Posts Tagged ‘energy’
GE is looking to cut the cost of solar panel installations in half by engineering a system that would make it possible to roofers and contractors to perform the installation as opposed to higher costed specialized labor. They want to get the total cost down to roughly $21,600 (from roughly $35,000).
Here’s how our Federal government can quickly solve energy problems as well as stimulate the economy in a real manner. We all know that Obama and Congress love spending money. Heck, throw W into the spending mix too, and you have the largest deficits and national debt in the history of the world! Unlike most spending our Federal government does, this spending would actually bring about some real value to America.
Our Government Just Prints More Money Anyway
Spend another $700 billion dollars to install the $21,600 systems on homes in America. Now, the first argument might be that we need to evaluate whether there is enough sun coming in to make this worthwhile. Well, good news, someone has already done that! There is plenty of sun hitting the majority of the United States to make this worthwhile.
The $700 billion investment would put solar systems on approximately 32,407,407 houses. Now, that’s not taking into consideration economies of scale. Manufacturing that many solar panels and performing that many installations would considerably drop the costs associated with the installations. We could easily see a 20-30% drop in total cost, but I’ll stick with the 32.4 million installations for easy math. That’s roughly 24.93% of the estimated 130 million houses in America. With these solar panel systems producing an average of 85% of the house’s energy needs, that means a drop in existing energy consumption by 21.19%
What would happen if our need for energy from existing sources dropped by 1/5??? Well, simple economics would shift the price of energy down. For global warming worriers, it would mean production of 1/5 of our energy now comes from solar. Of course, it wouldn’t really mean a drop in household energy cost by 20 percent. Production from other sources would decline to keep prices from plummeting by 20 percent, but there would be a substantial decline in the cost of energy for the end consumer. Even if it was a 10% decline, I’ll show you at the end just how substantial this could be!
True Trickle Down Economics
Now, let’s get into the worker value! Solar panel production would skyrocket. Solar panel producers would need to hire more employees, put more people to work, order more materials from their suppliers… It’s true trickle down economics. But that’s just the production side of things! There’s the installation side as well. Thousands of workers would be put to work making good, hard-working money! These workers would be driving, eating, buying clothes for their families, etc. True trickle down economics. Local economies around the US would greatly benefit from this massive rise in employment and their subsequent spending!
Now, let’s talk about the true economic savings as energy costs in the United States drop by 20% I’ve mentioned in Energy Based Inflation that rising energy costs have an impact on EVERYTHING. There’s no escaping the cost of energy in our current economy. Every company and every job requires energy. For some companies and some families, energy is a massive expense! For someone like me with a house but no kids, my electric bills are very low. Still, my house could produce enough energy for me and half of what the family that lives across the street from me needs!
But wait! There’s more!!!
Electric cars will become viable global warming worrier alternative energy vehicles. Currently, electric cars don’t really save much (if at all) in greenhouse gas emissions because of the fact that America gets so much energy from coal… This solar panel plan would make electric cars much cleaner than gasoline cars, since American would not be getting 21.19% of our energy from solar. Greenies rejoices!
So, what would the ROI be for our Federal government to print another $700 billion dollars? Well, we can start with the amount that Americans spend on electricity (Retail Electricity): $350,438,000,000. Yes, that’s $350 billion Americans spent on energy in 2009. Now, earlier I reasoned that while there is a 20% energy savings, our costs would only drop by maybe 10% because production from other sources would adjust to compensate for the sudden massive increase in energy production by solar. Even at just 10% that means Americans will be saving $35 billion (yes, BILLION with a B) in energy costs/year.
Collectively, we can go spend that money on other things, save it, invest it in retirement funds/stock market/kitchen remodel, etc. The savings for $35 billion dollars would significantly stimulate the economy because we aren’t just going to sit on that $35 billion. We’ll spend/invest it! We, the people will stimulate the economy from a legitimate and long-term value add from our Federal government. Much better than a couple of $600 “stimulus” checks we got from W! Or the great W/Obama bank/auto bailout.
Today gives me yet another day to gloat about the idiotic college professor I had years ago at Strayer University (yes, avoid this college. It is a waste of time and money). The CEO of Dow Chemical borrowed a page straight out of my economic philosophy and is proving that energy based inflation is a reality, not some idea that deserves a B on my term paper. Dow is going to raise their prices immediately by up to 20%
If you’re asking “Who the hell is Dow? Isn’t that a stock exchange?” Check the back of half the cleaning supplies you have in your house and ask just about every company in America where they receive a good portion of their supplies from! They don’t just make scrubbing bubbles America!
Dow is just the start too. Energy based inflation starts here. Energy prices increase, putting pressure on businesses to either cut profits or slow down. Traditional economist, aka most college professors, will tell you that energy prices will come back down and everyone will be happy. However, in the real world this doesn’t and didn’t happen over the last 10 years. The result is that every company in America (except big energy, and miraculously Walmart) is being squeezed to the brink of no ability to make a profit or even be productive at any level.
There is a solution. It isn’t cheap, but it wouldn’t cost any more than the failed tax rebate of 2008. This solution would provide a long-term solution to the energy crisis in America and heavily stimulate the US economy while building the infrastructure needed.
Where have all those “tax rebates” gone? Hats off to anyone who spends it on anything other than energy.
Not long ago, I wrote a blog about the most idiotic economic political scam of the 2008 election year. Today, I read to stories about our economy that rank up there with the “gas tax vacation”.
The first story was about how the Fed has adjusted it’s estimates for 2008:
- Economic growth of 0.3 – 1.2%, instead of 1.3 – 2%
- Unemployment rate 5.5 – 5.7%, instead of 5.2 – 5.5%
Good thing they are still running those antiquated economic formulas to give us these otherwise worthless numbers. An added bonus is that the Fed also adjusted their inflation estimate upwards.
There really should be no surprise here folks. Bernanke just needs to start reading my blog to get better guidance on economic policy. I’ve written about energy-based inflation before. Of course, I even wrote about it years before that in a paper for an upper division economics course I was taking in college. The professor said it was an unrealistic theory.
Why I keep talking about this college professor is because that is what economists are learning in college (not all colleges, of course). Our economists are morons because they were trained to be morons!
Meanwhile, back in the world of ridiculous economic news for May 21, 2008… The other bit of economic news that really got me chuckling today was the news about the oil executives going before Congress again. How many times are we going to have to watch the same FAKE political interrogation? This is a political SCAM. The oil companies are pulling an Enron. Only, the goal is not to get California to sign a ridiculous long-term energy contract… The goal is to get the United States to open land restrictions in Alaska, the Rocky Mountains, and/or the Pacific Ocean so the oil companies can go drilling for oil. Enron is small potatoes compared to this scam.
Complex problems require simple solutions!
Many point to alternative energy sources as a way to combat rising energy prices. While this will help get us half way there, it won’t solve the problem quickly. To find the solution to the American energy crisis, we need to borrow a page from one of our Founding Father and the creator of what is considered today the Republican Party. Yes, a Republican!
Borrowing ideas from one of our greatest Founding Fathers, Alexander Hamilton, I’ve devised a long-term plan that would stimulate our economy in the short-term and end our reliance on any foreign energy resources. The best part is that just about any government in the world could implement a similar plan, giving us something else to fight about 😛
If you are feeling dangerous, you can read my idea on my new website WordsCause.com. And don’t forget to checkout the weekly WordsCause radio show hosted by yours truly and my great friend Dean this Saturday at 10AM!
Just last week, I has started publishing information about energy-based inflation. I had the idea and predicted it in a paper I wrote for an economics class almost 5 years ago. It was the first, and only, B graded paper I had ever written in an economics class. The professor gave it this low grade because he ultimately disagreed with me that energy could cause a ripple of inflation in the American economy.
This morning, I check my email to find further support for my theory of energy-based inflation. The Washington Post published an article about how Coal Can’t Fill the World’s Burning Appetite. To sum up their article, circumstances have shot the price of coal up by 50% or more over the last five month. While this short-term spurt in price may be able to be absorbed by businesses, don’t count on it. The price of coal is not going to be coming down any time soon. Same with oil.
What does this mean for America? Well, if you read the report from our government, guess where we get 49% of our energy from? If there is a sustained increase in the price of the resource that generates 49% of all of our energy, you can bet your house that prices are going to go up everywhere!
The bottom line is that energy is driving inflation in our economy, not interest rates. Watch what happens to all the rate cuts by the Federal Reserve this year. They will go to offset the energy costs. It will temporarily stabilize energy inflation, but it is not a permanent solution. Energy costs will rise, and the Fed will be powerless. Changes in the energy market are the only thing that will curb energy-based inflation. I’ll post my solution on Wordscause this evening.
I majored in economics because I thought it was a fascinating subject. Years ago (circa 2003) I was taking an economics class at Strayer University and handed in a paper explaining that our economy was seriously threatened by energy-based inflation. Up until this point in my education, I had received an A on every test and every paper, but this paper on energy-based inflation would the first B grade I received on any economic paper. The professor even mentioned that he was going to give me a C but that I had worded my argument so well that I deserved a B.
His argument was that energy prices generally remain stable and that companies will compensate for any prolonged increase in energy prices. Failing to see the long-term trend towards higher energy consumption was my professor’s largest mistake in the analysis of my paper. He also failed to understand the world demand on supplies of energy. So, alas, I get to say I told you so! 😀
I’ve written a brief explanation of energy-based inflation on Words Cause. The idea is pretty simple. Energy is required at every stage of a product or service, which means that a sustained and rapid increase in the price of energy would severely damage the US economy. Over the last several years, my theory has essentially proven itself to be
correct. Energy prices continue to rise, causing inflationary pressures that the Federal Reserve is powerless to affect.
I’ll digress for a moment to cover the trash talking that politicians like Ron Paul have been spewing forth about the Federal Reserve. Ron Paul has no understanding of monetary policy and is exactly the political reason that the Federal Reserve is in place. Monetary policy should not be governed by the winds of politics.
Meanwhile, back to energy-based inflation… The Federal Reserve can’t do anything about energy-based inflation. Contracting the money supply will only choke the economy (which is what we’ve seen over the last 2 years since Bernanke has been Fed Chairman). Increasing the money supply will quickly be absorbed by a rapid increase in the price of energy (resulting in ripple inflation). Watch what happens with the recent decrease in interest rates.
So what would be the solution? I’ll outline my solution later this week on Words Cause.
Being from California, I’m familiar with rolling blackouts. But nothing could have prepared me for an email I received from a purchasing manager I know today. It was an email thread with a factory in China explaining the reason for the delay in certain shipments: 2 days a week without power!
I was disappointed when California would have our 30 minute blackouts. I can’t imagine 2 days… each week! Sounds like they need to start putting solar panels on the factory. 😀
Sometimes chalked up as “hippie consumerism”, green products have not received as much mainstream coverage as some of these great innovations deserve. Nor have they been accepted as widely as there is a true market for green products. There is a laundry list of reasons that green products have been muddling along for the last 15 years.
Often times green products are seen by some of the media as products that are developed by finger-pointing environmentalists who want to find fault in modern consumerism (watch Fox News). Some times, there are short-sighted green products that look green on the outside but fall short. For example, someone sent me a “hydrogen fuel cell charger” the other day. Thinking that I would receive something that I could just refill with distilled water, I was completely disappointed with what I found: a unit that I need to send back to the manufacturer to recharge! Let’s do the calculation on the UPS truck picking up the unit to send it back to the manufacturer. Not really green, sorry.
But things are reaching a tipping point for green products, making it one of the most impressive opportunities for business in years. Green products are not just “good” products or products that make the environment happy. What green products really are is the evolution of product development. After inventing hundreds of different types of batteries using limited (and mostly dangerous) resources, what is next? Developing a portable power source that is made of renewable and less toxic materials. After more than a hundred years of the internal combustion engine, what is next? Just think back to the replacement of the steam engine. Sure, there are steam engines around today, but they have mostly been replaced by better technology.
Our cars. Our homes. Our appliances. Our energy sources… These will all change into green products in the future. Remember the source of light for most homes in the United States at the beginning of last century? Wasn’t the light bulb folks! Remember cash registers from the 1800s? Weren’t swiping credit cards my friends! Remember how we traveled across the Pacific for most of the 1900s? Wasn’t in an airplane like today!
So, what is next for business? What is the next great industry that will take us through the evolution of the silicon age? Green products. This shift in industry won’t be led by the picket lines and inconvenient truths. It will be led by good old fashioned pioneers of innovations. People like Richard Branson and Bill Gates and George Westinghouse and Benjamin Franklin and Leonardo Da Vinci and Archimedes… and anyone who puts their ideas out there and makes it happen.
Be on the lookout for big news about green.