Category Archives: energy

Green byelection blues

Alas, the Green Party didn’t pick any seats up in the Nov 26 Canadian federal by-elections.  While their strong showings probably count as a real moral victory, I imagine at this stage they’d prefer amoral, real victories.  ;)  As it turns out, Parliament’s composition is unchanged, “while my green heart gently weeps”.  Despite donating to the Official Opposition (whomever it’s been) since 2008, I have a soft spot for the plucky upstarts.

Chris Turner got 25% of the vote in the Calgary Centre riding; which, according to a Globe & Mail commentary from Canadian polling blog threehundredeight, could mean that he pulled a lot of the “Red Tory” voters.  Since probably only 1-2% of Canadians are dues-paying members of political parties (see p16 of this report), some of this blog’s other readers might not be up to speed, so I’ll attempt to summarize for their sake.  :)

After years in the political wilderness first as an Opposition member and then as a lobbyist, current PM Stephen Harper succeeded in uniting far-right-wing (by Canadian standards) Alliance party with right-wing (by Canadian standards) Progressive Conservative party.  And promptly positioned the new Conservative Party considerably to the right of the old Progressive Conservatives.

In the recent provincial elections in Alberta, the federal Conservatives openly supported the far-right (by Canadian standards) Wildrose Party, infuriating many Albertans who vote Conservative federally, but vote Progressive Conservative, provincially.  These folks are called “Red Tories” because they’re on the progressive side of the conservative spectrum, and globally, red tends to be the colour of progressive parties, and blue is the colour of conservative parties.

The main exception is the US, where the red party — the Republicans — are the conservatives.  (And wow, are they ever!)  This is because they actually used to be the progressives, and the Democrats used to be the conservatives, with a hammerlock on the white vote in the southern US.  This all changed in the 1960’s when the Democratic Party embraced the Civil Rights movement.  The Republicans went after the white southerner vote, which is why the US has a progressive (by American standards) “Blue” Party and a conservative (by any standard) “Red” Party.

But back to Alberta, these so-called “Red Tories” appear to have defected en masse to the Green Party in this byelection, in displeasure at the Conservatives’ “as-right-wing-as-the-Wildrose-Party” candidate.

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Newsflash: Canadian PM’s American Idol supports Stephane Dion-esque carbon tax shift

Note: for non-Canadian readers (or, indeed for Canadian readers who don’t follow politics) Stephane Dion was the milquetoast who led the Liberal Party of Canada to its then-worst-ever federal election result in 2008.  He ran on a campaign of a carbon tax shift (“The Green Shift“), for which the Conservative Party mocked and savaged him.

We’ll get to Stephen Harper and his erstwhile idol after the jump, but a bit of background discussion is necessary to provide a proper context…

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Plug-in Prius payback period…

I’ll start with a preamble, expressing hope that the tragedies and suffering from Hurricane Sandy can be limited to a minimum.  And, recognizing that there are undoubtedly other tragedies I’m unaware of, whose victims are just as deserving of such hopes — I wish them the best as well.

I’ll also note that the Red Cross has a variety of apps available for emergency situations, including an earthquake app where you can sign in after a disaster, so that concerned friends and relatives visiting the Red Cross website can find out if you’re safe.  (The chances of them reaching you by phone are slim, given how phone lines overload in emergencies.)

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The inevitable question was asked about the payback for our Plug-in Prius purchase (versus a different vehicle), using time-value-of-money, assumed electric and gasoline costs, and so forth.

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1.  I’m going to argue that this is the wrong question.  The Plug-in Prius isn’t an attempt to save money, it’s the end result of having saved money.  By “delaying gratification” for various things (most specifically, the gratification of owning a house) we were lucky to wind up able to afford the vehicle.  (We also contented ourselves with a very old car, and managed to avoid acquiring a taste for cigarettes, alcohol, or fancy cuisine.)

Consider that many couples go out for a fancy dinner on their anniversary: perhaps they go to a nice steakhouse, order three courses, and enjoy some red wine as well.  From a purely financial perspective, that’s nuts because McDonald’s is way cheaper, and there’s no way to achieve net savings on the fancy dinner.  Well, unless one considers the certainty of divorce by a spouse who realizes they’ve married someone who sees relationships as an accounting entry:

 “Honey, by eating at McDonald’s instead of a fancy restaurant for our anniversary for the next twenty-seven years, and investing the roughly-$100 difference in a no-fee mutual fund compounding at 8% per year… we’d have $10,000!”

In a similar way, we could have purchased a nice used car, or even a new but much less expensive non-hybrid vehicle.  But since we could afford it, we chose a car which would benefit our son, in much the same way that married couples who can afford it, spend a bit more money to celebrate their anniversary — which presumably benefits their relationship.

As a side note, here’s a recent study arguing that small-battery PHEV’s (such as the Plug-in Prius) and regular hybrids (such as the regular Prius) are the most cost-effective way of reducing societal gasoline consumption… and by extension, of reducing transportation-related GHG emissions.

All of which is to say that the Plug-in Prius wasn’t bought as a cost-saving measure so much as a conscience-saving one; and it was paid for by previous cost-saving measures.  :)

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2.  Payback questions are highly influenced by one’s assumptions about the (uncertain) future

In the article, I estimated that the Plug-in Prius would prove cheaper than the regular Prius, after about 150,000 electric-mode km.  This was based on several assumptions:

– the Plug-in Prius’ premium over the regular Prius was $8000     (safe assumption, I checked it)

– electric prices of roughly 7 cents / kWh from BC Hydro       (reasonably safe assumption: BC Hydro has a record of keeping rates low, despite the fact that raising rates would spur conservation.)

– all-electric distance of 20 km for 3 kWh, or about 20 cents, of charge    (safe assumption, based on personal experience)

– gasoline consumption of 1 L per 20 km    (reasonably safe, based on personal experience; there’re a lot of hills where we live)

– gas prices of roughly $1.40 per L     (extraordinarily risky assumption, given how the price of oil has fluctuated over the past decade!)

The calculation therefore works out to a savings of $1.20 per 20 km (6 cents per km) in electric mode, so the number of electric km required to save $8000 equals:  (8000/ 0.06) = 133,333 electric km.  Since I was being quoted, I added a safety factor to come up with the 150,000 km.  Which is probably the equivalent of about ten years’ driving.  Good thing we plan to own it for twenty!  ;)

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I could get very different numbers, depending how I chose my gas price assumption!  And choice-of-assumption is often how people on different parts of the political spectrum can come up with wildly-diverging results on various issues.  As an example, supporters of Public-Private Partnerships (P3’s) claim they’re cheaper than government projects.  Opponents argue that this is due to flimsy assumptions (here’s a paper a Canadian union wrote up) and that other arrangements are more economical.  I don’t know enough about the nuances to know which is more correct, but given how the fantastically wrong assumptions of the right-wing deregulation faction caused the 2008-on-and-lingering financial crisis, I doubt the benefits are quite as extensive as proponents claim!

Similarly, there’s been noise about how the US could surpass Saudi Arabia in the carefully-chosen category of “liquid hydrocarbons” production.   I want to devote a separate blog entry to this fallacy, but suffice to say that Saudi oil production is about 10 million barrels per day, and American oil production is… 6 million barrels per day, and barely climbing.  The balance largely consists of about 1 million barrels per day of biofuels (a ridiculously roundabout way of turning natural gas based fertilizer and coal-based electricity into a liquid fuel) … and natural gas liquids and condensate, none of which are practical for running vehicles.  True, they could be refined into gasoline — but you’d have to build or retrofit an existing refinery first!  Here, the silly assumption is that all liquid hydrocarbons are equivalent to oil.  They’re not.

All of which is to say that payback calculations often give a false certainty to decisions built on a foundation of fluid variables.

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3.  Opportunity cost for companies is different than opportunity cost for individuals

It’s common in industry to assign a time-value-of-money, when deciding whether to move forward with capital expenditures.  This is tied in with the opportunity cost of a spending decision: the lost benefit of not doing a different project which would have also saved money in the long run.  A related metric is the payback period, being the time it takes for the savings to offset the up-front cost.  That’s the easiest to discuss without getting into detailed math, so I’ll focus on that.

A chemical plant has a zillion ways of reducing processing costs, so it’s not uncommon for spending decisions to have to pay for themselves in two years.  Other businesses might be a bit more lenient, but from what I’ve seen, three years seems to be a common cutoff.  Companies can’t afford to spend money on a project with a ten-year payback, because there are so many other projects which are more cost-effective.

Unfortunately for Mitt Romney, corporations aren’t people.  Unless a person is speculating in real estate or fad collectibles, there aren’t many purchases they can make, which will pay themselves off in a two- or three-year period!  As for the time-value-of-money, ING’s high-interest savings account currently offers a whopping 1.35%.  As for those who might be tempted to use the stock market’s historical average of 8%-per-year as a time-value-of-money metric… that hasn’t really (or should that be, “really hasn’t?”) worked for the past decade.

All of which is to say that business-type financial measures lose their meaning when applied to personal spending decisions.  Transposing them from the business context to the personal-finance context, is one of the dubious assumptions noted in (2) above.  :)

The plug-in has landed!

Yesterday (Sept 26) we had the pleasure of picking up our new Prius Plug-In, at a local dealership.  Apparently it’s the first one sold in British Columbia (not including prototype vehicle testing fleets, which’ve been around a couple years, but weren’t available to the public for purchase).  It’s so new, in fact, that Toyota salespeople haven’t been fully trained on it yet!  :)

It seems like an amazing vehicle — mind you, when your prior car is twenty years old, how could it not?  :)  Funnily enough, it took us a few minutes to turn it on the first time, because I kept forgetting to put my foot on the brake pedal when depressing the power button.  The 17 km drive back home from the dealership went smoothly; we made it back with 200 m of electric-mode range to spare.  Woot!

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All of which brings us to our first challenge as plug-in owning renters: getting access to a plug.  Basically, we’ll have to trade parking spaces and negotiate with the landlord for use of one of the outlets.  Many people aspire to a dream house, but me, I’ll settle for a dream garage.  ;)

More after the jump…

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Commemorating Joe Romm’s “Language Intelligence”

Joe Romm‘s book Language Intelligence is now out in the US (but maddeningly, remains unavailable in Canada).  Early reviews proclaim it as both a rhetorical masterpiece, and a masterpiece on rhetoric.

To commemorate the book in my small way, I dug up a piece I wrote for a competition on Dr. Romm’s blog, Climate Progress.  In 2009, he asked readers what they’d have Obama say, if they could write the energy and environment portion of his inaugural speech.

I made a couple light edits; some phrases sounded a lot better three years ago than they do now.  Regrettably, Obama’s “yes we can” is among them.  It rings hollow in 2012, given that his governing philosophy has largely been “no we can’t” — no we can’t switch to single-payer, universal health coverage; no we can’t prosecute financial corruption; no we can’t pass a climate bill; and so forth.

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Japan visit 2012 (part 3)

We stayed with my in-laws while in Japan, who head a two-person, six-cat, thirteen-umbrella (!) household. That theory about squirrels forgetting where they buried their nuts, no longer seems farfetched to me…  :)

Mom-in-law’s years of experience herding cats have been invaluable in managing her husband, an atypically adventuresome Japanese entrepreneur who possesses the kind of jaunty self-confidence that has helped many an investor make a small fortune in the Japanese stock market, out of a big one. Lucky for him, that’s a hypothetical: he didn’t start off with much to begin with. ;) And he’s got lots of company. If your country’s principal stock index has been trending down for the past twenty-two years, you’d be hard-pressed to find someone whose investments haven’t endured some downsizing!

After years of asserting his maverick status by driving foreign cars despite the steering wheels being on the wrong side, dad-in-law settled on a Prius, which has been among the top-selling cars in Japan for the past few years, thanks partly to public policy favouring fuel efficient vehicles. To offer up a statistically irrelevant but deceptively impressive anecdote, there are three (and soon to be four) Prii on the lane where they live.

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Cars…

Some of you may remember the phase in the 1980’s when American automakers fell in love with the “ie” sound, jamming it into the Cutlass Ciera (GM car), the Sierra (GM truck), the Fiero and Fiesta (Ford cars). h/t to The Straight Dope for that factoid!

Well, in contemporary Japan the “it” sound is… “it”, as evidenced by the Honda Fit, Toyota Vitz, and Sukuzi Wit — all three of them compact cars, directly competing for the same customer dollar!

Japanese carmakers sometimes rebadge cars when they’re exported to other countries, because the home-market names can be a liability: how many of us would drive around in a Nissan Bluebird or a Daihatsu Naked? I think we’ll all agree though, that the prize for least-exportable brand name goes to the committee that came up with the Mitsubishi Toppo BJ. That is not a typo, and it is a real car. The initials stand for “Big Joy”, which really doesn’t help things. As relaxed and liberal-minded as I think I am about such topics, I still felt compelled to avert young son Leo’s eyes when I saw it. ;)

Sticking with cars a bit longer, I saw the Nissan Leaf TV commercials while over there, which upended all my expectations for automotive advertising. They basically position the electric vehicle as a mobile family energy reservoir:
– charging at night when demand on the electric grid is low
– or when the family’s solar panels generate electricity (Japan announced a massive solar feed-in tariff recently)
– providing power to the household during peak times (easing the strain on the grid)
– and of course it can drive you around town, too

Irritatingly, I can’t seem to find the solar panel-containing ad on the Nissan YouTube channel, but the others are there.

The Leaf comes with a 24 kWh battery — enough to power a Canadian household for a day, or a Japanese household for two. Since Nissan has sold 30,000 Leafs, they’ve already put 700 MWh of potential “grid storage” on the market. Put all the automakers’ electric-vehicle plans together, and we soon get enough grid storage capacity to do very nifty things, in the event of natural disasters.

I could imagine that by 2015, one of the carmakers will come out with a major ad campaign built around a testimonial from a customer saying how their Chevy Volt / Nissan Leaf / Mitsubishi MiEV / Ford Focus Electric / or other electric vehicle helped their family get through a [hurricane, earthquake, or other disaster]-related power outage, safely, by keeping the lights or heat on / the radio working / or some such thing. I didn’t include the plug-in Prius in this list, since its battery is a lot smaller than the aforementioned cars, and would run out of power sooner.

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Sports

Soccer seems to have replaced baseball as the most popular sport in Japan — I wonder if the growing number of baseball players going to America has the effect of diminishing Japanese baseball, making it seem like a minor league. It was interesting that the sports section of the news had the usual local sports, then tacked on a review of how each Japanese player in Major League Baseball had done the prior evening.

On that topic, Ichiro Suzuki from the Seattle Mariners got his 2500th American hit a little while back. If you add his Japanese league hits he’d now be third on the all-time hit list, having recently passed Hank Aaron. If he’s able to get 3000 hits in the US, he’d have more trans-Pacific hits than all-time hits leader Pete Rose (who gambled on baseball and was banished) and second-place Ty Cobb (who gambled on baseball and was pardoned). No word yet whether Suzuki likes to gamble. ;) Still, he’s had a miserable past two seasons so it’s doubtful any team will keep him around long enough long enough for that.

Japanese baseball is infamous for trying to prevent foreigners from breaking records held by Japanese players, so it’s worth noting that when Hank Aaron (black) broke the all-time home run record held by Babe Ruth (white) in the 1970’s he received a lot of hate mail — and even death threats. I’m almost old enough to’ve been alive back then!

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and Baby Races

What else… oh yeah, Leo won the second of the two baby races he participated in — these are events put on at various malls by the local baby-goods retailers. He got lucky too; if I remember correctly, one of the other three babies was in the lead, but then got distracted by one of the baby toys placed partway along the course. (If you can call a four-metre stretch of foam flooring, a course.) Fortunately for him, Leo was interested in the toy that was at the finish line, so crawled all the way there before sitting down to play with it. :)

The decision by baby-goods retailers to put these community events on was one of the many, many examples of thoughtful service that seem to permeate Japanese culture. Another example was a discount grocery store which had a complimentary dry ice dispenser, so people’s frozen goods would stay frozen on the drive home… especially if they needed to make another stop elsewhere. Such a level of service must necessarily result in higher prices, but customers seem willing to pay the extra money to get that level of satisfaction. Even the store run by Wal-Mart (!) seemed more heavily staffed than the grocery stores over here.

In that vein, I wonder if people would grumble less about taxes if staff counts at government centers was doubled, and employees were forced to be cheerful. As gauche as I am, even I’ve grumbled Fraser Institute-like words after waiting in long lineups in an unpleasantly stuffy office, only to have a rude clerk give me unhelpful (later to be proven incorrect!) advice.  (For US readers’ benefit, the Fraser Institute is essentially the Heritage Foundation‘s Canadian franchisee.)

Another example of the “proactive” thinking was a Hitachi fan which automatically shuts off once someone touches the metal grille around the blades. I imagine they use the same kind of technology used by SawStop for their table saws — which also immediately shut off once they detect a finger. (A very small electrical current is run on the saw blade; body parts or hot dogs cause a change in the measured resistance, causing the saw to be immediately halted.)

Given the sweltering weather of the past few days, and the fact that Leo is now almost tall enough to reach the base of our floor fan, I’m kind of wishing we’d bought that Hitachi unit and brought it back. I’ll be rigging some safety netting up (I’m too cheap to buy one of those nifty Dyson fans) but it’d be nice to think that North American appliance-makers valued kids’ fingers as much as the Japanese ones do…!

Japan visit 2012 (part 2)

(written June 3, uploaded July 21)

As I’ve occasionally mentioned, one of my favourite things to do in Japan is to visit the fridge section of leading electronics retailers. The product selection puts ours to shame!  This may be because each of Japan’s tech conglomerates (Sharp, Hitachi, Panasonic, etc.) tries to differentiate their refrigerators.  The Japanese government’s Top Runner program probably helps too, as it forces companies to improve product efficiency, meaning innovation is incentivized.

From the looks of it, Sharp’s patent on magnet-based refrigerator doors is still in effect: this allows the design of a fridge door which can open from either side, and they continue to be the only ones offering this feature.  (When you open the handle on the left, the magnets on that side disengage, and the door pivots open from the still-engaged magnets on the right.  And vice-versa.)

Toshiba came out with a model where you can open the fridge door simply by pressing a touch pad — no yanking open required! Aya’s sister bought one, and she thought it Awesome… until her eighteen-month-old son got just… barely… tall enough to slap the touch pad while on his tiptoes, causing her to have to walk past a giggling infant to re-close said fridge’s door, dozens of times per day.  :)

Meanwhile, my in-laws have a Panasonic which beeps when the door is left open too long.  As ridiculous as it felt to be scolded by an appliance (!) for wasting energy, I immediately changed my behaviour to avoid further harrassment.  So, it worked…!

I’m also pleased to report that you can still take the electronics stores’ massage chairs for a”test ride”, and that the technology has continued to advance.  :)

In other shopping observations, the 7-11’s don’t just sell Vitamin Water; someone has come out with a Vanadium Water product, bottled around Mount Fuji.  The usual health benefits are claimed; realistically, every trace element is probably helpful for Something! :)

In addition to its convenience store empire, 7-11’s Japanese division owns a supermarket chain and a baby goods retailer; the latter hosted a Baby Crawling Race we entered Leo in.  Patterned after a marathon, it involves the babies crawling roughly one ten-thousandth of 42 km (that’s 4.2 meters) across a foam “racetrack” to their cheering parents.  At least, that’s the theory.  Ever seen a horse race where half the field sat drooling at the starting line?  ;)

But that tale, I’ll have to tell next time…  :)

The to-may-to, to-mah-to of economic statistics

(written June 28, uploaded July 16)

There was an alarming report out a couple weeks ago alleging that China was vastly underreporting its emissions, because the coal consumption reported by the Chinese national government was smaller than the sum of consumption totals reported by various Chinese provinces. Purportedly, the Communist Party didn’t want to reveal to the outside world just how much pollution it’s emitting, trying to raise the country’s standard of living.

This was followed the other day by a report that coal inventories in Chinese ports are at record highs (in other words, it’s not being burnt as fast as it’s being imported). The theory is that Chinese provinces have been overreporting electricity production to meet national targets for economic growth. If this is the case, then the national government is correct to apply a “fudge factor” and report lower production totals than the sum total of the numbers they’re given!

In light of the high coal inventories, I’d side with the national government on this one, and assume China is slowing down. And since China consumes so much of everything (urbanizing thirty million people per year takes a lot of material!) a slowdown there would drag down prices of most of the resources Canada is so good at exporting raw and unfinished — lumber, metal ores, bitumen, and so forth. Sigh — it’s as if we suffer from a lingering “economic colony complex”…

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A Chinese slowdown would exacerbate the problems our Albertan friends are facing: the price of oil is already sagging to levels which threaten the economic viability of (some) new tar sands projects. This Globe article lists a consultant study saying $80 per barrel is needed for a variety of projects to break even. As I write this, the price of the West Texas Intermediate Crude (“WTIC”) benchmark is $79. And as the Globe article notes, our countrymen aren’t even getting this much, since oil from North Dakota is clogging south-flowing pipelines in the US, forcing Albertans (who are upstream) to sell at a discount. Selling unrefined bitumen would incur a further discount.

And it just gets worse for our Calgarian cousins/rivals: US oil consumption peaked six years ago, and is set to keep falling. Not only are fewer teens getting licenses, and fewer total miles being driven per year, but those miles are being driven in more fuel-efficient vehicles, as the gas guzzlers of the cheap-oil-era early 2000’s get traded in for more fuel efficient ones. And while electric cars won’t displace much oil demand in the near term, some truck fleets are beginning to switch to natural gas — and trucking represents a huge 12% of US oil consumption! Not all of them will switch, and natural gas will get more expensive again, but the net effect will be that US oil consumption is likely to keep… on… falling, like a Japanese stock market index. (Incidentally, kudos to our friends at Westport for persisting in that natural-gas-vehicle market long enough to get to this tipping point; it’s a good lesson for us fuel-cell folks to learn from.)

Without a path to Asia, Alberta would be stuck selling its oil into a declining market — and that would make it impossible for them to shift the heart of Canadian power westwards, as has been their dream for decades. It’s a 180-degree turn from the message everyone has told our neighbours for the past several years, namely that they faced unprecedented wealth. With stagnant US and European demand, the only way for the oil patch to keep those dreams alive is to force pipelines through BC. Which is what the Prime Minister is agitating for, with the determination you’d expect from the son of an Exxon accountant. (Harper’s dad worked for Exxon’s Canadian arm, Imperial Oil / Esso.)

If we assume those coal mountains in China mean the country is slowing down, the oil price is likely to drift lower in 2013 (commodity trader group-think suggests a bounce up in the near term; not sure what Nostradamus’ take is). A lower oil price would probably mean further gnashing of teeth and scapegoating of “BC radicals” in Calgary* though the root cause would of course be that the market is a fickle god: it giveth, and it taketh away. Not infrequently taking its cues from those godless communists. ;)

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* Misplaced anger also applies to the 1970s’ National Energy Policy. While Trudeau reduced the oilpatch boom, he didn’t actually cause the bust; in fact, when oil prices dropped in the early 80’s, Alberta got more-than-market-rates for its oil. The guys who caused the real pain in Calgary were the Saudis, who turned the spigots on enough to drive the price of oil so low, they were basically the only ones making money. (They were punishing other OPEC members for exceeding their production quotas. Every other oil producer in the world, became collateral damage.) More recently, Alberta’s Wildrose Party seems convinced that over-regulation is what caused a slowdown in bitumen development in the past few years, neatly overlooking the Massive Financial Crisis of 2008/09 that caused the oil to drop to about $40 per barrel, before gradually floating back to the low $100’s, from which it has resumed sagging.