Category Archives: Nevada energy

Coal Myths and Legends: North Valmy as Dinosaur in the Coal Mine

The applause line “I dig coal” may play well in certain West Virginia venues, but it’s not playing all that well with Idaho Power:

“Idaho Power says its coal plants still generate capacity during high-demand periods, but baseload from the facilities has been declining—a trend it sees continuing in the region, and nationwide.

“The decline in baseload energy production is primarily viewed as driven by low natural gas prices and the expansion of renewable generating capacity,” the utility writes in its IRP. “Because of the low natural gas prices and expanded renewable generating capacity, wholesale electric market prices over recent years have frequently been too low to merit economic dispatch of coal generating capacity.”

Idaho Power is giving serious consideration to retiring its North Valmy plant in Nevada early; notice the references to natural gas prices and the expansion of renewable generating capacity.  In short, coal isn’t coming back, anywhere.

Why? Probably because capitalism works.  

“Coal has been crushed by the shale boom, which has made natural gas — coal’s biggest competitor — extremely cheap. The price that U.S. power plants have been paying for natural gas plunged 71% between 2008 and 2016, the Columbia report found. Coal prices were down just 8% in that same period.

At the same time, coal faces new competition from the rise of renewable energy, including wind and solar. The falling cost of solar energy combined with federal tax credits have created a boom in solar jobs. The solar industry ended 2016 with 260,000 workers, according to the Solar Foundation.” [MoneyCNN]

Why would a utility, or any other business for that matter, purchase supplies from a higher priced vendor when cheaper supplies are at hand?  If you want an example of how the “market works” this is it.  Utilities are increasingly using natural gas and renewables because those sources are (1) cheaper or (2) going to be cheaper in the long run.

A second point should be made — there are two coal markets: Metallurgical coal is used primarily in steel production; Thermal coal is used for electrical production.  Prices for metallurgical coal, also called Met Coal or Coking Coal, have increased as seaborne coal (from Queensland) tightens, and as supplies from Chinese mines diminish as their mines come under increased scrutiny about safety concerns.  The price of Met Coal is a function of not only American mines, but of Australian and Chinese sources.  The price of Thermal Coal has been declining since 2012 and doesn’t show any signs of reversing that five year trend anytime soon.  This is not a case of “if you mine it they will come,”  even with the decline in Thermal Coal prices, the price of natural gas and renewables are still putting pressure on the market.

The Columbia Study (pdf) explains, once again, how capitalism works.  What are the causal factors in the collapse of the coal mining sector of the economy?

“US electricity demand contracted in the wake of the Great Recession, and has yet to recover due to energy efficiency improvements in buildings, lighting and appliances. A surge in US natural gas production due to the shale revolution has driven down prices and made coal increasingly uncompetitive in US electricity markets. Coal has also faced growing competition from renewable energy, with solar costs falling 85 percent between 2008 and 2016 and wind costs falling 36 percent.”

Thus, bolstering the contention made previously that prices matter, and if lower prices are available for some commodity, then that’s where the “market” will go.  There are other factors: (pdf) A slowdown in Chinese manufacturing demands; deregulations may not have any significant effect on mining if the prices for natural gas and renewables continue to decrease; and, while we might expect a modest recovery to 2013 levels — that’s probably all that can be squeezed from this market.

So, Idaho Power/NVEnergy’s decision to concentrate on production using more renewables and natural gas is likely to be sound economically for long term corporate health — and the old coal-fired North Valmy plant sits like a Jurassic Creature in Pumpernickel Valley.

As for employment prospects, coal mining isn’t a growth industry: (pdf)

A plausible  range of US coal mining employment in these scenarios ranges from 70,000 to 90,000 in 2020, and 64,000 to 94,000 in 2025 and 2030 — lower than anything the US experienced before 2015.

Thus, basing economic policy on a sector which includes only 0.03% of our national economy makes precious little sense.  It makes even less sense to look backwards:

“When it comes to electricity generation in the US, the Department of Energy’s 2017 Energy and Employment Report suggests that the solar industry now employs more people than coal, oil, and gas combined. Oil still employs the largest share when including jobs related to fuels, however.

“Our findings would lead us to believe that the right place to invest dollars are in renewable energy rather than fossil fuels,” Delaney says. “These jobs are widely geographically distributed, they’re high paying, they apply to both manufacturing and professional workers, and there are a lot of them.”

How about job training for those seeking to move from a declining sector to sectors with more hiring prospects?  The Trump administration has lauded the prospects of job re-training and apprenticeship programs, but the money isn’t where the mouths are:

“Trump has proposed cutting the Labor Department’s budget by 21 percent in fiscal 2018.  That includes a 40 percent cut to the Labor Department’s Wagner-Peyser Employment Service, which supports about 14 million job seekers annually and last year helped nearly 6 million people find jobs. The proposed cuts also include a $1.3 billion reduction to programs that operate under the Workforce Innovation and Opportunity Act, which Congress reauthorized in a bipartisan move three years ago.”

Drilling down to “coal communities,” the impact is patently worse:

“Based on the limited information provided by the blueprint, President Trump’s FY 2018 budget would cut at least $1.13 billion from these programs and offices, including several in their entirety—a total that may increase when the full budget is released in May.2 Through the POWER Initiative, offices and programs targeted by the cuts funded more than $115.8 million in economic development, job training, and other grant projects targeting coal communities in more than 20 states from 2015 through early 2017.”

It is egregiously unseemly to give pep talks about “digging mining,” in coal country while slashing budgets for economic development and job training for the people facing declining employment prospects in the mining sector in those communities.  Indeed, the current administration gives every impression of saying “we love you,” to coal country residents while allowing greater pollution of their cities and towns, and cutting job training opportunities for residents seeking employment in faster growing sectors of the regional economies.

Meanwhile, the North Valmy plant stands in Pumpernickel Valley.

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Filed under ecology, Economy, energy, energy policy, Nevada economy, Nevada energy, Politics

Bits and Pieces: Misleading headlines, and other matters in Nevada Politics

Jig Saw Puzzle Sometimes the headline doesn’t quite fit the story. Here’s an example: “Millions in the red an Obamacare insurer has failed” compliments of the Las Vegas Review Journal.   You have to read a few paragraphs down to get the basics of the story.  In addition to poor administration and long repayment waiting periods, “the co-op made a critical mistake: Only Nevada allows enrollment in non-exchange plans outside of the federal sign-up period, which runs from Nov. 1 to Jan. 31. Most insurers require a 90-day wait to discourage people from going without a plan until they get sick, but the co-op started with no waiting period, then added a 30-day window in late 2014. That created a sicker — and pricier — member pool,..”  [LVRJ]  These aren’t issues with the Affordable Care Act, nor is this indicative of any flaws in the overall system. What this illustrates is that the reason most firms go under is poor administration and management.

Speaking of management:  Is Waste Management Inc. living up to the terms of the contract it signed with Washoe County?  The Reno Gazette Journal reports on a crucial point: “One central issue is whether Waste Management has fulfilled the requirement to build an Eco-Center in Reno to sort its single-stream recycling and provide other services to customers. The city allowed Waste Management to raise rates, in part, to finance the construction of the Eco-Center.”  Back in March, 2013, The RGJ reported that the Eco-Center was supposed to streamline recycling in the area, noting that there were still some “kinks” to be worked out. Evidently, the kinks are winning?

The Washoe County Democrats have a quiz for us.  How do you score on a test of Rep. Joe Heck’s statements on Medicare? Social Security? Immigration?  I’ll give you one – yes, he’s called Social Security a “pyramid scheme,” and called for it to be privatized.  By July 2012 he’d called the basic social safety net program a Pyramid Scheme at least four times. [NVDems]

One win for Solar Power:  Perhaps not a long term one, but for now the efforts of NV Energy Inc to slap down the solar power industry in Nevada have been thwarted in the short term. [LVSun]  The power company is all for solar, except: “NV Energy’s proposed plan would reduce the value of credits paid to consumers and add a new fees. In filings with the PUC, the company said that the current structure unfairly shifts costs to customers without solar. The rooftop solar industry expects that the utility-backed proposal would reduce the rate of adoption of solar power.”  Original NV Energy filing here (warning: slow loading PDF)  and here (warning: slow loading PDF).  There’s the Solar Energy’s proponent statement to the PUC August 18, 2015 which makes interesting reading – again a warning: slow loading PDF.

All this in time for the Valley Electric Association to build a 15 mega-watt solar project in the northern part of Pahrump. [PVT]

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Filed under ecology, energy, energy policy, health insurance, Heck, Nevada energy, Nevada politics, Social Security

Dim Bulbs vs. Economic Diversification in Nevada

Light BulbIt’s (sort of, kind of, maybe) official — Nevada has moved out of the Recession Line.  So sayeth the state’s chief economist.  Although, it’s not as if we can take a victory lap, wave the Battle Born flag, and ignore the problems around us.   The chief economist sees “national financial policy” issues (read: Cliffs & Hostages) and spiking gasoline prices as potential wet blankets at the recovery party.  Things are “looking good?”

“It became evident that we can’t rely on construction, leisure and hospitality to lead the way, and we’ve become more active in the economic development arena,” Anderson said. “We’re not seeing megaresorts popping out of the ground, yet more businesses are being attracted to come here. Nevada is well positioned to take advantage of the clean energy movement, wind and our geothermal resources in the north.”  [LVSun]

Yes, we are in a good position to take advantage of the clean energy movement, if there are any items of abundance in the Great Basin it’s wind, sun, and bubbling hot springs… However, that position may not improve much if the TeaParty/Republican led House of Representatives remains stuck in the 19th century, the following from June 16, 2012:

Republicans in the House of Representatives quietly passed 13 provisions last week that would choke off Energy Department financing for existing clean energy and efficiency programs.

The House adopted the amendments on June 6 as part of its 2013 Energy and Water Appropriations Bill. The proposed cuts reflect a broader trend. As the Tea Party reshapes the GOP, opposition to policies that reduce climate-changing gases and stoke the clean energy economy is soaring.

More than half of the targeted DOE programs were started under Pres. George W. Bush, while some go back decades. They range from wind technology supports to mandates for zero-carbon buildings, LED light bulbs and electric golf carts (and, of course, the controversial program behind the Solyndra loan).

Overall, the House energy bill would give $32.1 billion to energy and water programs, a cut of about $1 billion from Obama’s budget request. It would also shift more dollars to fossil-fuel programs. Research and development of “clean” coal, oil and natural gas technologies, for instance, would get a 60 percent boost from last year’s level to $554 million.

The House passed H.R. 5853, the Energy and Water Development Act with the following amendments, as issued by GOP leadership: (original pdf)

Cravaack (R-MN) #1 – The amendment would prohibit funding to require DoE grant recipients to upgrade their light bulbs to meet certain efficiency standards. This requirement is an inappropriate over-reach that puts an undue cost and regulatory burden on grant recipients. The amendment was adopted on a voice vote.

Harris (R-MD) – The amendment prohibits funding for a DoE renewable energy and energy efficiency international program. The underlying bill already reduces the account by 60%, and the amendment would go further to ensure the elimination of wasteful or unnecessary overseas activities. The amendment was adopted on a voice vote.

Burgess (R-TX) – The amendment prohibits funds from being used to implement or enforce energy efficiency standards regarding incandescent light bulbs and other incandescent light sources. The amendment was adopted on a voice vote.

Stearns (R-FL) – The amendment prohibits funding for DoE to forgo certain U.S. rights in a loan guarantee agreement. This was one of the actions taken by DoE prior to the Solyndra bankruptcy, and it reduces the ability of the government to recoup taxpayer dollars. The amendment was adopted on a vote of 348-60.

Jordan (R-OH) – The amendment prohibits the use of funds to issue or administer new loan guarantees for renewable energy systems, electric power transmission systems, or leading edge biofuel projects. The amendment was adopted on a voice vote.

Landry (R-LA) #2 – The amendment prohibits funding for a national media campaign on green technology. This activity is not part of the core mission of the agency. The amendment was adopted on a voice vote.

Schweikert (R-AZ) – The amendment prohibits funding for DoE to implement or enforce regulations on shower heads or water-closets. The amendment was adopted on a voice vote.

Fortenberry (R-NE) #2 – The amendment prohibits funding to implement or enforce a new DoE regulation that would impose energy efficiency standards on certain battery chargers. The regulation could place costly and unnecessary burdens on businesses, potentially costing American jobs and increasing prices for consumers. The amendment was adopted on a voice vote.

Flores (R-TX) – The amendment prohibits funds to enforce the ban on the use of certain fuels by federal agencies. The amendment was adopted on a voice vote.

Flake (R-AZ) #3 – The amendment prohibits DoE from using funds for the Wind Powering America Initiative. The amendment was adopted on a voice vote.  (emphasis added)

The cat came out of the bag as the GOP House leadership explains to us that regulations promoting alternative energy use, energy conservation, and energy standards are “costly and unnecessary burdens on businesses, potentially costing American jobs and increasing prices for consumers.”   Note the grammatical but meaningful disconnect in the phrasing — “are costly (for business)” but “potentially costing … jobs.”  This is the classic Republican line — any nod toward improving energy efficiency standards or regulating energy conservation might cost some business some amount in the short term, and therefore must have a deleterious effect on hiring.   For some reason known but to themselves, the GOP seems obsessed by light bulbs, exemplary of the short term focus of Republican energy policy.

Dim Bulbs

Me’thinks the market has spoken.  Between 2001 and 2003 the number of CFL bulbs increased from 1.8 billion world wide to 3.5 billion.  There’s more:

“Reliable global data on CFL use since 2003 do not exist, but sales growth in individual countries strongly indicates that total usage continues to increase at a fast pace. Between 2000 and 2004, for example, estimated sales in the United States grew 343 percent-from 21 million to 93 million-and by 2007 they reached 397 million.  CFL sales in Western Europe grew 34 percent between 2000 and 2004, from 173 million to 232 million units, and in Eastern Europe they rose 143 percent, from 23 million to 56 million units.”  [WWatch]

One can only wonder WHY, if the sale of an item increased by 343% in four years, the Republicans haven’t caught on to the fact that consumers have decided that energy efficient bulbs are better home management decisions, and aren’t going to squawk too loudly if their government also decides that the old inefficient incandescent bulbs are the buggy whips of the 21st century.  The logic is about as perilous as advising citizens that they should revert to the use of chamber pots, thus enhancing the pottery and ceramic industry,  instead of those new-fangled WC’s that flush.   This “logic” also seems to have inspired now-Senator Flake’s notion that we don’t need to invest in the Wind Powering America Initiative — although Nevada, with a surfeit of blowing breezes, could definitely benefit from such a program.

So, while the chief economist for the state of Nevada hopes that clean energy investment and technology will augment the economic development of the state, the Republican members of Congress remain incandescent dim bulbs in that department.  We could use more economic diversification — but there isn’t much illumination coming from the House of Representatives.

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Filed under Economy, energy, energy policy, Nevada economy, Nevada energy

Energy and Amodei

** Thus much for all the “Doom Despair and Agony On Me Deep Dark Depression and Excessive Misery“– Nevada’s unemployment rate has dropped to 11.8%.  [LVSun]  Not too shabby for a state that got caught in the midst of the Wall Street Casino generated Housing Bubble.

** There is an economic sector in which Nevada could do quite well:  “Nevada is rich in renewable energy potential but has few fossil energy resources. Nevada leads the Nation in geothermal power potential and much of the State is suitable for wind power development. The Colorado River, which forms Nevada’s southern border, is a powerful hydroelectric power resource.” [Eredux]  What could we be doing to create more jobs in the energy sector?

Wind Energy: “Over 24 million acres of land in Nevada within 10 miles of an existing transmission line is classified as ‘good’ to ‘outstanding’ for wind energy development. Nevada has the potential to generate 63 million megawatt/hours — 280% of the State’s current consumption.”

Solar Energy: “Nevada has the highest solar energy potential in the nation and is already the number one state in per capita solar energy production. The DOE estimates that 100 square miles of Nevada land could supply all U.S. electricity needs with current (~10%) commercial efficiency rates. With over 250 days of sunshine a year, Nevada is looking forward to a bright solar future.”

Geothermal Energy: “1500 MW of geothermal capacity that could come on line in Nevada by 2015. With 340 MW of geothermal power currently in operation and hundreds more coming on line in the next couple of years, Nevada is poised to become a world leader in geothermal power generation.”

UNR “Nevada’s Renewable Resources” Click for interactive maps and pdf reports.

**  The energy resources available for development in Nevada aren’t merely a matter of tree-huggin’ environmental interest — rural counties which need to diversify their economies are prime locations for energy development projects.   This ought to be a bi-partisan, if not non-partisan, issue.  Communities based on mining are all too familiar with the Boom and Bust phenomena — witness Hamilton,Belmont, or Bullfrog, and other ghosts of booms past.  Agriculture is a solid but geographically limited contributor to local rural economies.  Manufacturing clusters are developing, but face staffing challenges when competing with mining corporations for highly skilled employees.  Energy development is a sector which could contribute to rural economic development — the installations require construction (which would help in the short term), maintenance and staffing; better still they can’t be out-sourced to another country.

Instead of dismissing alternative energy development as a “passing fad,” which economists assure us isn’t the Chinese or German conclusion, or pretending that support for energy development is a futile exercise in picking winners and losers — could we guess that the Oil Giants believe they might be losers? — we should be looking at alternative energy development as a way to help diversify the economy in rural Nevada.

** And then there’s the short term vision of Nevada’s Second Congressional District incumbent.  Representative Mark Amodei’s view is remarkably foreshortened — as in limited to the next utility bill.

“If federal money is going to be spent on research and development to make wind, solar and geothermal energy more competitive that’s one issue, Amodei said.  “But if those, when they get done, go to sell into the grid and that increases rates, especially right now when things are they way they are in Nevada, and competition for sustainable living wage jobs is what it is in the Inter-mountain West, I think that’s the wrong energy policy,” he said. [NNB]

Somewhere in that word salad there’s a point which might be translated as  alternative energy development is OK if it is to make the projects competitive, and if there’s no increase in electricity bills.   The ultra-conservative NPRI chimes in with a misleading comment presented as if it proves alternative energy development doesn’t create jobs, and if it does it’s too expensive.  The NPRI took the total $1.3 billion investment in alternative energy since 2009, and divided it by the number of permanent full time jobs and came up with an astronomical price for each job created.

First, no one ever said alternative energy was going to create jobs for everyone in the country. Secondly, the NPRI’s complaint ignores the fact that the projects may also support those who are already employed in the industry — thus relieving downsizing pressures.  Third, construction jobs DO count.  Even though construction and installation jobs are by their very nature temporary, they do feed into the local economy, especially if local contractors and subcontractors are hired to do the work.

Economic diversification could be enhanced by including alternative energy projects, IF Representative Amodei were willing to take a longer view of the potential and less persistent in his opposition to anything that might require start up assistance.   It would be better for his rural constituents if he could even see past the envelop containing his power bill.

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Filed under Amodei, Economy, energy, energy policy, Nevada economy, Nevada energy, Nevada politics, nevada unemployment, Rural Nevada

Energy Policy: Two Candidates, Not Much Of A Question

Appointed Senator Dean Heller (R-NV) has a perilous tightrope to walk in the upcoming Nevada senatorial election, now a close contest with Congresswoman Shelley Berkley (D-NV1).  The Republican “energy policy” has mainly been about “Drill, Drill, and then Drill Some More,” which as most people know by now isn’t much of a solution.  Senator Heller’s  Road to Damascus Moment [LV Sun] wherein he notices that Nevada has plenty of sun, and an ample amount of wind, doesn’t completely obscure his voting record on advanced energy technology and alternative energy sources.

For example, Heller had two shots at voting in favor of H.R. 6 (the Energy Act) in 2007, and voted “nay” both times.  He also voted against H.R. 2776 and H.R. 3221, the Renewable Energy and Energy Conservation Tax Act.  Representative Berkley voted in favor of these bills. [PVS]  He voted against H.R. 5351 (Energy Law Amendments) on February 27, 2008, and against H.R. 6049 (Alternative Energy Tax Incentives) on May 21, 2008. [PVS] Representative Berkley voted in favor of these measures. [PVS]

On July 23, 2008 he did vote “yes” on H.R. 3221 (Housing Bill with Energy Tax Credit Extensions) and then voted “no” on H.R. 7060 (Renewable Energy Credits & other business and individual credits) on September 26, 2008.   Congresswoman Berkley voted in favor of H.R. 7060. [PVS] The American Recovery and Reinvestment Act (H.R. 1) which contained green energy and energy conservation programs got no support from then-Representative Heller in 2009.  Nor did Representative Heller support the “Cash for Clunkers” bill to incentivize consumers to purchase more fuel efficient vehicles (H.R. 2751) on June 9, 2009.  [PVS]

On September 16, 2010, Heller voted against H.R. 4785 which would have authorized loans for energy efficiency purposes.  [PVS] Representative Berkley voted in favor of H.R. 4785. [PVS]

Given this voting record it is difficult to place Senator Heller among the choir of voices calling for energy conservation, energy technology, and alternative energy source development.

A less reflexive, and more reflective, energy policy should stand on three legs — (1) the promotion of future energy efficiency standards, (2) the encouragement of current energy conservation practices, and (3) the development of alternative sources of energy.  Representative Berkley’s position on these three policy pillars has been far more substantial than Senator Heller’s.


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Filed under 2012 election, Berkley, energy, energy policy, Nevada energy, Nevada politics

Gassy-ness in Energy Policy Debates: Charts of the Day

Here we go again.  If you want cheaper gasoline in Nevada head to Elko where you might find it for about $3.10 per gallon, if you are stuck in the Kingsbury Grade area it’s likely to cost you $4.50. [NVgas]  One of the problems with discussing gasoline prices is a matter of perspective.  If we look at a short term graph the results are depressing.

However, if we look at a full year, the results are a bit different.

And there’s a different perspective if we go back six years:

Please climb back down from the barricades?   Yes, speculation in oil prices contributes to price increases.  However, as Ezra Klein explains in his Washington Post column, this may not be the entire picture — no matter how tidy the graphs.  Klein urges us to remember that the oil prices are a matter of supply (Saudi Arabia) and demand (China).  And, it’s hard to get a grip right now on the scale of the demand.

There’s this prediction from Reuters: “The China Petroleum and Chemical Industry Federation estimated that apparent crude consumption will increase 5.3 percent year on year to 480 million tonnes in 2012, or 9.6 million barrels per day, compared with its forecast of a rise of around 3.5 percent in 2011.” (January 2012)

And then there’s this prediction from Reuters:

China’s implied oil demand is likely to grow by a less-than-average 5 percent this year to 9.9 million barrels per day, an industry research group said on Thursday, as a slowdown in economic growth caps fuel consumption.

China is the world’s second largest oil consumer and the Institute of Economics and Technology, the research arm of top state energy group CNPC, said average implied oil demand over the last decade was 7.1 percent.

The institute also forecast net imports of crude oil to amount to 266 million tonnes this year, or 5.3 million bpd, the institute said, which would be an increase of 5.9 percent over the official 2011 import figure. (February 2012)

We can’t leave ourselves out of the picture because as the following graph indicates, the U.S. is the world’s top consumer of oil.

Either way these reports are read, there will be an increase in the demand for oil in China.  The question appears to be the level of that demand, and how their demand clashes with our demand.  On the supply side things are even less clear.

JODI graphs the production:

Saudi Arabia has 1/5th of the entire planet’s proven oil reserves, and has the world’s largest production capacity.  [USEI]  So, three days ago Bloomberg News reports that the Saudis have reduced crude oil production:

“The country reduced output by 237,000 barrels a day or 2.4 percent to 9.81 million barrels a day of crude compared with 10.047 million in November, statistics posted today on JODI’s website show. The kingdom’s exports were cut 7.36 million barrels a day from 7.8 million barrels, according to the figures, which include condensates and exclude natural-gas liquids.”

To make matters all that more confusing, the Saudi numbers don’t appear to be “adding up,” as explained by the Wall Street Journal:

Recent oil production figures from Saudi Arabia, the world’s largest oil exporter, simply don’t add up.

“There are competing explanations for this inconsistency. Some analysts claim that the increase in oil production Saudi officials promised in late February to compensate for lost Libyan supplies was fictitious. Statements from the Saudis themselves imply that the kingdom cut its production several weeks later much more sharply than reported. But either scenario contradicts previous statements from Saudi officials.”

Climbing demand and decreased production (spiced with some confusion) usually do cause price increases.  Granted that speculation isn’t helpful, but it may not be the sole cause of the current Pump Pain we are now experiencing.   So, what if we Drill Baby Drilled? Would that yield enough barrels of oil to bring down the prices?

Independence in FantasyLand  It was 1973 and President Richard M. Nixon was telling us that we could be “energy independent,” a term used and misused by nearly every administration since Carly Simon was singing “You’re So Vain.”  And, it is theoretically possible for the U.S and Canada to double their production — however some of that drilling would require technology we do not yet possess.   Would it be possible for us to double our production and sing “Take Your Oil And Shove It” to the Saudis?  Sadly, no.

“…let’s not be realistic for a moment. Let’s assume the U.S. and Canada did manage to drill enough oil that we could tell Saudi Arabia to take it’s light sweet crude and shove it. What then? Well, we’d still be exposed to all the ugliness of the global oil market. American and Canadian crude would be priced just like everywhere elsebased on what the world’s highest bidders are willing to pay for it. Americans would continue to pain at the pump whenever there was another war in the Middle East or African militants blew up a pipeline.”  [Atlantic] (emphasis added)

And if those “world’s highest bidders” happened to be from China, Japan, India, Korea, Canada, and Brazil… our prices would still be UP.  We’d drill and drill and drill and drill and the price of oil would still be determined by the global market.

President Obama is no more in control of what OPEC, the Saudis, the Russians, and the Iranians decide to pump into the global oil market than yours truly and my next door neighbors.  No more than former President George W. Bush was empowered when gasoline prices soared in the summer of 2008.  The oil will go to the highest bidder, wherever that bidder might be. That’s the way oil markets work.

There are some things we can do, but they would require some fundamental changes in the way we perceive our infrastructure.

# We could, for example, improve our electricity production and use  such that we aren’t losing 60 units in inefficient generation and waste heat, plus the 10 units we lose in transmission, and the next 10 units we lose because of inefficient grounding in our own homes. Of the 100 units in the fossil fuels we’re actually utilizing about 20.  [FERC]

# Developing the infrastructure to support hybrid automobiles could reduce our need for some 6.5 million barrels of oil per day. [FERC]

# Industry adoption of federal standards for vehicles sold from now until 2016 could save 1.8 billion barrels of oil over the lifetime of the cars and trucks. [CCES]

# We could also continue to support more fuel efficient public transportation. Ask any commuter from San Francisco to St. Louis to Washington D.C. if they’d rather drive into work or take the Park ‘n Ride Route?

However, when all is said and said and said what would be most useful for us  to reduce the Pain at the Pump by taking a wider view of our circumstances, and seeing our transportation needs as part of a comprehensive picture of how we move ourselves and our goods in a network that promotes the most efficient use of energy resources.

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Filed under Economy, energy, energy policy, Infrastructure, Nevada energy

Nevada: Land of Inopportunity

Ouch! “Nevada Ranks Last in Nation in Job Opportunity.” [LVSun] Given an “Opportunity Index” of 21.3, out of a national average of 58.4 the headline isn’t surprising.  Statistical compilations aren’t necessarily without their own kind of vision; we could put together an index of “Pro-Business” numbers and massage the ranking until the Silver State showed no sign of tarnish.  However, the sources for this specific index ought to give Nevadans an incentive to discuss something other than “No New Taxes” in future public discussions.

The “Jobs” portion of Nevada’s score combines our unemployment rate, the median household income, the percentage of the population living below the poverty line, physical availability of banking and credit institutions, affordable housing, and Internet access.  Jobs are harder to find in areas in which there is already high unemployment and the Las Vegas area’s 13.4% indicates treacherous job hunting territory.  Reno’s 12.1% isn’t much better.  [DETR]  The official word from Carson City can be interpreted as “Gee, at least the situation didn’t get any worse.”  [DETR pdf]

There is a tiny glint of hope from the gaming industry, which “may” continue to grow, but as of last June the analysis from Carson City wasn’t all that optimistic:

“The accommodation and food services sector contracted considerably during the recession, marked by a number of casino closures and layoffs. This year however, the industry has shown improvement and should continue to add employment. About half of all employment growth in Nevada in recent months has come from the accommodation and food service industry. Prospects look promising given an improving national labor market situation and rising consumer confidence. International visitation will increase so long as the value of the dollar remains weak, making popular destinations like Las Vegas, Lake Tahoe, and Reno more affordable for foreign travelers. Employment in the accommodation and food service industry will increase by 1.4% in 2011, 1.6% in 2012, and 1.7% in 2013. This will be a total of 13,700 new jobs for the forecast period.”

That doesn’t quite cover the current 176,400 Nevadans now looking for work.   Neither will the expected employment projections in retail trade:

“Retail trade has improved over the last year. Consumers are moving into a better position given falling unemployment and improved job prospects. Pent up demand will start to drive sales higher. Money that consumers were putting towards savings or paying down debt during the downturn should slowly work its way back into the economy. Retail sales in Nevada have been growing as seen by taxable sales reports. Collections are up 5.0 percent through the first 8 months of the fiscal year. Employment in this industry will continue to grow, increasing by 0.8% in 2011, 0.7% in 2012, and 0.7% in 2013. This will be a total increase of 2,800 jobs for the forecast period.”

Notice that the analysis for both gaming and retail trade is gently phrased.  IF there is rising consumer confidence (i.e. willingness to gamble with family resources) and IF the dollar is weaker, and IF there is some “pent up demand,” then we might see some slow improvement in our job market. Some sectors are improving, but we need to look at whether Nevada is ready to take advantage of the opportunity.

High Tech, Health Care, Energy: The Big Three

One variable the Opportunity Index doesn’t include is the use of office space and its relationship to economic sector growth.  There are three areas which seem to be rebounding: High Tech, Health Care, and Energy.  [PR/Biz] “These three sectors account for nearly 650,000 or 35 percent of the 1.8 million jobs added since the employment trough in February 2010. High-tech employment has surged growing its job base by 5.1 percent (5.9 percent for services and 3.6 percent for manufacturing), surpassing growth of any other sector on a percentage basis. ”

So, who is renting or leasing commercial office space now?

“Office-using employment sectors comprise 20.9 percent of total employment in the U.S., while high-tech services makes up just 1.7 percent. Nonetheless, high-tech services jobs increased by 5.9 percent from the trough, while office-using sectors increased by 1.9 percent. Though traditional office users are greater in number, high-tech office users are increasing at three times the pace, and this growth is more concentrated in specific markets thus driving office demand to a greater degree in those places. ” [PR/Biz] (emphasis added)

The main centers for this activity are  San Francisco, Silicon Valley, Seattle, New York, and Baltimore.  No Nevada towns on this list.   The High Tech expansion explains why California isn’t the same anemic blue on the Opportunity Index map, and the following should explain why Utah is a more positive shade as well:

“The Utah Department of Workforce Services projected the state will add 17,000 new jobs this year and 28,000 next year — a significant portion of which will be in the high-tech arena. Economists have also been optimistic — predicting slow, steady improvement on the employment front during 2011.

Not to mention the various recent accolades heaped on the Beehive State from national media like Forbes magazine and Moody’s, which listed Salt Lake City and Utah among the best places to do business and best job markets in America.

[…] Kate Mitchell, co-founder and managing partner of Scale Venture Partners — a venture capital fund based in Silicon Valley, Calif., said Utah has the core infrastructure that makes it attractive to potential job creators.

“(You) have great research and universities, great innovation and a very friendly business environment,” she said.”  [DeseretNews] (emphasis added)

If Nevada’s missed the High Tech train, perhaps it could catch a car on the Health Care Services line?  The national average of health care employment as a percentage of the total is about 9.1%.  Nevada’s percentage is 6.3%.  [Kaiser]

There are 35 hospitals in the state, 16 of which are “for-profit,” 13 are non-profit, and 6 are operated by state or local governments.  There were 50 certified nursing facilities, 66% were “for-profit,” 16% non-profit, and 12% government operated, serving 4,761 residents. [Kaiser] There are only 7 certified rural health clinics in the state. [Kaiser]  The DETR projections aren’t all that optimistic for health care institution hiring:

“Health care and social assistance continues to perform well despite some challenges. While Nevada’s hospitals struggle given recessionary and programmatic difficulties, smaller businesses continue to do well during the recession.   Doctor’s offices, dentists and optometrists will continue to add employment during the projection period. Demand for health care services will continue to grow given the aging baby boom population. Employment is predicted to increase by 1.8% in 2011, 2.0% in 2012, and 2.4% in 2013. Total employment for this forecast period will increase by about 6,100 jobs.” [DETR]

The DETR projections wisely notice there will be a need for more institutional employment in the health care services sector in Nevada, but not necessarily that those 61,000 jobs will be toward the median portion of the wage scales or above.

If the employment train may have already left the station in High Tech, and Nevada is still trying to approach the station in terms of Health Care Services, we might look to the Energy Sector for employment growth?

Utility System Construction is expected to include 6,312 jobs by 2018. [DETR] Utilities in general some 4,488 jobs.  Electrical power generation may employ as many as 2,923 people by 2018. [DETR] There is nothing in these 2008-2018 projections to indicate a “boom.”

A Slow Hard Slog Toward Recovery

If our Opportunity Index showing is an indication, Nevada is in for a long and slow economic recovery.  Already poorly positioned in terms of employment in High Tech, Health Care, and emerging Energy investment, the reliance on gaming and retail trade means the state is still reliant on consumer spending to create employment, and the factors which drive consumer spending aren’t all that positive.

Slow money: Economists see a “long term average” of 37.59% in the growth of the M2 (money supply) as positive — we are now looking at a growth rate of about 9.9%. [Treas] There are some technical rationales for this problem, but the bottom line is that the slow growth indicates that wages and salaries aren’t generating economic growth in this realm.   We can argue about whether banks are extending sufficient credit or whether the ARRA funding is insufficient to generate the necessary growth — but the bottom line is that if there is depressed demand for goods and services then employment levels, wages, and salaries will also be deflated.

Temporary Employment:  It used to be said that temporary employment levels signaled the permanent employment trends.  However, this analysis isn’t all that heart warming:

“Temp jobs are now up 19.6% year over year, a record for the series going back to 1990 (when BLS began tracking it).  Private sector jobs less temp jobs are still down 0.7% year over year.  Historically — and I’ll admit going back only to 1990 isn’t a particularly robust data set — when temp jobs are up over 10% year over year, private sector jobs (less temp jobs) are running in the range, on average, of +2.4% YoY,  not -0.7%.  In the 20 year history of the series, never has the year over year gain been 10% or more while the private sector (ex-temp) has been negative.”  [RitHoltz] (emphasis in original)

If this is as good as it gets, then it’s going to be hard to move that M2 number.

The Deleveraging Demon:  There was a time not so long ago when homeowners were courted into the home equity loan market, now that home values have plummeted this is no longer a source of consumer spending as those same homeowners are now paying down debts.  Las Vegas, Atlanta, and Phoenix have posted new “lows” in home prices, indicating that the “worst” is still being explored in the housing market.  [BusWk]

While we await the “bottom of the Nevada housing market,” we may very well want to discuss how the state might better position itself in regard to high tech employment expansion, how to incentivize investment in both public and for-profit health care services, and how to insert the state into emerging energy generation technologies.  Failing that, we’ll be stuck with slow money, temporary employment which doesn’t encourage increases in demand, and the deleveraging demons which continue to plague our national and state economies.

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