Most of us would agree that Warren Buffett's stature as an investor reaches level of Godlike stature in which many people call him the Oracle of Omaha. His company, Berkshire Hathaway Inc (BRKa.N) (BRKb.N), is paying $26 billion to buy out railroad Burlington Northern Santa Fe (BNI.N), the company's biggest ever investment. Burlington Northern Santa Fe is a leading transporter of coal. According to MarketWatch, this company's coal shipments accounted for roughly 25 percent of the firm's total revenue in Q3 2009. In fact, Burlington Northern had shipped 297 million tons of coal last year, which amounts to roughly 10% of the energy supply used to meet country's electrical needs. Its coal shipments are down 6% this year, however, which many believe is due to recession.
It seems odd that Berkshire and Buffett would invest this amount of money in a company that relies on a good portion of its revenue from shipping coal when there is a pending carbon emissions bill in Congress and a push to replace coal with other alternative clean energy solutions, such as solar and wind. Perhaps Buffett believes that coal will still be a significant part of the country's future energy policy or that the pending bill in Congress will not have as great of an impact in reducing coal usage. In addition, investing in a railroad is not a bad investment considering that trains use a significantly less amount of fuel than other forms of transportation.
In fact, Buffet is quoted as saying the following:
BNSF last year ... moved a ton of goods 470 miles on one gallon of diesel. It releases far fewer pollutants into the atmosphere. It saves enormously on energy consumption and ... it diminishes highway congestion. Rails last year moved 40 percent, more than 40 percent, over the country. They moved more than all those trucks, just the four big railroads. It's a very effective way of moving goods. I basically believe this country will prosper and you'll have more people moving more goods 10 and 20 and 30 years from now, and the rails should benefit.
It should be noted that Berkshire has invested in the energy company, MidAmerican Energy, which has received approval in Iowa to build wind farms with a total 1,001 megawatts of generating capacity. Like any shrewd investor, you need to hedge your bets. I am leaning toward Congress and public pressure to pass a carbon emissions bill that will restrict coal usage; however, betting against Buffett is never a good strategy even if you will be betting against the future survival of the planet.
Thursday, November 12, 2009
Tuesday, October 27, 2009
The Changing of the Leaves and the Landscape of the Rocky Mountains
I have come across news reports on NPR and in the Wall Street Journal about the decrease in Aspen trees in Colorado. So far, over 500,000 acres of Aspens have died off in Colorado. In fact, this decrease in the Aspen tree population is also occurring in Nevada, New Mexico, Arizona, Utah, Wyoming and parts of Canada. There is a variety of opinions on the cause, which range from the severe drought in the West to run of the mill pest and fungus and wild life. There is also the rise in the pesky pine beetle, which is wiping out the evergreen trees. In fact, it is expected that Colorado will lose virtually every mature lodge pool pine, a total of five million acres.
This will result not only a huge environmental impact in this area but a huge economic impact. Millions of people travel to states like Colorado during the fall to see the turning of the leaves of the Aspen trees. If these trees die off, so ends this picturesque spectacle along with the tourist dollars. Tourism is down this year already; however, part of it is due to the recession. Add in the disappearance of fall's main attraction, the small towns scattered throughout this part of the country may feel more of this recession pain.
Foresters and scientists are working on solving this mystery; however, unfortunately, there may not be any clear cut answer. We may be seeing the last of the Aspen and change in the Western landscape forever.
This will result not only a huge environmental impact in this area but a huge economic impact. Millions of people travel to states like Colorado during the fall to see the turning of the leaves of the Aspen trees. If these trees die off, so ends this picturesque spectacle along with the tourist dollars. Tourism is down this year already; however, part of it is due to the recession. Add in the disappearance of fall's main attraction, the small towns scattered throughout this part of the country may feel more of this recession pain.
Foresters and scientists are working on solving this mystery; however, unfortunately, there may not be any clear cut answer. We may be seeing the last of the Aspen and change in the Western landscape forever.
Tuesday, September 22, 2009
It really is windy
The American wind belt run from Texas up to the Dakotas. Last year, America has overtook Germany to become the world's largest wind power generator. Wind energy accounts for 42% of the new energy generating capacity in the US. Unfortunately, like many industries in the US, the growth of the wind generating industry has slowed down a bit from 2008 where it had grown by 50% compared to this year's growth of 20%.
What happened is that creating wind energy requires a lot of upfront capital. The credit crunch and economic down turn has shrunk the availability for this capital. In addition, the wind industry is having problems getting various local, states and federal authorities to set up power lines to transmit this wind energy. In fact, the biggest wind energy promoter, T. Boone Pickens, just called off plans to build the world's largest wind farm because he could not get the transmissions lines.
However, it is not all negative. Government stimulus and funding is helping to support the growth in this industry. In addition, legislation that would require energy company's to obtain a certain percentage of its power from alternative sources, such as wind, will help states commit to build these transmissions lines. There is great growth opportunity considering that 2% of US electricity is generated by wind and there is a lot of untapped resources out there to harness this energy. Keep any eye out on the weather report for more windy days, which could be a good thing for your utility bill.
What happened is that creating wind energy requires a lot of upfront capital. The credit crunch and economic down turn has shrunk the availability for this capital. In addition, the wind industry is having problems getting various local, states and federal authorities to set up power lines to transmit this wind energy. In fact, the biggest wind energy promoter, T. Boone Pickens, just called off plans to build the world's largest wind farm because he could not get the transmissions lines.
However, it is not all negative. Government stimulus and funding is helping to support the growth in this industry. In addition, legislation that would require energy company's to obtain a certain percentage of its power from alternative sources, such as wind, will help states commit to build these transmissions lines. There is great growth opportunity considering that 2% of US electricity is generated by wind and there is a lot of untapped resources out there to harness this energy. Keep any eye out on the weather report for more windy days, which could be a good thing for your utility bill.
Saturday, September 19, 2009
Could London Go Dark?
I remember watching documentaries about London in WWII when it suffered countless bombing attacks from the Germans. One of the UK's defense measures against these attacks was to turnoff all of the lights to limit the visual targets for the German bombers. Unfortunately, England may be seeing some form of a blackout again. At least it is not due to the threat of some country's aerial attack.
Britain is running short of power. It is facing the shut down of many power stations over the next decade and its energy supply from its own internal resources is becoming tight. The government estimates that 750GW in generating capacity will be gone by 2015. Ironically, the economic recession has perhaps pushed this out a little further because the demand for energy has dropped; however, it is hoped and believed that this economic down turn will end shortly.
Britain's energy grids have already shown some strain when it was hit by a harsh winter in 2005-06. It has faced blackouts recently due to two power stations failing at the same time. The problem is that Britain is facing aging power stations and a shortage of alternative resources and new power stations. In addition, the building of new "cleaner" power stations, such as nuclear, would take years to get one up and running and other alternative resources, such as solar. On top of that Britain has committed to lower its carbon emissions by 34% lower than its levels in 1990 by 2020 and 80% by 2050. As a result, it cannot turn to a reliable and abundant energy source, such as coal, because it is the largest fossil fuel emitter. The government is looking at expanding its alternative energy resources such as wind power. In fact, the UK is looking at getting 33GW of energy from its offshore wind program. This is an incredible leap considering now they only get 0.6GW. In addition, they would need to build 5000 turbine over the next 11 years to meet this goal. Another source could be gas; however, the supply from the North Sea is shrinking. This means that the Brits will need to rely on foreign sources such as Russia and the Middle East. This dependency could jeopardize the UK's security.
In the future, we may see many countries facing a similar energy crisis as they are limited on the type of energy resource they can use due to their commitments to meet certain carbon emissions reduction goals. This is a tough trade off; however, it seems like trade off that must been done in order to reduced global warming.
Britain is running short of power. It is facing the shut down of many power stations over the next decade and its energy supply from its own internal resources is becoming tight. The government estimates that 750GW in generating capacity will be gone by 2015. Ironically, the economic recession has perhaps pushed this out a little further because the demand for energy has dropped; however, it is hoped and believed that this economic down turn will end shortly.
Britain's energy grids have already shown some strain when it was hit by a harsh winter in 2005-06. It has faced blackouts recently due to two power stations failing at the same time. The problem is that Britain is facing aging power stations and a shortage of alternative resources and new power stations. In addition, the building of new "cleaner" power stations, such as nuclear, would take years to get one up and running and other alternative resources, such as solar. On top of that Britain has committed to lower its carbon emissions by 34% lower than its levels in 1990 by 2020 and 80% by 2050. As a result, it cannot turn to a reliable and abundant energy source, such as coal, because it is the largest fossil fuel emitter. The government is looking at expanding its alternative energy resources such as wind power. In fact, the UK is looking at getting 33GW of energy from its offshore wind program. This is an incredible leap considering now they only get 0.6GW. In addition, they would need to build 5000 turbine over the next 11 years to meet this goal. Another source could be gas; however, the supply from the North Sea is shrinking. This means that the Brits will need to rely on foreign sources such as Russia and the Middle East. This dependency could jeopardize the UK's security.
In the future, we may see many countries facing a similar energy crisis as they are limited on the type of energy resource they can use due to their commitments to meet certain carbon emissions reduction goals. This is a tough trade off; however, it seems like trade off that must been done in order to reduced global warming.
Friday, August 7, 2009
It is all about relationships
There were not many countries that liked George W. Bush. India, however, was one of them. One reason they favored Bush was because he did not pressure them to abide to any carbon emission restrictions. That was easy for Bush to do considering that he did not enforce any restrictions on his on country. At least he was not a hypocrite here.
Anyway, when U.S. Secretary of State, Hilary Clinton, raised the subject about India abiding to some carbon emission cap to India's minister of environment and forests, Jairam Ramesh, his response was not what she and many environmentalists hoped. He stated, "There is simply no case for the pressure that we — who have among the lowest emissions per capita — face to actually reduce emissions."
He stated further to her, "And as if this pressure was not enough, we also face the threat of carbon tariffs on our exports to countries such as yours."
The U.S. in its recent carbon reduction bill passed in the House has some form of tariff to be assessed against goods of countries that do not abide by certain carbon cap requirements.
The problem is that we have spent the last eight years ignoring this issue and now we are taking internal action, but also pressing other countries. Unfortunately, the President cannot always brush off past sins of the prior President by stating that what his country did in the past was not his fault. India looks at America as one country, regardless of who is running it. The actions of one President tend to carryover into to other President. The only thing America can do in regard to pressing developing countries to seek ways to reduce carbon emissions is to demonstrate to the rest of its world its serious commitment to this matter by drastically reducing its own carbon emissions. Some argue that the current bill passed in the House is not enought. In addition, the US needs to share technology with these countries in assisting them to reduce these emissions, which may be more controversial because of intellectual property issues.
This will not by the first or the last time that America will here the above statements from the developing countries. This is going to take awhile. Unfortunately, some believe we do not have enough time to wait patiently for the developing countries to turn around.
Anyway, when U.S. Secretary of State, Hilary Clinton, raised the subject about India abiding to some carbon emission cap to India's minister of environment and forests, Jairam Ramesh, his response was not what she and many environmentalists hoped. He stated, "There is simply no case for the pressure that we — who have among the lowest emissions per capita — face to actually reduce emissions."
He stated further to her, "And as if this pressure was not enough, we also face the threat of carbon tariffs on our exports to countries such as yours."
The U.S. in its recent carbon reduction bill passed in the House has some form of tariff to be assessed against goods of countries that do not abide by certain carbon cap requirements.
The problem is that we have spent the last eight years ignoring this issue and now we are taking internal action, but also pressing other countries. Unfortunately, the President cannot always brush off past sins of the prior President by stating that what his country did in the past was not his fault. India looks at America as one country, regardless of who is running it. The actions of one President tend to carryover into to other President. The only thing America can do in regard to pressing developing countries to seek ways to reduce carbon emissions is to demonstrate to the rest of its world its serious commitment to this matter by drastically reducing its own carbon emissions. Some argue that the current bill passed in the House is not enought. In addition, the US needs to share technology with these countries in assisting them to reduce these emissions, which may be more controversial because of intellectual property issues.
This will not by the first or the last time that America will here the above statements from the developing countries. This is going to take awhile. Unfortunately, some believe we do not have enough time to wait patiently for the developing countries to turn around.
Monday, August 3, 2009
Why isn't the Green going into Green?
$39 billion of February's $787 billion stimulus bill was set aside for the Department of Treasury for purpose of creating sustainable green jobs for this new green economy. With the unemployment rate at 9.7%, including it being double digits in some states, many are wondering whether or not this money was allocated correctly. Secretary of Energy, Steven Chu, stated recently in Iowa that he will soon initiate $16 million in spending for green fuels and energy efficiency. Up to June 19th, however, only $5.8 billion of that $39 billion of "green" dollars has been allocated. So what's holding everything up? You would think that the government being the true American spender would be out there spending money like one of the wives from the reality TV Show, the Wive of Orange County.
According to the Economist magazine, before this new sea change in energy initatives, the priority of the Department of Energy, which includes a large portion of its people and money, had been dedicated to handling America's nuclear-weapon stop pile. In addition, the Department has never seen this amount of money in its budget. It takes a up to three months for the Department to approve its current loan program applications for funding various projects. Unfortunately, even though it has increased its staff, the Department of Energy is seeking volunteer experts to assist them in reviewing applications and doing due diligence on the parties requesting such funding.
In the end, it might be a good thing that the government is being forced to take a little more time to spend this money. Who wants to have the government purchasing 100,000 solar flashlights valued at $1000 each.
According to the Economist magazine, before this new sea change in energy initatives, the priority of the Department of Energy, which includes a large portion of its people and money, had been dedicated to handling America's nuclear-weapon stop pile. In addition, the Department has never seen this amount of money in its budget. It takes a up to three months for the Department to approve its current loan program applications for funding various projects. Unfortunately, even though it has increased its staff, the Department of Energy is seeking volunteer experts to assist them in reviewing applications and doing due diligence on the parties requesting such funding.
In the end, it might be a good thing that the government is being forced to take a little more time to spend this money. Who wants to have the government purchasing 100,000 solar flashlights valued at $1000 each.
Friday, July 17, 2009
What do fireflies have to do with the economy?
I love the summer time. Especially, I love fireflies. They are nature’s little fireworks. When it starts to get dark, you see these little flashes of light dispersed throughout the night air. It brings out the child in all of us. My children love collecting these insects, studying them and then releasing them. Ironically, this spectacle of lights signifies more adult like activity then child’s play. The fireflies have a mission. These lights are the equivalent to a man at the bar sending a drink over to a female to get her attention. And like any male in this natural bar scene, they are competing with hundreds of other males trying to do the same thing. The night sky is not some natural landscape. It is an insect singles scene.
Unfortunately, the attendance of nature’s singles night is dwindling. There has been a considerable drop in the firefly population. It is not due to the firefly population finding marital bliss and coming off the singles market. There are variety of reasons cited, such as pesticides, light pollution and change in the weather patterns. No one is truly certain for this decrease and scientist continue to study the causes. In fact, you can go to the following website to read more about it and assist in the research: https://www.mos.org/fireflywatch/.
So what does this have to do with the economy? Most likely, you did not realize there is this firefly population decrease and you only would have become aware of the problem when there were no more fireflies. This is similar to the economic crisis.
Many of us did not realize that we were in a recession until a year after it officially began. More importantly, almost all of us did not realize the problems we were creating with sub prime loans, credit default swaps, and collateralized mortgage obligations until the crisis hit last year. The problem existed before that; however, everyone ignored it.
They say history never repeats itself; however, that is not true for human behavior. As my wife reminds me, I need to pay better attention. Perhaps, we all need to be more aware of our surroundings. Go out and enjoy the natural beauty of the summer. Watch that natural firework show. Maybe if we pay a little more attention to our surroundings, we can prevent the next crisis from happening as opposed to dealing with it when it happens.
I love the summer time. Especially, I love fireflies. They are nature’s little fireworks. When it starts to get dark, you see these little flashes of light dispersed throughout the night air. It brings out the child in all of us. My children love collecting these insects, studying them and then releasing them. Ironically, this spectacle of lights signifies more adult like activity then child’s play. The fireflies have a mission. These lights are the equivalent to a man at the bar sending a drink over to a female to get her attention. And like any male in this natural bar scene, they are competing with hundreds of other males trying to do the same thing. The night sky is not some natural landscape. It is an insect singles scene.
Unfortunately, the attendance of nature’s singles night is dwindling. There has been a considerable drop in the firefly population. It is not due to the firefly population finding marital bliss and coming off the singles market. There are variety of reasons cited, such as pesticides, light pollution and change in the weather patterns. No one is truly certain for this decrease and scientist continue to study the causes. In fact, you can go to the following website to read more about it and assist in the research: https://www.mos.org/fireflywatch/.
So what does this have to do with the economy? Most likely, you did not realize there is this firefly population decrease and you only would have become aware of the problem when there were no more fireflies. This is similar to the economic crisis.
Many of us did not realize that we were in a recession until a year after it officially began. More importantly, almost all of us did not realize the problems we were creating with sub prime loans, credit default swaps, and collateralized mortgage obligations until the crisis hit last year. The problem existed before that; however, everyone ignored it.
They say history never repeats itself; however, that is not true for human behavior. As my wife reminds me, I need to pay better attention. Perhaps, we all need to be more aware of our surroundings. Go out and enjoy the natural beauty of the summer. Watch that natural firework show. Maybe if we pay a little more attention to our surroundings, we can prevent the next crisis from happening as opposed to dealing with it when it happens.
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