Friday, May 04, 2012

Renewable Energy Or Economic Non-Renewal


From The Mackinac Center For Public Policy:

Renewable Energy Standard Driving Prices Higher in States, Europe'Green energy' groups push for 25 percent mandate in Michigan
By JACK SPENCER | May 3, 2012 
Those backing the Michigan Energy, Michigan Jobs Initiative say states that have mandated of 25 percent renewable energy by 2025 are doing just fine. 
Opponents of higher green energy mandates point to studies showing that claim to be disingenuous. 
Assuming its backers turn in enough valid petition signatures, the MEMJI, better known as the 25/25 proposal, will be on the statewide ballot in November. If passed, it would require that 25 percent of Michigan's energy be produced by renewable sources by 2025. 
Those who tout the 25/25 proposal say that the higher requirement, called a Renewable Portfolio Standard, would create jobs and result in only minimal rate increases. 
European nations aggressively pursued higher renewable mandates nearly a decade earlier than most U.S. states. Most did not suffer economically in the first few years after the mandates were put in place. 
However, as the amount of mandated renewable sources (particularly wind and solar) increased, the European quotas began running headlong into economic realities. 
Recent headlines have referred to these mandates as "destroying” the economy and "turning into a real horror story.” 
Closer to home, less than five years since passing its own 25/25 mandate, Minnesota, is seeing negative effects. According to the Minnesota Rural Electric Association, the forced use of renewable energy cost rural electric ratepayers more than $70 million last year.  [complete article]
Meanwhile in Europe where this "Green" program is in full display...via Benny Peiser:
€175 Billion Bombshell: Germany’s Green Energy Policy To Hit Households HardThursday, 03 May 2012 09:11 Jurgen Flauger, Handelsblatt

The switch to renewable energy could require more financial sacrifices than previously thought. According to a new study, the green energy transition could cost German consumers up to 60 percent more by 2020 compared to 2011. Overall, the renewables costs may total 175 billion Euros by 2020. 
A new study suggests that the green energy transition will make electricity significantly more expensive. By 2020, electricity consumers will have to forfeit 21.5 billion Euros in costs caused by the transition to renewable energies. This has been calculated by the energy experts at McKinsey in a recent study. That is 60 percent more than the 13.5 billion Euros consumers had to pay for renewables last year. 
McKinsey has also calculated what effect the transition to renewable energy sources will have on the electricity prices. The costs include the difference between the high prices, which are paid for electricity generated by wind and solar power plants based on the Renewable Energy Sources Act (EEG), and the price of electricity at the power exchange. Factored in too are the higher network charges which will finance the additional power lines required. Overall, the renewables cost totals 175 billion Euros between 2011 and 2020, according to the study. 
"The financial burden due to the energy revolution is enormous," says McKinsey expert Thomas Vahlenkamp, "the main burden will be borne by households." For them, the electricity price per kilowatt-hour is forecast to climb from 25.9 cents in 2011 to 29.0 cent in 2020. [...]

2012 IS HERE


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There is always an easy solution to every human problem—neat, plausible, and wrong.
Henry Louis Mencken (1880–1956)
“The Divine Afflatus,” A Mencken Chrestomathy, chapter 25, p. 443 (1949)
... and one could add "not all human problems really are."
It was beautiful and simple, as truly great swindles are.
- O. Henry
... The Government is on course for an embarrassing showdown with the European Union, business groups and environmental charities after refusing to guarantee that billions of pounds of revenue it stands to earn from carbon-permit trading will be spent on combating climate change.
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Tracking Interest Rates

Tracking Interest Rates


SEARCH BLOG: FEDERAL RESERVE for full versions... or use the Blog Archive pulldown menu.

February 3, 2006
Go back to 1999-2000 and see what the Fed did. They are following the same pattern for 2005-06. If it ain't broke, the Fed will fix it... and good!
August 29, 2006 The Federal Reserve always acts on old information... and is the only cause of U.S. recessions.
December 5, 2006 Last spring I wrote about what I saw to be a sharp downturn in the economy in the "rustbelt" states, particularly Michigan.
March 28, 2007
The Federal Reserve sees no need to cut interest rates in the light of adverse recent economic data, Ben Bernanke said on Wednesday.
The Fed chairman said ”to date, the incoming data have supported the view that the current stance of policy is likely to foster sustainable economic growth and a gradual ebbing in core inflation”.

July 21, 2007 My guess is that if there is an interest rate change, a cut is more likely than an increase. The key variables to be watching at this point are real estate prices and the inventory of unsold homes.
August 11, 2007 I suspect that within 6 months the Federal Reserve will be forced to lower interest rates before housing becomes a black hole.
September 11, 2007 It only means that the overall process has flaws guaranteeing it will be slow in responding to changes in the economy... and tend to over-react as a result.
September 18, 2007 I think a 4% rate is really what is needed to turn the economy back on the right course. The rate may not get there, but more cuts will be needed with employment rates down and foreclosure rates up.
October 25, 2007 How long will it be before I will be able to write: "The Federal Reserve lowered its lending rate to 4% in response to the collapse of the U.S. housing market and massive numbers of foreclosures that threaten the banking and mortgage sectors."
"Should the elevated turbulence persist, it would increase the possibility of further tightening in financial conditions for households and businesses," he said.

"Uncertainties about the economic outlook are unusually high right now," he said. "These uncertainties require flexible and pragmatic policymaking -- nimble is the adjective I used a few weeks ago."

December 11, 2007 Somehow the Fed misses the obvious.
[Image from:]
December 13, 2007 [from The Christian Science Monitor]
"The odds of a recession are now above 50 percent," says Mark Zandi, chief economist at Moody's "We are right on the edge of a recession in part because of the Fed's reluctance to reduce interest rates more aggressively." [see my comments of September 11]
January 7, 2008 The real problem now is that consumers can't rescue the economy and manufacturing, which is already weakening, will continue to weaken. We've gutted the forces that could avoid a downturn. The question is not whether there will be a recession, but can it be dampened sufficiently so that it is very short.
January 11, 2008 This is death by a thousand cuts.
January 13, 2008 [N.Y. Times]
“The question is not whether we will have a recession, but how deep and prolonged it will be,” said David Rosenberg, the chief North American economist at Merrill Lynch. “Even if the Fed’s moves are going to work, it will not show up until the later part of 2008 or 2009.
January 17, 2008 A few days ago, Anna Schwartz, nonagenarian economist, implicated the Federal Reserve as the cause of the present lending crisis [from the Telegraph - UK]:
The high priestess of US monetarism - a revered figure at the Fed - says the central bank is itself the chief cause of the credit bubble, and now seems stunned as the consequences of its own actions engulf the financial system. "The new group at the Fed is not equal to the problem that faces it," she says, daring to utter a thought that fellow critics mostly utter sotto voce.
January 22, 2008 The cut has become infected and a limb is in danger. Ben Bernanke is panicking and the Fed has its emergency triage team cutting rates... this time by 3/4%. ...

What should the Federal Reserve do now? Step back... and don't be so anxious to raise rates at the first sign of economic improvement.
Individuals and businesses need stability in their financial cost structures so that they can plan effectively and keep their ships afloat. Wildly fluctuating rates... regardless of what the absolute levels are... create problems. Either too much spending or too much fear. It's just not that difficult to comprehend. Why has it been so difficult for the Fed?

About Me

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Michigan, United States
Air Force (SAC) captain 1968-72. Retired after 35 years of business and logistical planning, including running a small business. Two sons with advanced degrees; one with a business and pre-law degree. Beautiful wife who has put up with me for 4 decades. Education: B.A. (Sociology major; minors in philosopy, English literature, and German) M.S. Operations Management (like a mixture of an MBA with logistical planning)