course, that might fall on deaf ears of the people who still deny global warming or that it is caused by man. Perhaps, as we see Russia dealing with forest fires and with 1/5th of Pakistan flooded by the heavy monsoons or Tennessee experiencing the most rainfall in one period of time in more than 1000 years, we can all work together and address this ever changing and unpredictable climate change. We will have to wait and see.
As I stated before, Russia faced the worse wild fires in its history this summer. Moscow throughout the summer was under a smokey haze. Also, Russia's wheat industry has been wiped out by these fires. As a result, spot prices for wheat rose by 24% in July and by more than 50% between the beginning of June and August 6th. In fact, the futures prices for September contract on the Chicago Board of Trades, which sales contracts of commodities, such as wheat, rose by more than 5%, which was the biggest daily increase since the end of the 2007-2008 food price spikes. Now, before you run to the supermarket and stock up on bread and flour, this movement in pricing is not unusual. The weekly wheat-price rises in July were no larger, compared with four weeks previously, than those during May and November 2009. In fact, if we look at prices over 12 week periods, they actually rose more at the end of 2009 than the past three months. According to Manuel Hernandez of the think tank, the International Food Policy Research Institute, this volatility is normal. The better indicator is not short term contract here, but long term ones, which have risen in price, but slowly. Another reason for calm is that we still have a significant global supply of wheat. In June 2008, the last "food-crisis", world wheat stocks fell to 121 m tonnes, the lowest level in 30 years. This was caused by the bio fuel frenzy and emerging markets growing demand for wheat. Today, we sit on 197m tones of wheat. This should be enough to absorb the impact of Russia's destroyed crop, which represent only 8% of the world's crop. Overall, the UN's Food and Agriculture Organization forecast that the wheat harvest will fall by about 5% this year. There will be a impact here, but not as cataclysmic as some feared. Also, this should benefit the US economy as one of the largest growers of wheat. Nevertheless, maybe it still is a good idea to get an extra bag of flour next time you are at the supermarket.
As I stated before, Russia faced the worse wild fires in its history this summer. Moscow throughout the summer was under a smokey haze. Also, Russia's wheat industry has been wiped out by these fires. As a result, spot prices for wheat rose by 24% in July and by more than 50% between the beginning of June and August 6th. In fact, the futures prices for September contract on the Chicago Board of Trades, which sales contracts of commodities, such as wheat, rose by more than 5%, which was the biggest daily increase since the end of the 2007-2008 food price spikes. Now, before you run to the supermarket and stock up on bread and flour, this movement in pricing is not unusual. The weekly wheat-price rises in July were no larger, compared with four weeks previously, than those during May and November 2009. In fact, if we look at prices over 12 week periods, they actually rose more at the end of 2009 than the past three months. According to Manuel Hernandez of the think tank, the International Food Policy Research Institute, this volatility is normal. The better indicator is not short term contract here, but long term ones, which have risen in price, but slowly. Another reason for calm is that we still have a significant global supply of wheat. In June 2008, the last "food-crisis", world wheat stocks fell to 121 m tonnes, the lowest level in 30 years. This was caused by the bio fuel frenzy and emerging markets growing demand for wheat. Today, we sit on 197m tones of wheat. This should be enough to absorb the impact of Russia's destroyed crop, which represent only 8% of the world's crop. Overall, the UN's Food and Agriculture Organization forecast that the wheat harvest will fall by about 5% this year. There will be a impact here, but not as cataclysmic as some feared. Also, this should benefit the US economy as one of the largest growers of wheat. Nevertheless, maybe it still is a good idea to get an extra bag of flour next time you are at the supermarket.
Wednesday, June 9, 2010
The Human Being Burden
I have watched extensive coverage of the oil disaster in the Gulf of Mexico. I see the horrible images of wildlife soaked in crude oil and blobs of oil washing up on beaches and suffocating the wetlands, yet I turn off the TV and I continue my normal activities. Unfortunately or fortunately, there is an underlying emotion of guilt in these activities. I continue to drive my car to work and purchase my morning coffee,which comes in a Styrofoam cup. Status quo. I am not effected by the oil spill. In fact, the gas prices have not even skyrocketed. So I or many others do not see any of the effects even though we see it on the television. That is the problem. It seems to me that in order for the US and the rest of the World to take action, it has to be effected in its entirety. Unfortunately, you do not want a global impact that becomes irreversible because then it would be too late. How do we get it in our thick heads that we are damaging the planet? The signs are there from the 1000 year drought in Australia or to the last decade being the warmest ever or the more frequent El Nino effect. Then there is the oil spill in the Gulf. Once again, it is out of sight out of mind. Is the problem that we look at all these events independently and not together? I am not sure what would make us change our habits. I know I need to change mine. I just hope the rest will follow.
Friday, June 4, 2010
The Australian-Chinese Partnership could be bad for Australia and the rest of the World
Australia has just come out of the worst drought in over 1000 years. The country has become the present example of the future impact that global warming will have on the rest of world. Yet, the country has been unable to get a carbon cap/credit legislation passed and it continues to export the largest carbon emitting energy resource, coal, to other countries to support their energy needs. In fact, coal is the major export for Australia and one of its primary recipients of this exported energy resource is China.
Although China is making great strides to shift its energy resources to renewable ones, its infrastructure is outdated and incapable of transmitting that energy to power its cities and factories. Unfortunately, it is years away from upgrading its infrastructure. As a result, coal remains and will remain its primary energy resource. In fact, China this past year was facing potential power outages at many of its power plants due to dwindling supplies of coal. As a result, China opened up many coal mines that were shut down for safety violations even though the existing safety issues were not remedied. If China is willing to risk the lives of its own citizens to avoid blackouts, what would China do if its actions threaten the citizens of other countries.
This creates a problem for Australia and the rest of the world. Australia's economy is largely dependent on this energy export; however, the environmental impact caused by coal is not restricted by a country's boundaries. The immediate benefit for Australia and China may result in a long term detriment for all of the world.
The immediate solution is for China to develop and incorporate more energy efficient solutions in its economy. This means developing energy efficient buildings and infrastructure. China continues to put up buildings that have inadequate insulation; as a result, these buildings require a significant amount of heat (energy) during the winter time. China should continue to develop alternative renewable energy resources and update its infrastructure as an intermediate and long term solution.
Unfortunately, the world's second largest economy will continue to use coal as its main energy resource and many countries will continue to supply that appetite for their own immediate economic benefit without considering the long term cost to their own and the world's economy.
Although China is making great strides to shift its energy resources to renewable ones, its infrastructure is outdated and incapable of transmitting that energy to power its cities and factories. Unfortunately, it is years away from upgrading its infrastructure. As a result, coal remains and will remain its primary energy resource. In fact, China this past year was facing potential power outages at many of its power plants due to dwindling supplies of coal. As a result, China opened up many coal mines that were shut down for safety violations even though the existing safety issues were not remedied. If China is willing to risk the lives of its own citizens to avoid blackouts, what would China do if its actions threaten the citizens of other countries.
This creates a problem for Australia and the rest of the world. Australia's economy is largely dependent on this energy export; however, the environmental impact caused by coal is not restricted by a country's boundaries. The immediate benefit for Australia and China may result in a long term detriment for all of the world.
The immediate solution is for China to develop and incorporate more energy efficient solutions in its economy. This means developing energy efficient buildings and infrastructure. China continues to put up buildings that have inadequate insulation; as a result, these buildings require a significant amount of heat (energy) during the winter time. China should continue to develop alternative renewable energy resources and update its infrastructure as an intermediate and long term solution.
Unfortunately, the world's second largest economy will continue to use coal as its main energy resource and many countries will continue to supply that appetite for their own immediate economic benefit without considering the long term cost to their own and the world's economy.
Saturday, May 8, 2010
China and Coal
For a long period of time, China was predominantly an exporter of coal. However, this coal consumption pendulum has swung from an exporter to an importer of coal. This has pushed up the price for coal. According to golbalCoal (an international trading platform), the benchmark price at Australia's Newcastle port for the type of coal burned at power plants (thermal coal) hit $108 a metric ton, which is the highest price since October 2008.
This shift from exporting to importing coal began last year. In fact, China's imports of coal jumped 165% from March 2009. It seems this level of consumption will remain. Even though China has been pushing for alternative energy solutions, such as wind and solar, 70% of China's electricity comes from coal-fired power plants. This is demand is expected to expand by 10% for this year.
There have been a variety of factors that have created China's demand for foreign coal. There has been a drought in southwestern China, which has made the rivers too low to power its hydroelectric dams. Also, there have been several mining accidents that have slowed production as the government is cracking down on safety violations. However, it is possible that this pendulum may swing back to China being an exporter of coal. But, one thing remains certain is that China's demand for coal will increase as it continues to run its factories to supply products to the world economy and also to its growing middle class. China needs a lot of electricity to run these factories and coal still remains the primary source of to create such electricity.
Data Source: Wall Street Journal.
This shift from exporting to importing coal began last year. In fact, China's imports of coal jumped 165% from March 2009. It seems this level of consumption will remain. Even though China has been pushing for alternative energy solutions, such as wind and solar, 70% of China's electricity comes from coal-fired power plants. This is demand is expected to expand by 10% for this year.
There have been a variety of factors that have created China's demand for foreign coal. There has been a drought in southwestern China, which has made the rivers too low to power its hydroelectric dams. Also, there have been several mining accidents that have slowed production as the government is cracking down on safety violations. However, it is possible that this pendulum may swing back to China being an exporter of coal. But, one thing remains certain is that China's demand for coal will increase as it continues to run its factories to supply products to the world economy and also to its growing middle class. China needs a lot of electricity to run these factories and coal still remains the primary source of to create such electricity.
Data Source: Wall Street Journal.
Monday, May 3, 2010
How much does a gallon of gas cost?
Many of us are watching from a far the ecological, economic and human tragedy that is unfolding in the Gulf Coast. People are throwing out numbers of the cost to clean up this oily mess in there to be in the billions. BP has stated that it will take full responsibility to pay for this clean up; however, as this cost grows, I am not sure that humanitarian and ethical stand that BP is taking now will remain. In fact, BP may have law on its side that caps the liability of oil companies from these types of events at $75 million. So if the law is on BP's side, who will pay the rest of the tab? Yes. The American taxpayer.
This made me think about the real cost for me when I fill up my car with gasoline. The gas pump says $3 a gallon. That must be the real cost. Right? Nope. There is study by the Institute for the Analysis of Global Security, which claims we are paying a lot more than $3 a gallon (http://www.iags.org/costofoil.html). According to this articles, when you add the tax breaks and subsidies we provide to the oil companies along with the foreign aid to the oil rich countries and the defense costs for securing these regions, you are actually paying $5.28 a gallon.
The response may be is that we need to extract oil domestically; however, all of those off shore oil rigs peppered throughout the US coastline, including the BP's oil rig, do not extract the oil for US consumption only. That oil goes onto the world market where other countries consume the oil.
The fact is that we must stop making compromises on what needs to be done. Does further off shore drilling make sense when the mistakes are too large? Are we going to learn that we have no right to take certain risks that can wipe out species that have no say in our decisions? Can we start committing to other real alternatives and force us to got off oil? I do not know the answers. I believe many of us have the fight in us to get off this oil addiction and, perhaps, this other Gulf Coast disaster will convince the rest of us that we need to stop this addiction too. We keep on saying it, but we do nothing. Unfortunately, we have to have a natural disaster like this to admit that we have an addiction and we need get treatment. Also, unlike many things, the literal and figurative residue of this natural disaster will not disappear for a very long time and will remind us again and again what type of damage our addiction is causing to other species.
This made me think about the real cost for me when I fill up my car with gasoline. The gas pump says $3 a gallon. That must be the real cost. Right? Nope. There is study by the Institute for the Analysis of Global Security, which claims we are paying a lot more than $3 a gallon (http://www.iags.org/costofoil.html). According to this articles, when you add the tax breaks and subsidies we provide to the oil companies along with the foreign aid to the oil rich countries and the defense costs for securing these regions, you are actually paying $5.28 a gallon.
The response may be is that we need to extract oil domestically; however, all of those off shore oil rigs peppered throughout the US coastline, including the BP's oil rig, do not extract the oil for US consumption only. That oil goes onto the world market where other countries consume the oil.
The fact is that we must stop making compromises on what needs to be done. Does further off shore drilling make sense when the mistakes are too large? Are we going to learn that we have no right to take certain risks that can wipe out species that have no say in our decisions? Can we start committing to other real alternatives and force us to got off oil? I do not know the answers. I believe many of us have the fight in us to get off this oil addiction and, perhaps, this other Gulf Coast disaster will convince the rest of us that we need to stop this addiction too. We keep on saying it, but we do nothing. Unfortunately, we have to have a natural disaster like this to admit that we have an addiction and we need get treatment. Also, unlike many things, the literal and figurative residue of this natural disaster will not disappear for a very long time and will remind us again and again what type of damage our addiction is causing to other species.
Wednesday, March 31, 2010
It's Climate Change and the Economy, Stupid
After surviving a horrible winter on the East Coast, one must wonder whether or not global warming truly exists. I have told my daughter to drop the reference to global warming because people will brush her off and point to the 4 feet of snow piling up next to the driveway. Also, it is too difficult to explain the science in arguing that the 80 plus inches of snow dumped during the winter is a result of global warming.
However, if you change the message and say that it is climate change, a person might stop and listen. This is especially true when you point out the extreme weather that we are getting from huge snow storms to massive flooding to the reduction in certain types of local plants, vegetables and wildlife. Perhaps explaining this in a broader picture will be a more effective message. In fact, the number of Americans that believe in global warming has dropped down to the 50% range. It seems to me this is a result of bad marketing. In the northeast, we just had one of the heaviest snow falls for winter in recorded history and are now facing one of the wettest springs. These are better arguments than telling a person that the polar ice caps are melting. More importantly, if you can tie in the economy with this message, then a person might really start listening.
Let's face it, America needs another economic revolution. We went through another gilded age in which many of us ended up with higher debt, lower wages and a growing economic disparity between the wealthy and the poor. We are looking at 10% unemployment rate and a fragile economic recovery with no really foundation to build from.
So we have a teetering economy and climate change. Many of us may want to get back under the covers and waive the white flag to the Gods of fate. Actually, now is the best time to take action to help the economy grow and confront climate change.
First, we need to reevaluate how we design buildings, houses, sewage systems and our general infrastructure to handle the new type of weather patterns. We may need to reassess our sewage and flood control systems to deal with additional rain on the East Coast and redesign water capturing systems in the West to deal with droughts.
Second, we need to preserve, recreate and reassess our local plants and vegetation. This might be tricky as the climate changes because plants that might normally grow in one area now can grow in another or can no longer grow in that original area where is was indigenous. We need to evaluate what can be effectively grown in certain areas and promote it.
We also need to diversify our agriculture system. We have become primarily a two crop agriculture system where corn and soybeans reign. We need to diversify our crops and rely on locally grown products. This will help revitalize local economies and maintain the community.
Third, we need to take action to improve our energy and transportation infrastructure. As I mentioned in the past, the United States is falling way behind other countries in providing renewable energy resources, especially at the residential level. We need to take an initiative similar to the US took with the race to the moon in the 1960s or revamping its military in 1940s. We need a concerted effort to push this technology through to become part of our daily lives. This will help create the next revolution for Americans.
Also, we need to reassess how we get from point A to point B. I believe the latest down turn has demonstrated that America can survive with only one major US car manufacturer. Perhaps, the days of every American having a car are over. If you add up the expense of owning a car, it might make sense to reduce the number of cars on the road.
I just took the train down to South Carolina for vacation. It was a 14 hour trip with two kids; however, for the most part it was very enjoyable. I got to read and watch a movie along with spending quality time with my family. More importantly, I did not have to deal with traffic or place wear and tear on my car and my carbon footprint for this trip was very small compared to driving or flying.
Last, we need to reevaluate how Americans work. The days of 9 to 5 job in an office seem to becoming a workplace relic. There are some many alternatives in regard to how we work. We can telecommute, work from a location close to home or work at different times of the day or days of the week. As we become a global society, our work patterns are dictated less on the American work schedule but rather the global work schedule.
Clearly, this is not a panacea to stopping climate change and turning around the economy however, the combination of these will help prepare us for a changing climate, reduce further negative impact on the environment and help the economy grow in a more sustainable manner.
However, if you change the message and say that it is climate change, a person might stop and listen. This is especially true when you point out the extreme weather that we are getting from huge snow storms to massive flooding to the reduction in certain types of local plants, vegetables and wildlife. Perhaps explaining this in a broader picture will be a more effective message. In fact, the number of Americans that believe in global warming has dropped down to the 50% range. It seems to me this is a result of bad marketing. In the northeast, we just had one of the heaviest snow falls for winter in recorded history and are now facing one of the wettest springs. These are better arguments than telling a person that the polar ice caps are melting. More importantly, if you can tie in the economy with this message, then a person might really start listening.
Let's face it, America needs another economic revolution. We went through another gilded age in which many of us ended up with higher debt, lower wages and a growing economic disparity between the wealthy and the poor. We are looking at 10% unemployment rate and a fragile economic recovery with no really foundation to build from.
So we have a teetering economy and climate change. Many of us may want to get back under the covers and waive the white flag to the Gods of fate. Actually, now is the best time to take action to help the economy grow and confront climate change.
First, we need to reevaluate how we design buildings, houses, sewage systems and our general infrastructure to handle the new type of weather patterns. We may need to reassess our sewage and flood control systems to deal with additional rain on the East Coast and redesign water capturing systems in the West to deal with droughts.
Second, we need to preserve, recreate and reassess our local plants and vegetation. This might be tricky as the climate changes because plants that might normally grow in one area now can grow in another or can no longer grow in that original area where is was indigenous. We need to evaluate what can be effectively grown in certain areas and promote it.
We also need to diversify our agriculture system. We have become primarily a two crop agriculture system where corn and soybeans reign. We need to diversify our crops and rely on locally grown products. This will help revitalize local economies and maintain the community.
Third, we need to take action to improve our energy and transportation infrastructure. As I mentioned in the past, the United States is falling way behind other countries in providing renewable energy resources, especially at the residential level. We need to take an initiative similar to the US took with the race to the moon in the 1960s or revamping its military in 1940s. We need a concerted effort to push this technology through to become part of our daily lives. This will help create the next revolution for Americans.
Also, we need to reassess how we get from point A to point B. I believe the latest down turn has demonstrated that America can survive with only one major US car manufacturer. Perhaps, the days of every American having a car are over. If you add up the expense of owning a car, it might make sense to reduce the number of cars on the road.
I just took the train down to South Carolina for vacation. It was a 14 hour trip with two kids; however, for the most part it was very enjoyable. I got to read and watch a movie along with spending quality time with my family. More importantly, I did not have to deal with traffic or place wear and tear on my car and my carbon footprint for this trip was very small compared to driving or flying.
Last, we need to reevaluate how Americans work. The days of 9 to 5 job in an office seem to becoming a workplace relic. There are some many alternatives in regard to how we work. We can telecommute, work from a location close to home or work at different times of the day or days of the week. As we become a global society, our work patterns are dictated less on the American work schedule but rather the global work schedule.
Clearly, this is not a panacea to stopping climate change and turning around the economy however, the combination of these will help prepare us for a changing climate, reduce further negative impact on the environment and help the economy grow in a more sustainable manner.
Friday, January 22, 2010
George Washington Carver
Its black history month and I thought it would be a good idea to highlight one man who was the vanguard of the agriculture and bio-green movement. That man is George Washington Carver.
He was born on or around July 12, 1865 into slavery. After slavery was abolished, he was raised by his original slave owner as his son. He was taught how to read and write at a time when African-Americans received no such fundamental training because they were not allowed to go to school where he lived. He ultimately went to a school for blacks and later attended college in Iowa where he ultimately studied agriculture.
In 1896, he joined the faculty at Tuskegee Normal and Industrial Institute (nka Tuskegee University), which was founded by Booker T. Washington. He became the school's director of agriculture. He devoted his time to research projects for helping farmers improve there methods of agriculture. He conducted experiments on soil management. He was shocked coming from the beautiful diverse agriculture and farming industry of Iowa to the limited astere cotton growing agriculture of the South. He wanted to change this myopic method of agriculture in the South.
Due to the poor condition of the soil in the South, he provided solutions to revive the soil by planting peanuts and soybeans. These crops help inject nitrogen back into the soil restoring it to a more fertile condition.
During his research and an effort to promote other crops in the South, such as peanuts and sweet potatoes, he developed 300 derivative products from peanuts, including inks, dyes, plastics and cosmetics, and another 118 from sweet potatoes, including postage stamp glue and rubber. His efforts help transformed the Southern agriculture to a multi crop and profitable business.
His concepts in reinventing agriculture were the stepping stones for other agriculture innovations that followed. Therefore, he was not only an important person in African-American history, he was a very important and influential figure in American history.
He was born on or around July 12, 1865 into slavery. After slavery was abolished, he was raised by his original slave owner as his son. He was taught how to read and write at a time when African-Americans received no such fundamental training because they were not allowed to go to school where he lived. He ultimately went to a school for blacks and later attended college in Iowa where he ultimately studied agriculture.
In 1896, he joined the faculty at Tuskegee Normal and Industrial Institute (nka Tuskegee University), which was founded by Booker T. Washington. He became the school's director of agriculture. He devoted his time to research projects for helping farmers improve there methods of agriculture. He conducted experiments on soil management. He was shocked coming from the beautiful diverse agriculture and farming industry of Iowa to the limited astere cotton growing agriculture of the South. He wanted to change this myopic method of agriculture in the South.
Due to the poor condition of the soil in the South, he provided solutions to revive the soil by planting peanuts and soybeans. These crops help inject nitrogen back into the soil restoring it to a more fertile condition.
During his research and an effort to promote other crops in the South, such as peanuts and sweet potatoes, he developed 300 derivative products from peanuts, including inks, dyes, plastics and cosmetics, and another 118 from sweet potatoes, including postage stamp glue and rubber. His efforts help transformed the Southern agriculture to a multi crop and profitable business.
His concepts in reinventing agriculture were the stepping stones for other agriculture innovations that followed. Therefore, he was not only an important person in African-American history, he was a very important and influential figure in American history.
Sunday, January 17, 2010
What a Waste?
Americans have criticized for being wasteful in many ways even though there has been a slight shift to becoming a more frugal society due to the economic downturn. Nevertheless, there is one area, however, where frugality has not set in, our food consumption. I will not bore you with a story about America's obesity problem. The issue I am concerned about is that we tend not to do what my Grand mom always made sure I did at the dinner table, clean off my plate. We have become a wasteful society when it comes to food. There are reports out there stating that the rich countries throw away 25 to 30% of what is bought at the supermarkets.
The National Institute of Diabetes and Digestive and Kidney Diseases, in Bethesda, Maryland has looked into this issue in regard to Americans. They concluded that the average American wastes 1,400 kilocalories a day, which amounts to 150 trillion kilocalories a year for the entire country. This represents 40% of the US food supply, which is up from 28% in 1974.
The production of these wasted calories has accounted for more than 1/4 of America's consumption of freshwater and 300 million barrels of oil a year. Add in the amount of methane that this rotting heap of thrown away food creates, which is a far more potent greenhouse gas than carbon dioxide, this level of waste is not just a food problem anymore.
One must be scratching his or her head trying to tie the obesity problem with this wasted food crisis. At first blush, they would seem to be contradictions; however, scientists concluded in their above report that there is a connection. They call it the "push effect" in which the increased supply of food and how it is marketed has created this wasteful food culture. Also, the fact that food still is relatively cheap is another contributing factor. If food was more costly, we would not be so wasteful because we would see both money and food that is being thrown away every time we turn to that garbage can.
Perhaps we can all make a another New Years resolution this year along with our goal to lose weight. Let's be less wasteful. Of course, this still means us cleaning off your plate, but this time we will not asking for seconds.
The National Institute of Diabetes and Digestive and Kidney Diseases, in Bethesda, Maryland has looked into this issue in regard to Americans. They concluded that the average American wastes 1,400 kilocalories a day, which amounts to 150 trillion kilocalories a year for the entire country. This represents 40% of the US food supply, which is up from 28% in 1974.
The production of these wasted calories has accounted for more than 1/4 of America's consumption of freshwater and 300 million barrels of oil a year. Add in the amount of methane that this rotting heap of thrown away food creates, which is a far more potent greenhouse gas than carbon dioxide, this level of waste is not just a food problem anymore.
One must be scratching his or her head trying to tie the obesity problem with this wasted food crisis. At first blush, they would seem to be contradictions; however, scientists concluded in their above report that there is a connection. They call it the "push effect" in which the increased supply of food and how it is marketed has created this wasteful food culture. Also, the fact that food still is relatively cheap is another contributing factor. If food was more costly, we would not be so wasteful because we would see both money and food that is being thrown away every time we turn to that garbage can.
Perhaps we can all make a another New Years resolution this year along with our goal to lose weight. Let's be less wasteful. Of course, this still means us cleaning off your plate, but this time we will not asking for seconds.
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