Category Archives: Outside the Box

Brookings, SAP, NRG, and the City of New York on our Energy Future

NRG Energy charging station.

NRG Energy

Follow LJF97 on Twitter  Tweet Will moving to the new energy future – deploying Solar, Wind and other sustainable alternatives create 2.7 Million New Jobs?

At “How Cities and Companies Can Work Together to Operate in the New Energy-Constrained Economy” a panel discussion (press release), Bruce Katz, Vice President and Director of the Metropolitan Policy Program, Brookings Institution, said “2.7 million new jobs” will be created in moving to the clean energy / low carbon economy.

Mr. Katz also noted that two out of three Americans – 200 million people – live in the 100 biggest metropolitan areas, and those 200 million people are responsible for 75% of our GDP. High carbon energy is no longer cheap. The people in those metropolitan areas, and elsewhere, therefore, must act. Continue reading →

Would Ayn Rand be Concerned about Climate Change? You Betcha!

TweetFollow LJF97 on Twitter On Ayn Rand, Objectivism, and Climate Change

Ayn  Rand would not “believe” in climate change.  She would try to objectively determine whether the theory correctly modeled the data. While it is legitimate to question both the conclusions of scientists and the methodologies by which data are gathered, denying objective validity of the data, which people who call themselves “Objectivists” are doing with respect to climate science, is well, in a word, anti-Objectivist, at least as described  by Ayn Rand in 1962.

“The essence of my philosophy” she said, is:

  1. Metaphysics Objective Reality
  2. Epistemology Reason
  3. Ethics Self-interest
  4. Politics Capitalism

“Translated into simple language, ” she continued, “it would read:

  1. “Nature, to be commanded, must be obeyed” or “Wishing won’t make it so.”
  2. “You can’t eat your cake and have it, too.”
  3. “Man is an end in himself.”
  4. “Give me liberty or give me death.” Continue reading →

Keynes, Reluctance to hire, & 21ST Century Energy

John Maynard Keynes, in black and white, because some ideas are.

in black and white, because some ideas are.

Tweet Follow LJF97 on Twitter   During the Great Depression the Classical Economists said “Unemployment is voluntary. Business owners will not voluntarily keep the means of production idle.”  While he had been a student of classical economics, John Maynard Keynes observed that the data didn’t fit the theory. And, he reasoned, if the observable data don’t fit the theory, the theory must be flawed.   “Business owners are risk averse,” he saw. “A employee needs to be productive, needs to make widgets. But if no one is buying widgets, then contrary to classical theory, factory owners will fire workers and keep capital idle rather than hire workers to create excess inventory. That’s just common sense.”

We see this today.

When unemployment was low, for example in the United States during the tech boom of the 1990’s, people acted on the premise that “There is so much work that we could hire and good people and train them.”  Today hiring managers seem to be acting on the premise that “There are so many people looking for work that they can wait for the perfect candidate.” Perfection being unattainable, jobs go unfilled. This is ok, in this context, because

  • “Budgets are tight.”
  • “The future is uncertain.”
  • “Money not spent on a new hire can be saved or used to pay down debt.”

Keynes also observed that the government is an employer that does not need to worry about going out of business. Building infrastructure is government employment that is investment for the future. These observations are as valid today as they were 80 years ago.

Continue reading →

Apple v Microsoft, 2011.

Graph of Apple and Microsoft, stock price, 1980 to 2010At a seminar on June 9, 2011, on securing the mobile worker, Apple‘s representative said  “We truly did not understand what we built.” That’s a direct quote. He went on to say “Here’s how they use it at GE, and Hyatt, and in the pharmaceutical industry.” A few minutes later he said “When users tell us what they can’t do, what they need to do, we listen, so tell us what you need.” At seminars on Microsoft‘s products, their consultants describe their software by saying “This is what we built, this is what it does, and here are our best practices – this is how you should use our software.”

This  is it. Apple’s “We truly did not understand what we built,” versus Microsoft’s “This is what we built, this is what it does, and here are our best practices – this is how you should use our software.” These statements define the corporate cultures.

Apple, at $325 per share, is a $300 billion company. With earnings of 21 per share, it has a price earnings  ratio of 15.8. It has no debt.  It is down slightly from it’s high of around $350 per share, reached a few weeks ago. There are 46,000 employees. Net income of 5.99 Billion on $24.67 Billion.  Microsoft, at $24 per share, is a $200 billion company. With earnings of $2.92 per share it has a P/E of 9.44. There are 89,000 employees, $16.4 billion revenue and $5.2 billion net income.

Microsoft’s income per dollar of revenue is higher – but they don’t make hardware. Revenue per employee at Microsoft is $184,000. Revenue per Employee at Apple is $536,000.  Income per Employee at Microsoft is $58,000. Income per Employee at Apple is $130,000.

These data are summarized below,

Employees Net Income Revenues Inc / Emp Rev / Emp
(Millions) (Millions)
Apple 46,000 $5,990 $24,670 $130,217 $536,304
Microsoft 89,000 $5,200 $16,400 $58,427 $184,270

 

When I last looked at Apple and Microsoft, October 30, 2010, here,  Apple was 305.24 per share, with an EPS, of $15.15 and a P/E of 20.147. It’s market capitalization was $279.59 Billion. Microsoft was $26.28, with an EPS of 2.11, P/E ratio of 12.48 and market capitalization of $227.42 Billion, $52 Billion less than that of Apple.  Today Apple’s market capitalization is up 25% to $300 billion and Microsoft’s market capitalization is down about 12% to $200 billion. Apple’s market capitalization is $100 billion higher than Microsoft’s.  Apple’s all time high stock price was a few weeks ago, and I expect it will bounce back and keep climbing as long as they keep selling hardware and software that shifts the paradigm. Microsoft’s was in 1999.  I don’t expect Microsoft to go out of business, but it’s days of shifting the paradigm and tremendous growth are gone.

The iPad (Apple site, here) is a paradigm shifting device.  It has a dual core A5 processor, 16, 32, or 64 GB of flash memory, and no moving parts (other than electrons, which are hard to keep still).  Treated properly, it should last for 10 or 20 years.  It adds a layer of durability and obsolescence resistance to personal electronics.  It puts us on the road from “disposable” consumer electronics back to durable, sustainable consumer electronics  (click here).

And it’s selling by the millions. Apple has sold 200 million iOS devices – iPhones, iPads, iPods Touch, that’s one for two out of three Americans. It’s sold 25 Million iPads, 14 million in 2010 and 11 million in the first half of 2011. The sales projections from Wall Street are tremendous, (Florin at UnWired, Schonfeld at Tech Crunch,  Elmer-DeWitt at Fortune). People buy multiple devices, e.g., iPhone and iPad or iPod Touch and iPad.  These are driving sales of music, apps – by the billions –  and the Mac. Microsoft is buying SKYPE, which is a great company with a great product but it doesn’t know how to make money. Apple is going up, both in terms of market capitalization and earnings. Microsoft is going nowhere.

Continue reading →

Telegraph Op-Ed urges Obama to build thorium reactors

TweetFollow LJF97 on Twitter An op-ed article in the Telegraph, UK, last year urged President  Obama “to marshal America’s vast scientific and strategic resources behind a new Manhattan Project” and by so doing we could “reasonably hope to reinvent the global energy landscape and sketch an end to our dependence on fossil fuels within three to five years.”  The article suggests we invent and commercialize nuclear reactors designed around radioactive decay of thorium.

The article concludes with the assertion that renewables can’t meet our needs. But that’s asserting a belief, not reporting scientifically observable data or a scientifically disprovable hypothesis. And the better question in that regard is not: “Can renewable and sustainable energy meet our needs?”

But: “How can renewable and sustainable energy meet our needs?”

Continue reading →

Cape Wind, Leadership and Vision

Jim Gordon


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On Friday, March 25,2011, Cape Wind LLC‘s CEO Jim Gordon spoke at Columbia University about the long delayed project. When he started the project, back in 2001, the Europeans were 10 years ahead of us. Today the Europeans are 20 years ahead of us, and the Chinese too are years ahead of us.

Mr. Gordon quoted Theodore Roosevelt, IV, as saying, “I live on the Cape. If we don’t do this, in 50 years the Cape will be under water.” Cape Cod’s highest point is about 300 feet above sea level so Mr. Roosevelt was exaggerating.  His home may wind up under water, but at least some of the Cape will be one or more islands. Speaking of islands, Nantucket, which in 2006 had the highest median property values in Massachusetts, rises some 30 feet above sea level. If sea level rises 30 feet, Nantucket will get washed away.

Mr. Gordon said, “Cape Cod has the most polluted air in New England. When you harness the wind you get clean electricity: No arsenic, lead, mercury, thorium, uranium, or zinc or carbon dioxide like you get from burning coal. No barges of oil that can spill. No radioactive waste like you get from nuclear power. Last year we read about the coal mine disaster in West Virginia. Then the Deepwater Horizon. Now we’re reading about the disaster in Japan.  With wind there is no possibility of a disaster, Zero.”

And, he added, “Fossil fuels are a finite resource. New England has neither coal, oil, or natural gas – but there is a tremendous amount of wind. When you factor in the costs of storms and sea level rise – you would think it’s a no-brainer.” The question is not “Can wind power provide base line capacity?” But “How can wind power provide base line capacity.”

Mr. Gordon told how during a trade mission to China, one of his engineers was grilled about wind power, offshore wind, engineering, costs, and siting. After the end of the grilling his hosts said “we read Cape Wind, by Wendy Williams and Robert Whitcomb. We would never allow that here.” In 2009 China built a 100 mw wind farm off the coast of Shanghai – completed the project quickly. By the end of 2010 they had 41.8 gigawatts of nameplate capacity wind power – enough for about 45 million Americans (wikipedia). Continue reading →

Sustainable Investing

To paraphrase Warren Buffett and Charlie Munger, “Buying a good company at a good price is a good idea. Buying a great company at a bargain price is better.” But to note this in light of L’ Affaire Sokol – Lubrizol, “Buying a great company at a good price when a stick-picker on my staff just bought it for his account is a really stupid idea.  And making excuses is even stupider.” (See this article by Joe Nocera at the NYTimes.)

Buffett claims to practice “Value Investing” as defined by Ben Graham, Phil Fisher, Ken Fisher, Joel Greenblatt, Bruce Greenwald, and others. I see “Sustainable investing” as a subset of “Value Investing.” Value Investing seeks to find companies that are currently undervalued by “Mr. and Ms. Market” but that are really effective at delivering Shareholder value. Sustainable Investing would seek to find companies that are currently undervalued but that are really good at delivering Stakeholder value. Continue reading →

Nuclear Power and Cocaine

Asking a nuclear engineering professor “Is radiation bad?” is like asking Charlie Sheen “Is cocaine bad?”

On “Morning Edition” today, 3/30/11, Renee Montagne did just that when she interviewed Professor Peter Caracappa, a member of the faculty of the nuclear engineering department of RPI (Interview / nuclear engineering at RPI). As is typically the case, what was left out of the conversation could have been more interesting than what was in the conversation. My questions for Professor Caracappa are below: Continue reading →

Nuclear Power: What Future?

Smoke from Fukushima Dai-ichi

Smoke from nuclear plant. (C) Reuters

The men and women who design, build, and work at nuclear power plants are bright, dedicated people who work hard so that when we flip a switch the power flows, so we can use our computers, watch our tvs, refrigerate our food, microwave our dinners and our popcorn, heat, cool, and vacuum our homes, and jam on our electric pianos and electric guitars when we want to. The drive, dedication and service of the engineers at Fukushima is heroic.

Under normal conditions, nuclear power emits less pollutants than coal, and the waste from nuclear power is regulated. The wastes from coal are not.

Yet, radioactive materials are an intrinsic property of nuclear power; consequently meltdown and disaster are inherent dangers. The disasters at Fukushima Dai-ichi, Fukushima Diaini, and Onagawa, while not predictable, were not unexpected. We’ve seen Chernobyl in ’86, Three Mile Island in ’79. We’ve had fires at Brown’s Ferry. We have had, and continue to have leaks of radioactive material at Oyster Creek, Indian Point, Vermont Yankee, the Hanford Nuclear Reservation and every other nuclear facility in the United States, Japan, France, and I am sure, the rest of the world.

And we learned what? To ‘harden’ the plants? To spare no expense in a fanatical devotion to safety and maintenance?

No. To cut corners and to defer maintenance. To extend to 60 years the life of plants designed to last 40 years.

Continue reading →

Cats, Mice, and Sustainable Energy

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“Join me in setting a new goal:  By 2035, 80 percent of America’s electricity will come from clean energy sources.”  – President Barack Obama, State of the Union, January 25, 2011.

When a mouse makes noise, only other mice and local cats take notice. When a lion roars, however, everyone notices; other lions, elephants, zebras, gazelles, smaller cats, mice ….

New Jersey is one of 27 states, which, like the District of Columbia, have a Renewable Portfolio Standard, or RPS, mandating that by a certain date, a specific target of a renewable energy capacity will be deployed. An additional five states have non-binding goals. (This are listed by the U. S. Dept. of Energy at Energy Efficiency and Renewable Energy.)

In New Jersey the RPS is 22.5%, about 1.6 gigawatts (GW), by 2021. New Jersey today, in January, 2011, has about 300 megawatts of renewable energy capacity.  I am confident that New Jersey will meet, and possibly exceed its RPS goal. We started with 9.0 kilowatts (KW) of photovoltaic solar in 2001. We were up to 211 megawatts (MW), by the end of September, 2010, and we added an additional 24 MW in December, 2010. Even when you factor in 30 MW of biomass, 8 mw of wind power, and 1.5 mw of fuel cells, this is less than 20% of the goal of 1.6 gw. (This is shown at the NJ Clean Energy Program Renewable Energy Technologies page.) However paradigm shifts are systems phenomena. They occur at exponential rates.  We went from 9.0 kw in 2001 to 211 mw in mid-2010, to 360 mw  by the end of 2010.  In December, 2010, we added an additional 10% – moving from 236 mw to 260 mw.  We are hitting the handle of the hockey stick.

California’s RPS is 33% by 2030. In Texas, the RPS calls for 5,880 MW by 2015. California , New Jersey and Texas are the roaring mice in domestic US clean energy policy. And a cat – the lion in the Oval Office – the President of the United States – has listened to the mice in California, New Jersey, and Texas. Last night he roared.

President Obama, Courtesy of the White House.

Courtesy of the White House.

In his “State of the Union” address, January 25, 2011, President Obama set a lofty goal: “80% clean electric generation by 2035.” While I think we can do better – 100% clean renewable sustainable energy by 2025 – Obama’s goal is specific, measurable, achievable, realistic, and time-bound. It’s SMART. It’s also wise.

As a President should, Obama is thinking, and thinking long term.  We at Popular Logistics wish him success because success for a President means a better future for the nation.

–

Two observations.

  1. There is no such thing as “Clean Coal.” Even if we capture and sequester all the carbon dioxide produced from burning coal, which is expensive, there are still impurities, such as arsenic, lead, mercury, uranium, zinc in coal. And mining and processing coal is a very dirty business.
  2. Nuclear is heavily regulated. We exercise tighter control over the wastes. In practice, nuclear power is arguably cleaner than coal. But in reality, things happen.

One question is “Can we achieve Obama’s Clean Electricity Goal?” But a better question is “How can we achieve this goal? ” My back of the envelope response is:

  • 100 gigawatts offshore wind,
  • 100 gigawatts land based wind,
  • 50 gigagwatts solar,
  • 75 gigawatts stored micro-hydro or biofuel, for when the sun isn’t shining and the wind isn’t blowing.

And as Amory Lovins, of the Rocky Mountain Institute, says, “The cheapest unit of energy is the ‘Negawatt’ – the energy you don’t have to buy.”  How much can we reduce our energy requirements? How much can we gain by conservation?

Steinbrenner, Infrastructure, and the Estate Tax

“Taxes,” according to Supreme Court Justice Oliver Wendell Holmes, “are the price we pay for civilized society.”

George Steinbrenner

George Steinbrenner

On July 13, 2010, George Steinbrenner suffered a massive heart attack and died. Steinbrenner was worth about $1.0 Billion when he died  (click here or here). Had Steinbrenner died in 2009, the tax on his $1.0 Billion estate would have been $450 Million.  Had he lingered until 2011, the estate tax would have been $550 million. Thanks to the Bush tax cuts, $0 went to the United States Treasury.

By many accounts the Yankees needed Steinbrenner to build up the franchise.  But think about the whole system. Steinbrenner and the Yankees, and all professional sports, would be worthless without other teams and fans. The Yankees need a stadium – which was built in part at public expense. Fans need to get to the stadium. Most of the people who live in walking distance, in Harlem and the South Bronx, can’t afford the ticket prices; a local transportation infrastructure is needed so fans with the ability to purchase tickets can get to the stadium. The NY Yankees franchise would also be worthless without other franchises, such as the NY Mets, the Boston Red Sox, the Los Angeles Dogers, etc. so a national transportation infrastructure is needed to transport players.

I would like to ask Steinbrenner’s heirs how they felt about the $1.0 Billion inheritance, the $500 million inheritance tax they avoided because Steinbrenner died in 2010, not 2009 or 2011, If they would have felt poor if they were splitting $500 million but if they feel rich because they now split $1.0 billion.

Estate Tax Chart

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Oyster Creek To Close in 2019

Oyster Creek

Oyster Creek, courtesy of Nukeworker.com

Chicago, Illinois based Exelon Corporation recently announced that it will close the Oyster Creek nuclear power plant in 2019. (NY Times, NJ.com AP). Oyster Creek, in Lacey, New Jersey, is the nation’s oldest operating nuclear power plant. It’s roughly 75 miles south of New York City and 60 miles east of Philadelphia. Exelon was recently granted a 20-year extension on its operating license by the Nuclear Regulatory Commission despite the wishes of local environmentalists, environmental groups, and people concerned about evacuations in the event of an emergency, and public concerns from the NJ Department of Environmental Protection.

The plant uses a single pass cooling system which sucks in 500 Billion gallons of cool water each year (click here) from Barnegat Bay, heats it 20 to 30 degrees, and returns the heated water to the bay. This kills billions of adult and juvenile fish, clams, crabs, and shrimp, and hundreds of billions, if not  trillions of hatchlings, less than a centimeter in length. This has had a negative effect – possibly a disastrous effect – on the fish and wildlife populations of Barnegat Bay during the 40 year operating life of the plant to date. The NJ DEP demanded that Exelon retrofit the plant with cooling towers.

Exelon claims the cooling towers would cost $600 million, roughly $1.00 per watt for the 610 megawatt reactor. Other estimates for the cooling towers range from $200 million to $800 million. Exelon decided to close the plant rather than spend the money on the cooling towers and other maintenance.  This is a gain for current Exelon shareholders as they defer a hundreds of millions on capital improvments, and corresponding hundreds of millions of liabilities, while they collect revenues and realize profits from the sale of electricity for the next nine years.

Continue reading →

The Furman Paradox & The Cornick Postulate

The Furman Paradox: “You want to be ahead of the curve, but not too far ahead. When the word on the street is sell, and you understand something others don’t, it may be time to buy. And remember, it’s a systems phenomenon, look for the feedback.”

The Cornick Postulate: “There are things that seem too good to be true, and yet are true – love, a child, sunset. These cannot be bought and sold; these are non-transactional phenomena.”

Renewable Energy, The Wall St. Journal, Faux News

George Gilder, writing in the Wall Street Journal, 11/18/10, in California’s Destructive Green Jobs Lobby complained of the defeat of the repeal of the “Global Warming Solutions Act.”

“Economic sanity lost out in what may have been the most important election on Nov. 2—and, no, I’m not talking about the gubernatorial or senate races. … This was the California referendum to repeal Assembly Bill 32, the so-called Global Warming Solutions Act, which ratchets the state’s economy back to 1990 levels of greenhouse gases by 2020. That’s a 30% drop followed by a mandated 80% overall drop by 2050. Together with a $500 billion public-pension overhang, the new energy cap dooms the state to bankruptcy.”

Gilder also wrote: “California officials acknowledged last Thursday that the state faces $20 billion deficits every year from now to 2016.” That’s $120 Billion over the next 6 years. This is a state of 37 million people (US Census). It should be able to borrow that money at 4% or 5% – which is $3083 per capita. Borrowed at 5% interest over 20 years, it’s $20.35 per person per month – which does not seem to be enough to push someone into bankruptcy.

Continue reading →

VoIP or IDAV

The term “VOIP”, or “Voice Over IP” doesn’t tell the story. What telecommunication people mean by the term is more than voice traffic – that is  phone calls – riding on the Internet, along with data. What they are actually referring to is integrated or converged systems in which voice and data packets “ride” over the same circuits. Integrated Data and Voice – IDAV™, is a better acronym. It’s not only Voice over Internet Protocol, it’s Voice and Data integrated over the Internet.  “Voice Priority” circuits give voice traffic priority over data packets.  The phone systems know the difference. IDAV™.

I am proud to say that the owners of Popular Logistics own the Trademark, and the term is available for licensing. As my buddy Jim says, “It’s All About Beach Time ™ .