Author Archives: L J Furman, MBA

About L J Furman, MBA

Analyst here and Director of Information Technology with an MBA in Managing for Sustainability.

Mayflower Oil Spill – Economic Externalities

Image showing oil covering lake at Dawson’s Cove, Mayflower, Arkansas

Back in the mid-1970’s, Amory Lovins, currently with the Rocky Mountain Institute, said “The cheapest unit of energy is the one you don’t need to buy.” He called this the “Nega-Watt.” We now know that the Nega-Watt is also the cleanest unit of energy. And the second cheapest – and second cleanest – is the one which doesn’t need fuel and doesn’t create waste, which might be called the “Nega-Fuel-Watt” or “Nega-Waste-Watt.”

Edward McAllister, reported in Reuters, covered by Yahoo News,

Warren Andrews had just finished putting up balloons for his stepdaughter’s 18th birthday party at their suburban home in Mayflower, Arkansas, when his wife came inside and said something was wrong.

After stepping out of his house, and taking one glance, he immediately dialed 911.

“I don’t know what’s going on, but I’ve got a river of oil coming down the street at me,” Andrews told the operator.

Five minutes later, the slick of noxious black crude spewing from a ruptured Exxon Mobil pipeline was eight feet wide, six inches deep and growing fast.

We now know that an Exxon Mobil pipeline, like the proposed Keystone Pipeline, carrying Canadian crude oil ruptured on Friday, March 29, 2913, spilling an estimated 500,000 gallons of oil into the grounds of the town. 500,000 gallons is roughly 11,000 barrels.

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Fracking: Scientifically Proven Clean – But Is It ‘Junk Science’?

Ronald Reagan, Courtesy Google Images

The petrochemical industry says “Trust us. The Fracking fluids are water mixed with sand, and a few – 0.5% – other chemicals, household chemicals, like chlorine and benzine.”

According to SourceWatch,

There were more than 493,000 active natural-gas wells across 31 states in the U.S. in 2009, almost double the number in 1990. Around 90 percent have used fracking … according to the drilling industry.^[2] Nationwide, residents living near fracked gas wells have filed over 1,000 complaints regarding tainted water, severe illnesses, livestock deaths, and fish kills.

While 1000 complaints on 493,000 wells is a low percentage, if fracking was safe and clean, why the complaints and controversy? President Reagan used to say “Trust people, but check.” Well,

If the speed limit was 350 miles per hour; then no one would get a speeding ticket.
If the tax code was “Whatever you feel like paying;” then I certainly would pay less taxes.
So if fracking was safe and clean; then why the complaints?

The industry says “Trust us, fracking is clean…. We adhere to all regulations…. ” But what are the regulations?

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Energy Portfolios At 3 Months: Sustainable Energy: Up 22%. Fossil Fuels: Up 3%

As of the close of trading on March 22, 2013, excluding the effects of dividends, the Sustainable Energy reference portfolio I created on 12/21/12 is up 21.67%, from $8.0 Million to $9.73 Million. Excluding the effects of dividends, the Fossil Fuel Reference Virtual Portfolio is up 2.7%, from $8.0 Million to $8.221 Million in the same time frame. The Dow Jones Industrial Average is up 10.85% and the S&P 500 is up 8.88%. Note that this is a simulation. Note also that this doesn’t take into account the effects of dividends.

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Fracking – Above the Law

Former Vice President & former CEO of Halliburton, Richard B. Cheney

Energy From Shale says,

“Spent or used fracturing fluids are normally recovered at the initial stage of well production and recycled in a closed system for future use or disposed of under regulation, either by surface discharge where authorized under the Clean Water Act or by injection into Class II wells

as authorized under the Safe Drinking Water Act. Regulation may also allow recovered fracturing fluids to be disposed of at appropriate commercial facilities. Not all fracturing fluid returns to the surface. Over the life of the well, some is left behind and confined by thousands of feet of rock layers.”

This is a very misleading statement, given that Congress, in 2005, passed the “Halliburton Rule,” which exempted Fracking from regulation by the Clean Water Act and the Safe Drinking Water Act.

As noted by the Environmental Defense Center, here, and Source Watch, here, Fracking is actually exempt from Eight (8) major federal regulations.

The Clean Water Act , due to the “Halliburton loophole” pushed through by former Vice-President/former Halliburton CEO Dick Cheney, exempting corporations from revealing the chemicals used in fracking fluid;
The Safe Drinking Water Act, also due to the “Halliburton loophole”.
The Toxic Release Inventory under the Emergency Planning and Community Right-to-Know Act.
The Resource Conservation and Recovery Act, which exempts fracking from federal regulations pertaining to hazardous waste;
The Comprehensive Environmental Response, Compensation, and Liability Act;
The Clean Air Act,
The National Environmental Policy Act; and
The Superfund law, which requires that polluters remediate for carcinogens like benzene released into the environment, except if they come from oil or gas;

As noted here, Bill McKibben, of 350.org, R. P. Siegel, who co-wrote Vapor Trails and writes for Triple Pundit, Al Gore, and many others, including myself, who think about global warming and climate change and see the challenges presented by our need for energy and the potential of sustainable energy suggest that it would be better to use wind, solar, geothermal, and other fuel free systems, and to manufacture fuel from sewage, garbage, agricultural waste and algae than to dig fossil fuels – and heavy metals – out of the ground – and in so doing severely damage the biosphere.

But I think McKibben, Siegel, Gore, and Cheney would agree with me that “Fracking” is aptly named.

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Part 3 in a Series.

L. Furman, 3/12/13, Hydro Fracturing, aka Fracking, Dirty & Ugly, but What Choice do we Have?
L. Furman, 3/14/13, Fracking,Best Practices versus Current Practice
L. Furman, 3/18/13, Fracking – Above the Law

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An analyst with Popular Logistics, Lawrence J. Furman holds a Bachelor’s in Biology, and an MBA in “Managing for Sustainability” from Marlboro College, Vermont. He also has experience in information technology. He can be reached at ‘L Furman 97” at G Mail.

Carbon Sequestration: A Surreal Carbon Solution

What was once a mountain. image courtesy of Appalachian Voices. AppVoices.org

Writing in the New York Times, here, Joe Nocera, says,

Sometime this summer, in Odessa, Tex., the Summit Power Group plans to break ground on a $2.5 billion coal gasification power plant. Summit has named this the Texas Clean Energy Project. With good reason.

The people behind this project want people to believe that the energy the plant produces is clean. Mr. Nocera continues.

Part of the promise of this power plant is its use of gasified coal; because the gasification process doesn’t burn the coal, it makes for far cleaner energy than a traditional coal-fired plant.

The plant doesn’t burn SOLID coal. It gassifies the coal, then burns the gas. It’s still burning the coal. Only this process uses energy to gassify the coal. It then uses more energy to capture and sequester 90% of the carbon. Think, Mr. Nocera, how can this make CLEANER? Answer: It Can’t and it Doesn’t. But it can – and does – make it more expensive.

And what about the Arsenic, Mercury, Uranium that are embedded in coal? And the processes that dig coal out of the ground? Refer to Appalachian Voices for more on mountaintop removal.

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Nuclear Power – Not “Carbon Free” Energy

Fukushima

Jeff Hanson, spokesman for the Omaha Public Power District, OPPD, in discussing the Fort Calhoun reactor, closed since April, 2011 for refueling then, in June, 2011, due to flooding, said,

“[Nuclear power is] a reliable source of electricity that’s carbon-free. That becomes more valuable going forward,” OPPD spokesman Jeff Hanson said.

This assertion that nuclear power is “carbon free” or that it produces “no greenhouse gases” is based on a simplified view of one aspect of the nuclear power – fissioning uranium – and ignores the complete picture.

Fallout Map from Fukushima Disaster

While fissioning uranium does not release carbon dioxide, when we look at the entire fuel / waste cycle we see that getting uranium out of the ground, fashioning it into fuel rods, transporting the fuel rods to the plant and managing the waste requires energy, and much of this energy releases carbon dioxide.

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Fort Calhoun – Still Shut Down – Since April, 2011

Fort Calhoun nuclear power plant, within the Missouri

Ft. Calhoun Nuclear Station, within the Missouri

The Fort Calhoun Nuclear Plant, (OPPD / NRC) 19 Miles from Omaha, Nebraska, was shut-down for refueling in April, 2011. Flooded by the Missouri River in June, 2011, the plant remains shut-down. It Will Be Two Years – 2 YEARS – In April!

The Omaha Public Power District, OPPD has raised rates 6.9% to finance a $143 million repair bill. This does not include the costs to the OPPD to purchase electricity that the plant would provide – which is 25% of the power that the OPPD needs on a daily basis.. This also does not include costs to replace teflon coated wiring – which disintegrates on exposure to high levels of radiation – and costs to repair some of the plant’s support structures. This also probably does not include the costs to the district for Excelon to run the plant for the next 20 years, reported on Jan. 28, 2013, by Kevin Cole, of Omaha.com, the Omaha World-Herald, (here),

“For the first year of management work, OPPD will pay Exelon between $20 million and $26.5 million.”

In a telephone interview with me, in August, 2011, David Lochbaum, of the Union of Concerned Scientists, UCS, estimated the total cost of maintaining the plant and purchasing replacement electricity to be $1.0 million per day – roughly $600 million, to date.

By asking Exelon to run the plant, it looks like the OPPD has decided to keep the plant running. Similarly, by requiring the OPPD to do what needs to be done to bring the plant back up, it seems like the NRC has decided that this 50 year old and severely constrained nuclear power plant is worth bringing back on line. Who is asking whether or not this is a good idea? It seems to me that OPPD would be better off asking Warren Buffett, Omaha based head of Berkshire Hathaway how to manage their assets than asking Exelon to spend whatever it takes to “Bring this bad boy back on-line.”

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Fracking, Best Practices versus Current Practice

Gas Flare in North Dakota, Courtesy National Geographic

EnergyFromShale.org, the industry website, says,

“The oil and natural gas production industry uses these lessons to develop best practices to minimize the environmental and societal impacts associated with development.”

The image above from National Geographic, The New Oil Landscape, March, 2013, suggests that the ideal is far from the reality. And even if the “Frackers” used “Best Practices”, “Best Practices” for a carbon source of energy is not “Best Practice” for an sustainable economy. Efficient use of energy obtained via solar, wind, geothermal, marine hydro and in stream hydro are best practices. Fracking doesn’t even come close.

But even if extraction was done in such as manner as to isolate all heavy metals, carcinogens, radioisotopes and other pollutants from the biosphere, the whole point of hydro-fracturing is to extract carbon from beneath the earth, in order to burn it and transfer carbon dioxide – a greenhouse gas – into the atmosphere.

Bill McKibben, of 350.org, R. P. Siegel, who co-wrote Vapor Trails and writes for Triple Pundit, Al Gore, who won the popular vote for US President in 2000, and many others, including myself, who think about global warming and climate change and see the challenges presented by our need for energy and the potential of clean, renewable, sustainable energy suggest that it would be better to use wind, solar, geothermal, and other fuel free systems, and to manufacture fuel from sewage, garbage, agricultural waste and algae than to dig fossil fuels – and heavy metals – out of the ground – and in so doing severely damage the biosphere.

But I think we agree that “Fracking” is aptly named.

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Part 2 in a Series.

L. Furman, 3/12/13, Hydro Fracturing, aka Fracking, Dirty & Ugly, but What Choice do we Have?
L. Furman, 3/14/13, Fracking, Best Practices versus Current Practice

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An analyst with Popular Logistics, Lawrence J. Furman holds a Bachelor’s in Biology, an MBA in “Managing for Sustainability” from Marlboro College, experience with information technology. He can be reached at ‘L Furman 97” @ G Mail.

Hydro Fracturing, aka Fracking, Dirty & Ugly, but What Choice do we Have?

Satellite photo of US at night. Flares from Bakken shale wells in North Dakota

We have large deposits of shale oil – in the Marcellus shale in Pennsylvania, and in the Bakken formation in North Dakota and Canada. Estimates vary. USGS, 2008 estimated 3.0 to 4.3 Billion Barrels of recoverable oil. Today, the North Dakota Geological Survey (PDF) estimates 18 Billions Barrels of recoverable oil. It also states

“the Bakken play on the North Dakota side of the basin is still early in the learning curve. Technology and the price of oil will dictate what is recoverable from this formation.”

Here in the US, according to the US Energy Information Agency, we consumed about 7.0 Billion barrels of refined petroleum products in 2010, slightly less, 6.7 Billion barrels, in 2011. This is roughly 22% of world demand. (here)

The Bakken formation holds Five Months to Two and One Half Years of US Oil needs.

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Sustainable Energy Portfolio UP 16% & Fossil Fuel Portfolio Up 1.7% – Dec.21, 2012 to March 1, 2013

As of the close of trading on March 1, 2013, the virtual portfolio I created in Sustainable Energy stocks on 12/21/12 is up $1.3 Million, 16.31%, from $8.0 Million to $9.3 Million. The Fossil Fuel Reference Virtual Portfolio is up 1.71%, from $8.0 Million to $8.137 Million in the same time frame. The Dow Jones Industrial Average is up 7.63% and the S&P 500 is up 6.15%.

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Announcing the Popular Logistics Virtual Portfolio in Information Technology

Hot on the heels of the December 21, 2012 launch of the Popular Logistics Virtual Portfolio in Sustainable Energy, here, up 22.36%, I am announcing the launch of the Popular Logistics Virtual Portfolio in Information Technology. Roughly $1.0 million in Apple, Google, HP, IBM, Intel, Microsoft, and Oracle.(Their investor relations pages are Apple, Google, HP, IBM, Intel, Microsoft, and Oracle.)

Tech Virtual Portfolio
Item	Stock	Price	Shares	Total
1	Apple	$446	2,242	$1,000,000
2	Google	$795	1,258	$1,000,000
3	HP	$17	59,559	$1,000,000
4	IBM	$198	5,051	$1,000,000
5	Intel	$20	50,000	$1,000,000
6	Microsoft	$27	37,037	$1,000,000
7	Oracle	$24	41,667	$1,000,000
	total			$7,000,000
Table 1. Acquisitions, Start of Business, 2/22/13

Generally speaking, here’s what I expect:

Apple, IBM: I expect to significantly outperform the Dow Jones and S&P 500.
Google: I expect to perform in line with the Dow Jones and S&P.
HP: An investment in HP is speculative. Whitman may turn the company around. The stock might wildly outperform the Dow & the S&P. As Gerstner might say, however, it’s hard to teach an elephant to dance. The stock may plummet.
Intel, Oracle, I don’t know enough to have an expectation.
Microsoft may become a leading indicator of the economy. Thus, if the S&P does well, Microsoft may do better.

These are in table 2, below

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Apple at $665 per share – or $705 – or $1077

Apple, if it can be compared to Google, IBM, Intel, Microsoft, and Oracle, should be priced at 665 per share. This analysis is simply based on Stock Price, Earnings per Share (EPS) and the Price Earnings ratio. or P/E. The average P/E of these companies is 15.08. If Apple’s stock was 15.08 times earnings, it would be 665. If you take Apple out of the mix, the average P/E becomes 16.01. At 16.01 times earnings, Apple’s stock price would be 705. And if priced like Google, $1077. Continue reading →

Gold Bricks and Sink-Holes – The Risk & Reward of Fossil Fuel, Solar & Wind

On Dec. 21, 2012, with virtual portfolios of 7 sustainable energy and 7 fossil fuel companies, I launched the Popular Logistics Sustainable Energy simulation, here.

On Feb. 8, 2013, after 6 weeks, after exercising virtual options to invest in 2 additional companies at 12/21/12 prices, I reported the results, here.

The Sustainable Energy portfolio is up 12.6%
The Fossil Fuel portfolio is up 5.09%.
The Dow Jones Industrial Average is up 6.52%
The S&P 500 is up 5.52%.
The Sustainable Energy Portfolio is up significantly more than the Fossil Fuel Portfolio, and the major indices.
The Fossil Fuel Portfolio is up, but lags the major indices.

These results are not that surprising. Continue reading →

Nega-Watts, Nega-Fuel-Watts, Mega-Bucks

On Dec. 21, 2012, I launched the Popular Logistics Sustainable Energy Portfolio Simulation. After 6 weeks, as of the close of business 2/7/13, the results are:

The Sustainable Energy Portfolio is UP 12.6%
The Fossil Fuel Reference Portfolio is UP 5.09%

In comparison,

The Dow Jones Industrial Average is UP 6.52%
The S&P 500 is UP 5.52%

While six weeks is a very short time frame, except for fruit flies and Day Traders, the Popular Logistics Sustainable Energy Portfolio outperformed the Dow, the S&P 500, and the Fossil Fuel Reference Portfolio by a wide margin. In the same time frame the Fossil Fuel Reference Portfolio also underperformed these indices.

Details are below

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Forget the Great Wall – Meet The Great Haze

Image 1. Beijing from space, Jan., 2013, courtesy NASA

忘了长城 – 我们现在有大的雾度

“Forget the Great Wall – We Now Have the Great Haze”

– Translation by Google

In the 1960’s and 1970’s astronauts showed that we could see the Great Wall of China from space. Today, it’s the Great Haze of China that we can see from space . The New York Daily News, here, published this image, taken by NASA in January 12, 2013 (here) when the Air Quality Index, AQI, reached 775.

The AQI was established by the US EPA. AQI above 300 is considered dangerous. AQI at 775 is probably deadly.

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