Wednesday, September 16, 2009

New mileage standards

Today's green headlines talk a lot about new aggressive mileage standards for vehicles in the US, and California.

We have had mileage standards for many years yet we are far behind the rest of the world on this front. In addition:

Our car makers are on life support.

We import a huge amount of oil.

The city of Dallas regularly exceeds its air pollution standards.

The question is...are all those things caused by the vagaries of the market or is it in fact the problem with government rule making? Is the government able to implement and manage complex market changing regulation when large scale business is involved?

The answer is no.

Our car makers are a huge industry with a lot of political clout. They are union labor which has huge political clout. The foreign car makers doing business in our markets have clout. The oil companies who depend on the car business have huge clout. All the tertiary businesses connected to cars represent a large amount of voters.

With all of that monetary and voter pressure to "do whats right " for the auto industry, what politician could do anything different than be highly sensitive to their wishes?

We now have a 650 page initial document on new vehicle mileage standards and it will surely grow as it goes through the public comment stage. Why 650 pages? Its all the "considerations" of the industry as described.

We all know that the SUV craze was caused by the government exempting this group from the lower car mileage standards. The regulation caused Detroit to focus on big cars and trucks and make more money with them because they had little foreign competition. They became dependent on that revenue stream that dried up with the $4.00 gas price. This crippled the US Auto industry.

So looking back now, what should we have done? In my view it's simple. Let the market work.

When we had an energy crisis in the Carter era we should have responded with real change...many countries did. But instead we worked really hard to get OPEC in line and get things back to "normal". We sold our independence and stability for cheap foreign oil. Why, because we could. We were huge customers that could bomb them off the map. We have been meddling in Middle East affairs ever since.

So we have artificially supported cheap oil. We spend a huge amount of money (and lives) making sure we get our cheap oil. This is a government distortion of the market...they enact the diplomacy and the wars.

Oil comes from risky places, is an environmental mess, is price volatile, pollution generating and politically and religiously charged. But does $2.00 a gallon gas reflect that? Of course not, it's an artificially low price matched only by the big oil producing countries themselves.

So a $5.00 a gallon price might be more accurate and you could throw away that 650 page document. American consumers have already shown they will eschew big cars and trucks at $4.00 a gallon and so has the rest of the world.

A pollution fee for the air we foul and a military fee on gasoline would do the trick, and be a lot less pages. Or we could just make an amendment to the constitution that we would never use military might to secure goods and services outside our borders.

Bottom Line - Cheap oil is bad because it's artificially cheap. To enact laws and complex regulations to artificially make us all use less of an artificially cheap product is silly. To spend more money bailing out Detroit because of our own artificial market distortions is sillier yet.

There is some new sabre rattling about reducing the huge incentives and supports for the oil industry. Can you imagine? We artificially support our oil companies? Just like our farmers and our auto industry? Does any of this artificial support work in the long run?

We have to artificially support renewable energy so it can compete with the artificially supported oil and coal industries?

I get the feeling that good lobbyists are way more valuable than a good product aimed at a healthy market.

Monday, September 14, 2009

Nuke or not?

It seems almost impossible that we are still having this discussion. The last Nuclear plant constructed in the US was started in 1977! That little mishap at Three Mile island? 1979. Coincidence? Not hardly. We decided, rightly or wrongly that coal was less dangerous than Nukes. (Tell that to a Virginia coal miner).

But now, with carbon reduction on the agenda, are Nukes a renewable clean energy resource? The simple answer is yes. No carbon, no soot, no mercury, no sulfur dioxide. All you get out of them is warm water discharge, steam and some nasty leftover radioactive material that lasts forever. What's not to love?

Over the years we have spent serious R&D money on Nuclear research, mostly on Nuclear fusion which is different than today's fission reactors. The difference between fission and fusion is that one is available, and the other isn't. (A few thousand nuclear scientists and researchers might disagree that it's that simple, but it is for me.)

It's worth noting that those old fission reactors provide 20% of US electricity today. We have 64 plants operating 104 reactors, all carbon and air pollution free and they haven't killed anyone yet... We are by far the largest world user with France and Japan having around 50 each. There are 436 reactors around the world currently operating. (This number does not include Nuclear ships and subs). China and India have the most under construction.

So what's the point of all the statistics? Well, Nuclear works, works well and is widespread and safe if one judges it on actual performance, not on "what ifs". But the "what ifs" are big ones.

So what if a terrorist bombs one, what if one goes rogue and melts down ala Chernobyl, what if we never find a way to safely deal with the radioactive waste?

There are 295 reactors proposed around the world with the US having 19 of those. Vietnam has 9! China has 90! So are we falling behind? Are we going to find ourselves with less cheap energy to run our economy? Can we afford the let Nuclear fall by the wayside here in the US while the world continues it's expansion? Did you know American companies Westinghouse and GE are major players in the global reactor business?

Bottom Line - After having posed all these question I only have one thought. We either should or shouldn't. This fence sitting and arguing is a ridiculous waste of time for our country. We can't accomplish much of anything meaningful if we are constantly at war with ourselves.

So let's have the largest Nuclear reactor expansion of all time to help save the earth from climate calamity. Or, let's stop all efforts and focus our energy on

Thursday, September 10, 2009

Geothermal - I want some

As we complete the cooling season here in Dallas, I am still pining for a geothermal heating and air-conditioning system. In some ways it's more compelling that a photovoltaic (PV) electricity system. Here's why....

Basically the system is a heat pump connected to holes in the ground. Heat pumps have been around for ages and are generally perceived as more efficient than regular AC compressors and furnaces. And more expensive to purchase and install.

What geothermal does is marry a high efficiency heat pump to a source for steady temperatures from the ground. We have local companies that do this by drilling deep but small diameter holes and running a plastic pipe to the bottom and back to form a ground loop (300 feet). Depending on the size of the system, (mine is five ton), they would drill one hole per ton.

They need 20 feet between each hole and they connect them all together and to a pump to circulate fluid to transfer the ground temperature to the pump. The ground is a steady 68 degrees all year round here in Dallas. This fluid is used to cool the air or warm the air in the heat pump. (It's actually way more complex, but that's the gist of it).

So on a hundred degree day the heat pump, (bad name), takes 68 degree water and uses it to cool the house rather than using a compressor to cool whatever the latest freon equivalent is... That's right, no compressor! No noise outside, no ugly box, no unreliable and expensive outside gear to make coolness.

On a chilly winter day, all the heat pump has to do is get the 68 degrees up to your thermostat setting using natural gas or electric. As a side benefit, you can also put your water heater in the loop so it isn't heating up colder water all the time.

All of this combines to save around 50% on heating and cooling costs per my contractor. Now my guess is your mileage may vary but...that's a huge amount! My AC compressor is rated at 14 SEER and the heat pump is around 27 SEER. The heat pump is a variable device meaning I could safely close off rooms and the heat pump adjusts its output without harm to itself.

50% of my heating and cooling bill would be around $1320 in electric and $450 in gas for a total of $1,770 savings a year. Now the bad news. The cost for the system is $36,000. There is a 30% federal tax credit that brings the price down to $25,200. That translates to a 14+ year payoff at today's utility rates. If I were forced to replace my current traditional system with a similiar system it would cost me $10,000, I know because my neighbor just priced out the same size system for her house.

That means the geothermal system would cost $15,200 more and that would take 8+ years to pay off at today's rates. If I financed that at 8% for 30 years it would be $110 a month or $1320.00 a year. If I could get low cost financing, like 5%, then my yearly cost would be $996 for a really good positive net effect.

It's important to note that is just the dry numbers. Reducing my carbon output 50% is a big deal as is spending less money on utility bills and spending more money on my home. In the future, the reduced electricity use would make a PV system much smaller and cheaper.

Bottom Line - This concept's time has come but we need a little maturity in the market to get prices down and make this a no-brainer. Right now its a good deal if you have the money or the equity in your home to borrow against. We all agree that energy prices will also go up, and then the deal would get even sweeter.

I hope my old system breaks down again soon...(what am I saying?)