Saturday, July 19, 2008

Steven Den Beste Makes a Rare Appearance.. weigh in on the current state of alternative energy. I've linked (indirectly) to him in the past. As Steven pointed out then, most of the forms of alternative energy aren't scalable, i.e., they can't replace the energy we produce now using fossil fuels/nuclear/hydro energy sources. He hasn't changed his opinion on that. You should read the whole post but it's worth noting the criteria he uses to evaluate whether a particular energy source is viable or not:

"In order for "alternate energy" to become feasible, it has to satisfy all of the following criteria:

1. It has to be huge (in terms of both energy and power)

2. It has to be reliable (not intermittent or unschedulable)

3. It has to be concentrated (not diffuse)

4. It has to be possible to utilize it efficiently

5. The capital investment and operating cost to utilize it has to be comparable to existing energy sources (per gigawatt, and per terajoule).

If it fails to satisfy any of those, then it can't scale enough to make any difference. Solar power fails #3, and currently it also fails #5. (It also partially fails #2, but there are ways to work around that.)

The only sources of energy available to us now that satisfy all five are petroleum, coal, hydro, and nuclear."

Like I said, read the whole thing.
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Friday, July 18, 2008

American Physical Society "Reopens" Global Warming Debate

It seems the "consensus" is getting more than a little shaky on Global Warming.

The APS is opening its debate with the publication of a paper by Lord Monckton of Brenchley, which concludes that climate sensitivity -- the rate of temperature change a given amount of greenhouse gas will cause -- has been grossly overstated by IPCC modeling. A low sensitivity implies additional atmospheric CO2 will have little effect on global climate.

Larry Gould, Professor of Physics at the University of Hartford and Chairman of the New England Section of the APS, called Monckton's paper an "expose of the IPCC that details numerous exaggerations and "extensive errors"

And there's this headline too: Proved: There Is No Climate Crisis.

Christopher Monckton, who once advised Margaret Thatcher, demonstrates via 30 equations that computer models used by the UN’s climate panel (IPCC) were pre-programmed with overstated values for the three variables whose product is “climate sensitivity” (temperature increase in response to greenhouse-gas increase), resulting in a 500-2000% overstatement of CO2’s effect on temperature in the IPCC’s latest climate assessment report, published in 2007.

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Sunday, July 13, 2008

Take a Look at the Trend in Gas Prices

Take a look at the trend in gas prices since the Democrats took over the Congress in January 2007 (data source: Energy Information Administration).

To be sure, prices were trending upward over the first 6 years of the Bush administration with a Republican majority Congress. There was a total rise of 47%, or about 7.8% per year on average. However, in the 18 months since the Democrats took over, with a promise to deliver a comprehensive energy policy and a price per gallon of $2.22, the price of a gallon of gas has risen a further 86% to $4.13 as of the end of June. That annualizes to 57%, or about 4.8% per month on average. Meanwhile they don't want to allow recovery of known domestic reserves, won't entertain increased use of nuclear energy and instead insist on converting our food supply into biofuels which is raising the price of food for people worldwide.

The Congress certainly lost its way under the Republicans but at least they weren't Hell-bent on wrecking the economy. They need to pick up on this issue and hammer away at it if they want any hope of getting back into the majority even staying relevant.

PS: Sorry for the fuzziness of the Chart. I haven't figured out how to post an Excel chart directly to the blog.

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Saturday, July 12, 2008

Raising Taxes Is Not a Good Idea

I've been meaning to comment on this op-ed from the Wall Street Journal by David Ranson but haven't been able to get around to it until now. He talks about the somewhat overlooked work of San Francisco economist Kurt Hauser who noticed something about the relationship between marginal income tax rates and tax revenues. No matter what the marginal tax rate is, revenues will track very closely to 19.5% of GDP with very little deviation. It should follow that if you want to increase tax revenues you want policies that encourage GDP growth.

It is pretty well accepted that raising taxes retards GDP growth and if GDP growth is already very low, as it is right now, then you could get negative growth, i.e. shrinkage. The definition of when the economy is in recession is two consecutive quarters of negative GDP growth. Raising tax rates at this time, as the Democrats want to do, could very well tip us into a recession. If the Democrats get into the White House and increase their majority in Congress, raising taxes is what they have promised to do, telling their voters that it will only affect "the rich", however they are defining that term today as they pander to wealth-envy and promise "free" goodies. To think that it won't affect them is demonstrably wrong, as the work of another economist, Nobel prize winner Ed Prescott has shown.
"Here is a somewhat startling fact: Based on labor market statistics from the Organisation for Economic Co-operation and Development (OECD), Americans aged 15-64, on a per person basis, work 50 percent more than do the French. Comparisons between Americans and Germans or Italians are similar. What’s going on here? What can possibly account for these large differences in labor supply? It turns out that the answer is not related to cultural differences or institutional factors like unemployment
benefits, but that marginal tax rates explain nearly all of this difference. " [my emphasis]

If the Democrats follow through on their promises then we will have a recession. That is definitely a change you can believe in.

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