Daily Archives: July 30, 2009

Wind energy code of conduct for New York

Posted on by

Michael Giberson

The office of the attorney general of the state of New York announced yesterday that a total of 16 … wait, make that 17 wind power companies have signed onto the state’s new “Wind Industry Ethics Code.” The news release indicates that the main point of the industry “ethics code” is to prohibit conflicts of interest between municipal officials and wind companies and establish related public disclosure requirements. Concerns about improper conduct had spurred an investigation by the attorney general’s office last year.

Why this requires an “industry code of conduct” I don’t know. Seems like local government officials should already be subject to laws and policies prohibiting them from using governmental authority to secure private benefits. Offering bribes or similar inducements to public officials is also likely already illegal in New York.  So what’s so funny about wind power development in New York that it requires a sub-industry specific code of ethical conduct?

The first news release issued yesterday said 14 additional companies had signed the ethics code (that is in addition to the two companies that signed last year after coming under investigation by the state). By the way, the news release said, the attorney general’s office was continuing its investigation by serving a subpoena on Reunion Power, which “has not agreed to sign the Code.”

A few hours later a second news release announced that, surprise!, Reunion Power had agreed to sign the attorney general’s ethics code. The second news release quotes the attorney general, “Accordingly, with this development, virtually the entire wind industry (17 of 17 major companies) has agreed to this new standard of transparency and accountability.”

So the 17 companies faced a choice to either (a) sign on to a statement that makes the attorney general look like a champion of good government, or (b) become the target of a potentially costly publicly-disclosed state-funded investigation into company activities.

I don’t know about accountability, but I’d say the attorney general’s actions are pretty transparent.

(HT to Wind Power Law Blog.)

Do school buses use more energy than the likely alternatives?

Posted on by

Michael Giberson

At Freakonomics, a Q&A with Christopher Steiner, author of $20 a Gallon.

Haven’t read the book, but my present question has only to deal with an issue raised in the Freakonomics Q&A: the energy economics of school buses.  Freakonomics asks how higher fuel prices would affect the way children get to school. Steiner replies:

How you live largely depends on where you live. For people who live in walkable communities, life at $8-per-gallon gas will be far easier. Their kids will just hoof it.

What most kids won’t be doing, though, is riding a school bus every morning. Just last year, when gas was $4, school districts across the country made huge cuts to busing programs. Maryland’s Montgomery County, outside Washington, buses 96,000 children to school every day, burning 3.3 million gallons of diesel fuel a year. When the price of gas goes up a penny, the county is out another $33,000. So the price of that program would increase nearly $20 million in a world of $8 gas. School board officials last year authorized Montgomery [County]’s superintendent to increase the maximum walking distances for high school students, which were set at two miles. Generally, students who live within the limits are expected to find their own way to school.

In a future of $8 gas, those limits will go up across the country. In fact, it’s possible that places such as Montgomery County would cut busing almost completely. Capistrano School District in California’s Orange County dumped 44 of its 62 bus routes when gasoline spiked, saving the district $3.5 million.

We led me to wonder about how the Montgomery County change affected the overall fuel consumption and fuel expenses for residents in the County. Say the maximum walking distance increased from 1 mile to 2 miles.  I suspect that many of the affected students taken off of the bus system switched to private automobiles.  So instead of a 30-student bus trip, assume some new walkers, some carpoolers, and so single-vehicle trippers, and probably an additional 10 to 15 vehicle trips twice a day for each bus eliminated.

Obviously the change will reduce the fuel use and total costs of the school district and increase the fuel use and costs of the student’s families.  My untested hypothesis is that the increase in fuel use and fuel costs of families will exceed the savings in fuel and fuel costs to the school district — i.e., the policy change reduces overall economic surplus — and my question is, “Why can’t families and school systems capture the potential gains from trade available by covering the additional school bus fuel costs?“

[MAKE YOUR PLANS NOW: Steiner offers career advice a later in the Q&A: "When gasoline reaches $8 per gallon, energy-related startups will form the new craze. That’s where the hot jobs will be. IPO’s, wild sums of venture money, 23-year-old C.E.O.s — all of it will be resurrected from that movie called 1999."]

Why is selling bottled tap water odd?

Posted on by

Lynne Kiesling

Over at Marginal Revolution, Tyler notes that someone is purifying, bottling, and selling New York City tap water, at a price lower than competitors. He then observes “I suspect this will seem odder to you, the older you are.”

I have never understood why so many people find the idea of selling bottled tap water “odd”. When you buy bottled water, you aren’t just buying water, you’re also buying three other features: portability, convenience, and some quality assurance. Portability is obvious. Convenience arises as a value when shops selling water are more widespread and accessible than water fountains. Quality assurance matters if you are concerned about whether impurities or minerals from the pipes affect the content or taste of the water.

So when you buy bottled tap water, you aren’t paying for water, you’re paying for portable, accessible water of a particular quality. How is that odd?

Relatedly, David Zetland has a recent post on the economics of the airport security water ban. Even if you can bring an empty water bottle through security, finding water fountains in terminals is difficult, and warm water in bathroom sinks deters filling your bottle there. Consequently, sales of bottled water in terminals increase. His punch line:

The costs of the ban on liquids are falling on customers; the benefits are falling on airports, vendors and bottled water companies. With these incentives — and lobbying realities — we are unlikely to ever see a return to the good old days (allowing people to carry water). I guess that the terrorists have won :(