Little girl, you need a license for that fruit stand

Lynne Kiesling

Here’s my cynical, anti-authoritarian link of the day: the mayor of Clayton, California shut down a fruit stand run by two little girls because it was a commercial enterprise in an area not zoned for commerce.

Hilariously, the mayor defends the decision to shut down this tiny lesson in capitalism, preferring to make it a tiny lesson in bureaucracy instead. His defense:

“They may start out with a little card-table and selling a couple of things, but then who is to say what else they have. Is all the produce made there, do they grow it themselves? Are they going to have eggs and chickens for sale next,” said Clayton Mayor Gregg Manning.

The mayor later called the girls and their father “self-centered.”

See also the Boing Boing post on the subject as well.

This may sound like it’s not that big a deal to you, but I think it’s disgusting on many levels (and given the comment volume on the Reason and Boing Boing posts, I’m not alone). I hope this guy gets sufficiently ridiculed that he’s voted out of office at the next election.

And if you want to see the bureaucratic process at work, check out the 19-page “produce stand/veggie stand ‘information’ ” document that the city has produced to detail the nefarious lawlessness of the girls and their parents, and to attempt to justify their bureaucratic approach as “balancing” the interests of many different groups in the community. Here’s a money quote:

Staff has determined that the outside sales activity involved in a residential zoning district is contrary to Chapter 17.71 Home Occupation Permits of the City of Clayton Zoning Ordinance and, therefore, is not allowed … Chapter 17.71 focuses on allowing residents in residential districts in Clayton to conduct limited commercial activities within a dwelling unit, and not allowing outside sales or external evidence of business activity.

I’m practically speechless. Well, I’m speechless in the realm of things that I am willing to say here in print for posterity. But you can imagine the colorful rant that the KP Spouse and I will enjoy over dinner this evening … and I may even go out and buy some dinner fixins from a roadside stand “in a residential area”, to celebrate the relative liberty that those sellers and I enjoy for not being in Clayton, California.

Welcome Deep Glamour!

Lynne Kiesling

Virginia Postrel and Kate Coe have started Deep Glamour, which “explores the magic of glamour in its many manifestations, from movies, fashion, and advertising to real estate, politics, and sports.”

Today Virginia has an energy-related post, about the visual elegance of wind turbines, and their use in advertising:

These images epitomize grace, one of the essential components of glamour. The blades appear to turn effortlessly, generating energy without waste. They look as autonomous as a bird in flight. Everyone, including me, leaves out the massive power lines required to carry the electricity some place where it will be useful. These are glamorized images.

This will be a great regular read. Welcome!

Vaclav Smil on the Pickens Plan for wind power and natural gas vehicles

Michael Giberson

Perhaps the greatest appeal of the Pickens Plan is its cascading simplicity. First, Pickens wants to dot the Great Plains (“the Saudi Arabia of wind power”) with wind turbines to replace all the electricity currently produced by burning natural gas. Second, he wants to use the natural gas freed by wind-powered generation to run efficient and clean natural gas vehicles. Third, he believes that this substitution will create a massive, new domestic aerospace-like industry — with well-paying jobs in the production of giant turbines and auxiliary equipment — that will bring economic revival to the depopulating Great Plains. Finally, Pickens says his plan would reduce the huge outflow of wealth to oil-producing nations as the U.S. cuts its oil imports by more than one-third.

If this were an opera, shouts of “Bravissimo!” would be in order. But despite its many positives, the timely realization of the Pickens Plan faces a number of extraordinary challenges, to say the least.

The quoted material is Vaclav Smil on the Pickens Plan in Yale Environment 360. “Cascading simplicity”? I’m still trying to decide if, ultimately, that is a compliment or an insult.

Related, a story in the Washington Post about the failure of natural gas vehicles to take off despite federal government plans in the 1990s.

HT to Environmental Capital for both links.

Power market seams get FERC attention

Michael Giberson

Today’s edition of Power Markets Week quotes me on the topic of resolving seams between RTO power markets. (I don’t have a link, the newsletter is by subscription only.) In the nature of shameless self-promotion, I’ll quote the interesting parts (i.e. the paragraphs mentioning me), along with only as much extraneous information as is necessary to make sense of what I am quoted as saying. That will keep me within “fair use” limits, right?

(Background on the “Lake Erie loop gaming strategy” is available in two earlier posts: “Lack of coordination between RTOs provides multi-million dollar gaming opportunity“; “Senator calls for FERC probe of traders using Lake Erie loop strategy“)

From “FERC investigating trading across seams while others cite Constellation in loop flows”, Power Markets Week (August 25, 2008):

The Federal Energy Regulatory Commission on Thursday said that since May its Office of Enforcement has been investigating power transactions that created loop flows in the Lake Erie region.

The flows in turn caused congestion that numerous parties claim caused hundreds of millions of dollars in increased costs. At the same time, FERC approved emergency tariff revisions that the New York Independent System Operator sought to help counter the loop flows….

The regional transmission organization and a number of regional market monitors have been looking into trading strategies that caused an increase in loop flows between NYISO and the PJM Interconnection in the Lake Erie region.

Market observers say the issue of the loop flows presents a critical window of opportunity for federal regulators to overcome lingering seams issues. Seams issues can arise when neighboring grid operators have different operational protocols, market designs and planning, and can have an impact on things such as congestion and loop flows.

Michael Giberson, an energy economist at Texas Tech University and formerly an economist with Potomac Economics, said what could go a long way to help solve issues associated with seams would be for a FERC commissioner to take this issue head on.

“Someone at FERC needs to champion this,” he said, adding that there needs to be a substantive effort, and “not a few paragraphs in an order,” but actual substance.

Consultants familiar with seams issues also said some guidance from FERC could help in solving the problems.

“FERC could make it more of a priority,” said Sam Newell, a principal with the Brattle Group consulting firm.

PJM and MISO have elaborate protocols set up to manage grid operations jointly in efforts to eliminate seams. This allows the two grid operators to share information and not to be “constantly surprised” by operating conditions, said Giberson.

The grid operators have also tried to make inroads on the seams issues through stakeholder working groups, but apparently with mixed results.

If the grid operators fail to talk to each other and seams issues continue to play out, another approach that may force a resolution could be coordinated, single dispatch for the RTOs, or in other words a super pool, some said.

At a NYISO meeting earlier this month discussing the Lake Erie loop flows, a stakeholder warned that if the RTOs failed to act in this instance and decide to remain islands without sharing information, there may be the “horrible alternative” to be forced into something like a “super pool.”

NYISO staff fired back that it wanted to take the “leadership role” in getting to the bottom of the issues surrounding the loop flows.

Getting something like multiregional coordinated dispatch could solve a number of these issues, sources said, however the move would be extremely difficult because RTOs would lose some autonomy with a super pool, and states may be reluctant to give up some control.

Also, sources said some participants, particularly generators, may be reluctant to see better coordination because it may take away some profitable opportunities such as when price spikes occur across RTO borders.

But rather than coming down hard from the top and mandating something like a super pool, Giberson said he’d rather see a “bottom-up approach” with someone taking the initiative to bring everyone together to communicate and provide better coordination with neighbors.

Betting on the weather as a way to manage risks

Michael Giberson

You’ve heard the old joke about the weather, right? — everybody talks about the weather but nobody ever does anything about it. Well now you* can do more than just talk about the weather, you* can bet** on it.

*By “you” I mean, “accredited investors with a minimum net worth of $1 million,” pursuant to CFTC regulations, according to this story about WeatherBill appearing on Portfolio.com. Which isn’t me, but might be you. Or maybe, by “you” I mean, “businesses, not individuals,” due to Federal Trade Commission rules, according to this Newsweek story on WeatherBill.

**By “bet” I don’t mean to imply gambling is involved, according to the WeatherBill site, their contracts are “commodity contracts intended to be used as risk-management instruments.” So by “bet” I just mean you can take on a risk that, for example, you can use to offset a financial weather-based risk you are already exposed to.

WeatherBill is using a lot of weather data and some complex computer processing to open up the specialized world of customized weather risk management and make it available to more kinds of businesses (and perhaps “accredited investors”, too). As mentioned in the Portfolio.com and Newsweek stories, businesses from car washes to ski resorts to restaurants with patios have used WeatherBill to help hedge their exposure to weather-based risks.

Yahoo computer scientist David Pennock offers additional commentary, describing the operation “as a combinatorial prediction market with an automated market maker”. See also discussion on WeatherBill at MidasOracle, including early skeptical remarks by Eric Zitzewitz which appear not to be borne out by WeatherBill’s early and apparently successful experience.

Texas court favors wind turbines over claims of spoiled views and nuisance noise

Michael Giberson

A couple of weekends ago I took a quick trip from Lubbock to Austin to visit my brothers and their families, the first time I’ve taken that trip since I moved back to Texas from Virginia. I knew a few wind turbines had popped up since my last drive down US 84, perhaps 18 years ago, but still I was surprised by the extent of the development. From about Post, Texas southeast to Sweetwater and then east to Abilene — a stretch of about 120 miles — there is almost always a wind turbine somewhere in sight.

At points the wind turbines were so numerous as to be, to me, awe inspiring.

Not everyone likes them, of course, and neighbors of the Horse Hollow Wind Energy Center near Abilene sued owner FPL Energy in 2005, “saying the turbines were too loud, lowered their property values and ruined their scenic views,” according to an Associated Press story. AP reports:

After the two-week trial in which noise levels and land values were discussed, jurors ruled in favor of FPL Energy.

In a ruling issued Thursday, the 11th Court of Appeals said the trial judge did not err because Texas law “does not provide a nuisance action for aesthetical impact.” But the appeals court seemed sympathetic to landowners.

“We do not minimize the impact of FPL’s wind farm by characterizing it as an emotional reaction,” the judges wrote in the ruling. “Unobstructed sunsets, panoramic landscapes, and starlit skies have inspired countless artists and authors and have brought great pleasure to those fortunate enough to live in scenic rural settings. The loss of this view has undoubtedly impacted plaintiffs.”

I don’t mind wind turbines so much – when I saw vast wind farms I imagined many smoke stacks that weren’t belching dark smoke into the air. Of course, I can drive by a oil refinery and imagine how it makes possible an 800-mile weekend trip to visit family.

HT to Environmental Capital, which provides several other useful links. Tim Haab observes Green vs. Green conflict at Environmental Economics.

Useful perspective on speculation in oil markets

Michael Giberson

Geoffrey Styles offers some perspective on the Vitol S.A. affair. (Vitol was indirectly revealed to have had a rather large position in NYMEX’s oil contracts when the CFTC reclassified a single trader from “commercial” to “non-commercial.” The CFTC did not name Vitol, but enough information was available that industry insiders were able to discern the company involved.) According to the Washington Post, Vitol held approximately 11 percent of outstanding contracts in the market.

The Washington Post headlined its report online: “A Few Speculators Dominate Vast Market for Oil Trading.” But, as Tyler Cowen remarks, “influence” may be a better choice of words than “dominate.”

I recall that folks said that Amaranth dominated natural gas futures, too, and yet somehow all of their domination led to multi-billion dollar losses and the disbanding of the firm.

Anyway, if you’ve read some of the news reports about the CFTC reclassification, then you should also read Styles for a deeper perspective on the news.

UPDATE: NewsWatch: Energy also has comments.

STILL MORE: Bloomberg reports that the CFTC disputes the Washington Post‘s claim that “financial firms speculating for their clients or for themselves account for about 81 percent of the oil contracts on NYMEX.” Accorder to the Bloomberg article:

The agency said the 81 percent figure cited in the Post story seems to count an entire group of traders, those labeled “swaps dealers,” as speculators even though some of them are engaged in hedging for commercial entities.

(The Styles piece found via The Energy Collective.)