Pinching Pennies

From 1793 through 1857 the U.S. mint produced a coin called a half cent.  It was the smallest denomination of coin ever available in U.S. history.  Eventually, after 64 years of production, the half cent was discontinued due to a lack of utility, popularity, and usefulness.  At the time that the half cent was declared useless it had the equivalent 2010 purchasing power of 13 cents.       

The 1 cent coin has now reigned as the smallest denomination of coin for 154 years; well over twice the time of the half cent.  Today it carries virtually no purchasing power and amounts to a loss of time in counting coins.  Economists speculate that we lose millions of dollars per year in wasted efficiency by carrying and counting pennies.  As if this weren’t enough, the cost to create a 1 cent coin is now around 1.79 cents based on the U.S. Mint 2010 report, resulting in a clear 79% loss of taxpayer funds.  An even greater capital loss occurs in production of the nickel, which costs 9.2 cents to make, for a hit of 84%.  All other coins are minted profitably.

Numerous attempts have been made to end the minting of the penny.  In fact, bills were brought to the legislature in 2001 and again in 2006.  Neither bill prevailed.  The major arguments to keep pennies amounted mostly to issues of tradition and sentiment, while the mathematical argument is a no-brainer.  Of course we can’t ignore the fact that a major argument in support of the penny is voiced by the zinc lobby fighting tooth and nail to secure their place in the market.

If economy were the basis of decision we would have good cause to eliminate the penny, the nickel, and the quarter; leaving the dime, half dollar, and dollar coins as the remaining currencies.  Transactions would then be rounded to the nearest dime, making them considerably more precise in terms of purchase power than they were in 1857.  In this case most retailers will be forced to round down.  Since most prices end in $.99 to create a lower price image, retailers would be more apt to use $.90 wherever possible, instead of the weightier $1.00.

This rant isn’t just about pennies.  It’s about the fact that we excuse waste in the most inexcusable ways.  We spend millions of dollars creating little round metal objects that we don’t need.  We carry them around, sort them, exchange them, and count them, knowing all the time that they don’t really amount to much.  So we throw them in a jar.  We have always done it that way.  We have also always burned a thousand gallons of gasoline per household per year.  We have always wasted thousands of gallons of water on lawns.  We have always burned millions of BTU’s of energy in unoccupied rooms.  We have always thrown away a horrendous percentage of recyclables.  

In early July, our law makers in Washington argued over the Better Use ofLight Bulbs act, a bill intended to prevent higher efficiency standards in light bulbs.  Republicans introduced the act saying that energy efficiency standards limit consumer choices.  Rush Limbaugh supported the bill saying “Let there be freedom!”  After all, haven’t we always used inefficient light bulbs?  Fortunately, the BULB bill failed and the efficiency standards that were signed into law by George Bush will still remain in place mandating more efficient light bulbs and several other energy saving initiatives.

One perplexing side effect of the Great Recession is that America has been forced to become leaner in order to adapt and survive.  We have spent the last three years seeking out and removing sources of waste.  Consequently, as the economy makes a slow recovery U.S. employment has not rebounded despite increasing corporate profits.  Businesses are now doing more work with less manpower and less space.  The penny pinchers are the survivors.  So perhaps you could start cutting waste by emptying your jar full of pennies and nickels.  Use that money to buy better light bulbs!

Desalination for free

Yes, that’s right.  I said it.  Free. 

When we imagine ourselves being completely out of water resources, we look toward the ocean.  We lament desalination as the inevitable and least desirable way to get our future fresh water.  This is natural - just look at all of that water.  But we fail to recognize desalination is already happening for us - for free.

Contrary to conventional wisdom, the available quantity of fresh water is not finite.  It is expandable to a far greater extent than we will ever need.  During the height of the last ice age (aka last glacial maximum about 20,000 years ago), entire land masses were covered in fresh water glaciers to such an extent that sea level was 100 feet lower than today.  In order for glaciers to impound that quantity of water, they needed to be several thousand feet in thickness!  This stored quantity of fresh water was multitudes greater than we have today.  All of this happened naturally.

The greatest single source of our planet’s atmospheric moisture comes from the oceans.  This moisture then blows over the continents and forms clouds where it precipitates inland.  The ocean delivers purified, chilled, desalinated water onto our dry land.  One of the scary impacts of global warming is that ice formations are receding and the sea is consequently rising.  This is causing beach erosion, inland flooding, and in some rare cases, the complete disappearance of small habited islands.  Imagine that we make an effort to trap all of our rain and snow in millions of containers so none of the fresh water flows back to the ocean.  Each year, new precipitation will fall.  Much of it will come from the evaporation from the buckets, but still more would come from the ocean.  Each year we will need more containers.  The more fresh water we store, the more fresh water we get.  Consequently we also mitigate sea level rise.

The Great Salt Lake is 2 to 7 times more saline than the ocean, yet it too provides us with free desalination via the “lake effect”.  This large body of water allows humans to survive in the area because the evaporation from the lake creates precipitation, with the highest concentrations of fresh water within 30 miles of the shore.  Consequently, the Great Salt Lake is a source of fresh water in Salt Lake City.  If you take away the Great Salt Lake you also lose the fresh water that precipitates from it, thus making Salt Lake City uninhabitable.

Lake Havasu was created in 1938 when the Colorado River was dammed for the purpose of storing and routing water through aqueducts.  The city of Lake Havasu, AZ was established there in 1968 and it now contains over 52,000 people.  Yet the river still flows.  Did we manage to accumulate fresh water?  Yes in fact we did.  If we need more fresh water, we simply need to store more water inland.  Water reservoirs do not deplete water - they reserve it and increase it.  As we build more reservoirs, we control flooding and we keep excess fresh water from running back to the ocean.  We also encourage lake effect precipitation thus enriching the land around the reservoirs.  At the same time, the oceans continue to contribute even more fresh water to inland locations, providing natural desalination for free.   We only need to store it.

Tony F.

Unravelling Greenhouse Gases

First of all, greenhouse gases are a good thing.  Without them our planet would be around 60 degrees colder and we would probably not exist.  Over the last 200 years, however, greenhouse gases have increased in volume causing greater warming impact on the planet.  Although we tend to concentrate on carbon dioxide as the culprit the actual inventory of greenhouse gases consists of 6 primary sources.  They are (in order of prevalence) Water Vapor, Carbon Dioxide, Methane, Ozone, Nitrous Oxide, and Synthetics (CFC’s, HFC’s, PFC’s, and SF6). 

Water vapor is a gas, and it is the most influential greenhouse gas.  That is to say that it is the primary force that retains heat in the atmosphere.  It is generally believed that water vapor averages around 1% of the total atmosphere, thus making it 25 times more prevalent by volume than carbon dioxide’s 0.039%.  Water vapor is also widely believed to contribute 55 to 70 percent of global greenhouse influence.  Yet water vapor is not blamed in global warming scenarios for good reasons:  Water vapor acts as a greenhouse gas until it reaches high concentrations, then it forms clouds and acts part time as a coolant.   Water vapor moves with temperature change - it increases in warmer zones and precipitates from cooler zones.  This movement occurs almost instantly; therefore water vapor cannot cause a warming trend.  It simply reacts to it.  It is considered a feedback gas to global warming, not a causal gas.

As global temperatures increase, water vapor also increases due to relative humidity.  Thus, water vapor supports higher temperatures as a new normal, exacerbating the trend and making it more difficult to reverse.  Conversely, warm and humid regions (particularly closer to the equator) do not get warmer because the other greenhouse gases are not influential enough to overpower the more prevalent water vapor.  For this reason, global warming is evidenced almost exclusively in polar, glacial, desert and mountain regions where water vapor is least prevalent.  The term Global Warming is therefore a misnomer.  A more correct term may be “Regional Warming”.  This is best illustrated by the climate of the Eocene maximum, approximately 50 million years ago, when the average temperature of the earth shot up by as much as 16F degrees and carbon dioxide was 4 times more prevalent.  During this period, geologic evidence indicates abundant life forms and forests had grown near the poles while equatorial regions appeared nearly the same as they are now.  Temperatures had never been as consistent across the planet as they were during the Eocene.

As greenhouse gases warm the colder and dryer regions of the planet we see receding ice caps, shorter durations of sea ice, and surprisingly in some cases – more precipitation.  In Boulder, Colorado for example, NOAA has identified significant and measurable rise in water vapor concentration over the last 40 years, trending to as much as 0.1 percent per year, or a full percent over 10 years.  Consequently, increasing humidity is causing portions of Colorado to experience greater rain and snow despite a warming climate.  Because water vapor continues to support and elevate the current temperatures, we are unlikely to reverse the trend even if we were to eliminate greenhouse emissions.  And for what?  Life was abundent and widespread during the Eocene epoch, so reversing warming trends do not necessarily help living conditions.

Despite the fact that global warming is underway and essentially irreversible, we continue to hope for a better outcome.  Building design engineers are not making adjustments to drainage calculations or roof loading to compensate for inevitably greater precipitation.  Coastal cities are not making allowances for inevitably rising sea levels or inevitably more severe hurricanes.  It is time to forget about the argument of who is causing global warming as well as how to reverse it.  Neither conversation is worth having.  It is time to plan for the change that we all know is happening right before our eyes.

 

Tony F.

The Immorality of sex

The Bible clearly states that homosexuality; specifically male to male sexuality is wrong, so wrong in fact it is punishable by death.  The Bible also clearly states that adultery is wrong, thus punishable by death.  This punishment is also set forth if a man has sex with a single woman and fails to take her hand in marriage.  If a woman is found not to be a virgin upon marriage, she may be stoned to death.  If a married woman is raped in a populated area and fails to get attention by screaming for help, both she and the rapist shall be stoned to death.  A man who spills his semen on the ground in an attempt to avoid impregnating a woman shall surely die.  So as you can see, homosexuals, adulterers, unmarried lovers, rapists, rape victims, and users of birth control are all rated on the same level that is worthy of death.  Many young lovers today believe they should retain their virginity by engaging in oral sex, but these acts, when carried out between unmarried people, are also sins worthy of death.  Moreover, no single person is guilty of such a sin.  Lovers cause each other to sin.  In the Middle East, stonings are carried out on a frightening number of women each year despite the fact that their alleged male sex partner is equally guilty and goes free.

Most of these laws are cited in Genesis, Leviticus, and Deuteronomy and are cited by nearly all major religions.  Clearly the laws of the Old Testament are harshly structured to support virginity, marriage, procreation, monogamy, and family structure.  But there are a couple exceptions:  the Bible is not very clear about lesbian relationships, nor is it clear about masturbation when no other person is present.  These are interesting exceptions from such a rigid structure, but evidently God figured it was no big deal.  Consequently it stands to reason that the laws of the Bible are geared mostly toward the prevention of disease and promotion of births. Evidence dictates that masturbation and lesbianism are highly unlikely to spread disease when compared to any other sexual act.

The bottom line here is that unmarried heterosexuals and male homosexuals are all equal sinners in the eyes of the Bible. Heterosexuals rise above this scrutiny only through marriage, procreation, and omission of birth control.  So the truth remains, it is a small minority of people, if any, who are righteous enough to criticize any other for homosexuality or permiscuity because they are all guilty of equal sin.   1Cor. 6:9-10, "Or do you not know that the unrighteous shall not inherit the kingdom of God? Do not be deceived; neither fornicators, nor idolaters, nor adulterers, nor effeminate, nor homosexuals, ¹⁰nor thieves, nor the covetous, nor drunkards, nor revilers, nor swindlers, shall inherit the kingdom of God."  This is quite a list of sinners all placed on the same list together!  Evidently a sin is a sin is a sin.  According to the Bible there is very little difference between one sin and another.

This rash of immorality, gay or straight, is nothing new.  The world is not suddenly going to hell in a hand basket.  The Bible itself documents entire cities (Sodom & Gomorrah), and even the entire world (during Noah’s Ark) filled with sin and immorality to the extent that “not a single righteous man existed among them”.  So, if any faction of society is to claim that they are the “moral right” I find their claim hard to believe.  Like everyone else I am not perfect.  No birth control?  Really?  Yes!!  So who are we to judge anyone else, gay or straight?  As Jesus said, he who is without sin may cast the first stone.    

Tony F.

Appraisals for Energy and Economy

Economists believe that the housing bubble of 2008 burst for two reasons:  mortgage brokers who convinced underqualified buyers that they could buy more, and buyers who wouldn’t accept that they were underqualified.  Although these two points are not arguable we forget one of the most highly trusted participants in the equation – the Appraisors.  It is the Appraisor who convinced the Buyer and the Broker that the value of the house was fair and sustainable.  Because of the work of the Appraisors, millions of houses are encumbered by loans larger than the value of the homes. 

The appraised value of any house is established by the most recent sale price of a similar house.  So as prices of houses rise, the appraisal system allows prices to continue to rise until the bubble bursts.  As the houses are then sold at lower prices in a dead market, the prices continue to fall.  Consequently, home prices rise and fall at such great percentages that home owners lose billions in the swing.   In the period from 2008 to 2011 the value of used houses plummeted 30-40%, but the cost of new construction only declined 8-12%.  Consequently, the buyers of used houses suffered a much greater loss than the buyers of new homes.  The current appraisal system supports this trend.

Moreover, a home owner who invests the time and money to renovate their older home to a new standard will never get a return on the investment because the renovated home cannot be compared to another like kind sale.  The older home upgraded to the new standard is a sure loss if the rest of the neighborhood does not do the same.  Herein lies the flaw.  Old neighborhoods stay inefficient and ill repaired while new homes are constantly improved with better design.  Because the new homes are better designed they retain their value longer - even through an economic crash.

What would happen if appraisals were based on the reasonable cost of a new energy and water efficient home with modern ammenities, yet keeping its original size, architecture, and location?  For instance, if a home is 20 years old, what would it cost to renovate it to the new standard?  Compare this to the cost to raze the house and rebuild to a new standard.  The difference is the net value of the house.  Of course the cost of the lot is assessed separately.

We can call this the New Standard Equivalent.  The qualified buyer must be a person who can purchase the house for the net value and also has the financial ability to upgrade the property to the New Standard Equivalent.  With the New Standard Equivalent, old neighborhoods get upgraded, slums get repaired, old houses become more energy and water efficient, and urban renewal becomes automatic.  Only the seller who fails to upgrade will feel the pain when it is time to sell.  Buildings become more efficient, jobs are created, and investment risk is reduced.

The EPA reports that buildings consume 70% of the electrical energy and 37% of the total energy produced in the US.  It is also reported that new buildings are 30% more efficient than buildings 20 years older.  Yet there is no current way to incentivize the upgrading of older buildings to a higher standard.  By modifying the appraisal process to a New Standard Equivalent, this becomes a matter of economics and good investment sense.  Property values are maintained, construction jobs are increased, and energy is saved.

The Great Exuberance

We currently live in a period referred to by many as “The Great Recession”.  After the fall of 2008, the economy hit a point from which it has not yet recovered.  We begrudgingly wait for the moment where we can safely get back to the way of life we once knew.  But I predict that twenty years from now we will not look back on this period as a Great Recession at all.  The fact is that we enjoyed a period of great excess in the decade prior to 2008.  Alan Greenspan referred to the period from 1996 to 2006 as one of “irrational exuberance”.  Now, in 2011, we live in a more normal economy.  This is not the Great Recession.  It is the end of the Great Exuberance.

Unemployment is the relationship between the people who are seeking jobs, and the number who are actually employed.  Right now it appears unemployment is high because a larger percentage of people are seeking jobs than ever before.  In U.S. history prior to 1980, more than half of the American population did not work, nor did they seek jobs.  I am referring to the children, the elderly, the ill, the students, the unemployable, and the home parents.  According to the USDept. of Labor, the US workforce averaged around 40% from 1950 to 1970.  It then climbed briskly to an all time high of 50+% during the Exuberance, and this over employment was reflected in lower work ethic, lower customer service, and lower production per worker.  Now that the workforce is declining back to a more sustainable 49% we think we are in a depressed economy.  Yet many of us look back on the 1950-1970 period as a time of relative stability and comfort despite the fact that true unemployment per capita was 10% higher back then!  People valued their jobs.  They worked harder, served better, and produced more.

Not only did we over employ ourselves during the Exuberance, we also over spent.  We over spent our time away from our children.  We over spent on our children.  We over spent on our pets, our cars, and our gadgets.  We bought over priced, over sized homes with practically no money down.  And we filled our credit cards to the max in anticipation of the next inevitable pay raise.  Average credit card debt reached $5,500 per card in 2009, and has come down only a bit as a result of the Great Correction to a slightly more modest $4,700 per card.  The economy of the Great Exuberance could only be maintained through excess consumerism.

We weren’t the only ones who overspent though.  The US government did the same thing.  In the Exuberance, the US government enjoyed record income from taxation, and they spent significantly more than they received.  Our government created a greater national debt during and shortly after the Exuberance than since World War II.  This was propogated by both Republicans and Democrats alike.  The national debt has now exceeded the GDP for only the second time in U.S. history.  In fact, our government continues to grow debt in the hope that they can recover the economy and get back to the Great Exuberance.

The message here is that we need to stop crying over the economy and get accustomed to it.  This is the normal economy folks.  We once lived in a balloon and the balloon has popped.  The economy will no longer guarantee us a job, or a house, or a 401K.  We need to earn those things through hard work, creativity, and money management.  We need to cut back and save, because we cannot afford and should not have an economy like the Exuberance.  If you are thinking of buying something in anticipation of your next big raise you shouldn't buy it.  And, if you are waiting for a return of the Great Exuberance you will surely be disappointed.

Natural gas - invisible renewable

For the longest time I thought natural gas was a fossil fuel that would eventually be depleted.  This would be unfortunate because it is the cleanest fossil fuel around.  Many of our coal burning power plants are now switching to natural gas as a cleaner solution, and the conversion of vehicles to CNG (compressed natural gas) reduces tailpipe emissions by more than 21%.

Then I discovered that natural gas is refined methane gas.  Methane is formed in landfills, sewage systems, and farms; and all of it can be captured and sold as fuel.  Unfortunately, much of the methane we generate is lost to the atmosphere where it behaves as a powerful greenhouse gas.  This is important to know when we consider that the largest single U.S. source of methane emission is the natural gas system itself!  All of these wells, processors, and pipelines offer endless opportunities for leaks.  We would never settle for leaky oil pipes, so we should set the same standards for leaky gas systems.  Invisible or not, natural gas leaks still impact the environment.

The capture of methane is considered by the EPA to be possibly the greatest opportunity to cut greenhouse gases.  Methane is 25 times more potent than carbon dioxide as a greenhouse gas, and it has only 1/8^th of the atmospheric lifespan (12 years as compared to CO2’s 100 years).  Consequently, a significant cut in carbon dioxide emission would not be felt for a century while a significant cut in methane would show results in just over a decade.  Moreover, methane is a commodity that provides an incentive for capture, but reduction of CO2 results in cost increases.  Fortunately, current efforts to capture methane have kept annual emissions flat over the last 20 years despite growth in gas exploration, population, and GDP.

After natural gas systems, the second largest source of U.S. methane emission comes from the raising of animals for meat.  The grass that is eaten by animals creates methane in the digestive tract.  This has improved as researchers apply genetic engineering to both the animals and their food sources.  Consequently, according to the EPA, cattle in feedlots are easier on the environment than free range cattle are.  This occurs because the food source is engineered for higher digestive efficiency, and the resulting manure can be managed for methane capture.  Combine these efforts with genetic engineering for heavier animals, and the methane output per pound of meat is reduced each year. 

Surprisingly, another significant source of agricultural methane comes from a seemingly benign source.  Rice production requires great quantities of fresh water lying in rice paddies.  This ponding water generates methane.  Although work is being done to decrease and capture the methane from farm animals, pipelines, and landfills; very little has been done to control or capture methane from rice production. As a result, world methane emissions from rice rival the world’s garbage dumps.  This demands attention since rice is among the most common staple foods.

Natural gas (methane) is currently our most promising source of clean burning fuel.  As we continue to improve our methods of capturing and controlling it, we create a long term solution to a cleaner future.  It is local, storable, transportable, abundant, clean burning, and renewable.  All we need to do is capture it.  So what can you do?  Write your congressman about tightening the requirements for leak monitoring in natural gas systems.  Then eat less meat and rice.  The planet will thank you.

Tony F.

The Pity Party

On August 6, 2011 the U.S. government’s credit rating was down graded for the first time in history.  Instead of carrying the best possible credit rating in the world, we now have the second best.  Standard &Poor's had several reasons for the rating, but ultimately they cited the fact that the U.S. government failed to handle the budget within the necessary time frame.  Over the entire month of July our 2.5 party government played the blame game instead of doing the work.  The Republicans blamed Democrats, the Democrats blamed Republicans, and both blamed the Tea Party.  In the long process of taking stands and pointing fingers, adequate measures were not taken to protect our country’s credit.  After S&P announced their decision, the 2.5 party system continued on the same course of blaming each other and some even blamed S&P.  Welcome to the pity party my friends.

So who is responsible for this debacle?  We are.  We voted for politicians who promised to stop each other from getting things done.  We feared our government so much we voted to stop it from functioning.  The truth is that there is no one party that is right for the county all of the time.  This is the very reason why the two party system exists.  If we allow the Democratic ideal to run its course we would ultimately have a socialist society.  If we allow the Republican ideal to run its course we would ultimately have a feudal society.  Instead, our government operates as a pendulum between the two.  It is this great compromise that works.  In America one thing is always certain:  no matter what kind of party you have, someone will eventually be cleaning up after it.

In 2008, a majority of Americans elected a Democratic president along with a Democratic congress.  Immediately the Dems set out to make big changes in health care.  I don’t know if these changes were good or bad, but I do know that our pendulating government has the ability to change the bad stuff.  The damage would be temporary at most.  But this change scared many of us.  This fear opened the door for the Tea Party – a more extreme form of the Republican ideal.  They convinced us that the country was being destroyed by liberals.  So in 2010 we put handcuffs on Washington by intentionally gridlocking the system.  Instead of having a party we have stopped the music.  The 2010 election was last call.

I did not vote for Barack Obama but I am ok with letting the Democrats have their day.  Again, I firmly believe that any bad policy could be undone, and I firmly believe that if EITHER party controlled our government we would still have our AAA credit rating.  Our fear is the problem.  Gridlock is the problem.  Either party would have avoided a credit default.  Either party would have avoided a credit down grade.  In fact, the President and the Speaker of the House had reached a compromise, but they were stopped by the politicians we put in place to prevent compromise.   August 6, 2011 proves that this was a bad idea.  We cannot afford to prevent government action.   It doesn’t matter which party rules the country for a short time.  No party is permanent, and no policy is permanent if it is bad policy.  It is far better to vote for someone who will reach across the aisle to get something done than it is to fill our government with people who will take a stand regardless of the consequences.  The party, whichever one it may be, must go on.

Tony F.