Sweet Subsidies

Did you ever wonder about the return one gets for tax dollars? There is a bit of a sad story at the Examiner http://washingtonexaminer.com/politics/2011/02/green-energy-plant-sucks-subsidies-then-goes-bust of a bio-fuel plant closing down. It is an example of what we get for our subsidy dollars.

Range Fuels built a cutting-edge refinery, to turn wood chips into fuel. Net cost to the taxpayer: $162,000,000, and private investors added another $100,000,000. $262 million and the amount of bio-fuel they produced: zero. The realization that the taxpayers and green investors were taken for a ride: priceless.

Don’t worry. We are still subsidizing bio-fuel, and the farmers are doing somewhat better than Range Fuels, but bio-fuel costs more to make than it is worth. The same goes for wind generated electricity and photoelectric cell electricity, but what the heck. It’s only taxpayer money. Do you suppose it’s too late to jump on the investment wagon?

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A wise expenditure of taxpayer funds?

I think the cost of energy will come down when we make this transition to renewable energy.
Al Gore

Yep, the United States is going green, at least the U.S. Navy is. While I am sure there must be a local news release, I heard about it from a U.K. news article http://www.guardian.co.uk/environment/2010/oct/27/us-navy-biofuel-gunboat?intcmp=122. The navy has successfully tested a 50/50 mixture of diesel and algae-based biofuel. If one reads it as a humorous article, it is very funny. If one reads it as proof of a successful use of green technology, it is amazing. If one reads it as a practical fuel source, it is tragic.

The Navy’s purpose was to demonstrate the ability to avoid dependency of fossil fuels . . . by using 50% fossil fuels. Wait, what? Well, one could suppose that 50% is better than 100%, which is good, right?

Well, the first test did not go so well. The diesel and the algae separated and the algae started growing. It caused corrosion to the engines. Oops.

The second test worked. It is a wonderful thing . . . except it costs $424 dollars a gallon. To break that down a little, the cost of diesel has not been over $5 a gallon in the last three years. It is now at about $2.49, but to be fair, let us say it costs the Navy $10 a gallon—we all know how economical government agencies are when spending other peoples’ money. That means that the algae side of the fuel costs $414 a gallon. Not to worry, it is other peoples’ money. The Navy was so impressed that they ordered an additional 150,000 gallons of the fuel. Mixed 50/50, that is 75,000 of diesel at $10 a gallon ($750,000), and 75,000 of algae-based fuel at $414 dollars a gallon ($31,050,000). Wow, that is a total of $31,800,000 for a whole 150,000 gallons of fuel. Everyone needs to go out and buy a diesel vehicle. That is a bargain too good to pass up.

There were two rationales in the article as to why this is worthwhile. First, the avoidance of dependence on foreign supplied fossil fuels; and second, the ability of this fuel to be made locally instead of having to transport it thousands of miles.

There was a recent article (which I cannot locate now) about the cost of fuel in a war zone; the U.K. article mentions the cost but does not reference where it originated. When all the costs (loses in transport from torpedoes or roadside bombs, the necessities of fuel conveys, the extra trucks and manpower) are totaled up, fuel in the war zone costs around $400 a gallon.

Apparently, the Navy feels we will be able to grow the algae and process it into a fuel anywhere it is needed; therefore, that ship, transporting warriors and war machines to a battle thousands of miles away, will be able to sprinkle a little algae over the side, allow it to grow, haul it back aboard, process it and dump it into the fuel tanks. Better yet, the Marines fighting in the mountains or deserts of Afghanistan will just start their own algae farms. Instant fuel, it does not get any better than that.

Of course, for those who think algae farms and processing plants will be a little more restrictive on where they are practical, there will still be the costs of transporting it to the war zone. Instead of costing $400 a gallon for $10 a gallon diesel, it will cost that same $400 plus the $412 for the algae soup. That is $812 a gallon for something that may separate and corrode the engines it is supposed to be fueling. Mmm, somehow I do not feel very confident, but what the heck. It is other peoples’ money.

Published in: on October 29, 2010 at 1:34 pm  Leave a Comment  
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Subsidy madness

When we give a subsidy, the benefits to the public ought to exceed the benefits to the company. When it doesn’t, that’s our definition of corporate welfare.
John Kasich-politican

Here is a short blog from the Daily Bayonet click link that does an excellent job of showing the subsidy cost of energy from solar energy panels in Canada. If enough Canadians were willing to place the panels on their houses so that other forms of energy could be discontinued, the consumer cost of electricity would be twenty times the present cost. Such a deal.

Published in: on August 23, 2010 at 12:12 pm  Leave a Comment  
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Subsidies, good or bad?

No delusion is greater than the notion that method and industry can make up for lack of mother-wit, either in science or in practical life.
Thomas Huxley – scientist

Have you ever noticed that a good capitalistic idea can stand on its own. A good product can find private funding, customers and be sold at a profit. Think of all the home computer companies. People wanted computers, the factories made them and they were sold at a profit. Of course, not all computer companies that started up are still in business. Some just did not measure up, some did not adapt to the speed of advancement in the business. They failed. It is called survival of the fittest.

Or how about televisions? Many companies manufactured them over the years. Some could not remain competitive, so they dropped out, but the public wanted televisions and they bought them. No subsidies were needed.

Henry Ford made an automobile. The public wanted it; they bought it. I really do not know if there were government subsidies back then or not, but the company made it on the value of its product, not on subsidies.

A big portion of the stimulus package is being spent on subsidies to private industries. These subsidies are supposedly to create jobs, but have you noticed they are going to companies that are never going to be competitive in a level working field.

Take General Motors’ (61% owned by the government) battery powered car, the Volt. Over the next five years, the American government will supply 27 billion (with a b) of taxpayer money to develop a battery-powered, four-occupant car that will cost $41,000, have a range of 100 miles and has a dubious battery life.

Henry Ford’s car was successful because it could go almost anywhere, even in a time without many paved roads. An owner could put the family in the car and go coast to coast. Somehow a “modern vehicle” costing as much as a luxury vehicle, but with a range of 100 miles, does not seem to measure up. If no one wants it, it does not matter how politically correct it is, it will not succeed.

Of course, the actual cost of the Volt will probably not be $41,000. The government will subsidize the buyers. That means that an individual taxpayer will help pay for the development and construction of the car, and then pay part of the price for someone to buy it, even if that taxpayer has no intention of buying an electric car for himself. God help us if the thing actually becomes popular and sells millions of units. Taxes would have to be raised to subsidize the taxpayers . . . huh?

The correct way to market a car is to make what the buying public wants. Many things go into the buyer’s decision, things like cost, size, mileage, performance, durability, reliability, range, weight and passenger capacity, appearance, pride of ownership, insurance cost and cost of repairs. There are people who will buy a specific car only because it will help save the environment, if they can afford it, but those people are a small part of the overall population. The wisdom of subsidizing a car that has a small chance of success does not bode well for pork barrel politicians.

There are other major government subsidies. They can be found in all the energies sectors. Here is a quick comparison:

$0.25 per megawatt-hour for gas and oil generated electricity. This subsidy should be eliminated; gas and oil have always been able to compete without subsidies.
$0.44 per megawatt-hour for coal generated electricity. This subsidy should be eliminated; coal has always been able to compete without subsidies.
$0.60 per megawatt-hour for hydroelectric power. This subsidy should be eliminated; hydroelectric has always been able to compete without subsidies.
$1.60 per megawatt-hour for nuclear power. This subsidy should be eliminated; nuclear power has always been able to compete without subsidies.
$23.50 per megawatt-hour for wind power. This subsidy should be eliminated; wind power will never be able to compete without eternal subsidies.
$24.50 per megawatt hour for solar power. This subsidy should be eliminated; solar power will never be able to compete without eternal subsidies.

If someone has an idea on how to generate electricity on a competitive basis, there will be individuals and companies interested in investing in that technology. There will be no need for government subsidies. If all subsidies were discontinued today, would you invest in the GM Volt, wind power, and solar power? Would a high probability of never seeing a return on your investment bother you? If it would, you might consider that these enterprises are what your government sees as the best use of YOUR money. The government has no money of its own. Perhaps it should get out of the subsidy business.

Published in: on August 6, 2010 at 2:33 pm  Leave a Comment  
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Campaign funding

An able, disinterested, public-spirited press, with trained intelligence to know the right and courage to do it, can preserve that public virtue without which popular government is a sham and a mockery.
Joseph Pulitzer-publisher

I am definitely confused by a front-page article in the Post-Dispatch on 7/24/10. I always expect the Post-Dispatch to be extremely liberally biased, but the article on the campaign cash sources for Roy Blunt and Robin Carnahan threw me off track.

While the British Petroleum oil spill is causing many to view oil companies somewhat negatively, the polls show that most Americans want the drilling to continue in the Gulf of Mexico. For all that goes, they want drilling opened up all over the United States. That is because most common citizens realize that very little oil is used in the generation of electricity (no matter how bad Obama wants everyone to believe otherwise and tries to link it to cap-and-trade bill), but it is a vital necessity for the car-driving public.

I am sure the article was supposed to be positive for Carnahan and negative for Blunt; however, I believe the P-D must have missed those polls. The whole crux of the article is that Roy Blunt is receiving much of his campaign money from dirty old oil companies, while Robin Carnahan is receiving hers from renewable energy companies and labor unions.

Unfortunately for the Post-Dispatch, more and more people are realizing that renewable energy will not be will not be replacing fossil fuels anytime soon. Renewable energy combines the traits of unreliability and great expense. If not for tax-dollar subsidies, no privately held renewable energy company could hope to live in a competitive market. It needs massive federal funding and the passage of cap-and-tax bill to raise the cost of fossil fuels before it can hope to become competitive. Of course, the subsidizing taxpayers will still not appreciate the intrinsic blackouts and brownouts just so renewable energy can show that profit.

So why is the Post-Dispatch wasting top-of-the-fold front-page space, (on something that should maybe be somewhere on page 9) on an article about Senate candidates’ funding sources? I believe they are trying to smear Blunt with his attachment to an inexpensive, reliable, vital fuel source, while trying to enhance Carnahan by her attachment to an expensive, unreliable energy source.

Is it possible the Post-Dispatch has decided to start leaning right? Yeah, right.

Published in: on July 24, 2010 at 6:32 pm  Leave a Comment  
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The perfect place

I am an expert of electricity. My father occupied the chair of applied electricity at the state prison.
W. C. Fields-comedian

Have you ever wondered what would happen if a community of true renewable energy believers would put it all on the line and make their community carbon free? Well, it happened. (Click Link)

The Isle of Eigg, off the west coast of Scotland, is not what one would call a typical location for the development of green energy; one would call it an excellent location. As a small island, with a population of 87, its energy needs were small. On the twelve square mile island, the constant offshore winds were considered ideal for wind turbines, there was sufficient space for solar collectors, and the annual rainfall was suitable for hydroelectric production. Oh yes, and there was a need. The island once had a small hydroelectric generator, but it broke down. The community therefore survived with small diesel or gasoline generators at each house or business.

The cost of the green system needed turned out to be 1.6 million in Euros (1.9 million dollars). That breaks down to just under $22,000 per person. The residents spent twenty years trying to acquire funding. By 2006, the residents, the European Union, lottery cash and other bodies had come up with the money. The great experiment began, and the lights were switched on in 2008.

What happened? Well, in January of this year, Eigg won a million Euro prize (Click Link) as a model community for the renewable era. If they used the prize to pay off the cost of their green energy, it brings the cost per person down to $8,400. As a place with no other form of energy, it is almost reasonable.

I must reiterate, Eigg is not a typical green energy installation. It is ideal.

So, you might wonder, how are things going with Eigg today? Not so well. Mother Nature can be so fickle (Click Link). Now, with 96 residents (the population explosion may be the result of available power), Eigg is in the middle of a hot spell. Rainfall is down, and so is their hydroelectric plant. The constant offshore wind has become very intermittent, so the wind turbines cannot be counted on. One can assume that the sun still shines during the day hours, so they do have some renewable electricity, but their main power is now from backup diesel generators, and it is being rationed. Carbon power to the rescue again.

Perhaps there is a lesson here for those of us who dream of a fully renewable energy future. Eigg was the ideal location for renewable energy. It cost a fortune to get it up and running. The upkeep costs will continue in the form of a higher utility bills than most of the world is presently paying. Still, it did not work. It is not dependable. Money is still being spent for a reliable diesel generator; a backup system is always needed for all renewables except for nuclear.

If the United States could build a similar countrywide renewable energy system for $20,000 a person (Eigg only had to run six miles of wire) it would cost something north of $6 trillion just to create it, it would work only part of the time, and require a backup system as large as our present electrical system, and the ongoing costs would be much more than we presently pay. It is time to wake up and smell the coffee.

Published in: on June 29, 2010 at 5:20 pm  Leave a Comment  
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Oil versus wind, or one flew over the cuckoo’s nest

Formula for success: rise early, work hard, strike oil.
J. Paul Getty-businessman

Perhaps you are aware of the gulf oil spills’ carnage to the innocent birds. I have seen articles speculating on the fines BP should have to pay.

There is legal precedent for huge fines related to bird kill. It cost Exxon-Mobile $600,000 for the deaths of 85 migratory birds (Click Link), that is $7,059 per bird, and the Exxon Valdez disaster killed between 350,000 and 600,000 birds costing Exxon nearly a billion dollars in damages (Click Link). Actually, only 11,000 dead birds were found. Knowing more birds had to have died, realistic estimates ranged from 90,000 to 270,000 (Click Link) but the Greens used a PDOOMY (Pulled directly out of my ass) number and rounded it up to 600,000. Any of those numbers made it pretty expensive for Exxon: somewhere between $1,667 and $90,909 per bird.

Well, so far only 658 dead birds have been found on the Gulf coast. That was the count up to June 11th (Click Link). A more up to date count has proven to be elusive, but probably does not matter. After all is said and done, the fine will depend on another PDOOMY number with zero reference to reality anyway.

It is easy to see why the Greens are licking their lips at a chance to really punish BP. Something has got to be done to get those responsible to realize the damage they did to the bird population. Even the lowest fine from the precedents is $1,667 per bird. Let us fine all those responsible at least that much. Right?

Wait a minute. Are there not other man-made causes of bird deaths? Actually, it turns out that there are (Click Link).

Hum, ferial and domestic cats, hundreds of millions of birds killed. The cat owners had better have pretty deep pockets. At $1,667 per bird, that adds up pretty quickly.

Power lines: 130 million to 174 million. Get ready for that rate increase.

Windows: 100 million to a billion. What is that thing about people living in glass houses?

Pesticides: 70 million. Food prices may be going up.

Automobiles: 60 million to 80 million. Eh, does my insurance cover that?

Lighted communications towers: 40 million to 50 million. There goes the phone bill.

Wind turbines: 10,000 to 40,000. Of course, we only get 2% of our electricity from wind. That number will rise year after year.

I do not know and do not care how many of the above numbers are PDOOMA numbers. None of them reflect the trillions(?) of birds that die naturally each year. All creatures, including men, die. Some adapt and multiply, and some become extinct. Fining a person or a company because of an accident is silly. If there is criminal negligence, lock those responsible away.

Fining a company money that it will recoup by raising the product price is fining the general public, kind of like a new tax. Wait, didn’t Obama say that energy prices would skyrocket? It is the perfect solution. Fine the oil companies, raise the cost of energy, give the fine money to some green organization to save the world, get the green vote, don’t raise oil taxes, get oil political contributions and public support . . . .

Published in: on June 28, 2010 at 1:45 pm  Leave a Comment  
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