A Soft Winter Results in Hard Cash

Ignoring the unnerving sense that the climate may be going through drastic changes, there were many benefits of this past mild winter. Chiropractor visits were down due to the reduction in pulled out backs due to shoveling. The number of magical snowmen was reduced in size, which allowed the police force to spend more time on addressing day to day safety and security issues as opposed to fielding calls about snowmen in top hats prancing and dancing down the town streets. On average, many cities in the US saw less than half their average snow. New York City's annual snow average is 25.1 inches. This past winter it was 7.4 inches. Boston has an annual average of 43.8 inches and ended this year with only 9.3 inches. Salt Lake City and Minneapolis average 55.8 and 54.4 inches, respectively. Minneapolis only saw 22.3 inches and Salt Lake had 24.8 inches. The result of these seasonally lower snow falls is more cash in the city's budget because they did not have to spend money on salting the streets and removing snow. In fact, the last two years before this year, many cities were in the red because of the expense of snow removal. In fact, some had to get emergency funding from the state. For example, Lake Tahoe spent about $700,000 this year on snow removal or 24% less than last year. Milwaukee came $2 million under budget for snow removal. Iowa spent only $19.4 million in snow removal this past winter compared to $31.6 million the year before. Also, the cost of maintenance of the streets has reduced because the harsh winter cause wear and tear on the roads, which creates potholes. The other benefits is that many road projects where able to get a jump start this year due to the mild winter. It is easier to do road work when it is 40 degrees and clear skies vs. 10 degrees and driving snow. Unfortunately, the industries that rely on snow for tourism did suffer. And that does has an impact on the states' and cities' tax coffers due to lower taxable revenue. Therefore, for some of these cities, the budget windfall was reduced by the decrease in taxable revenue. In the end, this mild winter provided some form of relief to city and state budgets and the backs of many Americans. Does this mean that cities and states are reducing their snow removal budgets for next winter? The answer is no. In this environment, the only thing that we can count on is the weather is never predictable. Personally, I would not mind another snow free winter. No offense, Frosty. Source: Wall Street Journal, Tuesday, May 1, 2012.

Derailed in America

Considering that it was the railroad that help propel this country into a mega economic power and connect the west to the east, it is somewhat perplexing on why many states have stalled or cancelled projects to build high speed rail lines that connect cities throughout the state.

Last year, Florida turned down federal funding for a high speed line. The governor claimed that it was cost prohibitive based on a incomplete analysis.

California is facing funding issues for its bullet train from Southern California to the Bay Area. As a result, that program is on hold.

Now, Honolulu may be facing delay or cancellation of an elevated train project. This project has been in the making since 1968. The ex-governor of Hawaii, Ben Cayetano, is running for Mayor of Honolulu and he is against this project. He claims that it will not alleviate the increased congestion on the major highways and the $5.2 billion in funding could be spent on updating the cities water and sewage infrastructure. He has vowed that if elected, he will prevent this project from being completed. Regardless of his campaign commitments and potential victory of the mayoral seat, it is uncertain that this project can be stopped by this former Governor because of the momentum and push to get this done by other external forces. The first phase of the railway will be in service by 2015.

This does bring up a general question about America. Why do we not like having a fast efficient rail system? It can promote economic growth by reducing traffic and congestion on the highways. Many work hours are lost due to traffic congestion. It also will help the environment by offering a form of transportation that is low pollutant. In addition, it will save people money considering that gas is averaging close to $4 a gallon. Most important, we are not reinventing the wheel here. We can look to the successes in Europe, South Korea and Japan where there are efficient fast rail systems.

If we want to continue to progress and maintain our economic superpower status, we need to stop having a myopic point of view of things. It seems that we are taking steps back instead of forward. We currently have to rely on the Russians to send us into space because we have do not our own rocket ship to send our own astronauts into outer space.

I am not asking for us to shoot to the moon here. I am just asking to get me from LA to San Fran in 4 hours. Is that too much? Apparently, in this climate, it is.

Energy Industry: The New Job Creator

There is an industry in the US that growing jobs at an accelerated rate. It is not IT industry or the financial sector. And it is not the renewable energy sector; however, you are getting warmer, no pun intended.

The gas and oil industry is going through a major resurgence on US soil. I know that we heard about the record breaking profits of oil companies and have never heard how those profits benefit the US, especially considering the subsidies they receive and the prices at the gas pump continue to rise.

According to the Wall Street Journal, this new energy boom has helped add about 158,500 new oil and gas jobs. This is the result of new drilling techniques to tap oil and gas in shale rocks. This has created jobs in the oil and gas fields, but it also has created job at the companies that provide the equipment and machinery to this industry. In addition, it has brought in revenue to the local communities where the drilling is occurring.

So is this good for us? Clearly, it is good for the oil and gas industry. There is an initial benefit in discovering more local resources of energy. It keeps the natural gas and oil prices lower. I would argue that that natural gas prices are lower than oil prices. It can also bring in tax revenue for the states and local communities. However, in places like Pennsylvania, the have not taxed this industry until now. Even with the new legislation, it is a flat fee that the state would charge, a minimum of $190,000 a well and a maximum of $355,000. Of course, the person who owns the land and leases it to the natural gas companies will benefit from the gas and oil royalties. And as I mentioned before, companies like the ones who provide the drilling technology, trucks and even the prefab housing for the workers in the fields benefit because of the increase in purchase orders from the oil and gas companies.

On the other side, there is the potential of people being hurt We all know about the documentary, Gasland, which showed a person lighting their faucet of running water on fire. It was believed that the nearby drilling for the natural gas was contaminating the local communities drinking water. In addition, a town in Arkansas suspended drilling because of the increase in seismic activity following the commencement of drilling in the area. Also, there is a real risk of a boom and bust cycle in these small towns. They reap the immediate profits with the industry being there drilling new wells, but once all the wells are complete, these companies will leave along with the potential revenue for the local business.

I am not saying this is a bad thing. I believe it does make sense to find local energy resources. I also believe that one solution to our energy problem is not feasible. Also, natural gas as an alternative to coal make sense. It is cleaner than coal. Furthermore, drilling for more oil makes sense because oil is used in many of our products and were are never going to get completely off of oil as an energy resource in the near term. However, we have to balance all of this with smart choices, including instituting appropriate environmental controls. Also, local communities should develop a rainy day fund for when these industries go away and there should be a reoccurring tax revenue from this business to cover any aftermath expense that these companies may cause to the communities, such as water contamination or other unforeseen problems. In addition, even though Pennsylvania is providing statewide ordinance requirements, I believe it really should be left to the local communities. They know better than anyone else what local ordinances are needed.

Of course the contrarian will say that if you place all these restrictions, these company will never want to drill. The one thing you have and they don't is the natural resource. These companies are not going to give up the opportunity to make millions. Sure they can go to another town over; however, if there are certain standards set at the state level to protect communities from not sacrificing its future for short term gains and some flexibility to control its ordinances, in the end these companies will accept these regulations and taxes and not walk away. It is just good business sense.

A New Ice Age?

I just read an interesting article in the Wall Street Journal about whether we are approaching another Ice Age. That is hard to imagine considering I saw some people wearing shorts in mid-December in the Northeast. However, according to the article, it has been as warm as this or warmer for less than 10% of the time over the past million years. Ironically, Newsweek in the 1970s had an article in which lead climatologists were fearing another Ice Age. Of course, if you talk to people in Eastern Europe right now, they would say that we are already in an Ice Age with record low temperatures.

There are theories that the Earth's climate in more prone to Ice Ages. This has been tied to the salinity levels in the ocean. In fact, there are theories that as the fresh water glaciers melt in Greenland and run into the Atlantic Ocean, this will reduce the salt water levels in the ocean. As a result this could slow down the conveyor belt effect in the Atlantic Ocean that brings the warm waters from the Gulf of Mexico, which in turn keeps the temperature levels higher in the Atlantic Ocean, which avoids us going into a deep freeze. Some scientists claim this is already happening. It has been reported there is a fresh body of water the size of Lake Victoria coming down from the Greenland.

So who would be impacted more by this? It is believed that Northern Europe would feel this deep freeze effect, especially in the UK and Scandinavia. It does seem counter intuitive with rising temperatures and more mild winters that there is a threat of an Ice Age, but then again who could really predict the weather anyway.

Dodd Frank Legislation: Protector of Civil Rights

There are many controversial provisions in the Dodd Frank legislation; however, one that seems to be going under the radar without much notice from the protagonists against this legislation is a provision that requires companies to disclose whether raw materials essential to their products include minerals from Congo and neighboring nations.

The Congo? What does the Congo have to do with legislation that was designed to overhaul the rules and regulations of the financial industry to prevent another financial market meltdown?

This is what happens in Congress. Many times random pieces of provisions are included in legislation that have no association with each other. For example, the unemployment benefits and employer payroll tax extension bills include provisions for the construction of an oil pipeline from Canada to Houston, Texas.

Here, there was pressure by human rights groups to some how fight back against the atrocities in the Democratic Republic of Congo. As a result, Congress ordered the US Securities and Exchange Commission in the Dodd Frank legislation to require companies to disclose this information about whether certain materials it uses for its products come from Congo and its neighbors. Clearly, this will not effect every company. The minerals from the Congo are casserite, columbite-tantalite, gold and wolframite. The only mineral here that I recognize is gold. Then again, I am not a geologist. However, if you take a look at your phone and many other electronic products around your house, including this computer that I am using to type this posting on my blog, many of these products include this minerals. Unfortunately, the mining industry in that region consists of corruption, kidnapping, child labor, racism, torture and murder.

The intent here is that if companies have to disclose that some of their suppliers are rapists, murders, kidnappers and just all around bad dudes, perhaps that will force the company to find a more friendlier, gentler and kinder supplier. Let's face it. In today's society, image is almost as important as the quality of the product. Does that mean there will be a shortage of iPhones and other electronic devices because companies stop doing business with the Congo. Most likely, the answer is no. The Congo only supplies 20% of the global demand for these raw materials. However, companies will face additional cost because of the added cost for auditing its suppliers in order to properly disclose on its 10K whether or not it has such a nefarious supplier. This also has not had an impact on companies' stock prices. For those companies that already disclosed this information, their stock was not impacted by this information. I guess investors are not concerned about companies being human rights stalwarts. As long as the company is meeting it numbers, investors are happy. However, that may become a different story with consumers. There is this hidden intangible capital about people feeling good. Perhaps, people will not feel comfortable to do his or her Facebook update on a computer that includes minerals that came from children mining the mines in the Congo. Maybe I should check Apple's disclosure. It would be contradictory for me to write this story and not confirm that this computer does not have any components with such Congolese minerals.

Then again, I have stock in Apple and there is no way I am going to sel that stock right when its 2012 growth projections are through the roof. What can I say, I am a pragmatist not an idealist.

Update on Climate Change Conference

It was the last day of the talks and the last hours of the Conference. It seemed as if this would be another conference of failed opportunities. However, at the end of this conference, an agreement was made between all 194 participating groups.

They agreed to start negotiations on a new accord that would place all countries under the same international requirements with respect to controlling the emission of greenhouse gases, which would take effect, at the latest, by 2020. This is a historical deal like the Kyoto treaty; however, the participants in this deal would be more expansive, especially if the US, China and India follow their commitments here.

In addition, to the agreement on greenhouse gas emissions, the parties agreed to set up bodies that will collect, govern and distribute tens of billions of dollars a year for poor countries. This is very important because many of the countries that will be hit hardest economically by climate change are the poor countries and, more importantly, the poor countries need additional funding to advance their technology to more green/carbon neutral type of products.

Also, the agreement sets out rules for monitoring and verifying emission reductions, protecting forests and transferring clean technologies to developing countries.

This is a good start, with the emphasis "start". They key will be all the parties to this agreement following through. More importantly, following through sooner than later. Unfortunately, the Earth's climate is already changing. Depending how quickly we act, we may be able to slow down this process of change where the concept of a white Christmas in the Northeast of the United States does become something of folklore and myths, like that red nosed reindeer.

Update from Durban- Drama at Sunnyvale High

Surprise, surprise, surprise. Another stalemate on an agreement for carbon emissions cuts at the Climate Summit in Durban, South Africa. It seems to be a repeat of a teenage coming of age made for TV movie.

There is the rich spoiled powerful character that is being played by the U.S. She is the most popular girl in the school. This character has caused serious damage and harm to many people's social lives; however, everyone is afraid to stand up to this diva type of character because of the repercussions, especially her click of friends known as the industrialized countries, like Japan and Europe. Then there is a new character that has recently arrived into town, who lives on the other side of the tracks and is getting the attention of the US friends. Of course, these this character, being played by either India and China, is relatively poor compared to the US, but is getting to be popular with everyone in the high school. Now, in this story, there is a major crisis that the US caused, but the US will not agree to a solution unless China/India agrees to it. Unfortunately, China/India will not agree because the US wants China/India to make certain sacrifices for things that US did. That is the problem in a nutshell.

Now back to reality. The US has been the largest emitter of carbon emissions in the world over the past decades and will agree to a emission reducing pact as long as China and India agree to the same restrictions. China, in particular, will agree to it only if the US agrees to a larger amount in emission cuts to catch up for the enormous levels of Co2 emissions it released in the atmosphere over the past decades. Of course, the US will not do it.

So there you are. It is the same story in Copenhagen and that is now playing out in Durban. It is also the same story you could find in any high school teenage drama on ABC Family, CW or Nickteen on cable/satellite TV. In these stories there is some happy ending where the popular girl realizes she is wrong and becomes friends with the outsider girl and they work together to resolve the major crisis at the high school. Of course, there really is no happy ending here. We hear it all the time. If there is not immediate commitment and action to reduce our carbon emissions, the end result will be catastrophic. These two high school girls will not be fighting over who gets elected president or gets to take the star athlete to prom. Instead they will be fighting for their own survival.

It is time for the US, China and India and the rest of the world to grow up and act like adults instead of teenagers in high school. At least, that is what the main characters did in Sunnyvale High School Day, the made for TV movie on Nickteen. They acted like adults and resolved their differences.