http://online.wsj.com/article/SB10001424052970203893404577100861639601898.html?mod=WSJ_Opinion_LEADTop
***************
"A good idea can become a great idea when it is given focus time." (John C. Maxwell)
***************
The WSJ points out today that the congressional debate about whether the "tax holiday" will continue (yawn) has just gotten more interesting: House Republicans are putting a policy rider in the payroll tax bill which would force a decision on the Keystone XL pipeline within 60 days.
This is their response to President Obama's "decision" to delay a decision until after the general election next year (probably 2013) as to whether to approve (the pipeline).
This is a decision that sat for three years in the Secretary of State's office and was finally approved with 59 provisos (like burying the pipe 4' under the ground) all of which Keystone agreed to. Keystone is a private company in Canada: could we be getting oil from a better (or closer) place? Who are we worried about, Al Gore?
According to most experts, this is the most shovel-ready project in America and the TransCanada company (Keystone's parent) has already made plans to buy the steel pipe to carry crude oil from Canada thru the U.S. to the Gulf of Mexico. This pipeline will create jobs. That's why even the Teamsters support it!
But, as the WSJ so aptly points out, "Mr. Obama's green financiers see the pipeline as a conveyer of evil carbon."
Again, the WSJ: "To give Mr. Obama a spinal implant, the House passed a provision that would give TransCanada a permit to start building in 60 days if the President does nothing. He can still kill the pipeline if he objects. But at least Hamlet of Pennsylvania Avenue would have to make up his mind."
The Keystone codicil is now being negotiated in the Senate where at least eight Democrats have said publicly they hope the project goes forward.
I would agree with those who say that Mr. Obama is probably not willing to see the payroll tax holiday die in the name of stopping a pipeline that will create more jobs.
***************
On a much less noticed subject, but important to those of us who live in North Texas, another provision passed by the House would give companies 5 years to comply with the EPA's onerous "boiler rule." That rule would impose vast costs on industries that burn oil or coal, such as manufacturers and utilities.
Here in North Texas, it would cost less to shut down a coal-fired power plant (some claim) than to comply with the new rules. My first problem with that is that the people in charge of the power grid warn us that we could lose power in peak load times/days. But, isn't that just when we need the power. So, we'll shut down some power plants: what will that do? Does it take a rocket scientist to answer that question?
My second problem with that is, oh well, China and India: they are building 4 coal-fired power plants per week!!! So, we're going to cause unemployment (and power shortages) in North Texas because of some possibly polluted air that we might be sending to Louisiana? So, what are we doing about China and India?
There are answers here: the U.S. has found major supplies of gas here and elsewhere. That makes gas cheaper. Provide government tax incentives to convert coal plants to gas. Save jobs, improve productivity - do something smart.
Senator Susan Collins (R. Maine) introduced a bill in July telling the EPA to repropose the "boiler rule" in less costly form. That bill has 40 co-sponsors. Maybe there's some "hope."
Friday, December 16, 2011
Wednesday, December 14, 2011
The Sustainable Capitalism Manifesto
http://online.wsj.com/article/SB10001424052970203430404577092682864215896.html?mod=WSJ_Opinion_LEADTop
***************
"When failure isn't an option, nothing serves a person better than strategic thinking." (John C. Maxwell)
***************
It's so nice to have Al Gore back. This time we have the "Sustainable Capitalism Manifesto!" This, of course, is how businesses can "embrace" environmental, social and governmental metrics. And, we can do all this at once! This must be how you win a Nobel!
I can't wait for Al's next movie!
But first Al has to show us why we need this thinking: we have "disruptive threats" facing the planet. Those would be climate change (somebody tell Al the the climate has been changing for the last 20,000 years and that it has actually "cooled" for the better part of the first ten years of the 21st century, but I digress), water scarcity, poverty, disease, growing income inequality, urbanization, massive economic volatility and more.
Al has the answers for all this: "sustainable capitalism." You see, this is "...a framework that seeks to maximize long-term economic value by reforming markets to address real needs while integrating environmental, social and governance (ESG) metrics throughout the decision-making process." All I need is another acronym to try to remember. Fortunately, I don't need to remember this one.
According to Al, this concept transcends borders, industries, asset classes and stakeholders. That's one way to look at it. Another would be great companies do the right thing about environment anyway. What a concept!
Al recommends 5 key actions companies should take (I recommend just one: don't pay any attention to Al). The first of those "actions" is to evaluate "stranded assets." Of course, this concept requires a definition: those (assets) whose value would dramatically change, either positively or negatively, when large externalities are taken into account - for example, attributing a reasonable price to carbon or water. I'm sure that current GAAP accounting rules would cover that, just as they did for Enron's creative efforts. Perhaps Al could sell this approach in China where their equivalent of U.S. GAAP accounting is "CRAAP" accounting (really!). Based on some of China's business practices, there might be flexibility there. But, I think Al would have trouble with the fact that, between China and India, they're building 4 coal-fired power plants per week.
I'd explain the rest of the "5 key actions" but I don't want to waste time (the article is attached). Unfortunately, I have to agree with one of Al's recommendations: "End the default practice of issuing quarterly earnings reports." We should all be in this for long term value creation and he's right about that.
I'm anxiously waiting for Al's next big pronouncement.
***************
"When failure isn't an option, nothing serves a person better than strategic thinking." (John C. Maxwell)
***************
It's so nice to have Al Gore back. This time we have the "Sustainable Capitalism Manifesto!" This, of course, is how businesses can "embrace" environmental, social and governmental metrics. And, we can do all this at once! This must be how you win a Nobel!
I can't wait for Al's next movie!
But first Al has to show us why we need this thinking: we have "disruptive threats" facing the planet. Those would be climate change (somebody tell Al the the climate has been changing for the last 20,000 years and that it has actually "cooled" for the better part of the first ten years of the 21st century, but I digress), water scarcity, poverty, disease, growing income inequality, urbanization, massive economic volatility and more.
Al has the answers for all this: "sustainable capitalism." You see, this is "...a framework that seeks to maximize long-term economic value by reforming markets to address real needs while integrating environmental, social and governance (ESG) metrics throughout the decision-making process." All I need is another acronym to try to remember. Fortunately, I don't need to remember this one.
According to Al, this concept transcends borders, industries, asset classes and stakeholders. That's one way to look at it. Another would be great companies do the right thing about environment anyway. What a concept!
Al recommends 5 key actions companies should take (I recommend just one: don't pay any attention to Al). The first of those "actions" is to evaluate "stranded assets." Of course, this concept requires a definition: those (assets) whose value would dramatically change, either positively or negatively, when large externalities are taken into account - for example, attributing a reasonable price to carbon or water. I'm sure that current GAAP accounting rules would cover that, just as they did for Enron's creative efforts. Perhaps Al could sell this approach in China where their equivalent of U.S. GAAP accounting is "CRAAP" accounting (really!). Based on some of China's business practices, there might be flexibility there. But, I think Al would have trouble with the fact that, between China and India, they're building 4 coal-fired power plants per week.
I'd explain the rest of the "5 key actions" but I don't want to waste time (the article is attached). Unfortunately, I have to agree with one of Al's recommendations: "End the default practice of issuing quarterly earnings reports." We should all be in this for long term value creation and he's right about that.
I'm anxiously waiting for Al's next big pronouncement.
Tuesday, December 13, 2011
Global Warming Wash Out
http://online.wsj.com/article/SB10001424052970203518404577094081344492356.html?grcc=3613e2dde038d8c460e062470151dc46Z3&mod=WSJ_hps_sections_opinion
***************
"When you reflect, you are able to put an experience into perspective." (John C. Maxwell)
***************
The subtitle to today's WSJ editorial on "global warming" is: "The Kyoto Protocol can now be ignored for another 5 years." As global warming conferences go, the one that ended Sunday in Durban, South Africa was "...by common consensus..." a wash out.
What emerged from the meeting was an agreement to extend the Protocol (never ratified by the U.S.) to 2017. Russia and Japan have said they'll ignore the extension. Yesterday, Canada said it is quitting Kyoto entirely.
The WSJ editors interpret the latest activities post-Durban as creating an extended agreement that Europe has made with itself.
The Durban meeting produced promises from China, the U.S. and India to "develop a new protocol, another legal instrument or agreed outcome with legal force" by 2015, and to implement that by 2020. Rich countries are supposed to provide poor ones with $100 billion a year as of 2020 for climate mitigation. But Durban offered few details as to how that fund might be collected or disbursed.
Seriously.
I wouldn't hold my breath for the U.S. to fork over any portion of that $100 billion when the clock strikes 2020. Besides, what does that fix?
I'm guessing that what the U.N. was looking for in those meetings was a strong deal to cut carbon emissions. Assuming that such a deal could occur, Bjorn Lomborg points out that a 50% cut in emissions below 1990 levels by 2050 - an extremely unrealistic scenario - would produce a difference in temperature of 0.2 degrees Fahrenheit by 2050.
Enough with the math and carbon capping. Lomborg points out that we can begin to fix carbon emissions smartly thru technological innovation. His perspective: adaption is the key.
According to Exxon's energy outlook, coal use will begin to drop by 2025 (in the developing countries where it is most used), and hybrid vehicles will move from the margins of the market to the mainstream (40% market share) sometime after 2030. Overall fuel efficiency will grow from 27 miles per gallon in 2010 to 48 mpg in 2040. This will lead to a flattening of fuel demand in passenger cars despite a doubling of the fleet to 1.6 billion by 2040.
It would appear that reasonable future projections of energy use have more potential impact than any carbon capping approach which most countries can't agree on anyway.
While I'm sure Al Gore can shed some light on all of this, I won't bet a Nobel on it.
***************
"When you reflect, you are able to put an experience into perspective." (John C. Maxwell)
***************
The subtitle to today's WSJ editorial on "global warming" is: "The Kyoto Protocol can now be ignored for another 5 years." As global warming conferences go, the one that ended Sunday in Durban, South Africa was "...by common consensus..." a wash out.
What emerged from the meeting was an agreement to extend the Protocol (never ratified by the U.S.) to 2017. Russia and Japan have said they'll ignore the extension. Yesterday, Canada said it is quitting Kyoto entirely.
The WSJ editors interpret the latest activities post-Durban as creating an extended agreement that Europe has made with itself.
The Durban meeting produced promises from China, the U.S. and India to "develop a new protocol, another legal instrument or agreed outcome with legal force" by 2015, and to implement that by 2020. Rich countries are supposed to provide poor ones with $100 billion a year as of 2020 for climate mitigation. But Durban offered few details as to how that fund might be collected or disbursed.
Seriously.
I wouldn't hold my breath for the U.S. to fork over any portion of that $100 billion when the clock strikes 2020. Besides, what does that fix?
I'm guessing that what the U.N. was looking for in those meetings was a strong deal to cut carbon emissions. Assuming that such a deal could occur, Bjorn Lomborg points out that a 50% cut in emissions below 1990 levels by 2050 - an extremely unrealistic scenario - would produce a difference in temperature of 0.2 degrees Fahrenheit by 2050.
Enough with the math and carbon capping. Lomborg points out that we can begin to fix carbon emissions smartly thru technological innovation. His perspective: adaption is the key.
According to Exxon's energy outlook, coal use will begin to drop by 2025 (in the developing countries where it is most used), and hybrid vehicles will move from the margins of the market to the mainstream (40% market share) sometime after 2030. Overall fuel efficiency will grow from 27 miles per gallon in 2010 to 48 mpg in 2040. This will lead to a flattening of fuel demand in passenger cars despite a doubling of the fleet to 1.6 billion by 2040.
It would appear that reasonable future projections of energy use have more potential impact than any carbon capping approach which most countries can't agree on anyway.
While I'm sure Al Gore can shed some light on all of this, I won't bet a Nobel on it.
Monday, December 12, 2011
2011 Global Energy Forecast
http://online.wsj.com/article/SB10001424052970203501304577084594165136990.html?KEYWORDS=Exxon+Declares+Gas+King
***************
"What we are is God's gift to us. What we become is our gift to God." (Eleanore Powell)
***************
Exxon puts together an energy forecast each year that is very closely watched. There are several reasons for this but the most important one is that they are usually right. When you're spending $25 billion per year for oil/gas exploration and related needs, you have to have a good batting average.
When all the security analysts were predicting in 2009 that Exxon needed to buy another oil company in order to shore up their oil reserve "replacement rate" (a critical indicator that security analysts watch closely), they bought a gas company (XTO: a natural-gas business costing them $25 billion) in 2010, much to the surprise of the "experts."
This year's forecast came out last week and it indicates that global energy demand will grow about 30% by 2040 as the world population climbs from 7 billion to 9 billion people.
The forecast goes on to indicate that coal use will continue to grow thru 2025 primarily in developing nations such as China, India and the African continent (because economic growth is the fastest there). But, for the first time in history, coal use will start to drop after that date because of growing demand for fuels that produce fewer greenhouse gases and a decline in China's population expected after 2030.
One of the headline projections from Exxon's forecast is that (again, by 2040) oil imports from OPEC nations will be reduced to nearly 1 million barrels per day (or, as the report has been characterized: OPEC oil imports to the U.S. will "...nearly vanish.").
The report goes on to predict that hybrid vehicles will move from the margins of the market to the mainstream by 2040: basically from 1% today to 40% in 2040.
Last, the forecast predicts that, in spite of a "doubling" of the worldwide fleet of passenger cars to 1.6 billion in 2040, fuel demand will flatten because average mileage will grow from 27 mpg today to 48 mpg by the end of the period.
There's some good news here and that's refreshing.
***************
"What we are is God's gift to us. What we become is our gift to God." (Eleanore Powell)
***************
Exxon puts together an energy forecast each year that is very closely watched. There are several reasons for this but the most important one is that they are usually right. When you're spending $25 billion per year for oil/gas exploration and related needs, you have to have a good batting average.
When all the security analysts were predicting in 2009 that Exxon needed to buy another oil company in order to shore up their oil reserve "replacement rate" (a critical indicator that security analysts watch closely), they bought a gas company (XTO: a natural-gas business costing them $25 billion) in 2010, much to the surprise of the "experts."
This year's forecast came out last week and it indicates that global energy demand will grow about 30% by 2040 as the world population climbs from 7 billion to 9 billion people.
The forecast goes on to indicate that coal use will continue to grow thru 2025 primarily in developing nations such as China, India and the African continent (because economic growth is the fastest there). But, for the first time in history, coal use will start to drop after that date because of growing demand for fuels that produce fewer greenhouse gases and a decline in China's population expected after 2030.
One of the headline projections from Exxon's forecast is that (again, by 2040) oil imports from OPEC nations will be reduced to nearly 1 million barrels per day (or, as the report has been characterized: OPEC oil imports to the U.S. will "...nearly vanish.").
The report goes on to predict that hybrid vehicles will move from the margins of the market to the mainstream by 2040: basically from 1% today to 40% in 2040.
Last, the forecast predicts that, in spite of a "doubling" of the worldwide fleet of passenger cars to 1.6 billion in 2040, fuel demand will flatten because average mileage will grow from 27 mpg today to 48 mpg by the end of the period.
There's some good news here and that's refreshing.
Saturday, December 3, 2011
8.6% Unemployment
http://www.nytimes.com/2011/12/03/business/economy/us-adds-120000-jobs-unemployment-drops-to-8-6.html?nl=todaysheadlines&emc=tha2
***************
"It is very dangerous to go into eternity with possibilities which one has oneself prevented from becoming realities. A possibility is a hint from God. One must follow it." (Soren Kierkegaard)
***************
I want to contain my enthusiasm about the .4% drop in the new unemployment report. It's nice that it went down (from 9%) and not up but that's about it. Show me some big time capital spending from the Top 500 here in the U.S. on projects "in" the U.S., and maybe I'll start to get excited.
The short answer to why the rate dropped is that 300,000 plus people stopped looking for a job. That's not a real good reason for excitement about why an unemployment rate drops.
Then there's the upbeat 120,000 jobs were created (last month) data. All that does is barely keep up with monthly new entrants into the workforce (usually 125,000 to 135,000).
Usually, these data are revised at least twice after they are initially reported so the good news could, indeed, be revised right out, but we'll see.
I'm thinking as I post this about, "Do these economists really have any idea what they're evaluating?" Back a few years ago, I was struck by an interview with Dr. James K. Galbraith (yes, he is the son of a very famous father), a very prominent member of the faculty at the Lyndon B. Johnson School (University of Texas), who said that, of the 15,000 or so professional economists in the U.S., maybe 10 or 12 predicted the worldwide financial crisis (I can think of only one: Nouriel Roubini).
The Bureau of Labor Statistics "U-6" unemployment rate is a much broader category and covers people who have given up looking for a job, are working part-time but want full-time employment, etc. The U-6 dropped .6% last month. That is much more significant and, if it doesn't get "revised" out of existence this month, could mean something. It has been 16.5%. It's now 15.6%.
The reason for that new number (15.6%) is the "big drop" last month in the "number of people working part-time and would prefer full-time work" category. That's an awkward name for a category but it's got an important reason for its drop: that new lower number could reflect people having their hours increased or part-time workers moving on to full-time work.
If this trend continues in the U-6 unemployment rate, it's significant.
Floyd Norris pointed out in the NY Times this week, "As it is, there are many who reacted to the job numbers as Michael Darda of MKM Partners did this morning (12/2):
'While the economic data have been better of late, we remain concerned that we are seeing a bounce back from a series of supply shocks earlier in the year that may not be sustained against the foliage [is that an economic term?] of tighter financial conditions, a deep recession in Europe and a sharp slowdown in China and emerging market countries [too many "ands"]."
If I'm reading the "foliage" right, something good could be happening.
***************
"It is very dangerous to go into eternity with possibilities which one has oneself prevented from becoming realities. A possibility is a hint from God. One must follow it." (Soren Kierkegaard)
***************
I want to contain my enthusiasm about the .4% drop in the new unemployment report. It's nice that it went down (from 9%) and not up but that's about it. Show me some big time capital spending from the Top 500 here in the U.S. on projects "in" the U.S., and maybe I'll start to get excited.
The short answer to why the rate dropped is that 300,000 plus people stopped looking for a job. That's not a real good reason for excitement about why an unemployment rate drops.
Then there's the upbeat 120,000 jobs were created (last month) data. All that does is barely keep up with monthly new entrants into the workforce (usually 125,000 to 135,000).
Usually, these data are revised at least twice after they are initially reported so the good news could, indeed, be revised right out, but we'll see.
I'm thinking as I post this about, "Do these economists really have any idea what they're evaluating?" Back a few years ago, I was struck by an interview with Dr. James K. Galbraith (yes, he is the son of a very famous father), a very prominent member of the faculty at the Lyndon B. Johnson School (University of Texas), who said that, of the 15,000 or so professional economists in the U.S., maybe 10 or 12 predicted the worldwide financial crisis (I can think of only one: Nouriel Roubini).
The Bureau of Labor Statistics "U-6" unemployment rate is a much broader category and covers people who have given up looking for a job, are working part-time but want full-time employment, etc. The U-6 dropped .6% last month. That is much more significant and, if it doesn't get "revised" out of existence this month, could mean something. It has been 16.5%. It's now 15.6%.
The reason for that new number (15.6%) is the "big drop" last month in the "number of people working part-time and would prefer full-time work" category. That's an awkward name for a category but it's got an important reason for its drop: that new lower number could reflect people having their hours increased or part-time workers moving on to full-time work.
If this trend continues in the U-6 unemployment rate, it's significant.
Floyd Norris pointed out in the NY Times this week, "As it is, there are many who reacted to the job numbers as Michael Darda of MKM Partners did this morning (12/2):
'While the economic data have been better of late, we remain concerned that we are seeing a bounce back from a series of supply shocks earlier in the year that may not be sustained against the foliage [is that an economic term?] of tighter financial conditions, a deep recession in Europe and a sharp slowdown in China and emerging market countries [too many "ands"]."
If I'm reading the "foliage" right, something good could be happening.
Subscribe to:
Posts (Atom)