Monday, December 13, 2004

Environmental Extremism - Spencer Abraham

Yesterday, The Detroit News ran an article about Spencer Abraham stepping down as head of the Energy Department. He is quoted in the article as saying:

"But if we continue to see a lack of growth in the nuclear power sector, if we continue to see regulations make it more difficult to produce natural gas or oil domestically, then, that will have the opposite effect on prices," he says. "That's the issue people are going to have to come to grips with."

"If you are going to address the global climate issues, as well as the growth in energy and electricity demand, you have to make nuclear energy part of the equation," Abraham adds. "Those countries that are Kyoto signatories are going to have a difficult time meeting their Kyoto targets (of pollution reductions) if they don't have nuclear at least as part of the mix."

On October 23, I wrote:
It is not about resources... it is about fear. There are plenty of energy sources. It is all about using our resources in the most constructive way possible. We have a world full of coal, but we fear it because we remember the soot scattered over the white snow 50 years ago and refuse to accept that it can be burned cleanly today. We have a world full of nuclear materials and safe designs for power plants, but we fear it because we remember the shoddy way it was handled in Chernobyl. We have an abundance of oil in North America, but we are slow to develop it because importing it is politically easier (but may not be cheaper very soon).
Nevertheless, I continue to have the concern that the wrong-headed thinking is being used in planning for alternative fuels to oil and coal:
Abraham says the international consensus among countries he's worked with, including Japan, the European Union and China, is to invest substantially in hydrogen research.

"We foresee an evolution to a hydrogen economy where hydrogen is a much more frequently used fuel for motor vehicles, but also to power stationary electricity production," he says, adding, "it's still down the road."

In a climate of worries about gas-guzzling vehicles, he says one of the attractions of hydrogen is that it allows people to continue to choose whatever operating system they want.

"You can put it in the kinds of vehicles people want," Abraham says. "The efficiency will exist whether it's in a compact or an SUV. It has the potential to really maintain people's market choices while still dramatically reducing consumption of petroleum products. It has the other great benefit of having minimal emission issues, because only really water vapor emerges when you use these kinds of fuel-cell vehicles."

I have a major concern when the head of the Department of Energy says that hydrogen can be used to power stationary electric production... since the opposite is what happens... stationary electric power is used to produce hydrogen. From my November 4 post:

False science, such as the "hydrogen energy" efforts divert us from real, responsible approaches to protecting the environment while providing for the needs and growth of society [hint: hydrogen is a "storage medium" for energy... but to create hydrogen gas, large amounts of energy in the form of electricity... from oil, coal, nuclear material... must be expended].
I agree that using hydrogen fuel, produced from electricity, produced from either nuclear or geothermal energy, is a desirable alternative to continued expansion of oil or coal power generation. It is important to get the stories straight so that people don't think that we can avoid the use of nuclear power because they believe that we can have a hydrogen energy economy rather than a hydrogen fuel economy... unless he is talking about hydrogen fusion technology for generating power... and that is a very long way off, indeed.

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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)