Energy Watch: Solve for California 18 comments
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The next BLS release of unemployment data for California comes this Friday, and its bracing to think what the numbers might be. Currently, the broad measure of unemployment for California–or U6–is running at 19.9% and the more conservative measure, which will be updated this this week, is at 12.2%. I’ve written quite alot on the subject of California this year. So, I watch the macroeconomic newsflow that emerges from the state each week, and most of it is pretty awful.
This Summer I spent a little time on television making the case to both MSNBC and BNN in Toronto that California was extremely overleveraged to the automobile, and should probably think seriously about building out it’s rail system. At that time the machinations over California’s budget were in full swing, and a number of observers thought the budget agreement would put the state on the right path for at least another year. I was doubtful, and said so at the time. Moreover, I tried to draw the two points together: California was now suffering diminishing returns from its vast automobile and highway system, and it was unlikely to crawl forward again as an economy unless petrol became very cheap again (unlikely), or got serious about transition.
This month’s Gregor.us Monthly, published 31 October, is titled Solve for California, and it attempts to lay out the backstory to the Golden State’s current predicament. Meanwhile, I see that Sacramento via the Strategic Growth Council has comissioned a new study, Vision California, and hired Calthorpe Associates of Berkeley to come up with reference scenarios to both spur and define future economic growth in California. Sounds good. But one question I have is as follows: of all the consultancies hired both in the past, and now, do any attempt to quantify for Sacramento the cost of maintaining the automobile system in an era of structurally higher oil prices?
The most recent news on California’s financial crisis emerged this week, when Sacramento reported that the state’s budget gap has already blown out again to 6 billion in the current year, with more shortfalls to come next year. Meanwhile, Washington has actually started to make smoke signals about fiscal discipline and the growth of federal debt, which raises the question again: how would California raise the capital for new energy power generation and new transport, when the Federal Government itself is in so much trouble and tax revenues continue to decline?
Herewith I will re-cap some of the points from my newsletter:
• Build light rail, commuter rail, and high speed rail on an emergency basis, by-passing much of the public review process. Recognize that community concerns about noise, construction, eminent domain, and changes to the status quo are all subordinate concerns to the problem of California’s dysfunctional over-leverage to the automobile.
• Cease all new investment in roads and highways. This shouldn’t be much of a problem in the current situation because it’s unlikely anyone will be developing either commercial or residential real estate on any scale for many years to come. Existing roads, highways, and bridges will have to be repaired and maintained. However, a plan should be formed to remove some of these, especially getting them out of downtown areas. Alot of new studies show, globally, that removing highways from urban areas can be economically revitalizing.
• Drill offshore, and onshore, for oil and devote every penny to the construction and maintenance of new Rail and new Solar and Wind power. There should be a public Energy for Rail agency (and website) that would be a kind of transparency project itself, that would educate Californians –showing them that this was essentially a conversion policy of domestic energy to public transport. Equally, it is no longer rational to avoid the extraction of State oil and gas in the name of the environment, when nothing could be more destructive to the California environment than its present vehicle fleet, which spews out 6000 tons per day of CO2. In fact, any policy which does not attempt to radically dislocate California’s automobile-based transport system now has to be regarded as the most environmentally destructive policy of all.
• Adopt a policy similar to the new resource and economic policy coming out of Brazil. Thus, demand that drilling rigs be built in California ports. Demand that rail cars, electronics for the new rail, and other manufactured goods for the new rail system be built in California. Favor oil companies that make their tax home either in California or at least the United States with drilling and production contracts. California needs to operate much more like a sovereign state, in this regard. The entire focus should be to extract energy, then recycle the wealth into the State in the form of productive capacity (new rail, new manufacturing, new power generation).
• Build out massive new Wind and Solar, again, on an emergency basis and by-pass much of the public review process. The new extraction of California’s oil and gas would have as its single purpose the creation of capital, not energy, with which to fund the transition to a more sustainable energy system. California should also lobby to increase Natural Gas production from the new, NG shale plays.
In the same way that I disagree that the United States can solve either its energy dilemma or make progress on carbon-emissions reduction by focus on the power grid, while continuing to preserve and protect the automobile, I don’t see that California can accomplish much through this route either. Yesterday’s ruling on energy efficiency standards for TVs, for example is part of the state’s laudible record of achievement in electricity demand reduction, but, that has neither solved the state’s over-reliance on power imports, nor is it comforting in the light of Jevon’s Paradox or the Khazzoom-Brookes Postulate–showing that efficiency gains are most often arbitraged away into greater energy demand.
My greatest concern, however, is that recent models which articulate the scale of transition to renewable power are a warning. A warning that the energy required to fund that transition is absolutely massive, in quantity. My call is that the construction fuel for a global buildout of Power Grid 2.0 will be oil. But, the longer we wait the more expensive that oil will become.
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It has a vastly corrupt, insatiably greedy, very wealthy and totally self obsessed ruling elite for whom California is a private plantation.
It has a large, brutal, bribed and ignorant lower class manipulated and collectivized by bread and circus.
It has a coerced , demoralized and compressing middle class caught in a cruel pincer from above and below.
It has a parasitic economy that is strangling and consuming the productive economy.
The California Junta does and will keep doing the wrong thing because that is what it craves and feasts on. It has no intention of doing the right thing.
California is on a descending trajectory from moral and intellectual Third World to social and economic Third World.
The biggest danger of being ahead of the curve, is that often it means other people have to believe your idea is their idea before they will do what is best or what should be done. What you outline are the solution paths that are impossible within the squabbles of democracy. What you have proposed is what all will realize in 20 years what should have been done, but will only be agreed upon in the collective wisdom...... by hindsight.
This is one hell of a good article! Excellent job! The comments are right on as well. California as a Sovereign State - has a nice ring to it. Perhaps they could even secede from the Union for a brief while - and then come back in after they have cleaned up their act.
By the way, a lot of what you have outlined here could also apply to Scotland (sans the emphasis on the automobile).
Other than more, better rail, this article was bad.
First on RE, they have a great program paid for in a minor utility tax. Oil is rarely used to generate power.
Cal has about the most eff fleet in the US. Switching over trucks to NG and cars to Hybrids, PHEV's and EV's are the future surface fleet fuels. And Cal is the leader in them now.
The fiscal problems are political with republicans doing the worst by not letting anything get done raising taxes where needed. I don't disagree much of Cal needs reform in the public sector like health, education, but it's repubs that are not allowing it.
These are good ideas that will not come to pass, alas, until things have gotten MUCH worse— not in my lifetime, I hope.
Go ahead--Try that one. The Okies will return to Oklahoma.
Right now, what I see are people making sacrifices and elected official continuing their business with the same salaries, opposing one another as they have done in the past.
This has to change.
Governor Schwarzenegger is shooting himself in the foot!
1. Taxation is better for everyone, if energy really needs to be saved.
TV set taxation based on energy efficiency - unlike bans - gives Governor Schwarzenegger's impoverished California Government income on the reduced sales, while consumers keep choice.
This also applies generally,
to CARS (with emission tax or gas tax), BUILDINGS, DISHWASHERS, LIGHT BULBS etc,
where politicians instead keep trying to define what people can or can't use.
Politicians can use the tax money raised to fund home insulation schemes, renewable projects etc that lower energy use and emissions more than remaining product use raises them.
Also, the energy efficient products can have their sales taxes lowered.
2. Product regulation, bans or taxation, are however unwarranted:
Where there is a problem - deal with the problem!
Energy: there is no energy shortage
(given renewable/nuclear development possibilities, with set emission limits)
and consumers - not politicians - pay for energy and how they wish to use it.
It might sound great to
"Let everyone save money by only allowing energy efficient products"
However:
Inefficient products that use more energy can have performance, appearance and construction advantages
Examples (using cars, buildings, dishwashers, TV sets, light bulbs etc):
ceolas.net/#cc211x
For example, big plasma TV screens have image contrast and other advantages
along with the bigger image sizes.
Products using more energy usually cost less, or they'd be more energy efficient already.
Depending on how much they are used, there might therefore not be any running cost savings either,
Two more factors contribute to a lack of savings:
1. If households use less energy, then utility companies make less money,
and will just raise electricity prices to cover their costs.
So people don't save as much money as they thought.
2. Conversely, energy efficiency in effect means cheaper energy,
so people just leave TV sets etc on more, knowing that energy bills are lower,
as also shown by Scottish and Cambridge research
ceolas.net/#cc214x
Either way, supposed energy - or money - savings aren't there.
----------------------
Why energy efficiency regulations are wrong,
whether you are for or against energy and emission conservation
ceolas.net/#cc2x
Summary
Politicians don't object to energy efficiency as it sounds too good to be true. It is.
--The Consumer Side
Product Performance -- Construction and Appearance
Price Increase -- Lack of Actual Savings: Money, Energy or Emissions. Choice and Quality affected
-- The Manufacturer Side
Meeting Consumer Demand -- Green Technology -- Green Marketing
--The Energy Side
Energy Supply -- Energy Security -- Cars and Oil Dependence
--The Emission Side
Buildings -- Industry -- Power Stations -- Light Bulbs
On Nov 19 06:45 AM User 353732 wrote:
> Morally and intellectually California has all the tropes of a Third
> world country.
> It has a vastly corrupt, insatiably greedy, very wealthy and totally
> self obsessed ruling elite for whom California is a private plantation.
>
> It has a large, brutal, bribed and ignorant lower class manipulated
> and collectivized by bread and circus.
> It has a coerced , demoralized and compressing middle class caught
> in a cruel pincer from above and below.
> It has a parasitic economy that is strangling and consuming the productive
> economy.
> The California Junta does and will keep doing the wrong thing because
> that is what it craves and feasts on. It has no intention of doing
> the right thing.
>
> California is on a descending trajectory from moral and intellectual
> Third World to social and economic Third World.
Otherwise the only rail system will be the Unirail in Disneyland which I once saw hanging upside down from its single track.
I have always thought that the state is too large and should be split into two states.
Like some others, I am glad that I left there at an early age and returned South even though the work in the aerospace industry was very interesting, and I liked my co workers and most of the people that I met. Can't say that about some other places.
Overall a good plan and much better than doing nothing.
Most of the insightful folks out there, have long since sold out and left for the interior states, where people are more frugal, consume less, and aren't a bunch of useless phonies.
There's an enormous amount of research that I have done, that sits behind this brief blog post. The annual cost to the state budget and to the state's productivity and air quality caused by the automobile-oriented transport system is gargantuan.
I very much enjoyed user 353732's social stratification comments.
seekingalpha.com/artic...
Indeed, I think it's fair to say that the wealthy elite of CA control alot of the real estate through which rail would run, and, they love to promote green and climate slogans but neither want to have their own cars dislocated, nor think very much about doing the same for the State. In short, they like policies that green-up the power grid as it will affect their lifestyle "less". Or so they perceive. I suspect this is why the Sierra Club is much happier to address emissions of buildings, than California's 33 million vehicles (all vehicles). The Sierra Club does not want to irritate the elite.
I remain amused the whole EV solution idea. CA is already importing more of its electricity than any other state (as a % of the whole) and it has to use a huge amount of that simply for Water Conveyance and Treatment.
But look what happens when you try to build a Utility Grade Solar plant in a CA desert. Uhhm, that's not a "Republican" senator that stands in opposition to that.
Thanks for all the great comments!
G
On Nov 19 09:54 AM Mad Hedge Fund Trader wrote:
> vgt I finished my indoctrination on how to overthrow the government
> last weekend. Specifically, I attended a grass roots meeting of activists
> in Berkeley, California planning to collect 450,000 signatures by
> April to put the “California Democracy Act of 2010” on the November
> ballot. The measure seeks to amend California’s broken constitution
> by permitting passage of budget and tax measures with a simple majority.
> The current two thirds requirement, which California shares only
> with the miniature states of Rhode Island and Delaware, is widely
> blamed for the legislative impasse in Sacramento that has driven
> the state to financial ruin. Overdependence on capital gains-up to
> 40% of revenues in good years-enabled the state to just barely balance
> the budget at stock and real estate market tops, but death spiral
> into gigantic deficits during the inevitable busts that followed.
> Furthermore, since proposition 13 capped real estate taxes at 1.25%
> 1978, the state’s population has grown by 16 million to 38 million,
> placing a backbreaking strain on all services. Only six obstinate,
> conservative legislators are holding hostage the world’s sixth largest
> economy, right after France. Decades of relentless gerrymandering
> have made virtually every seat in the state safe, so elections offer
> no solutions. I sat down with Daryl Steinberg, president of the California
> Senate, who says that people of all political stripes are fed up.
> Once boasting the best public education system in the country, California
> now ranks 47th in spending/pupil and 49th in pupils/teacher. The
> University of California, the top public university in the world
> and a veritable PhD and Nobel Prize factory, has endured two 20%
> back to back budget cuts. Schools, police and fire departments, parks
> and aid agencies are closing throughout the state. Antiquated infrastructure
> is falling apart, with the San Francisco Bay Bridge closed for five
> days this month, forcing the local economy to take a huge hit. The
> barbaric prison system, which has been ruled by a federal judge as
> inflicting “cruel and unusual punishment,” is letting 24,000 prisoners
> out early, since it can’t afford to house or feed them. The public
> outrage is so violent the initiative will almost certainly pass.
> When it does, taxes are going to go up a lot. Target numero uno:
> property taxes and the top 5% of income earners. Expect a battle
> royal, as the top 1% of taxpayers already pay a marginal state tax
> rate of 10.3%, the second highest in the country after Vermont, generating
> 50% of state revenues. This will make our sunshine the world’s most
> expensive. That will be great news for the Golden State’s beleaguered
> bond holders who will love to see new sustainable sources of revenue.
> Take a look at the California municipal bond funds (VCV), (NCP),
> and the (NVX). If California were a stock, I’d be buying it now.
> If you want to join the revolution, or just learn more about the
> issue, go to www.CAMajorityRule.com