Back in June there was a lot of angst about oil prices and the fault was laid at the feet of "speculators" who some accused of driving prices up. Here is what New Jersey Governor and Obama ally Jon Corzine said at the time:
"I think everyone believes there's too much speculation in the oil markets," said New Jersey Gov. Jon Corzine, an Obama ally who announced the proposals in a conference call with reporters. "A lot of the price of oil, I think, people put at the doorstep of speculators bidding up and holding supplies off the market."
Oil prices have fallen from $145 to $60 a barrel in six months, the fastest decline in history. Without government regulation.
Back in June I wrote that such government regulation would be risky and that I had more faith in consumers and oil purchasers to find the proper price because "speculators risk their own money." Those who bought oil at $140, or more, a barrel are not very happy right now. Consumers reduced their demand, oil consumption fell, oil purchasers became nervous about being overextended and prices fell.
During a campaign it is understandable that candidates would pander, promising to solve the issue du jour with resolute government action. The case of oil "speculation," however should be an object lesson to politicians who jump at the chance to add permanent and costly government regulation rather than allowing the aggregated decisions of millions of people to adjust prices.
The ultimate irony, however, is that Obama's supporters who wanted to crack down on speculators because of the oil price spike will now lament that cheap oil is encouraging people to drive more. Don't be surprised when those same folks call for an increase in gas prices to fight climate change.
Last week I attended a public meeting to discuss bringing "green" jobs to King County. Three things stood out at the meeting.
First, those in the audience were not asked if this was a good idea, but merely what were the obstacles to bringing green jobs here and how we could overcome those obstacles. Before the public was asked for their opinion, there was a panel of "experts" all of whom praised "green" jobs and efforts to create more of them. There was a bit of unintended candor, however, that caused a ripple through the room. Bob Markholt, the Program Coordinator of the Pre-Apprenticeship Construction Training at the Seattle Vocational Institute said he felt there is "not a nickel's worth of difference between a green job and a regular job." We have written in the past, making precisely that argument -- a low-paying green job isn't better than a high-paying job in health care, manufacturing, technology or anywhere else.
Second, the panelists admitted that global warming wasn't really their concern. It was simply the latest reason to achieve traditionally leftist goals. Jessica Coven of Climate Solutions said that she wasn't really interested in global warming until Hurricane Katrina. She said it made her realize that "global warming is a social justice issue." She went on to say that a "sustainable economy is more equitable." She did not provide any evidence of this, especially since efforts to drive the price of energy up disproportionately impact low-income families.
Finally, the County appears to continue to believe that government can best determine the direction of the economy. This, of course, never works out as intended but the temptation for politicians to believe they can run every aspect of the economy is often too overwhelming. The bill developed by King County staff will "drive investment into the green economy." Given the bill's authors, it is not surprising that this misguided perception holds sway. The bill was developed by "unions, job training programs, community colleges and 'progressive' businesses." One of these "progressive" businesses was McKinstry, an engineering firm that specializes in "green" building. The President, Doug Moore, made a claim I think is probably inaccurate.
He said that building "green" has a longer timeline for return on investment than businesses typically like. "Green" elements have a 7-10 year return on investment as opposed to the more typical 5 year return timeline businesses like (I doubt the 7-10 years based on my analysis of green schools, but OK). He then added that the "green" sector was recession proof, saying that demand for his services didn't fall off during the economic slowdown during 2001. So he seems to be saying that at a time when investment capital is least available, during an economic slowdown, companies continue to invest in projects that have a lower return on investment but shelve investments that provide a return more quickly? It might be true that companies would invest in efficiency if that was the best available investment, but there is no reason why, in a situation where capital is tight, that companies would keep investing in "green" projects with a 7-1!
0 year ROI timeline but fail to invest in traditional projects with a 7-10 year, or better, ROI timeline.
It may be true that in 2001, demand for his services did not fall because "green" building was a niche or emerging industry at that time. Niche products can do better than mass-marketed products and services in a recession. When those products become mandatory or more common, they are likely to suffer the same economic pressures as all other types of investment.
The very real problem with setting up a one-sided discussion, with input only from supporters and those who have a stake in a particular outcome and hoping that government can effectively "drive" the individual decisions of millions of people is that it sets the stage for failure. Such a narrow view and unrealistic claims have led to problems with biofuels, green schools, subsidies for electric cars and other eco-fads. People, making individual choices, will far more effectively improve efficiency, cut CO2 emissions and create sustainability.
[Al Gore] said the goal of producing all of the nation's electricity from "renewable energy and truly clean, carbon-free sources" within 10 years is not some far-fetched vision, although he said it would require fundamental changes in political thinking and personal expectations. "This goal is achievable, affordable and transformative," Gore said in remarks prepared for the conference. "It represents a challenge to all Americans, in every walk of life — to our political leaders, entrepreneurs, innovators, engineers and to every citizen."!
Or, Al Gore reduces his energy use:
In the year since Al Gore took steps to make his home more energy-efficient, the former Vice President’s home energy use surged more than 10%, according to the Tennessee Center for Policy Research. ... In the past year, Gore’s home burned through 213,210 kilowatt-hours (kWh) of electricity, enough to power 232 average American households for a month.
Asthma rates have become a surrogate for a number of environmental statistics. The reason is that the quality of air, water and other environmental metrics is improving, so environmental groups mention asthma instead, hoping you will focus on asthma rates rather than actual pollution data. A growing number of children have asthma and these groups claim that the increase is due to pollution, including indoor and outdoor air quality. For instance:
"Automobiles are the number one source of Washington’s air pollution and are a major factor in asthma rates in our cities. Kids in Seattle and Spokane suffer from asthma at a rate higher than the national average." - Washington Environmental Council, January 2005
"Why Green Building? Health. ... Increased asthma rates, EPA ranks poor indoor air quality as one of the top 5 health risks in the U.S. today." - Presentation of Rachel Jamison, Department of Ecology, January 2008
We've addressed these problems in the past. For instance, air quality has significantly improved in the past few decades at the same time asthma rates are climbing. Further, the link between green buildings and asthma is purely speculative.
So, am I arguing that a clean environment causes asthma? Well...maybe.
Today's Scientific American says that clean water and prosperity may be causing the increase in asthma. They noted that children who have a certain stomach virus have a lower rate of asthma (before we go crazy and start injecting the virus in kids we should note that the virus also causes increased ulcers later in life). What has caused the decline in the prevalence of this virus? Here's what they say:
H. pylori is acquired during childhood, usually from close contact with parents and siblings. Beginning in the early 20th century, clean water, smaller families, better nutrition and the widespread use of antibiotics in industrialized nations led to a dramatic decline in this microbe. Only about 5 percent of children in this study who were under 10 years of age were found to harbor H. pylori compared with developing nations, where most children test positive.
So, clean water causes!
asthma? Since the environmental community is so worried about asthma, I'm sure they'll jump on doing something about this issue immediately.
Yesterday we hosted the 6th annual Environmental Luncheon and for the first time hosted a half-day conference on climate change and eco-fads. More than 330 people heard The Skeptical Environmentalist Bjorn Lomborg talk about his new book Cool It and the best way to deal with climate change and why the Kyoto Protocol is expensive and ineffective. We awarded him with our annual Environmental Innovator Award for his contributions to creative thinki!
ng about how to improve the environment and the well-being of people across the globe (here I am handing him the award).
The first panel in the morning featured a lively debate between Dr. Don Easterbrook from Western Washington University and Dr. Cliff Mass of the University of Washington on the issue of climate change, its causes and effects. You can see Dr. Easterbrook's PowerPoint here and Dr. Mass's PowerPoint here.
The second session featured Dr. Matthew Manweller of Central Washington University who spoke about the unintended consequences of environmental regulations and how well intended, government-mandated approaches can actually do serious environmental damage to the very areas regulations were designed to save. You can read his op-ed published previously by the Washington Policy Center on this issue here.
He was joined by the President of the Cascade Policy Institute John Charles who discussed a range of eco-fads that have been tried over the years in Oregon. For example, he cited numerous problems with carbon offsets mandated by the State of Oregon. You can read his research on this in an excellent article called "Money for Nothing."
Thanks to all who attended, asked questions and made the event a success. For those who could not attend, we will be posting the video of all speeches in the near future.
Yesterday I attended a presentation on how "Smart Growth" can reduce CO2 emissions and vehicle miles traveled. Reid Ewing and Jerry Walters are authors of "Growing Cooler: The Evidence on Urban Development and Climate Change." They spoke at the Seattle Chamber of Commerce and the Kirkland City Hall. The press release for their new book says "The findings show that people who move into compact, 'green neighborhoods' are making as big a contribution to fighting global warming as those who buy the most efficient hybrid vehicles, but remain in car-dependent areas." They argued that government planning can achieve these goals and that these compact communities are what people want anyway.
They provided a range of statistics on how much these strategies could reduce vehicle miles traveled (VMT). Interestingly, they noted that a doubling in transit service would reduce VMT by only 6 percent.
One statistic they did not provide was the cost of this approach. So I asked if they had calculated the cost of these strategies to society per ton of CO2 reduced. This would allow us to compare growth management to other CO2 reduction strategies. Their answer? "Nobody has calculated the true cost and who is paying it."
Put yourself in the position of a policymaker. Experts have just presented you with a strategy they say will be successful at achieving a particular goal. When you ask how much this will cost they respond that they don't know what it will cost and who will pay. Would you a) adopt their approach, or b) suggest that they go back and do more work? Which approach do you think Washington's policymakers are adopting?
Last week, the 9th Circuit Court of Appeals ruled that judges should not act as scientists when it comes to environmental lawsuits. The Associated Press reported:
The court said environmentalists had asked it "to act as a panel of scientists that instructs the Forest Service how to validate its hypotheses regarding wildlife viability, cho!
oses among scientific studies in determining whether the Forest Service has complied with the underlying Forest Plan, and orders the agency to explain every possible scientific uncertainty," Judge Milan D. Smith, Jr., wrote. "This is not a proper role for a federal appellate court."
This is a very encouraging decision. We've written here! and elsewhere about the important difference between policymaking and science when it comes to environmental issues. Both policymakers and scientists like to pretend that value judgments are based on "science," when, in fact, they are not. Judging which risks we are more comfortable with, the risks of climate change or nuclear power, cannot be settled by a scientific formula. Nor can questions about which is more important, personal freedom or a reduction in CO2 emissions. Those are value judgments.
Now the court has agreed that scientists do science and judges do law. That's why their robes are different colors.
The environmental community should be cheering the ruling today overturning King County's onerous and unfair Critical Areas Ordinance. The decision fits exactly with an argument they often make to justify environmental restrictions.
A common argument used by environmental activists is that those who benefit from an activity must also pay for the costs of the impact associated with that benefit. For instance, regulations are reasonable when a smokestack hurts air quality downwind. The people downwind are harmed by the reduced air quality but the factory receives all the benefit. Policies that reduce the impact or require the factory to pay for the harm are appropriate.
The same is true with the Critical Areas Ordinance. The benefits of requirements that 50 percent of rural land be left untouched accrue to all of society in the form of scenery, clean water and the societal value of preserving wildlife habitat. The costs, however, are borne only by a few -- the landowners who have seen the value of their property diminished. If, following the logic of environmental regulation, those who benefit should pay the costs, it only makes sense that society at large should pay the costs for the few who have been impacted.
This argument played a role (the case was decided on more technical issues) in the decision. The court ruled "that development conditions must be tied to a specific, identified impact of a development on a community." In other words, regulations are appropriate only when tied to the impacts of a specific development. Those who create the impacts, developers, must pay for or mitigate those specific impacts.
This is one (of many) differences between environmental activists and free-market environmentalists. Free-market environmentalists apply the rule in both directions, recognizing that environmental amenities have a value and requiring those who impact or benefit from that value to pay. Environmental activists, on the other hand, seem to follow a different rule -- do what I want regardless of the principle (or lack thereof) involved.
That's why greens won't cheer the rational application of what they claim is their own philosophy.
It was hot this weekend and most in Seattle are thankful. However, the Seattle Times notes that not everyone is happy and that there was an increase in the number of emergency calls.
This reminded me of a statistic cited by climatologist Pat Michaels at the International Conference on Climate Change this year in New York. He noted that as temperatures go up, people adjust and the number of heat-related deaths go down. He said "If we take a look at heat-related mortality in our major cities, it is going down. Why? Because people get used to it."
There was only one city that defied the trend, where as temperature went up, people failed to adjust and saw mortality increase: Seattle.
So here's my question. Given the Mayor's plan to close down roads, "limiting traffic to bikes and pedestrians on Thursdays," in an effort to reduce CO2, are we saving the planet or increasing climate-related deaths by encouraging Seattlites, who are bad at coping with heat, to expose themselves to hot summer temperatures?
Another "green" school has been open for a year and, once again, it has fallen far short of projections.
When Washington passed its green building law in 2005, advocates promised a minimum of 30 percent energy savings, reduced absenteeism and higher test scores. Lincoln High School is the most recent school to open using these new rules. In fact, it was actually part of the state's pilot study on green schools (there is an irony that the law was passed before the pilot project was completed).
Lowest 10th-grade WASL scores among Tacoma’s five comprehensive high schools.
Greatest overall student body turnover – 95 percent – as measured by the combined number of admissions and withdrawals at each of the five high schools in the 2006-07 school year.
The fiscal year is not yet complete, so we do not have data on the high school's energy use.
The failure of a "green" school to reduce absenteeism or increase test scores is not surprising. The studies "green" building advocates cite on absenteeism and school test scores are pretty flimsy and our research on schools in Washington show no trends. Our research found that absentee rates of "green" schools are virtually identical to the district averages for three districts in Washington. The Northshore green school has higher absentee rates, the Lake Washington school has lower rates and Spokane is nearly identical.
Unfortunately, these schools cost more to build and, sometimes, to operate (Giaudrone MS in Tacoma spends 30 percent more on energy each year than Mason MS, a non-green school built in the same year). Rather than putting funding where it will make a difference, Washington is chasing nonexistent benefits which are likely to do actual harm to students especially as the state deals with a $2.5 billion budget shortfall.
Ironically, the Tacoma City Council is set to vote to require green building standards for city buildings next week. Perhaps they should call the school district before they vote.
Commodity speculators are now the center of the debate over oil prices and presidential candidate Barack Obama says he will do something about it. The Washington Post reports today:
Sen. Barack Obama rolled out a proposal yesterday to curb speculation in energy markets, which his advisers said would help stabilize soaring gasoline prices.
Speculators are those who believe the price of oil will be higher than it currently is and are buying today in an effort to sell for a higher price later. They "speculate" that the cost will rise. They do this for a variety of reasons. They may believe that supply will be limited by environmental regulations. They may believe we have already used most of the world's oil and are gradually running out. They may believe that demand overseas is growing so fast that capacity won't be able to keep up. Whatever their reason, they believe prices will be higher in the future than they are !
Interestingly, Barack Obama appears also to believe that the price of oil will (and perhaps should) be higher in the future. He supports environmental policies that limit supply, keeping oil reserves out of reach.
He also has made it clear that he doesn't object to the current price of oil. In a response to a question about whether Congress was actually keeping oil prices from falling, Obama told an interviewer, "I think that I would have preferred a gradual adjustment." In other words, the problem isn't the price, it is the rate of price increase. In this, however, he certainly has a sense that prices should be higher, not lower. Thus, Obama has an idea about what the proper price range of gas should be. That idea is based on...speculation. He speculates about the proper price of oil.
There is really no difference between Obama and the oil speculators he decries. Both are offering policies based on the future price and availability of oil. The only difference is that speculators risk their own money and Obama is risking the energy policy of the world's largest economy. Which is more dangerous?
Today's Seattle P-I has a story about the Blue-Green coalition which is asking government to subsidize the creation of a "green" sector here in Washington state. I am quoted criticizing this effort.
"We're going to end up spending tax money and increasing costs to consumers just so we can say we have an (renewable energy) industry here," Myers said. "I don't think we should turn Bill Gates into a windmill manufacturer unless that's what he's best at. Bill Gates should sell software and buy lots of windmills, rather than making them in his back yard."
The response, in the article, is interesting. Environmental activists argue that Europe is ahead because of government subsidies, and that we now need our own subsidies. My question is, who pays for and who benefits from those European subsidies?
The answer is that Europeans pay and we benefit, both in terms of increased prosperity and environmental quality.
First, when we purchase a windmill from Denmark, the price is lower than it would normally be because the Danish government subsidizes the cost. Instead of costing $1 million, let's say, it costs $800,000. Danish taxpayers are putting $200,000 in our pocket.
But what about jobs? Aren't they taking jobs away from American workers? No. We now have more money (thanks again Denmark, Germany, et al.) and can hire workers to do other jobs, like in biotechnology or other industries. We may not meet an artificial target of 25,000 jobs in a particular sector, but we have more money and more jobs in the state, but in different sectors.
Finally, this is also good for the environment. The lower the cost of the windmill, the more windmills we can buy and the more renewable energy we can generate. That's a good thing.
But won't we forgo all of the profits that the green sector will create? If the green sector is truly as prosperous as some claim, venture capitalists will put their money there. If, however, the Europeans continue to subsidize these technologies, we should continue to happily take their money and invest it effectively in other sectors.
Some say it is "unfair" that Europe gives its "green" sector a leg up with these subsidies. In reality, however, they are giving American consumers a leg up by paying part of the cost of those technologies. Foreign subsidies are essentially a rebate to American buyers. If you still think this is unfair, I encourage you to reject the manufacturer's rebate the next time you buy a car -- accepting it would be unfair to other car companies.
The problem with politicians picking and choosing technologies is that they are often severely myopic and fall prey to fads. The desire to pay more and get less when it comes to "green" technology is a good example of that trend.
Leah Ceccarelli of the University of Washington today writes a piece in the Seattle Times today calling on "defenders of science" to protect science from the sophists who question them and she cites "global-warming skepticism" as one example. This is a common refrain from those who favor particular government policies (Ceccarelli is a professor of communications, not a scientist), arguing that anyone who disagrees with them is ignoring the science.
Three things come to mind.
First, science does not dictate policy. Policy is set by weighing our value priorities and understanding the economic incentives used to achieve particular ends. Science informs the goals but often does not determine the tactics. For instance, if we agree with Ms. Ceccarelli that climate change is a concern, does science say a carbon tax or cap-and-trade is better? It doesn't. Sometimes, however, those who preach the primacy of science pretend it does. I wrote about this in February.
Second, in recent years it has been the left preaching the manta of "following the science," but their desire to do so is selective. Follow the science, they say, when it comes to climate change but not when it comes to DDT or preservatives in vaccines. With DDT and Thimerosal, a vaccine preservative, recent studies have shown definitively that there is little threat from the chemicals used to fight malaria or reduce the cost of vaccines, but in both cases the environmental community continues to ignore that science in favor of sophistry. The environmental community often cites theoretical science but ignores the empircal science ("worldwide temperatures haven't increased in a decade, but the models say they should").
Finally, if you want to see anti-scientific sophistry at work, watch this video of a recent effort to ban another dangerous chemical: dihydrogen monoxide.
Does Mayor Nickels really care about climate change? The next few days will truly tell the tale.
Seattle Parks & Recreation has announced that they want to ban or limit bonfires on Alki Beach to combat global warming. According to the Seattle P-I, a memo from Parks & Rec argues that "Mayor Greg Nickels' plan to reduce climate-threatening pollutants 'begs the question of whether Seattle Parks is acting responsibly ... to systematically reduce controllable contributions to global warming..."
Bonfires, however, don't contribute to climate change. One reason the City of Seattle and other climate activists promote biofuels (which include "biomass" i.e. wood) is that the life-cycle carbon impact is zero. Wood and crops remove carbon from the atmosphere. The wood is then burned and the carbon is released back to the atmosphere. The next tree, however, pulls the carbon out of the atmosphere, and the cycle continues. The impact of this cycle on carbon in the atmosphere is zero.
In fact, Seattle touted this very process when it announced that Seattle Steam would use waste wood to generate energy for Seattle. In the City's "Green Ribbon" Commission report from 2006, they note that "Intergovernmental Panel on Climate Change Guidelines generally state that there are zero net emissions from burning wood waste; in essence, because the natural cycle of vegetation is to absorb CO2 when growing and emit CO2 when decaying, burning vegetation only accelerates this process as opposed to being a source of CO2 emissions." Seattle Steam announced its plan to burn wood waste to generate energy and the City counts this as zero net emissions.
Instead of creating energy, bonfires create heat and entertainment. Is there any difference between burning wood for that purpose or for creating energy so I can watch the yule log on TV?
If the City does not shoot this nonsense down immediately, it will demonstrate that all of the climate activists' talk about science is meaningless and that climate change is merely an excuse used by the City and bureaucrats to increase their control over people.
Update: 4:20 pm
The PI is now reporting that "Seattle Parks and Recreation has backed off on considering restrictions on bonfires this year, and on possibly banning or charging fees for them at Alki and Golden Gardens beaches next year."
They did not do so, however, because their logic was flawed. A spokesman for Parks Superintendent Tim Gallagher said that "He thinks things are working just fine" and so they didn't need new restrictions.
We should still get a straight answer from the Mayor and his staff about whether bonfires contribute to global warming and if this is the kind of science on which they are basing climate policy.