In my previous blog “The 200-mile Paradigm,” I discussed how the 200-mile range electric vehicle revises the charging infrastructure needs significantly downward where only around 2900 well placed quick charging sites can meet nearly all of the charging needs for the entire United States. This was important because with nearly all automakers coming out with base model electric vehicles with 200-mile range most charging would take place at home and the only need for charging away from home would be traveling across country or traveling to places where either the round trip or the destination was over the vehicle’s 200-mile range. Having slow level 2 charging stations all over the place, as would be needed with the current low range EV model, wasn’t necessary since 200 miles of range would be more than the daily average for nearly all drivers. With AAA’s finding that on average Americans only drive about 32 miles a day, the 200-mile base range of the new EVs would be over six times that average. Continue reading
For those of you who haven’t been tuning into what has been going on in the automotive industry with respect to electric vehicles (EVs) lately, from 2008 when Tesla introduced the first viable electric vehicle to the market there have been more than 1.5 million electric vehicles sold world wide, and over 500 thousand EVs sold in the US alone. Most electric vehicles sold by the major automakers to this point have had the distances that they can travel on a single charge, also known as range, limited to between 65 to around 100 miles. Tesla Motors, on the other hand, has had its vehicle’s ranges typically set at 200 miles or above. They flirted with a 160 mile range vehicle for a while, but sold few and dropped the production of such vehicles as of March of 2013. Tesla’s vehicles so far have been marketed to upscale luxury/performance market, which inadvertently is like saying its vehicles were expensive. Tesla introduced itself to the automobile market with it’s Roadster, which sold for $109,000, and gave consumers a two seat sports car with 221 miles range. Tesla then introduced an electric full-sized luxury sports sedan called the Model S with a 265 mile range and a price tag of around $86,070. They then introduced an SUV into the market known as the Model X that started with a sale price of $80,000 and a range of around 250 miles per charge. Despite the higher price tag of Tesla vehicles Tesla has managed to sell a very large number of vehicles and its sales are increasing month over month allowing it to capture a lion’s share of the sports/luxury car market segment. When we look at the EV market from its current renaissance that began in 2008 to now we see Tesla with vehicles having ranges of 200 miles and above and the major automakers producing and selling quite a few electric vehicles with ranges of 100 miles range or less.
Is the Tea Party Real? The reason that I ask this question is because I was doing research on the Web to get a better understanding of who and what the Tea Party was and what it stands for and found things that seemed inconsistent. For one, according to a Gallup poll conducted on April 5, 2010, the ”œTea Partiers Are Fairly Mainstream in Their Demographics.” This seemed odd to me because the rhetoric that I heard coming from those said by the media to be most associated with the Tea Party, namely Glenn Beck, Sarah Palin, Ron Paul and Dick Armey, many times expressed that particular segments of the US population were the sources of our ills.
I couldn’t imagine Hispanics, for example, being part of the Tea Party in a big way since many of the Tea Party spokes people have worked xenophobic ideas about Hispanics into their utterances. Without Hispanics, the United State’s largest single minority, demographic figures could not be mainstream. Also, given Ron Paul’s denial of the importance of the Civil War and Abraham Lincoln, his refusal to vote to grant Rosa Parks a congressional coin for her part in the Civil Rights Movement and his view that shop owners have the right to deny service to any patron they wish even if the denial is because of their sex, race, religion or sexual orientation, why any of the members of these groups would support the ”œintellectual godfather of the Tea Party” (The Atlantic) or the Tea Party itself. My feeling is that those that claim to be the leadership of the Tea Party movement actually have little to do with the actual people who answered the poll identifying themselves as of the Tea Party movement. I also think that outside of claiming that they have views that are inline with the Tea Party movement, Tea Partiers don’t actually think in the terms that are used by those who have put themselves out in front of the Tea Party.
The Tea Party’s beginning dates back to February 19, 2009, when Rick Santelli ranted on the floor of the Chicago Mercantile Exchange as a CNBC on floor editor. In the rant Santelli responded against the idea of helping ordinary American citizens to stay in their homes. Mr. Santelli in his rant doesn’t call them ordinary American citizens, however, he refers to them as ”œlosers.” Having watched family members go through the pain of foreclosure, I could never lower myself to call anyone dealing with foreclosure a ”œloser.” Most of the people I know that have been caught up with the foreclosure process have done so because of circumstances beyond their control. Santelli’s rant showed his upset with the idea of using taxpayer money to help just such people about to be foreclosed on to refinance their loans at lower interest rates. Supposedly this rant went viral. There is some speculation as to the validity of the true viral nature of the rant, because in extremely short order, I am talking within a few hours, there were Websites featuring the rant and calls for the establishment or claiming the existence of a ”œTea Party,” something alluded to in Santelli’s rant and, much of the early activity on the Internet about the rant was conducted by well-established conservative Internet sites.
What doesn’t ring true to me is that this request to solve the financial crisis through the refinancing of mortgages compared to what had already been earmarked for stimulus to banks, state and local governments and large corporations was a relatively small amount of money, only a few hundred million dollars as opposed to billions and trillions used so far by the Federal Government. It also doesn’t ring true since this part of the stimulus was nearly the only part aimed at helping ordinary citizens, and despite what the media tells you ordinary citizens typically act in their own self-interest. Rick Santelli’s rant dealing with refinancing goes against people acting in their own self-interest. By having the Federal Government deal with the deflation that had occurred in houses everyone benefits. For example, if you are a home owner who has borrowed responsibly but there are dozens of homes about to be foreclosed on in your neighborhood, what better way for the value of your home to be protected than having someone, anyone, offer those people a chance to refinance their homes so that the monthly payments are manageable. No one company, no not-for-profit group, no bank has stepped up to offer what the President has proposed. For those struggling to meet their mortgages this would have been a real good thing since it would have most definitely stopped the downward slide of home prices, stopped mortgage-backed securities from becoming completely worthless, something that would have prevented Europe from having as many problems as it is having at the present, and put a large group of Americans back on a solid financial footing. Americans back on a solid financial footing would in turn have spent into the economy quickening the economic recovery. Refinancing is not like granting money, the Federal Government will eventually get it back with interest. Going down the path recommended by Santelli and then forced upon us by the newly elected ”œTea Party” candidates actually has helped prolong the problems that we have experienced with the economy. So, with some calm and some understanding of the bigger picture you can see how the Rick Santelli’s rant was counter intuitive, counter effective and doesn’t make sense as something that people would really want for themselves. This leads me to believe that most people wouldn’t go for Santelli’s solution and that there was something else at play.
What I believe was at play here was that a relatively small group of people, upset by the election of Barack Obama to the Presidency of the United States, in particular those who supported Sarah Palin, decided to glom onto this as their rallying cry. They would have glommed onto anything that had a faux patriotic twang to it and was anti-Obama. At its core this was an anti-Democratic and anti-President New Administration as Santelli puts it, thing to latch onto. The right-wing of the Republican Party was ready to pounce on just such a thing through their ”œAstroturf” program. Astroturf being the Republican program to create fake grassroots movements opposed to anything the Democrats suggest. The difference this time being that the Republicans are unfortunately using the Internet. That the spark for this faux movement came from a crazy business ranter is no surprise to me since many Wall Street commentators have been chaffing at the fact that the financial world has changed and what is worse is that things could never go back to the roaring days of excess. We know we can never go back because 99% of us have figured out that excess only leads to fiscal and financial ruin. So what remains for the financial pundits? To rant how Obama has spoiled the party for them, while in the real world President Obama probably saved their butts. These three things, the upset Wall Street pundit types, the at-the-ready Republican ”œAstroturf” building machine and those still upset by Barack Obama’s win, ultimately led to the first forming of the Tea Party. However, I don’t believe that it was that great of a movement until the mass media focused on to it. The mainstream media made this out to be a much larger viral thing than it probably really was and the mainstream media probably led by the conservative media also helped pick the Tea Party’s leaders that aren’t.
One of the first things I discovered about the Tea Party as a whole is that they support government action and do not hold to a strict ”œLibertarian” view. I found polls showing that nearly all Tea Partiers weren’t Libertarian in their thinking. However, Ron Paul, a true Libertarian, was christened the ”œintellectual godfather” of the Tea Party very early on by The Atlantic. Mainstream media plastered this all over the place by re-reporting The Atlantic’s opinion as if it were news. This led J. Ann Selzer, a Bloomberg News pollster to state, ”œYou would think any idea that involves government action would be anathema, and that is just not the case.” The polls also discovered that Tea Partiers believe that they are being taxed fairly, which is another aspect of their beliefs that is inconsistent with the anti-tax agenda that is promoted by its so-called ”œleadership,” namely Dick Armey. We can see clearly that the views of the anointed leadership by the mainstream or right-wing media, doesn’t mesh with the views of the actual Tea Partiers. In fact the number one leader that the Tea Party people favor is ”œno one,” 34% of Tea Partiers stated that there is no one that represents the group; that followed by Sarah Palin at 14%, Glenn Beck at 7%, Jim DeMint and Ron Paul at 6% and Michele Bachman at 4%. That means that 94% of the Tea Party does not view Ron Paul as representing their views while the media pronounced him the Tea Party’s ”œintellectual godfather.” Which begs the question, is the Tea Party, as portrayed by the media, actually a construct of the media, or could it be a construct of people and organization that have substantial influence on the media, or a construct of the Republican Party?
Unfortunately, the Tea Party made up of people who identify themselves strongly as the Tea Party, is real. Fortunately, they don’t hold most of the views that their media anointed leaders hold. Unfortunately, they are far more extreme about the few beliefs they hold in common. Their common areas of support, according to a poll done by the University of Washington, are; 73% disapprove President Obama’s policy of engaging with Muslim countries, 88% support the Arizona immigration law, 82% are against gay and lesbian marriage. There you have it. Those who identify strongly that they are Tea Party members in essence are an anti-Muslim, anti-Hispanic and anti-gay group. There are finer ways to put this than my putting it so bluntly, but I am talking about the essence of the Tea Party movement. The polls won’t say this outright, but in essence the polls say the same thing. People are aware of political correctness and they know how to answer questions to remain ”œPC” or at least keep themselves from being exposed as extremist. Which is to say that if you asked Tea Partiers straight out in a poll if they hate Muslims, Hispanics and gays they would know to answer ”œno.” But, if you catch up to them at a party, especially after they have had a few drinks in them and you make sure that they feel safe for expressing their true views among what they believe are like-minded people, you will get the answer you won’t get in a poll. The University of Washington’s poll was extensive and didn’t ask right out questions of bigotry, but clearly, the three questions that rose to the surface among all the strong Tea Partiers polled ended up with a particular bent. That bent in essence is what I stated that the core of the Tea Partiers are anti Muslim, Hispanic and gay.
Given the realities of who and what the Tea Party really is, it is amazing that right-wing Evangelicals have moved in to co-opt the Tea Party after the Libertarian Paulbots and the anti-tax Armey Republicans have moved in. They jumped in to force Christianity on the entirety of the American population through government programs, to stop abortions and contraception, and to censor anything that they might think would offend the all mighty God. Evangelicals are not a perfect fit with the Tea Party but maybe better than Libertarians and tax cutters. This has created a sort of Frankenstein’s monster of the Tea Party that has to fit in the Republican construct and the mainstream medias creation, which is a Christian, gun-toting, anti-tax, libertarian, fiscal conservative group within the Republican Party. And as it is defined this way in the media, so it has attracted elements of these groups.
Given the partly manufactured and partly grassroots nature of the Tea Party, the Republicans have been having a hard time steering this monster of their own making. The Tea Party politicians that have been put forward in the last election have to have emerged from that soup that the Republicans and the media are now calling the Tea Party, but they also know that they have to feign allegiance to the real Tea Party of Muslim, Hispanic and gay haters. The politicians produced by this supposed construct must be new to avoid a connection with the Republican Party that tanked the economy. What were produced were mainstream Republican politicians that are not so versed in mainstream Republican political gamesmanship. And these new Republican’s job is much harder because they have to vote in lock step with the GOP leadership while remaining a ”œTea Party” kind of guy. It is a bad mix.
As long as the Republican Party couches what they want in terms that the Tea Party Frankenstein understands it works. But if the Republicans say something like ”œreduce government spending” the Tea Party Frankenstein drinks the Cool-aid too deeply, and we get, things like the debt ceiling fight, which hurt everyone, Republicans, the Tea Party, American citizens and our nation’s credit rating, everyone but the Democrats. Use your best Frankenstein imitation when saying the following. ”œMaster say reduce spending, must not allow debt ceiling to go up, must to stop Obama.” You can do a bunch of these using the Frankenstein voice like one for stopping appointments, another for taxing the rich, one for killing Social Security, another for ending food stamps, etc. The Tea Party politicians have turned out to be a blunt instrument at best for the Republican Party, a club when a scalpel will do. But as bad as these Tea Party politicians have been at doing government, they never the less don’t represent the actual Tea Party. What you are seeing is rookie mistakes by a new crop of Republican ideologues that lack the experience of good politicking. This is not, however, pure Tea Party ideology at work.
The Republicans can’t embrace the real Tea Party because that Tea Party is made up of extremists, who hold extremist views. Views, that once the population as a whole gets to look at rejects, as witnessed when watching how Arizona politicians were thrown from office, the very same politicians who crafted the controversial immigration laws for the state that the Tea Party likes so much. The Republicans in the current election cycle have shown what they really are, and that is puppets for the power grabbing, influence purchasing, media manipulating worst part of the 1%. Scott Walker may have ridden the wave of Tea Party populism into office, but he is most likely going to be recalled for his union destroying, pension killing, slash and burn cost cutting all while handing his masters massive contracts and tax breaks. Walker, is not a Tea Partier, he is a true Republican created by his billionaire overlords. Once the Muslim, Hispanic and gay hating Tea Partiers realized this they jumped on the bandwagon for kicking him out, which, brings me full circle.
Outside of their misguided and extremist ways, the Tea Party is also made up of people who have been swept up in the financial crisis of our time. Tea Partiers are people, who have had homes foreclosed on them, have lost jobs, have been unemployed and underemployed for years. Despite what they have been told what to think, by Glenn Beck, Rush Limbaugh and the like, the bill collector at your door, the phone or electricity being cut off, the not being able to go to the hospital without going bankrupt are all realities tugging at all of our elbows and Tea Partiers as well. Eventually, the bigoted hatred for having a black President gives way to dealing with the reality in which we all live. Eventually Muslims, Mexicans crossing the border and the private lives of men and woman don’t seem as important as keeping the wolves at bay. And though they may resist with their thinking at first, for having been so deeply brain washed by the conservative media, they wake up to the fact that we have been robbed, and it wasn’t the gays, it wasn’t the Muslims, it wasn’t the Hispanics that did it, but white men in suits, in offices in New York. Men who have never known what it is like to work long hours for minimum wage and barely making ends meet and then having that meager lifeline cut by some suit, just so his account at Tiffany’s can be higher, or so he can trade in his yacht for a bigger one.
The Tea Party is largely an unorganized group of people who have been influenced by hate speech. Hate speech that blames their current ills on others. Outside of that there is nothing uniform about those who call themselves the Tea Party. They mainly live in the rising anti-Obama and anti-Democrat rhetoric of the Republican ”œAstroturf” making machine. They are in a word, ”œagainst.” What they are against is mainly whatever the individuals feeding them what to think tell them to be against. Who makes the message for this multi-headed, multi-issue grassroots movement is the Republican Party. Separately, the politicians that claim Tea Party affiliation are really just inexperienced right-wing Republicans working for their corporate overlords who also are the main contributors to their campaigns. Never has this been more evident than viewing the choices that the Republicans have put forth for Presidential candidates this election year. All of the Republican candidates are running to be puppet and chief for the Koch brothers or the like, one of them, Herman Cain, actually saying so in a speech, another a venture capitalist.
So, is the Tea Party real? It is, but not in the way that other parties and movements are real. The Tea Party exists mainly as the spirit of discontent among people who don’t know how to make things better. Because they are discontent and are searching for answers, they are easily manipulated. They have been told that the words ”œDemocrat” and ”œLiberal” mean accepting things that they don’t want to accept, such as Muslims, Hispanics and gays. So they seek answers in ”œConservative” forms of mass communication. When the Republican Party failed them by bringing on two wars and a great recession, they went seeking new answers. Since they couldn’t seek the answers to what they wanted with the Democrat liberals, the Republican ”œAstroturf” team was ready to provide them with an alternative, the Tea Party. It was the very same tactic that the Republicans used to get Sarah Palin into the Governor’s mansion in Alaska. The former Republican Governor was ousted for corruption. A Democrat should have been a shoe in to the office; however, Sarah Palin came in vowing to clean house, and ran as the anti-corruption candidate for the Republican Party and she won! It was like watching a crime family member named Vinny Gepetto getting caught for steeling money from a church’s poor box, so he is fired. When it comes time to hire someone else to watch over the poor box the people of Alaska chose his brother Joey Gepetto over one of the church’s trusted altar boys because Joey has assured Alaska that he is going to clean house at the Gepetto family and that his family’s stealing days are over. What did George Bush say? Fool me once…
The Tea Party as a political movement as we know it in the end is largely a construct by those who control the Republican Party and the right-wing media, similarly in the way that Sarah Palin is a construct of those who control the Republican Party and put her forward as a capable politician that could have been the President of the United States and withstand the rigors of national and international politics. After having put forth a person who couldn’t remember her puppet master’s talking points well enough so as to need to write them down on her palm and have her win the Governor’s office for Alaska in the midst of a Republican corruption scandal, and again putting her forward as the Vice-Presidential candidate for the nation with all her shortcomings, and having her accepted by some as viable, the puppet masters of the Republican Party realized they could manipulate a good portion of the electorate. When disgusted over the financial crisis and scandal threw the Republicans out of office in 2008, the forces behind the Republican Party knew they had to do something. If the prolonged financial crisis were to remain identified with the Republican Party, then the electorate would most likely continue to punish them for the problems they created. To change their situation the Republicans went to the Sarah Palin playbook and decided to create the Tea Party as an alternative. The Tea Party, carrying their Sarah Palin shovels, were going to clean house while never having to leave the Republican fold. The Republicans imbued the Tea Party with the attributes of the disenfranchised Libertarians, Evangelical and xenophobic groups often independent of the Republican Party and worked them into a frenzy against the Liberal Democrats in 2010, and it worked!
In conclusion, the Tea Party as a true grassroots movement is not real. The Tea Party as a group of politicians representing a large group of a dissatisfied electorate also isn’t real. The Tea Party as a mishmash of Libertarians, Evangelicals and xenophobic as created by the Republican Party does exist, but the only thing that holds them together is their xenophobia, something that is not ascribed to by a great majority of American citizens.
A PS of sorts to Rick Santelli’s rant on CNBC, his tea party reference in his rant was a description of what he thought should be done to “derivatives” saying in essence that there should be a ”œtea party” to gather up derivatives and dump them into the Chicago River. Santelli’s reference to a ”œtea party” was at its core a protest against Wall Street. Something that is disconnected from Tea Party rhetoric now.
I was trying to think of ways that we could remember the basic tenets of the Occupy movement so that when people ask what we stand for we can more easily recall them. In this way we don’t spend time arguing over the things that are being yelled at us (lazy, socialist, get a job, bums, etc.) and keep the conversation about what is really important.
What I thought we could use to help us is our hands as we do with our hand signals together with some easy to remember mnemonic devises. My idea started with the convenient fact that we all have ten fingers. This can be the beginning reminding ourselves first that we have ten basic tenets.
I put up my right hand pointer/index finger up. One. I think, my index finger is attached to my hand, which is attached to my arm and body. My body, when I am dead, is a corpse, my body is a corporation. I lower my index finger in the air and remember that we first want to reduce corporate influence on politics.
I imagine a corpse dressed in a hooded sweatshirt under the corporate uniform of a pinstriped suit. I imagine that corpse suddenly getting up like a zombie. I think, ”œthat corpse is a person with a hood,” and remember that we want to eliminate the ”œpersonhood” legal status for corporations.
I look back at my hands and see my fingers as citizens united by my palm and I flip my hand of citizens over to see the reverse side of my palm. I remember that we want to reverse the ”œCitizens United” Supreme Court decision. To remember why we need to reverse ”œCitizens United,” I think back to the corporation corpse (zombie) and imagine it trying to speak, but instead of audible word coming out money keeps coming out of its mouth instead. Then I remember that ”œCitizens United” was the Supreme Court ruling that designated dollars as free speech and therefore could not be limited.
Then I imagine our corporate zombie trying to give money to a politician on an elevated platform and Occupy movement trying to stop him, and remember that we want to limit campaign contribution. I then imagine our hooded corporate zombie with the word ”œlobbyist” emblazoned across the shoulders of his pin stripped suit, trying to give money to a government official at a desk while the Occupy people try to prevent him from doing that, and I remember that we want to stop the influence of money and lobbyist on government officials.
When I go back to my fingers and look at my index finger I remember:
1. Stance on reducing or eliminating corporate influence in politics
Eliminate “Personhood” legal status for corporations. The interests of the general public and society must always come before the interests of corporations.
Reverse Citizens United versus Federal Election Commission (2008 Supreme Court decision), the decision that states that dollars equal free speech.
Fix our broken electoral system by limiting campaign contributions.
Eliminate the influence of money and lobbyists on government officials.
Then I put my index finger and my middle finger up at the same time indicating 2, the second tenet of the Occupy Movement.
I bend my fingers down imagining they are crumbling as I do this. When I put them back up I imaging they are reforming into the walls outside the New York Stock Exchange, and remember stance number 2 is for the reform of Wall Street. I look into the palm of my hand and I imaging that there is a glass there with an image of a seagull on it and remember that we want to reinstate the Glass-Steagall Act, which keeps brokerage houses out of regular banking.
I look back at my two fingers and I imagine them gripping the handle of a broom and I go into the New York Stock Exchange (NYSE) and begin to sweep out Black Jack tables, roulette wheels and slot machines and remember that we want to remove the casino like aspects of investing now practiced on Wall Street. Once I’ve finished with sweeping the casino stuff out of Wall Street, I go back in and cuff all the brokers responsible for the gambling, and lead them out of the NYSE, all of them wearing blue trader coats like prison garb and all chained together like a chain gang. This reminds me that we want those who caused the financial crisis to be held accountable.
2. Stance on reforming Wall Street
Reinstate the Glass-Steagall Act, keeping brokerage houses out of mainline banking.
Eliminate the ”œcasino” aspects of business investing currently practiced on ”œWall Street” and place serious regulations on how business is conducted by Wall Street and banks.
Hold the people who caused the financial crisis accountable.
I now have my index, middle and ring finger up to signify 3. I go back to my hand and cup them as if to hold water. This reminds me of a dam. I imagine my hands making a life-like model of the Hoover dam on my palm and thousands of tiny workers helping me put it together. This reminds me that Occupy wants the government to be active in creating jobs and one solution for this is to massively expand public works projects. I imagine my hands paying all these tiny workers money, which reminds me that all workers should be paid a living wage.
3. Stance on creating jobs
Massive expansion of public works projects or projects in general designed to employ people directly.
Guaranteed living wage income for employment.
I now have 4 fingers up with my thumb tucked into my palm. I put my 4 fingers together and take my left hand and create a flat top on top of my right hand to form a ”œTimeout” T. Only this time the T stands for ”œtaxes.” I put my hands together with the palms facing my eyes, tuck my thumbs in and bend my spread out fingers to form a bush, and remember that we want to end Bush-era tax cuts to the wealthy and put in a progressive income tax structure. I now cup my hands together to form a hole and imagine our corporate zombie trying to squeeze through, but then I collapse the hole so he can’t. This reminds me that we need to close corporate loopholes that allow corporations to avoid paying taxes. Then I imagine that I have money in my hand and I am giving it to our corporate zombie, but then I don’t, which reminds me that we want to end corporate welfare and handouts.
4. Stance on reforming the tax structure
End the Bush-era tax cuts, institute a progressive income tax that asks more from the wealthiest Americans, close corporate tax loopholes and eliminate corporate handouts.
My right hand is now wide open showing all five fingers. I look at my hand and think how much it is like the leaf of a palm tree and how it would be a shame if that palm tree leaf would be damaged by pollution or burned by climate change. And I imagine it catching fire. And I see the flame turn into the burning flair off of oil well heads and the flames seen above refineries. I remember that we want to strengthen our environmental laws in order to hand future generations a world undamaged by our callousness to the environment. I also remember that we want to end the fossil fuel economy and replace it with clean, renewable energy.
5. Stance related to the environment and energy
Strengthen environmental laws to guarantee a clean, undamaged environment to future generations.
Begin a fast track process to bring the fossil fuel economy to an end while at the same time bringing the alternative energy economy up to current energy demand.
Now my right hand is wide open and I have the index finger of my left hand up. I move my hands over and under each other as if I were holding a globe the size of a softball between them. I move my hands close to my heart and I remember health, which reminds me that all Americans should have healthcare.
6. Stance related to healthcare
Join the rest of the free world and create a single-payer, free and universal health care system that covers all Americans.
I now have two fingers up with my left hand and an open hand with my right. I move my hands to point up, fingers together and parallel, like the ”œtouch down” signal, but only in front of my face. I bend my fingers over and touch my middle fingers together to form a roof and remember that we want to freeze foreclosures until we can figure some way to keep families in their homes during this crisis.
7. Stance on how to deal with the mortgage crisis
Keep working families in their homes by putting a freeze on all foreclosures until a solution can be put in place.
I now have three fingers up on my left hand and all five fingers up on my right. Eight. I move my hands together and open them up as if they were a book. This reminds me that college education should be free and that the overburden of college loans currently being held by students needs to be eased.
8. Stance on reforming education
Tuition free public college attendance.
Ease current student debt.
I now have four fingers up on my left and all fingers up on my right hand. Nine. I move my right hand to the edge of my brow then I put my index fingers out with my thumbs up, point them straight ahead and pretend to shoot as if they were pistols. This reminds me that we don’t want to be the policeman of the world and we don’t want to be an empire by force or arms. We want to reduce our military presence around the globe and immediately withdraw our troops from Afghanistan and Iraq.
9. Anti-war stance
Reduce the U.S. military globally. We are supposed to be an empire of peace, freedom and liberty, and not of war, force and oppression.
Immediate withdraw all troops from Iraq and Afghanistan.
My palms are facing out and my fingers are flared. Ten. My fingers are now American workers in their various worker uniforms and clothes. Little by little their clothes signifying their jobs begin to disappear and corporate zombies fingers begin to transform to have the American workers clothes. Before I can do anything, corporate zombie jumps on a corporate jet and flies off. This reminds me that corporations should be taxed for moving American jobs off shore and that goods coming back to this country should have tariffs imposed on them so as not to unfairly compete with wages here in the United States.
10. Stance on out sourcing and moving jobs off shore
Assess a penalty tax on any corporation that moves American jobs to other countries.
Impose trade tariffs on all imported goods entering the American market to level the playing field for American family farms, American manufacturing and the American worker.
Gold doesn’t have the capacity to do anything that the Federal Reserve Bank can do to regulate inflation or deflation. Gold doesn’t allow money supply to keep up with money creation, which is what happens in a sound economy. Gold is a limited supply commodity that is finite. It won’t reach to cover the United States economy and there ain’t a prayer that it can cover the world’s economy. Deflation has economic problems that can be just as bad as inflation. If we tried to use it as our currency, we would have massive deflation. Massive deflation leads to money hording rather than investing and banks can’t lend because the value of things are going down. Deflation is mostly associated with depressions.
Let me explain. Remember when real estate was the only sure bet investment? It had real… estate value. You could pass it down to your children. You could live on it, or in it. It had physical size and was tangible. However, its value went up and up and up, far beyond its real affordability. Why? How?
Why? How? Because the banking game had changed and people who were not bankers were throwing money at unsophisticated ordinary citizens and telling them they could afford these homes and the extra demand pushed the price of houses up. When the houses became more expensive they just increased the amount of money they could loan people of a certain income. Prices went even higher and these non-traditional bankers started making loans to people without checking their credit worthiness or doing a check on anything. Volume was the watchword for these brokers. With every loan they made they collected a fee, and they experienced none of the consequences if the loan went bad after. Then they turned around and sold these mortgages in pieces of paper, telling the purchasers that the value of their paper was guaranteed because, even though these were risky investments, they were backed by something of real value, actual houses, which at the time was an unmistakably safe investment. Real estate had only gone down in value once in the United State’s history and that was during the Great Depression. Even though they were doing the very same things that lead to the Great Depression, in their eyes, the United States was an endless ocean of prosperity, it was like the atmosphere, their illegal activity couldn’t possibly pollute it, at least not to the extent that it would create any real damage to our economy. For them there wasn’t any danger of the United States going into anything that remotely looked like a Great Depression. That was ancient history. Things are different now. We have smart phones and super fast computers; we drive sophisticated cars that run on gasoline. Besides, real estate is real estate and will not go down in value. Unfortunately we know now that that type of thinking is ludicrous. So use that critical thinking to think about what people are telling you about our money and gold?
The true value of gold is what others are willing to give up or do to get it from you. Gold, just like real estate, only has value when conditions are right to support that value. The value of gold is relative to the value of its importance to what you buy given a particular set of circumstances. Let me give you an example. If I am starving and I will die soon if I don’t get food and I have gold in my pocket, I will want to exchange that gold for food real fast. Gold has no value for me in comparison to food. However, if the food supply is limited and the person who has food also needs it to survive, my gold is worthless. It is worthless to both him and I because you can’t eat it and survive. The decision of to whether you will get food at all depends on either the goodness of the food holder’s charity or the timing when the food holder thinks there will be more food. Chances are the food holder will only give you at most a portion of his food for gold, and more likely then not, they will want all your gold for an amount of food that will most likely not sustain you. You can substitute anything that has a myth of value for the word gold here, such as jewels, platinum, stocks, bonds, money and even mansions. Let me explain. During the Bataan Death march wealthy people signed over mansions for food only to die anyway. Suddenly faced with dying their mansions weren’t that valuable anymore. Back to my point, things only have value relative to their worth during a given circumstance. It is an illusion to thing otherwise. So I am going to ask you, why do you think gold is any different than paper money? Remember real estate?
Paper money is the truest form of exchange under trading goods themselves for goods, or at least it should be. It truly has no value on its own. The value of paper money is in the exchange of goods. For example, socks are worth a buck a pair let’s say, and shoes are worth 10 bucks. You can also say shoes are worth 10 pairs of socks. Money is just a medium of exchange. If you put gold into the equation things get more complicated. Let’s say that you purchase wool and knitting needles with 2 bit of gold and you make ten socks. You go to buy shoes but the person isn’t willing to sell you his shoes for your 10 socks. He wants gold. He says you have to have ten bits of gold first. So you have to go to someone who has gold to buy gold but the only gold in this economy is the gold you first used to purchase socks and it is with the person who sold you your wool and needles. You go to him and he wants three pairs of socks for the one bit of gold, because he wants to rent the shoes from the guy with the shoes when he goes outside and renting shoes only costs one bit of gold. Now, think of this simple example on a Macro level. Why is gold valuable? One reason is that it is not a commonly found metal, found in abundant quantity. It is scarce compared to the demand for it. Just imagine how valuable gold would be if it was the medium of exchange for the world’s economy. Very few people would be capable of possessing it. All the gold in the world would not equal all of the active money being handed over for goods in a single day in the current size of our world’s economy. It doesn’t take a genius to realize that gold simply doesn’t work in a modern economy as it didn’t work in my example.
There is another factor, perhaps an even more important one about how money works in our economy that makes using gold not beneficial to the ordinary citizen, which is how ordinary people and businesses create added value goods and the value of services. Money is created in an economy by adding value. For example, clay has little value alone. You or I, if we know where to look for it, can probably get clay for free. However, you take that clay, shape it, glaze it and fire it and it becomes a useable bowl. This is something that has value to a lot of people, especially people who specialize in making spoons, or soup or something else. Let’s say you have made more bowls than you need and you want to explore the idea of not using your hands to eat your food. You are willing to exchange a bowl that you made to a person who has made spoons in excess of what they need. You come to an agreement that the bowl is worth four spoons. The value of the clay, plus your know-how and labor now has a measurable value in spoons. For a period of time spoons became the de facto currency since compared to other goods spoons have a traded value in the bowl standard. Substitute spoons for currency and now the bowl has an added value over clay of some figure of money. You, the lowly bowl maker has just created money in an economy over clay. This happens almost every time goods or services are exchanged in our economy. I know it is hard to believe, but you can replace the word “profit” quite comfortably with the words “value added” without messing up the meaning too badly. You purchase bowls in bulk that are priced at a value added over clay, and you sell the bowls in smaller quantities in a nice display at your retail establishment at an added value over bowls purchased in bulk. Every step of the way creates money. In order to deal with the ever-expanding value of raw materials being turned into value added goods you need something that will grow with it, and gold can’t do that. In order for gold to keep up with this enormous engine of economies creating money, mining of gold would have to be on a level comparable to how we mine for coal or drill for oil. Gold, like oil and coal is a finite commodity. We probably in a year or two after switching to a gold standard would begin talking about peak gold. Currency, however, doesn’t have these problems. It is just a medium of exchange. The value of goods and services are not based on the currency, but the value of your goods or services against all goods and services. What makes the value of money go up or down isn’t a factor of the money itself, but its supply in the economy. In order for money to not go up or down in value is how close the government agency hits the mark of how much money was created during a particular period. In the United States that agency is the Federal Reserve.
Our reserve bank tries to keep the amount of money in our economy at the level of the economies creation of money. This is a bit of guesswork and is not an exact science. If they project to low then the value of currency will increase and you have deflation, if they put too much money into the economy the value of currency will decrease and you have inflation. The Federal Reserve adds or detracts money from the economy by printing money and lending it to the banks that circulate it into our economy in the form of loans. If interest rates are high, fewer people get loans and the money supply in the economy drops, if interest rates are low, loans are more affordable and many more people barrow money and increase the money supply.
The Federal Reserve is not a private institution, it is, however, an independent institution wholly owned by the Federal Government and the therefore owned by the citizens of this country. It is independent to free it from politics, so that it may act in the best interest of the citizenry.
The Federal Reserve System fulfills its public mission as an independent entity within government. It is not “owned” by anyone and is not a private, profit-making institution.
As the nation’s central bank, the Federal Reserve derives its authority from the Congress of the United States. It is considered an independent central bank because its monetary policy decisions do not have to be approved by the President or anyone else in the executive or legislative branches of government, it does not receive funding appropriated by the Congress, and the terms of the members of the Board of Governors span multiple presidential and congressional terms.
However, the Federal Reserve is subject to oversight by the Congress, which often reviews the Federal Reserve’s activities and can alter its responsibilities by statute. Therefore, the Federal Reserve can be more accurately described as “independent within the government” rather than “independent of government.”
The 12 regional Federal Reserve Banks, which were established by the Congress as the operating arms of the nation’s central banking system, are organized similarly to private corporations–possibly leading to some confusion about “ownership.” For example, the Reserve Banks issue shares of stock to member banks. However, owning Reserve Bank stock is quite different from owning stock in a private company. The Reserve Banks are not operated for profit, and ownership of a certain amount of stock is, by law, a condition of membership in the System. The stock may not be sold, traded, or pledged as security for a loan; dividends are, by law, 6 percent per year. ~ Federal Reserve website
The 12 regional Federal Reserve Banks are the functioning portion of the system that carry out the requirements put upon them by the Federal Reserve Board. The Federal Reserve Board or the Fed has two mandates, the first is to keep inflation under control and the second is to keep unemployment low.
The Federal Reserve is necessary because we industrious Americans keep taking things that are worth nothing or of little value and making them more valuable, (i.e. making clay into bowls). We create money in our economy and so the money supply has to increase with that. The Federal Reserve controls interest rates at the bank level by the interest rates it is willing to lend to banks. (Oh, so that is why they report the Federal Reserves interest rates so much on the news.) The interest rates asked for by the Fed are directly linked to two things, the cost of borrowing and the rate of inflation; however, inflation has other factors affecting it as well. Remember that when interest rates are high people and businesses tend to barrow less. This dampens economic growth, but maybe necessary to slow down inflation. If it makes interest rates low then businesses and people tend to barrow more and grow their businesses and employ more people. However, more money flowing to people and businesses tends to increase demand and that causes inflation. One example of this was the low interest mortgage loans that were too easy to get by nearly everyone, caused housing prices to go up and up, in other words, caused there to be inflation in the housing market.
Gold doesn’t have the capacity to do anything that the Federal Reserve can do to regulate inflation or deflation. Gold doesn’t allow money supply to keep up with money creation, which is what happens in a sound economy. Gold is a limited supply commodity that is finite. It won’t reach to cover the United States economy and there ain’t a prayer that it can cover the worlds economy. Deflation has economic problems that can be just as bad as inflation. If we tried to use it as our currency, we would have massive deflation. Massive deflation leads to money hording rather than investing and banks can’t lend because the value of things are going down. Deflation is mostly associated with depressions.
Just like what happened in the housing market and the supposed incorruptibility of the value of real estate, we have been manipulated in believing the value of certain things such as gold don’t go down only to have them change in value dramatically typically at great cost to ordinary citizens. If you can’t remember back 12 or 13 years ago to the end of the 1990s let me remind you, gold had gone down in value to a 22 year low. That means that those who had purchased gold close to their retirement as a sure bet for the intervening 22 years of their life would have seen their savings drop by nearly 70%. If someone had saved 100 thousand dollars to retire on, then at the end of the 22 years, provided that they hadn’t touched it for living expenses, they would have had only 30 thousand left. Compare that to what would have happened if they had put their money in a bank and kept it as cash, they would have been far a head even at a 3% interest rate. I am sure with every drop in the price of gold during that period investors were told that gold had enduring value. The reality was that gold went from a high of over $800 per ounce around 1976 to a low of somewhere around $250 in 1998 and it stayed around that price until 2001. That drop in value would have given us an average inflation rate of over 14% a year for 22 years. The truth is that most of that drop occurred within the first 5 years. Most average citizens would have experienced an inflation rate of 50% or more per year for that period of time. Gold would have been devastating to our economy if it had been our currency for that time period.
One last thing to think about. If we truly are thinking of social and economic justice then remember this. Forty percent of the wealth of the United States is controlled by 1% of the population. Murphy’s golden rule: whoever has the gold makes the rules. The 99% aren’t the people who have the gold.
A Declaration of Independence for Egypt
There comes a time in every society for the people to rise to a station to which the laws of nature intended them. This elevated station is based on the following obvious truths, that we are all equal under the law, that as humans we have certain rights that are incorporated into our person. Among these are the right to life, the right to be free from restriction of movement, the right to speak freely and the right to pursue what ever it is that we believe will add to our happiness. We here and now affirm that because of these rights governments derive their permission to govern from the people and that governments are created by people to protect these rights. When any form of government acts against these rights, it is the privilege of the people to change its government to a new government that affirms its commitment to preserving these basic rights.
For practical reasons government that satisfies their responsibility should not be changed for ephemeral reasons. However, it is up to the people to decide what reasons are weighty enough to warrant change. As our history has shown us, people are more apt to tolerate suffering as long as the suffering is not too great. We are more apt to go on suffering rather than change the things which we have become accustomed to. But when we suffer many abuses and face a callus disregard of our rights, all designed to subjugate us under dictatorship, it is our right, it is our duty, to throw off that government and make provision for a new government that is committed to protecting our freedoms and liberties.
The present leader of our country has many times violated our rights. He has worked his way to what he is now, an absolute despot over us. We have awakened to the realization that we live under tyranny. With this awakening we have also realized that it is time for us to change our current system of government and what we want is a political system based on genuine democracy and social justice.
To this end we demand:
The resignation of the current president
Free and fair elections involving all Egyptian people be held expeditiously
That there be judicial oversight of the whole election process
That local and international groups be brought in to monitor the elections
That all Egyptians must be free to run for and win any office without interference
That there be fair and equal access to media for all candidates
That the right to vote is extended to even Egyptians living abroad
That the president’s term in office be limited to two terms
That all who hold the National ID be allowed to vote.
That all sectors of the population be free to organize and assemble
That all political detainees be released
That the government may not hinder the expression of religious belief
That the government protect religious freedom for all religions
That the government may not encumber free expression and the press
We, the people of Egypt, assembled here on Tahrir Square and in other cities around our nation, solemnly declare that we are free of tyranny; and to the support of this declaration we mutually pledge to each other our lives, our fortunes and our sacred honor.
I want to be able to see the trailer for ”œRevenge of the Electric Car,” but I can’t see it until there are 10,000 hits of the Face Book page for the movie. So I need your help. Please click on the link http://www.facebook.com/revengeoftheelectriccar go to the top of the page and click that you like the page. If a mere 3,000 something of you do that I can see the trailer.
There are very few things that I can point to that I can say influenced my way of thinking. There are even less things that I can point to that I can say that through their influence they changed my life. Looking back at the last 10 years of my life I can see that being involved, in the most cursory of ways, with the movement s of the EV1 electric car club in California was one of those pivotal moments in my life that ended up changing my life for the better. I went from simply wanting a product that didn’t use petroleum as its fuel, to actively working to give everyone in the world the choice of traveling personally using fuels that didn’t use petroleum as a fuel. In the course of this experience I found that my politics had changed and my view of the world had changed. What could have made such a profound change in my way of thinking? It was a simple mistake of being aware of the possibility of something and then having that something taken away. continue reading after the jump Continue reading
If you think that going green in transportation is like doing acupuncture you’re wrong. If you think driving clean is like tasting nasty medicine you’re wrong again. If you think by going to an electric vehicle you can say good-bye to tinkering in your garage with your hot rod, you are wrong one more time. I bet you didn’t think you would ever be happy about being wrong about anything. Let me tell you, you’re going to be happy about being wrong about this.
For the last 9 years the Electric Vehicle Association of Washington, DC, together with the National Electric Drag Racing Association have been putting together a show in Hagerstown, Maryland of what insaniac, electric gear heads, scientists and engineering departments can put together in their garages.
In part one of this series we looked at a possible reason why Mr. Pickens abandoned his plans for the worlds biggest wind farm. It explored a possible connection between water pipelines Mr. Pickens wants to build and legislation he pushed to allow water pipelines to follow power line tracks. The idea being, his wind farm was only a device to get his pipe line built over the objections of land owners and environmentalists.
With this blog we are going to explore the other side of the Pickens plan, the natural gas part. Remember that the Pickens’ Plan is predicated on the notion of moving the nation’s natural gas away from the steady utility industry into the volatile transportation sector, while wind energy moves into the utility segment vacated by natural gas.
Understand that T. Boone Pickens doesn’t at this point have his promised wind farm, and given the announcement of July 8th that he had ”œtemporarily” put on hold his wind farm plans to a certain extent trading the promise of wind if we move to natural gas in our transportation sector. He is not even making a promise of a wind farm, but rather presenting a concept. Looking at what is happing in the Pickens’ plan is like watching a magician’s slight of hand. The magician keeps the audiences attention on the hand that is moving with a brightly colored handkerchief. Think of the handkerchief as wind power. While up his sleeve there is an egg. Think of the egg as natural gas. The magician says keep your eyes on the handkerchief, and, vualla, the handkerchief disappears and in his hand appears a natural gas egg.
T. Boone Pickens might have been thinking something along the lines like this, ”œI want to get the money that oil is getting for my natural gas. I want the nation’s money now going to mega oil companies and nations in the Middle East to go to me instead. To do this I want the government to spend the tax payer’s money on developing a natural gas fleet of cars so I can sell them my natural gas at a much higher price then what I can ever get out of those regulated utilities with their long term contracts and steady prices.” But some pesky people most likely would have said, “But Mr. Pickens we use natural gas to produce 20% of our nations electricity, and natural gas is much better than coal to produce electricity because it pollutes far less.” Mr. T. Boone Pickens would have probably thought about it a second and said, “Now don’t you fret none, because we are going to have wind take over natural gas’ role in the utility industry. Just so you know that I am not kidding about this I plan to build the world’s biggest wind farm on my ranch in Texas. This hanky symbolizes the wind. Concentrate on the hanky.” And some of the people say, “Yes, we will watch the hanky,” but, some other pesky people said, “Mr. T. Boone there isn’t enough natural gas to replace gasoline in the transpiration sector” And Mr. Boone says, ”œDon’t worry your silly little heads about that, we won’t replace all the cars… just the heavy duty trucks. That’s right. We won’t replace gasoline in cars, just in big trucks like the 18 wheeler kind and trash trucks and stuff. Now if this trick is going to work you need to watch the hanky.” And more of the people say,” Yes, we will watch the hanky.” Yet, there are still pesky people… thinking, no doubt… and we would say, ”œPickens you don’t really have any investment in wind. You just have a promise for wind power and a huge ranch in north Texas.” At that point T. Boone Pickens says, ”œAbracadabra,” and poof the wind hanky is gone, but the natural gas remains.
From ABC’s Good Morning America, July 8, 2009, [T. Boone Pickens says,] ”œHe was unable to secure financing for the transmission lines, and now acknowledges that natural gas is “the only option at this point,” although he said he sees it as a bridge from oil to cleaner fuels.”
According reporter Jim Fuquay for the Fort Worth Star-Telegram’s, ”œ…the Public Utility Commission of Texas identified nine organizations to build various segments of about 2,400 miles of power lines in the nearly $5 billion project.” Reporting on January 29, 2009, 6 months prior to T. Boone Pickens’ claim that he was unable to get financing, Fuquay asks Jim Owen at the Edison Electric Institute how the utility companies were able to finance $5 billion in spending given the backdrop of how bad financial markets were. Owens responded, ”œUtilities are hugely capital-intensive,” adding, ”œ…if you have a regulated revenue stream, it helps significantly with the financing.” So, T. Boone Pickens’ excuse that he can’t get financing seems a little bogus since he is working with a regulated revenue stream and he is claiming now when things are loosening up that financial markets won’t lend when they were lending at the peak of the financial crisis for transmission lines.
When you analyze wind production of electricity and the demand for electricity you can see that wind alone could never fully replace natural gas in electric power generation. Wind, as even T. Boone Pickens understands it, is largely produced in a corridor that spans from north Texas to North Dakota, areas that are sparsely populated, while consumption of electricity is largely relegated to the coasts both east and west. T. Boone’s wind farm could power a part of the Dallas/Ft. Worth areas… when the wind is blowing. What could be used to generate electricity when the wind isn’t blowing? You guessed it, natural gas… or coal, or something else. There are other operational problems with wind too that make it difficult to fit into the grid completely. Wind, in north Texas tends to blow strongest at night, electric use is strongest during the day. Wind also blows steadily most of the winter long and doesn’t blow nearly as much during the summer when electric use peaks as air conditioners turn on. Surprise, there is even a conflict built right into the plan. Wind blows the least at the height of peak driving season meaning that natural gas would have to pull double duty providing electricity for all those air conditioners as well as all those cars. What do we know from economics 101? High demand on a limited resource makes prices rise.
So, for me it is simple folks. I believe that T. Boone Pickens truly has a plan, it just isn’t the plan he has spent millions of dollars promoting. I believe that T. Boone Pickens’ desire has always been to inject oil money profits into his enormous investment in natural gas. I don’t believe he ever had any intention of doing anything with wind power. He bought his north Texas ranch because it has water under it in an aquifer. Aquifers, according to the Energy Information Agency (EIA) are used by natural gas companies to store natural gas. I think he needs to get some of the water out for it to be a good place for him to store natural gas. That is the natural gas that he plans to pull off the market at peak demand, so he can then jack up the price to an unsuspecting public. On top of that T. Boone Pickens knows that some deep well aquifers store gas in the water itself. Natural gas and methane gas become water soluble under high pressure under the earth.
T. Boone Pickens’ real plan, I believe, is to create much more demand for natural gas by injecting the transportation sector into its market. I also believe that he plans to force prices for natural gas to raise by removing natural gas from the market and hording it in an enormous natural gas storage facility in the aquifers under his ranch in north Texas. He plans to keep supply out of the market during peak air conditioning and the driving season causing prices for natural gas to skyrocket, then selling back the natural gas he horded at a premium at the top of the market. On top of that I believe T. Boone Pickens plans to make money on depleting the aquifer of water while extracting gas from the depressurized water. He plans to sell that water to the Dallas/Ft. Worth area of Texas on pipelines that he has laid down in a corridor originally designated to be for wind power, power lines. He plans to use that same corridor to pipe natural gas to be used for transportation, as well as using it to supply power plants in the region. However, there is one thing that I am almost certain about, I am afraid that wind power will never be transmitted through power lines along that corridor. T. Boone Pickens really doesn’t swing that way, he is not an environmentalist, or a man truly interested in the prospects of making money with wind. In reality, T. Boone Pickens is an ultra-right wing, wing nut known for financing ultra-right wing campaigns and torpedoing even moderate political campaigns. I believe that Mr. Pickens fancies that he has performed a slight of hand having fooled a gullible American public in believing that he was planning on building a wind farm when in reality what he was doing was setting them up to be gouged for his natural gas.
And the pesky people say, ”œMr. Pickens’ we see what you are and we are not amused.”
Maybe I am the only person in the world to not be surprised by the announcement of July 8th by T. Boone Pickens when he announced that he would ”œtemporarily” put his plans to build the world’s biggest wind farm on hold. I also wasn’t surprised that he quickly followed that announcement by doing the only logical thing one does when one puts something ”œtemporarily” on hold. He proceeded to announce that he was shopping for buyers of his $2 billion worth of wind turbines that he had already put on order. Because not having any wind assets in the pipeline is the quickest way to get back to providing wind power once your ”œtemporary” hiatus is over.
Having followed T. Boone Pickens wily ways in the oil markets always made me suspicious of his wind power aspirations. T. Boone Pickens is a business man to the core. From what I know of him it seems to me that his credo has always been, ”œI ain’t gona do nothing if there ain’t big bucks in it for me.” Where did that fit in to wind which for years has been more like, ”œI am doing something for the planet,” kind of stuff. When he started throwing out numbers of spending $10 billion on a wind farm that could serve as many as 1.3 millions homes, I started asking myself questions like. How much money does that turn out to be per house? It turns out that $10 billion divided by 1.3 million households equals $7692.31. What is the average household use of electricity? In 2005, the average monthly residential electricity consumption was 938 kilowatt hours (kWh), according to the Energy Information Administration (EIA).
How much do people pay for electricity in Texas? They pay on average $.1045 or 10.45 cents per kilowatt hour according to EIA. That translates into $98.02 a month on average and $1176.24 per year on average per household. In the larger picture if T. Boone Pickens were able to get somewhere around a 7% rate on $10 billion, he could collect nearly a 50% return per year on his investment if he were able to sell directly to customers. Of course he wouldn’t be selling into the residential market directly. There would be a utility company between him and the customer. Granted there would be other costs such as maintenance, transmission lines, paying people to flip switches and other things, but these costs for wind power are relatively minor and remember their isn’t any continuing fuel cost such as other forms of non-renewable energy.
The margins from my perspective look good. So why abandon this enormous project? It very well could be that he simply wasn’t able to get the financing. I find that hard to believe since T. Boone Pickens has been able to raise huge sums of money for his corporate raiding and oil speculation, all, I might add, were extremely risky investments when compared to the staid and true ”œwidows and orphans” type investment electric generation and utilities represent. Plus there are the added government support funds and subsidies from local and the federal government, financing at this point can be done through the Department of Energy for wind power, there is a premium that utilities are willing to pay for wind power so Mr. Pickens would get more for his electricity over that produced by a fossil fuel and there is the extra money that can be made by selling clean air credits to polluters in the cap and trade systems that exist and those coming up. So why would he bail out when the prospects for wind seem so very good right now? I think the answer lies in understanding T. Boone Pickens more fully.
T. Boone Pickens started his business life in the oil industry. Knowing the oil business and discovering that he could raise big money with junk bonds moved him from being a productive oil well driller to a corporate raider of oil companies. Raiders barrow money on the basis that a particular oil company’s assets are more valuable than the value of the company’s stock. He would purchase stocks with this money in amounts to sufficiently control the company, fire the board members and management, replace them with himself and his people and then proceed to sell the company’s assets to satisfy the loan and to line their own pockets, all the while paying themselves big salaries. This in effect destroys companies and saddles the companies that survive with large amounts of debt. It was a practice that has fallen out of favor mainly because it had such an astoundingly detrimental affect on the American economy without benefiting anyone other than the corporate raider. Unfortunately, such behavior hasn’t been regulated out of existence.
T. Boone Picken’s has been asked many times why he continued to do business with such zeal for making large sums of money when he was rich enough to live the most comfortable life imaginable. He would respond by saying that making the huge sums of money wasn’t about the money at all. For him money was just points on the score board of a game. The higher the score the greater sense of accomplishment he felt. Money for him wasn’t something to spend on a lavish lifestyle but something that indicated how well he was doing. What made him happy was playing the game and trying to figure out how to get a higher score.
T. Boone Pickens is not, and I repeat, is not in any stretch of the imagination an environmentalist. He is and has said on record that he is a life long Republican. He backed the campaigns of right wing conservative Republican candidates. He has spoken openly that he believed that the concerns about humans causing climate change were overstated, and, for a while was considered the antithesis of Al Gore and was proud of the title. What changed him? He changed his tune a little after his announcement that he wanted to build his massive wind farm. The disconnection between what he said and his investment felt peculiar not only to me but to others as well. However, this investment into green renewable energy while trying to maintain his conservative street creds gave me a clue that there was something else going on with T. Boone Pickens, especially when he realized that he couldn’t do one, advocate for wind power, without being the other, concerned about pollution, without people focusing on his other activities. I believe to keep the focus on his wind and not his other activities he suddenly changed his attitude towards climate change.
Given his background I simply don’t believe T. Boone Pickens was interested in wind power in the first place. Even though wind in my opinion is a good investment, its return on investment is a slow and steady, secure kind of way of making money, something that our oil booms and busts, former corporate raider Pickens is unfamiliar with, and which frankly I don’t believe he has the patience for.
T. Boone Pickens likes oil because we have structured our economy so that we can’t live without it. He knows enough that when you hold back on something that has become a ”œneed” people will pay just about anything to get it. The highs of oil however are not as high as a true ”œneed” because if prices get too high, people first respond by rationing, they start using less of it. They switch to smaller cars, combine trips to the store with other activities, and they car pool. The next step they take is they begin to look at using alternatives. First they will do things like take the bus or train to work, some may walk or ride bicycles, they push for legislation to have alcohol added to fuel, they purchase hybrids and begin seriously thinking about using plug-in power for their cars, and they look at things like natural gas as possible alternatives. In the end if T. Boone Pickens wants to fully satisfy his greed in the oil market he will end up destroying the market in oil since people can and will switch to alternatives. So oil simply isn’t good enough a product for T. Boone Pickens to do what he wants to do. It’s close, but not perfect. What would be something that we all truly need and there isn’t a substitute for? Could it be food? Could it be water?
According to Zaproot.com, T. Boone Pickens has, amazingly, been busy buying up the water rights to the largest aquifer in the United States, which just happens to be under his massive planned wind farm in north Texas. He wants to pump the water out in north Texas and sell it to the Dallas area. This water plan actually precedes his wind interests by many years. He first tried to purchase a corridor for his pipe line all the way to the Dallas/Fort Worth area, but ran into problems with people not wanting to sell him their land or sell him the right to put pipeline through their land. Pickens had to adjust his strategy. He persuaded local Texas politicians along his route to form a water district so they together could impose eminent domain and force his pipe through. The harder he pushed the stiffer opposition became. The politically connected land owners effectively blocked Boones’ plans. Not to be outdone by these pesky landowners, Pickens pushed an initiative at the state level to amend an energy bill to allow for water pipelines to be laid along side power lines, which would skip the entire battle with the land owners. At the same time he pushed for state statutes that would strengthen the eminent domain power of water districts. With the amendment to allow for water to go along electric lines passed T. Boone Pickens didn’t want to fight the same battles over power lines that he had fought with water rights. He must have figured out that there would be much less opposition to the power lines if they came from a wind farm rather than a fossil fuel. From my perspective T. Boone Pickens’ love of wind really isn’t a love of wind at all, but rather comes out of his personal desire to hold a monopoly advantage of something that is vital to life over the heads of the thirsty people of the greater Dallas, Texas area.
And the pesky people say, “Mr. Pickens we need water to live give us water.” And Mr. Pickens says, “How important is it that you don’t die from dehydration in the hot Texas sun?” And the pesky people say, “We don’t want to die Mr. Pickens.” And Mr. Pickens says, “Then give me all you own. That isn’t a price too high to pay to live, now, is it?”
The dialog above is indeed harsh and I don’t believe that T. Boone Pickens thinks in this way, at least I hope he doesn’t, but the reality is that there is an aspect of economics that I call ”œdesperation economics” that makes such a scenario possible. Desperation economics only shows its ugly head when people are desperate to have something they believe they really, really need. It is the affect that made English nobility trade manors for plates of food on the Bataan Death March. A manor for plate of food is only an example of the most extreme example of desperation economics; however, there are many degrees of this phenomenon. Hording in a supply challenged market would be an example of another, one all too familiar to a person like T. Boone Pickens in his dealings with oil.
On the flipside of the dark picture that I have painted here is the possibility that I hope is the core of what drives T. Boone Pickens today. I simply wondered to myself, what would I do if I had tons of money and were in the twilight of my life? My interests are pretty simple. I would like to leave the world a better place for the children of the future. Moving the nation to pollution free renewable energy would be one thing that I would like very much to leave behind as my legacy. The nation would be cleaner, freer, more independent and more economically secure. I sincerely hope that T. Boone Pickens when he looked at his grandchildren started to think that maybe he should do something to make things better for them. The games all time high scorer title becomes meaningless when overtime the world becomes so plagued with problems that it doesn’t have time to care about that sort of thing. At least a wind farm would be there for decades after he was dead and gone, and that everyday it would generate electricity providing an alternative to putting pollutants in the air. I am hoping that this is T. Boone Pickens’ true motivation for getting into wind power, no matter how hard capital markets harden. I hope the health of the planet has really become something important in T. Boone Pickens’ mind, since the state of Texas has decided to build the power lines from Dallas/Fort Worth to north Texas allowing him to build his water pipeline with out the fights that have stopped him so far. I hope T. Boone Pickens truly believes that his wind investment is still needed even though he may have strengthened the ability of water districts in Texas to impose eminent domain. Finally, I sincerely hope that T. Boone Pickens has come to the understanding in his twilight years that being good is its own reward despite the ever improving prospects for making money in wind power. Wind power for T. Boone Pickens in my opinion would be the ultimate win win in his life. He would win in profitability, he would win in his stewardship of the planet, and he would establish a legacy of good that would live far beyond his time on Earth. He would be known as the man who made wind power king.
Plug in America Press Conference and Rally
Date: Wednesday – March 26, 2008
Time: 10:30 a.m.
Where: California EPA Building
……….1001 I Street
The California Air Resources Board (CARB) meets tomorrow. Their plan is to weaken the laws that govern pollution from automobiles. In particular they plan to reduce the number of Zero Emission Vehicles that were originally required by the law popularly known as the Zero Emissions Mandate or ZEV Mandate. In a show of public will we need anyone available from San Francisco to Reno to come to the rally and let CARB know that Zero Emission Vehicles, with out any dictates to which technology will get us them, should be in large numbers on the road.Plug-in hybrids should be encouraged as well as pure electric vehicles that use batteries and if the automakers want to make fuel cell vehicles sooner rather than later in large numbers they are certainly welcome to do so. The point is, we need those vehicles on the road now, so CARB shouldn’t be working to limit the numbers of vehicles in the near future. Be there to show your support for clean air that comes from having cleaner cars.
The following interview was published by Venster, a Shell Oil Co. Dutch-language magazine produced for circulation internally with in the company. The interview is with Shell Oil Company’s CEO, Jeroen van der Veer, and was translated into English by Rembrandt Koppelaar, president of ASPO-NL and contributing Editor to the Oil Drum: Europe. I acquired the interview from a Blog post to the European Tribune that had added commentary by Jerome a Paris. For this Blog I am not using Paris’ commentary but have removed his and added my own. I have rewritten some of the translation to correct some of the improperly written English. I made sure that none of my changes had any affect on the meaning of the translation.
The purpose of this post is to point out a very disturbing trend in oil pricing. There has been much speculation in the media and in the blog sphere that the price of oil today reflects a shortening of supply directly attributed to peak-oil having been reached. The interview with Jeroen van der Veer indicates something radically different is going on. My speculation is that he is right and that the consequences could be dire if unheeded.
Q: It appears as if it is taking much longer to develop new oil and gas projects.
Jeroen van der Veer: “It is quite clear that the active interest that governments show is leading to project delays. Negotiations on the share of profits from the governmental side are taking much longer then before. One would think that higher oil and gas prices will lead to an acceleration of decision making, in reality the opposite is happening. On the longer term this is having an influence on the speed at which new projects can be put into production.”
In this response Jeroen van der Veer clearly puts the development of new oil projects in the relationship oil companies have with oil supplying nations. He says that the problem of developing new oil and gas resources is being caused by oil companies not being able to reach agreement on profit sharing quickly enough. He is not saying that supplies are dwindling, but rather that governments are not reaching extraction agreements with the oil companies at the same pace as before the rise in oil prices. He is saying that peak oil in not the cause of the slowdown in production, but rather oil producing nations are causing the current imbalance in supply because they are taking longer to come to agreement with oil companies on how to share the profits of new extraction sites.
Q: These delays are occurring at the same time as the natural production decline of oil- and gas fields continues and as the demand for energy is rising. The “peak oil” theory does seem to be correct.
JvdV: “The peak oil theory, as it was first published by the old American Shell employee King Hubbert, is correct, at least for the easy oil [easily extractable conventional crude]. But Hubbert did not have the Gulf of Mexico on his radar screen. Neither did he think of the oil sands in Canada. For the Oil Sands a peak oil theory can also be formulated, but for the moment we are still at the beginning of it. And there are many more unconventional sources that can be developed.”
Here van der Veer states that peak oil is true only to the extent where easily extractable conventional crude oil is concerned. He points out that deep wells such as those in the Gulf of Mexico, Oil Sands of Canada and many more unconventional sources of oil can be developed, thereby pushing the peak oil scenario well off into the future.
Q: But the world is currently running on 85 million barrels of crude oil per day. Mostly from easy oil which is not so easily substituted by unconventional sources.
JvdV: “Correct. A considerable amount of knowledge and know-how needs to be developed and large investments need to take place in unconventional oil projects. We have said that in 2015 around 15 percent of the oil production of Shell should come from unconventional sources. Already the oil industry is very capital intensive and that will only increase – it will become a gigantic investment industry. My proof for all of this? The world in 2015 will use more energy than today and for every barrel more investment will have taken place, and that trend is not going to end in 2015. A growing world population and growing welfare are different types of `inconvenient truths’.”
Here van der Veer says that oil is becoming more capital intensive as it moves towards the future. He says that this increasing capital intensity is a process that has already been taking place and that this is a natural course for oil and not a surprise. He says that Shell already has plans to get 15% of its oil by 2015 from unconventional sources. He says that demand is growing because populations are growing and there is growing industrialization, which he referred to as welfare, and that those two factors will keep prices for oil where extraction can be paid for even when coming from unconventional sources.
Q: Does that mean that `100 dollar oil’ is just the beginning?
JvdV: “For our investment decision we are in any case taking a much lower oil price to see whether projects are worth investing in. The “difficult oil” can easily be produced on a sound financial basis at much lower oil prices than 100 dollars.
The nearly mythical hundred dollars per barrel is based in the perception of a coming shortage of capacity on the oil market. But I think that the demand for oil will react by the present high price, although with some delay. However, this will not lead to a decline in demand, but in lower demand growth. We also know that there is a lot of psychology in the present oil price. The reality is that throughout the chain no one has to wait for any oil: tankers don’t have to wait to be loaded, refineries don’t have to wait for tankers, trucks don’t have to wait at the refinery and consumers don’t have to wait at the filling stations. The physical system is functioning properly.
In addition it is an economic law that demand and supply are always in balance. Apparently not everyone is realizing this. Sometimes there are frictions, which are showing itself in the price, to which supply and demand are both reaction. This law has not been put out of business.”
He says here that when Shell is making a decision about whether or not to begin a project they take into account what the oil price should be. Currently, he states, that the price of oil they use as a measure for extracting from unconventional resources is much lower than the 100 dollar price oil today. He clearly says that the $100 a barrel price of oil today is due to a belief that there is a coming shortage of capacity in production (peak oil). He says that market demand will react to high priced oil, but he believes that oil demand will not decline but rather just slow down in the rate of growth. He says that there isn’t a shortage of oil anywhere in the entire supply chain today causing the price of oil to rise.
Q: According to the International Energy Agency in its most recent World Energy Outlook it is possible that a `supply side crunch’ will occur somewhere between 2012 and 2015, at which oil supply can no longer meet demand. How likely do you find such a prediction is?
JvdV: “I don’t know. On top of that I only look at whether we have sufficient opportunities as a company for our business. I am not an industry guru. At the moment I see that we have adequate resources to develop new projects. Shell currently has 60 billion barrels oil-equivalent of `to develop resources’ at which we can unleash our technology. That is where my attention lies.”
His answer to whether there will be a period somewhere around 2012 and 2015 where oil supply can no longer meet demand is very telling. He narrows his answer to Shell only and states that Shell has 60 billion barrels of oil-equivalents to develop (in reserve). He says that they have adequate resources to develop new projects. In other words Shell will not be experiencing the supply side problems indicated by the report and Shell will not be experiencing a peak in oil supply.
My Analysis of the Interview
I have stated in the past that one of the best gages of whether peak oil is truly a real serious concern or not can be found in how the oil company executives react to such concerns. This interview shows that the top executive at one of the largest oil companies is not worried about peak oil. He states that the current problems of new resource development are a factor of reaching agreements with the governments where the resources are located and not a factor that the resources are disappearing or not being found. He points to substantial unconventional resources available to continue production of oil and oil-equivalents and that the cost of accessing those unconventional sources are more capital intense than the easily extractable oil of the past, however, oil today is much more capital intense than oil of the past and that the trend of greater capital intense oil has been with us for some time and will continue the trend in the future. In other words Shell has already planned for increased costs in oil extraction in the future and prices for oil will reflect those costs. He pointed out that he did not foresee a drop in demand for oil because of today’s high prices, but rather a slowing of the growth of demand. He pointed out that the price of extracting and profiting from unconventional sources of oil is and will be far less than the 100 dollar a barrel oil price we are experiencing today. He goes on to say that the price of oil is being pushed up by a psychological factor and not supply and demand factors, the psychological factor affecting price being a belief that oil supplies will not meet oil demand in the future (peak oil). He points out that currently there are no shortages at any point in the supply chain.
All of what Jeroen van der Veer said points to a very disconcerting prospect. This prospect is that the price of oil today is out of alignment with supply and demand cycles. In other words it is a bubble. He clearly states that his oil company is supplying oil and there isn’t a waiting period on supply anywhere in the process between extractions to consumer use that is causing the increase in the price of oil. He also says that they have plenty of oil in reserve and that even with the process of negotiating to have access to develop new reserves taking longer, it is still occurring at a regular rate. He clearly believes that the high price of oil is speculative or panic driven over fears that oil will be in short supply in the future. He points out that it is this psychological factor that is driving the price of oil. In other words the current price of oil is unreasonable in economic terms and there are no real economic fundamentals holding the price up as high as it is. In simple terms it is a bubble. These factors typically lead to a market correction once the fear and speculation have run their course. Market corrections are often called ”œThe bursting of an economic bubble” and come with some very difficult economic consequences.
A positive consequence of dramatically reduced oil prices in a sudden burst would be that the freed up money now being spent on oil would flow to other areas of the economy creating a greater spread of positive economic welfare. However, the most dire consequence that will be seen with the bursting of the oil bubble, were it to be a violent one, will be that alternative fuels and the current strong push for low carbon producing energy will suddenly see a tremendous shake-out with a great many companies going bankrupt in that industry. Investment will flow away from planet saving renewables, and investors will shy away from that type of investment for decades to come.
We need to put in place now a price floor under the current bubble pricing so that a hard correction doesn’t make the pendulum swing for oil prices to far in the other direction. A correction in oil pricing is inevitable but a gradual correction to a placed soft landing to a pricing floor set at a level would be better than allowing for the extremes of market speculation and psychology to dictate where oil prices would end up. The pricing floor needs to be set where oil prices are both sustainable for oil producing countries as well as being still high enough to maintain the world’s interest in renewables and alternatives. This policy approach would be the most prudent policy measure to take. Not allowing the coming oil bubble to burst completely will do everyone, especially alternative energy producers, a lot of good.
This was first posted on the Daily Kos.
The belief that uniform benefit could be had by pure unregulated capitalistic economies died more than a century ago when people realized that pure market economies failed to produce a benefit to society as a whole. This wasn’t a change in thinking from capitalism to socialism as it is often debated now days, but rather a realization that unbridled capitalism exacerbated the conditions that brought about Communism. The great majority of the nation, liberal and conservative, businessman and laborer, came to the same conclusion, that to be in a truly fully capitalist society government played an important role. That role was and is primarily to keep the playing field fair and even so that basic economic principles that benefit mankind can take hold. What had occurred during this time period was that forces gaming the system, chiefly monopolists, took over the open capitalist markets and closed them to the detriment of a great majority of the citizenry.
It was a popular cry for businesses after the American Civil War to ask to be left alone to make their way in a free and unregulated business environment in order to provide goods and services and meet the needs and wants of the society at large. In the burgeoning economy of the period prior to the Civil War this model served a large portion of the nation well, with only pockets of severe economic depression occurring in industrialized places such as those found in central London and New York. The widely held belief that the extreme capitalist model of laissez faire was infinitely beneficial to society reached its apex around 1870. After 1870 the all too real economic folly from a completely unregulated capitalist society began to be clearly visible in the ever increasing poverty concentrated in the cities.
One of the counter beneficial forces that began to occur was that businesses began to merge for the purpose of monopolizing markets and thereby lowering the positive effect of competition. In laissez faire capitalism large corporations quickly establish monopolies and forced pricing upon the citizenry to their extreme gain, rather than allowing competition to flourish. The next 30 years were marked by poor labor conditions, labor strife, polluted cities, Communism establishing itself in Europe, high prices and increased poverty. Unlike today where nearly universally businesses constantly rail against regulation of any kind, that time period brought home the horrors of unregulated business, to the point where small, medium and some large businesses turned against the idea of laissez faire. They pleaded for the government to get involved in helping to fight the ever growing threat of monopolies.
By 1911 the first of many anti-trust (anti-monopoly) laws were put in place. One of the biggest monopolies that the Federal Government broke up was Standard Oil. Before 1911 if you filled up your car with gasoline, you would be hard pressed to find gasoline that came form anybody other than Standard Oil. Standard Oil was so big that when broken up it formed the following list of major companies.
- Exxon originally named Esso.
- Mobil, now part of ExxonMobil.
- Chevron originally Standard Oil of California, became ChevronTexaco.
- Amoco originally American Oil Co., now part of BP.
- Atlantic Oil Co.
- Richfield Oil Co. Atlantic and Richfield merged to form ARCO, now part of BP.
- Kyso, later acquired by Standard Oil of California /Chevron.
- Conoco, now part of ConocoPhillips.
- Sohio, now part of BP.
- Marathon Oil Company, which was based in Ohio and competed with Sohio.
- Standard Oil of Indiana.
- Standard Oil of Kansas – refining only, eventually bought by Indiana Standard.
- Anglo-American Oil Co. – acquired by Jersey Standard in 1930, now Esso UK.
- Buckeye Pipeline Co.
- Borne-Scrymser Co. (chemicals)
- Chesebrough Manufacturing (Vaseline)
- Colonial Oil.
- Crescent Pipeline Co.
- Cumberland Pipe Line Co.
- Eureka Pipe Line Co.
- Galena-Signal Oil Co.
- Indiana Pipe Line Co.
- National Transit Co.
- New York Transit Co.
- Northern Pipe Line Co.
- Prairie Oil & Gas.
- Solar Refining.
- Southern Pipe Line Co.
- South Penn Oil Co. – eventually became Pennzoil, now part of Shell.
- Southwest Pennsylvania Pipe Line Co.
- Swan and Finch.
- Union Tank Lines.
- Washington Oil Co.
Once Standard Oil was broken up, oil and gasoline prices dropped.
In a competitive capitalist environment multiple suppliers provide like products or alternatives, (typically called “substitutes” in economic terms). This allows for customers to choose from a variety of products. When suppliers compete by differentiating their products consumers have choices that more closely match their needs, likes or tastes. In the vehicle market we see this at work. People are given a choice between small, medium and large vehicles, vehicles that can go off road, vehicles that can carry sheets of plywood and drywall, vehicles that can double as homes and even vehicles that can take advantage of regenerative braking for greater fuel efficiency using an electric motor in combination with gasoline.
In a base commodity market, such as the market for gravel, typically you will find multiple suppliers providing an undifferentiated product with minimal profit. Simply put, if you need gravel your not going to pay more for different gravel since good enough gravel from any source will suffice, just as you wouldn’t pay less for gravel if it wasn’t good enough since good enough gravel wouldn’t be that much more expensive. Oddly enough, gasoline and oil are commodity products. When observed at the distributor level they act very much like a commodity product. For example, if there were two gasoline stations across the street from each other, chances are that if one where selling gasoline at a price that was even just a few cents more expensive you would purchase your gasoline from the other one. If the gasoline in one of the stations was substantially of poorer quality to the point of affecting the way your vehicle operated, chances are you wouldn’t hesitate to use the slightly more expensive gasoline at the other stations since it is not that much more expensive. To survive in a commodity product marketplace suppliers typically end up producing good enough product at a price that is typically very similar to its competitors.
At the macro level commodity suppliers face similar market forces. Gravel producers can’t get away from the purchasing affect of the consumer on the market. Retailers will only purchase good enough gravel not poor quality, lower priced gravel, nor will they purchase higher priced gravel no matter how good the quality is since the function of gravel is that good enough will suffice. Broad market forces may change the price of the gravel however, such as a sudden building boom may increase the demand for gravel and scarcity of the gravel resource allows suppliers to sell their gravel at a higher price. The prospect of being able to sell gravel at a higher price typically means that suppliers will produce more gravel to meet the new demand and return the price and profit margin back to what they were before the building boom. This is called equilibrium.
If oil is truly a commodity market product the upswing in demand is normally met with an upswing in supply and prices again return to equilibrium. At the retail level this works out quite well, however, oil at the international market level doesn’t seem to act as the commodity product it is. One explanation for this is that we have reached a level of demand that is completely beyond the ability for the market of suppliers to increase their production and bring prices back to equilibrium. Demand simply outpaces the ability for the current group of suppliers to meet the demand. Typically, in such scenarios new suppliers enter the marketplace increasing supply and bringing the price back to equilibrium. From what I have observed there hasn’t been a dramatic increase in oil suppliers in the last several years of relatively high gasoline prices. The barriers to entering into the marketplace for new oil suppliers are very high, but the prospect for profitability is very high as well, oil companies today being among the most profitable businesses in the overall market. Risk for entry should be very low no matter how much it costs since the chances for profitability are very high and existing oil companies are highly profitable.
Instead of seeing new suppliers in the marketplace for oil we have seen the exact opposite occur. In the last 7 years or so we have seen a great consolidation of very large oil companies into much larger oil companies. Mergers such as ConocoPhilips, ExxonMobil and ChevronTexico are exactly the opposite market reaction to high oil prices that should have occurred. What I fear I am seeing is the beginnings of the monopolization of the markets similar to the monopolizing forces that occurred during the late 1800s. The top of the market, instead of operating properly based on market forces, begins to work counter to market forces governed by supply and demand. Oil companies of enormous size begin to dictate prices to the market rather than competing on price for consumers and market share.
Peak oil has been described by many as the point where new supplies of oil discovered are systemically less then the rate at which oil is consumed. I believe that there will be a time when the world will have to face the specter of peak oil, however, at this juncture in history it is difficult to tell whether what we are experiencing is peak oil or whether what we are experiencing is the affects of a monopolizing of the oil industry. If pressure on oil prices is that production has outstripped demand then we would likely see oil prices moving steadily higher. Instead what we are seeing is that prices have acted erratically, dramatically increasing due to some weather or news event, only to return to some price similar to what it was before yet typically higher than before.
We could conclude that the price of oil is traveling upward over time and the tightness in demand and supply are what is causing these wild swings in pricing. Price volatility is a factor of tight supplies, but they should only occur where those supplies have been affected and only to those markets for which it serves. The global affect of hurricane Katrina should not have occurred since distribution channels for Katrina-affected-oil did not stretch into the northern states and other countries where oil supplies come from different sources. For example the oil used in Midwestern states comes mainly from Canada and is refined in the Midwestern states. The price of that oil, if a large portion were diverted to those states where supply were affected by hurricane Katrina, could have gone up, however, prices went up across the globe affecting oil prices in Europe and Latin America as well, areas where supplies were not interrupted and where oil produced and distributed never reaches the US markets. In fact the idea of a single price for oil for the entire planet seems counter intuitive given that there are independent refining and distribution networks that should be shielded from global price increases and price drops since these supplies are dedicated for their particular markets.
Upon studying the markets in the Midwestern states for gasoline I discovered that oil prices had not gone up to the refineries and that the refineries did not change the prices of gasoline they sent to the retail outlets after hurricane Katrina. What actually happened was that the retail outlets had increased the price of gasoline independently of their particular cost and supply factors. It seems that information on Katrina on the Gulf Coast created the opportunity to raise prices at the retail level in the Midwest. What had occurred in the Midwest wasn’t what I would call typical market forces, but actually a new type of market force that had more to do with the psychological affects of information in formulating a reason for increased prices. The station owners took it upon themselves to increase prices using hurricane Katrina as the excuse. The other side of this economic psychology was that the consumers accepted the reason for the price increase being Katrina and continued to pay the price. This market affect seems to have taken hold on the spot market for oil as well. The oil that they are selling may have nothing to do with or any connection to an incident that occurred on the other side of the planet, however, it provides the cover to increase prices.
An underlying factor maybe at present here and that is that consumers have no real choice whether to or not to pay for gasoline. Gasoline has become a necessity of their life-style. Formulating an excuse to raise prices at the gasoline pump is really not necessary in such a supply-and-demand scenario. So why did the gasoline station owners and operators choose to increase prices in the Midwest at that time? So why does the spot market for oil gyrate so based on crises that is not connected to that particular barrel of oil? This is a subject worth exploring.
The only way that small interruptions of supply could have global implications is that the demand is substantially ahead of the supply curve. In this case there would be no room for sharp downward fluctuation in the price of oil, sharp upward spikes yes, sharp downward spikes no, and yet there is, leading me to believe that there must be other forces at work here. We don’t have a steady ever increasing price of oil. What we do have is wild gyrations of prices that slowly have lead to increases in the over all price of oil. If we are truly seeing a compound affect of demand ahead of the supply curve and wild fluctuations in prices due to small interruptions in the supply we would be able to trace the gradual increase of prices through the spikes. Looking back at the data we can see that this seems to be true. Prices may be going up and down dramatically but the overall trend is for ever increasing prices. A sure sign that demand is outstripping supply on a consistent basis.
Lately the retail price of gasoline has hit a long plateau from the summer prices percentage wise. What is happening here? Could we be seeing the gradual decline in oil and gasoline prices brought on by over supply created by the normal market forces associated with higher prices for a commodity product? Could we be seeing the diminishing return finally kicking in on high oil and gasoline prices? Maybe? However, unless prices return to some modicum of commodity pricing like we would typically see of other commodity products, it will still be hard to distinguish whether what we are seeing is normal economic factors, the monopolization of the market, gaming or the affects of peak oil.
We have discovered two very important factors in our study of oil and gasoline prices in the last few years. One is the fact that independent forces such as gasoline retailers and spot market sellers can arbitrarily increase prices under the guise of crisis without actually experiencing the actual affects of a shortage of supply or being the victims of some natural disaster. We learned of this from the Midwestern gasoline dealers taking it upon themselves to raise gasoline prices even though their supply costs and quantity had not changed. The second is that because of psychological factors in the commodity market for oil it is difficult to tell whether the overall price of oil is actually going up due to demand being ahead of the supply curve or that it is more of a factor of the seller using the psychology of crisis in order to increase prices through an average of upward and downward spikes that are unrelated to actual market forces. Since we know that there are shielded supply chains that are not affected by particular crises directly, we know that a single global price for oil is not a product of standard economic forces but rather a construct. Whether this construct has any true meaning was unexplored, however, because of this construct we were able to deduce that it could be used to mask a general unwarranted price increase by creating the illusion of volatility in all oil markets when in actuality their may only be a crisis affecting only one limited supply chain.
In conclusion current prices in the oil market may not be subject to traditional market forces based on generally accepted economic principles. These principles may be being compromised by an artificial consolidation of the oil suppliers at a time when normal market conditions would dictate that there would be an increasing in suppliers. Market forces may be being compromised in the oil markets by gamesmanship. The standard price for gasoline and oil may be rising not because of demand outstripping supply, but rather through the belief that there is a single price for oil for the entire globe, devoid of supply chain factors, and that that oil is affected by a crisis anywhere affecting any supply chain. The series of crises that the oil industry seems to have experienced over the last 7 years or so has lead to an annual climbing average oil price for all markets even though logic would dictate that shielded markets and supply chains should remain unaffected.
After examining these factors it is in my opinion that stronger controls and regulations are needed in the oil industry to maintain oil as a commodity product through a process of deconsolidation of major oil companies. We should also subsidize the entry of new suppliers into the oil markets as well as heavily subsidize substitute fuels, further more rules on retail pricing should be put in place limiting the price increase of gasoline only to stations that have been directly affected by wholesale price increases or shortages. We should disallow a single global oil price to be reported but rather only allow for market and crisis conditions to be reported about particular supply chains. The idea here is to reduce the affects of gamesmanship being practiced on the market without true market forces having taking affect on the particular barrel of oil for sale. In other words the government once again must make its presence felt in the marketplace to maintain free and fair markets and keep them from being gamed or degenerating into the horrible monopolistic societies of the unregulated period at the beginning of the Industrial Revolution.
Last week I was at the 23rd International Electric Vehicle Symposium, otherwise known as EVS23. Last year I helped organize volunteers for the Electric Drive Transportation Association Conference (EDTA) coming from EVA/DC and found the experience so enlightening that this year I told myself that I would be at EVS23, which, by chance, was going to be run by my friends at EDTA. What I hoped and planned was to just be an attendant at EVS23 so I could see more of the panel discussions and spend more time talking to people and learning about what people are doing and where the industry was going. The best laid plans of mice and men.
In the intervening year between the EDTA conference and EVS23 I have been busy. I have been organizing demonstrations of electric and plug-in vehicles at places such as the National Science Foundation, the Department of Energy, the Power of DC, the Washington, DC Green Festival, etc. I also made friends with Mike Harvey who had joined our local electric vehicle club who immediately became busy converting cars to EVs and making BugE Blue Sky Design kits into drivable electric vehicles. After successfully building an award winning EV, a comfortable, drivable BugE kit and learning how to do the CalCars Prius PHEV conversion, Mike got the idea that he could make a business out of his newly acquired skills. I had made a promise to my readers that anyone who was going to put enough effort and money behind making EVs that I would be there too. I never thought it would be so convenient as to be in my part of the country and that the person would have been a member of my EV club, but there was the opportunity right in front of me. So, I decided that I would help. Mike turned around and put out a press release letting the world know that Harvey Coachworks and EV were ready to take orders for ready to drive BugEs. After that an odd thing happened.
The first people to contact us after the press release was a group out in Hollywood that organized celebrity gift rooms. Gift rooms are mainly to have celebrities handling or showing off products that they receive, giving the companies that supplied these products an opportunity to take their pictures with the product. Connected, the organization that had contacted us, had been looking for something green and something charitable to attract celebrities to their room, which had been timed to correspond with the American Music Awards. We couldn’t give each celebrity a BugE, so what we came up with was to have the celebrities sign a BugE that we had specially built for this event, and then we would then auction it off for a charity. We first thought of helping a variety of charities but later thought better of it and settled on Autism Speaks, a charity close to Mike’s heart for personal reasons. Connected was completely on board with how we wanted to handle things and put their support behind our efforts to make it happen.
What followed next was Mike and I screaming across the country from the right coast to the left in a mini-box truck with the BugE inside. We were desperately trying to make it to Los Angeles in time for a demonstration by CalCars on a fast Prius plug-in conversion. It meant that we would have to make the trek in only 2 and a half days. We just made the end of the event after all the media and fanfare was gone, but as luck would have it Chelsea Sexton and Linda Nicholes of Who Killed the Electric Car? showed up just after we did. Mike and I didn’t want to miss out on an opportunity to have two EV stars sign the vehicle, so we asked Linda and Chels to sign and they graciously obliged.
The following day we were off to Hollywood to the Sofitel hotel for the Connected gift room date where we were placed just outside the entrance in between the registration table and the gift room. I couldn’t have found a more perfect location for the vehicle. Every celebrity had to pass in front of our vehicle to register for the event after which they were asked to sign the vehicle to be auctioned off for Autism Speaks. Every celebrity enthusiastically signed. They were excited by the cause, they were excited by the vehicle. It seemed to establish a really good feeling about the event and what was to go on beyond that. For me the event took on special meaning once I saw Earnest Borgnine sign. Earnest Borgnine’s body of work on the silver screen and off is unparallel. That he was willing to lend his support made all of our efforts worth while. The event went on, with big name stars that many times I could only identify by their roles in the movies or on television. Some were famous comedians. Some of the biggest stars were of course from music, such as John Legend, Chris Daughtry and two members of the Cheetah Girls. The first day we got more than 50 signatures, the second day we got less, but it was still very good. Lots of eyes on the BugE and lots of signatures and lots of pictures of Celebes, it was a big success.
After the event we took the BugE to Paul Scott’s house and parked it for safe keeping. We did a quick look at the LA auto show, visited Santa Monica and other sites in the area and then flew home. Once home we got it into our head that we needed to get more publicity for the celebrity signed BugE and someone suggested that we get it on the floor of EVS23. So I asked my friends at EDTA and they said YES!!!
I was all set up to go to EVS23, having paid my way myself since my experience at the EDTA conference had been so positive the year before. My entire purpose for going to EVS23 was to learn as much as possible. Now, I was not only going to represent myself but also represent Autism Speaks and Harvey Coachworks and EV. Even more, I had to coordinate people to bring the BugE to the event and then find a place to put it after the event. It all came together wonderfully with the angelic generosity of a number of people, the most important being Michelle Harris and Lynnecia Johnson from EDTA who provided everything to get us on the floor of EVS23, Keith Vansickle, who helped coordinate the movements of the BugE to and from the event and used his charm and family to make things run smoothly, and as if that weren’t enough took the vehicle to his home after the event, Jessie Meza at All Points Motorcycle Towing of Lomita, California, who towed the BugE to the event for free just to help out Autism Speaks, Paul Scott, who housed the vehicle for the time in between the events and Jerry Asher, who offered guidance and moral support throughout the event.
The Harvey Coachworks and EV’s version of the BugE garnered quite a following at EVS23. I heard from an engineer at Johnson Controls that the BugE was all they could talk about at their booth. Feedback was very encouraging.
Now it is your part. We need you, and that means all of you, to bid on the BugE. The more people bid the greater the amount it will be sold for. The greater amount that the vehicle will be sold for, the more money we raise for Autism Speaks. Tell your friends. Send them the link and if they are interested in helping, have them bid.
Ebay number 160189478545
When people ask me when did I start becoming interested in electric vehicle I honestly tell them I can’t remember. Electric vehicles weren’t an ”œaha!” moment in my life where I suddenly realized that I was seeing something revealed for the first time. Electric vehicles and many other forms of capturing and using alternative energy have always been in my psyche. I think it goes back the OPEC oil embargo of the 1970’s.
I was a preteen and a teenager during that time, very much interested in cars and driving, as well as being interested in science’s ability to solve our everyday problems. One of our neighbors purchased one of Bob Beaumont’s tiny Sebring-Vanguard CitiCars and I was enthralled. I never got a chance to look at it up close. I just would see it driving on the street here and there every once and a while. The Apollo space missions were well on their way and on the moon was an electric car. I remember going to GM’s Tomorrow Land in Disney World and becoming fascinated by what I saw.
One thing I saw was a machine that held plants up in the air and allowed them to grow and root in mid-air by misting the root system. I also remember my first inklings of applying logic and practical thinking there too. After the buzz of the presentation I remember learning about the retail value of the fruit from that plant I saw being held up in the air and suddenly realized that it may have been cool to see but why in God’s green earth would you spend several thousand dollars on a machine that keeps a plant alive in mid air so that it can produce a fruit that retails for a few cents. It would take a millennium to pay for the machine. I realized that a lot of what we were seeing was just big company razzle-dazzle and not practical science.
There is much to be said about basic research that is good. This experiment with the cheap plant and the multi-thousand dollar machine has its merits rooted in basic research, which is a good thing. However, bringing it out as a display as a solution for poor quality arid soils was ridiculous. From there I was able to connect the dots to a variety of demonstrated technical solutions presented in prototype that were extremely impractical and presented as a solution to the crushing problems of our day. Those displays were too impractical to ever make it to the market place yet they pushed more credible solutions to the wayside.
The large US automakers talked about what they were going to do, while things in essence stayed the same. Their failure to adjust to the market place with product rather than rhetoric instilled in me my first critical view of the American automobile industry. That view was clear to me as a teenager in the mid 1970’s and unfortunately remains today. The view I held then is the same one I hold today. That is that in the face of very serious industrial and market change the US automakers fail to change significantly enough to maintain their markets, their sales and their profitability.
They doggedly hold onto a model of the market that they want to sell into rather than the market that will buy their cars. It took the US auto industry ten years to answer OPEC with smaller more fuel efficient cars. All the while the US auto industry whined about how hard it was for them to produce smaller cars, how they couldn’t make any money making small cars, how the consumers didn’t want smaller cars. It took so long that by the time they were finally able to get something that American’s wanted the crisis was over and gasoline prices began to stabilize at a much higher cost but lower then where they had been. The only thing that the American automakers had to face after the oil embargo was over was the vaunted quality issue, of which two decades after that crisis began America auto industry finally made inroads into the problem of quality. Unfortunately, Japan’s quality had improved, the product line of Japanese cars had already adjusted to the new likes and tastes of its American consumers and Europeans had reaffirmed themselves in the marketplace with better quality products and higher performance then that of their American counterparts. The view stayed the same. In the face of very serious industrial and market change the US automakers fail to change significantly enough to maintain their markets, their sales and their profitability.
Back as a teenager the oil companies very carefully manipulated public sentiment by coining the OPEC created and Oil Company profited artificial crisis in oil production as a broader ”œEnergy Crisis.” I remember almost immediately talking about conserving electricity, I remember people pushing for more nuclear power plants, I remember conservation becoming the watch word and conserving coal as being a major focus of that thrust. A ridiculous notion since we had about 600 years worth of easily accessible coal in the ground and there was no threat of shortages any time soon. What we had was an embargo, which meant at that time there was plenty of oil in the ground and plenty of oil available; it was that OPEC nations weren’t sending it to us, a factor that showed all of us how vulnerable we were having allowed ourselves to become too dependent on a single source of energy. It begged the question, why, if being dependent on oil makes us so vulnerable economically to other nations, nations that may view us as their enemy, would we allow ourselves to maintain that vulnerability?
President Jimmy Carter weaned the United States electric power industry off of oil almost instantly. A proper response to the threat, however, the automobile industry didn’t do anything to mitigate the threat. I, to this day scratch my head and wonder; why, if so much damage was done by the oil embargo to the American auto industry would automobile executives allow themselves to be so vulnerable again? If I were an executive of the American auto industry that had lived through the near bankruptcy of my industry, seeing Chrysler being bailed out by the Federal Government and seeing large portions of our market share ceded to the Japanese, why wouldn’t I be working like crazy in the intervening years to mitigate the threat of the thing that did so much damage to my company and to my industry. Instead the American auto industry’s response was to go headlong into the practices and market vulnerability that they so enjoyed in the 1970’s. And almost like clockwork the same scenario occurred again. How does the saying go? Those who fail to learn from the failures of the past are doomed to repeat them. For me the times we are living today are a repeat of the 1970’s failures in energy policy and executive readiness. All you need to do is replace the words small cars with hybrids and big cars with SUVs and you would be using the same language. Why didn’t the executives at our automobile manufacturing companies learn the lessons of history? Why didn’t our legislatures put laws in place to maintain our economic security?
Since the artificial oil only crisis of the 1970s I have been trying to keep up with all of the innovations to alternative fuels and energy as best as I could. Nothing got me as excited as the World Solar Challenge except the announced soon after by GM those electric vehicles would be available for the general public soon, all things that came to pass in the last decade of the previous century. The innovations centered around the same things. That was, make the vehicle as light as possible, improve regenerative breaking, make heating and cooling more efficient, and managed propulsion energy use better, all to overcome the shortcomings of the battery. I focused like a laser beam on this new stuff. I aimed my master’s thesis on alternative fuel’s barriers to entry into the market place. I wanted to understand why we weren’t moving forward in America to reduce our vulnerability to oil shocks by diversifying our motive fuel choices.
Every morning on the radio GM plays an advertisement where the head designer of their fuel-cell vehicle talks about his inspiration to become an engineer. He claims it was Sputnik. How appropriate that a Soviet Era technology would inspire the leading engineer to design the drivable fuel-cell vehicle, given that it would take Soviet communism like government control to force fuel-cells on the American public. Now, when people ask me when did I first become interested in electric cars? I think I can safely say, it goes back a long time. It goes back to a time when we had all of the reasons to free ourselves from our dependence on foreign oil, but didn’t do it. I became interested in EVs when I first saw the first entrepreneurial solution to the 1970’s OPEC created oil crisis. I became interested when my eyes first saw Bob Beaumont’s Sebring-Vanguard CitiCar?