Lynne Kiesling
As I have mentioned before, the KP Spouse and I have been renovating our house for the past 6.5 months (see, for example, this earlier post, and have been living in an apartment during the work. Today we move back in! I’m a little behind in my photographing, but here’s a snapshot of the new bedroom:
It’ll be a busy day!
Lynne KIesling
Can someone please explain the logic of the argument in this Wired Autopia blog post to me?
EV advocates say the California Air Resources Board is trying to kill the electric car — again.
Under a proposal pending before the Air Resources Board, state regulators would slash — from 75,000 to as few as 27,500 — the number of zero-emission vehicles automakers must build between 2012 and 2017. Under the changes, the big automakers could put fewer than 2,500 nonpolluting cars on the road in the next four years. That’s only 300 more than Tesla Motors plans to produce in the next two.
Ummmm … first of all, the whole reference to killing the electric car “again” is a reference to the fact that the technology was not scalable and commercializable the last time California passed an electric car mandate. Wishing didn’t make it so then, and it still doesn’t, despite all of the arguments about government policy being “technology forcing”. High gasoline prices and increased environmental concerns at a distributed, decentralized level are much more effective at inducing resilient technological change than government mandates. Such mandates run much more of a risk of the unintended consequences of governments having the hubris to think that they can pick technology winners. They cannot. What if, for example, such mandates induce researchers to shift entirely into electric vehicles and out of plug-in-electric hybrids, and what if it turns out that the PHEV has a larger portfolio of benefits and is more consumer-friendly than the EV? Then the government has picked wrong, and we all bear the cost of the coercion.
Second, does it occur to any of these so-called EV supporters that with the electric car plans of Tesla and GM, such government policy is irrelevant? That last sentence of the quote — that Tesla itself will be producing almost as many as are named in California’s mandate — belies the argument that more government forcing is needed.
I think the carrot is there, the lures are all around, and the commercial electric vehicle (and plug-in hybrid) is in the near future. How can changing a government target in a wishing-it-to-happen piece of legislation reverse that? Ridiculous.
Michael Giberson
It is rare that these little “learning moments” come nicely packaged, but the two near contemporaneous power system emergencies in Florida and Texas on February 26, 2008 present such a package. Still, otherwise intelligent industry observers seem to miss the point. Example, the Smart Grid News of March 26, which presents an overly harsh interpretation of the “challenges” of working with wind, and points to the Texas event as supporting evidence.
ERCOT operators had to react promptly on February 26 to balance load through demand response (DR) because of system reliability problems caused by wind intermittency. But systems reliability was not the only issue caught in the headlights by this event. The Wall Street Journal also spotlighted the economic impact; namely that the unexpected loss of wind generation caused wholesale power prices to soar from $30 per MWH to $105 per MWH in West Texas.
The article continues with a discussion of “system reliability and pricing challenges” and concludes with an ominous, “Federal and state incentives and mandated renewable standards, along with investor interest …, will all drive additional wind generation. Whether the grid can keep up is another matter.”
No mention was made of the Florida event, but here is the short version: a worker’s error while performing maintenance led to a fire at transmission substation which tripped a series of transmission lines out of service and shut down several major power plants. About 2600 MW of capacity was lost from the system. About 2.5 million Floridians lost power during the event.
So in Florida, 2.5 million people suddenly could not buy power at any price, because in the few seconds that the transmission lines went down and power plants went off line, the local integrated utility system operators didn’t have time to react.
In Texas, later that same day, wind power unexpectedly dropped well below day-earlier forecasts over a period of several hours. Some other non-wind generators in Texas were operating below schedule at the same time, and evening electrical load was beginning to shoot up. The combination of factors left the independent power system operators at ERCOT scrambling to keep the system in balance, which they did in part by calling on market-based voluntary load reductions. No one lost power, though prices did spike in reaction to the emergency conditions.
As the Energy Legal Blog notes, ERCOT has recently released its operations report on the event. One problem – ERCOT has relied upon day-ahead forecasts of wind power capacity, but the wind is not (yet?) so reliably forecasted so far in advance. The Texas grid operator is seeking to advance a wind forecasting tool under development, which was scheduled to be added to the system in conjunction with a switch in the ERCOT market system later this year.
While in Florida businesses were shut down and millions of people were made significantly worse off, in Texas mosts residents were likely unaware of the problems until they read about in the newspaper the next day. Of course there is much more to the picture than is captured in these two public events, but my point is that the “unreliability of wind” just needs to be kept in perspective. (Or better, just priced appropriately.)
It is not yet clear whether Florida Power & Light will be integrating an improved worker error forecasting system into its operations.
Michael Giberson
Usually, with annual Spring price increases, we hear the perennial allegations of gasoline price gouging from politicians. Despite all the talk about high gasoline prices, there hasn’t been a lot of talk about price gouging this year.
The precise meaning of the term “price gouging” is sometimes hard to pin down, but a paper forthcoming in Business Ethics Quarterly tries to fix it enough that the meaning can be carefully examined. In “The Ethics of Price Gouging,” Matt Zwolinski describes price gouging as “a practice in which prices on certain kinds of necessary items are raised in the wake of an emergency to what appear to be unfair or exploitatively high levels.”
The definition includes three key elements that recur in most of the state laws against price gouging: an emergency period, necessary goods, and unfair price increases. Zwolinski surveys state laws to arrive at his definition, and while not every state law has all three elements, these three elements make up the core concept.
After defining price gouging, Zwolinski seeks to rebut three common beliefs about gouging: (1) that laws prohibiting price gouging are morally justified, (2) that price gouging is immoral, even if it is legal, and (3) that price gouging reflects poorly on the persons who engage in it, even if the act itself is not immoral. All three of these beliefs are wrong, or at least questionable, in Zwolinski’s view.
His position emerges from a basic understanding of economics, and particularly the role of prices in society. Zwolinski argues that anti-price gouging laws work to prevent individuals already in a vulnerable position from entering into what would be a beneficial exchange. Further, drawing on Hayekian notions about prices as information and coordination devices, Zwolinski asserts that anti-price gouging laws discourage extraordinary (or perhaps even ordinary) efforts to aid persons in need, because the laws interfere with information about scarcity and reduce incentives to act.
All in all, I found myself generally in agreement with Zwolinski. But, since he starts with generally libertarian foundations and flavors his ethics and policy examination with a heavy dose of economics, what is not to like? I was sympathetic from the beginning.
Still, I think most proponents of anti-price gouging laws, even if they agreed point by point with Zwolinski’s analysis, would still feel that price gouging was morally wrong, and would not oppose anti-price gouging laws. I’m increasingly convinced that morality is fundamentally a social manifestation of emotions.* Zwolinski’s point-by-point rebuttal of anti-price gouging positions barely touches on the emotional component. I suspect opponents of Zwolinski’s view would feel he just doesn’t “get it.”
So while Zwolinski is doing useful work – as are various economists who patiently explain the value of permitting “gouging” (or impatiently, and here, and here) – something more will need to be done before the anti-price gouging folks will finally “get it.” To understand the feelings behind price gouging, economists need to delve into the broader mysteries of emotional reactions to prices and allocations. Most economists don’t want to go there, and so they are left only to scratch the surface of the problem they want to resolve.
*NOTE: I’m slowly reading Jesse Prinz’s book on the subject, The Emotional Construction of Morals. More on it later.
Lynne Kiesling
It’s spring break, and I’m escaping the course prep and house renovation load chez KP for a concert at the Savannah Music Festival.
Just got back from a run, and I’ve got to say, Savannah is picturesque! Just beautiful in that distinctively Southern way. The weather’s gorgeous too. Now I’m off to prowl town and then to hear some great music!
I’m leaving Mike in charge … just don’t let those crazy friends of yours tear up all of the bushes out front, and clean all of the beer caps out of the hot tub drain before I get back …
Michael Giberson
Even in the Houston area, with an economy built on the oil industry, some consumers are looking for a little extra — and sometimes a lot extra — energy efficiency in their home purchases. Via the Houston Chronicle:
Local builders for years have touted the energy efficiency of their homes, such as better insulation and power-saving appliances, but some are taking it to a new level.
One company, for example, is creating an entire community where all the houses will have solar power. Another builder claims its new green homes will cut up to 50 percent in heating and cooling usage.
“Just about every other person I come across is wanting at least one of these green features,” said real estate agent Stephanie Edwards-Musa, who specializes in green homes. “But it’s still making its way here because we are still overcoming the misconception that it’s too costly.”
[...] But rising energy costs are fueling demand.
In a move to bring solar power to the masses, Houston developer Land Tejas plans to power its 2,700-home Discovery at Spring Trails community with the help of solar power.
The solar systems will offset about 15 percent of the electric usage in a 4,000-square-foot home that uses an average 3,000 kilowatts a month, said Craig Lobel, a planning consultant hired by Land Tejas.
Of course, just because you slap a solar panel on your roof doesn’t make your home energy efficient. It may not even make much sense economically – perhaps a good shade tree strategically placed would provide more cooling than a solar-panel powered air conditioner.
But the houses are to be built to “Environments for Living” program standards, and each of them will get a General Electric designed dashboard to track water and power use, and measure solar power production. At least it looks like a pretty good set up, just judging from a newspaper story and a few pictures on the internet. At least if you are looking for a new home just north of Houston.
Michael Giberson
The title question, “Why are gasoline prices so high?”, or some variant has been the primary driver of new viewers from search engines to Knowledge Problem over the past three or four weeks.
It is a topic we have done before (and before that, and before that, etc., etc.), but of course those searchers want to know, “why are gasoline prices so high now?”
Crude oil prices are higher than last Spring, but no recent hurricane damage to oil production areas, unlike Fall of 2005. Otherwise those posts cover the basic points.
One thing that is not driving up the price of gasoline, except maybe by a fraction of a hairsbreadth, is the purchase of crude oil for injection into the Strategic Petroleum Reserve, as John Whitehead demonstrates at Environmental Economics. Read Evan Herrnstadt at Common Tragedies for links to more.
Lynne Kiesling
Courtesy of Slashdot, and following up on Mike’s spectrum auction post from earlier this month, the 700 MHz spectrum auction has come to a close. From the New York Times blog post mentioned in the Slashdot article:
The winning bids totaled $19,592,420,000. That’s nearly double the amount the commission had hoped to raise from the spectrum being abandoned next year as television stations switch to new frequencies. On the scale of billions, the total has hardly changed in a month. But bidding continued on little blocks of frequencies around the country that cellphone companies are using to fill in gaps in their service. The last bid in the auction was $91,000 for frequencies around Vieques, P.R.
Lynne Kiesling
Have you seen the Galvin Electricity Initiative Sad Socket ad?
In the half-century since our electric power system was completed, little has been done to update it — and it shows. We’re relying on an obsolete electricity grid that is dangerously vulnerable, even to forces as predictable as thunderstorms and as tiny as squirrels. And blackouts and power interruptions cost public facilities, businesses and households at least $150 billion a year. Power plants generate as much pollution as they do electricity, and then two-thirds of this energy is lost before it ever reaches the end-user. Meanwhile, consumers are no more than passive participants without real choice. [emphasis added]
The technology already exists to address these unhappy circumstances, save you money, improve the quality of electricity service and give you control.
But regulatory policies stand in the way of progress.
The Galvin Initiative’s website suggests five things you can do to help accelerate the transformation of the electric power network:
1. Use the power of the purse
2. Demand control — by federal law, your utility is required to provide you with a time-of-use rate and an enabling meter. Call them and ask for it!
3. Call for policy change — write your elected representatives
4. Use less power
5. Share your business story with the Galvin Initiative, to show how widespread and dispersed the inefficiency of the existing electric power network is
Lynne Kiesling
Mike’s two recent posts about turning animal waste in to electric power and John Doerr’s focus on methane recovery from animal waste prompt me to mention one of the innovative entrepreneurs in this space: RealEnergy. RealEnergy builds, installs, and manages distributed generation and combined heat and power (CHP) systems, and can do so within a local microgrid if the regulatory barriers to interconnection and to the construction of microgrid power lines across roads are removed.
Real Energy has done many projects ranging from urban installations in San Francisco to dairy farms. On dairy farms they turn animal waste into biogas, which is pretty much a methane conversion, as far as I understand it.
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