The Garden Island reported yesterday that JoAnn Yukimura wants to mandate solar hot water heaters be installed in new homes based on her belief in the future of energy prices.
“We are moving as a global community from cheap, abundant fossil fuel to scarce, expensive fossil fuel,” she said. “We need to protect our community against ever-rising prices and dependence on fossil fuels.”The thing is, if JoAnn were correct in her market predictions, she ought to mandate that everyone in the county purchase petroleum futures. That way she would not just shield us from rising energy prices, but she could instead take credit not only for ending poverty on the island but also for making us all into millionaires.
What JoAnn really ought to mandate is that all the "Peak Oil" theory adherents not be allowed to impose their beliefs on the rest of us but instead be forced to put their money where their mouths are and go long oil, purchasing either petroleum futures or call options on futures or stock in the industry. They could finance the purchases by selling put options, a normally extremely risky strategy but not so here since, you know, petroleum prices are only going up.
That way those with a personal belief in the ultimate direction of prices can - if they are correct - benefit by their market analysis, but if they are wrong and energy prices instead continue to do what they have done throughout history - fluctuate - then they have not imposed the burden of their amateur prognosticating on the rest of the community.
14 comments:
Fi fie fo fan
I smell the poo of a Libertarian.
We have building codes in most of the country requiring certain levels of insulation for energy efficiency. We have auto CAFE standards. We have energy standards for appliances, air conditioners, and electronics. Would you abandon all that and just wait for "the market" to fix any problems that arise? We could have just mandated people invest in energy futures in 1970 instead.
Of course, that massive increase in efficiency of GDP/energy input is one reason that energy prices slumped for 20 years. Public policy is sometimes about making people do the best thing for the group rather than each individual just grabbing what is best for himself and to hell with rest.
You also need to at least distinguish between Peak Oil, which is a rational description of how pricing is likely to go when we hit peak production of a non-renewable resource and the Kunstler collapse theories which are pretty extreme.
If you can't see oil prices quadrupling in 5 years (2002-->2007) or up by 10X in 10 (1998--2008) you just won't see. What should be frightening you a little is that unlike the 1978--1982 spike, there is no rapid surge in new projects to bring a flood of new production to the market. Nor is there, so far anyway, any massive effort to increase efficiencies like in the earlier period.
The USA uses roughly 20 MMBD of petroleum. That's almost 25% of world production for just 5% of the world's population. The rest are starting to get rich enough to start paying up for a more proportionate share. Your energy free lunch is over.
Also keep in mind that solar water heaters will unload our electrical system pushing out the time for the next expensive capacity expansion. We can either make that investment house by house or pony up for expensive new generation from some other source.
You must smell libertarians lurking wherever anyone questions the wisdom of the reasoning behind any regulation. God help whoever questions an actual regulation.
You remind me of the old John Birchers who called anyone they disagreed with "communists." You couldn't question any of their right wing views without being called a communist. The most middle of the road moderate democrat was, as far as they were concerned, a communist.
This condition where you smell political theologies lurking beneath every quesioning of one of your assumptions - it must be a gene or something.
Your last paragraph contains what could actually be a legitimate reason to mandate solar - in order to postpone some investment that the government would otherwise have to make sooner.
But that's not what the paper said was JoAnn's rationale. The paper said she imagined she knew the future direction of energy prices. If you guys are so sure, I'm telling you, you should be going long oil big time. You'll turn out looking like rich geniuses - if you're right.
In fact, if one is not willing to back one's junior commodity analyst prognostications with their own money then they should for sure be forbidden from imposing their sure-fire, can't lose theories on the rest of the community.
Charlie:
You hit a homer with your piece.
And, speaking of poo, your first commentor's missive wreaks of the socialist variety. I'll take liberty in a pit of poo rather than paradise under the boot heel of the likes of Yukimura,Hooser et. al.
His comments reveal a gross ignorance of how markets work and reflect the error of thinking about oil only in terms of inventory--an engineering view versus a dynamic economic one. The concept of "Peak Oil" is just that a shortsighted, stagnant, engineering view that is more appropriate for very short-term reflection. From an economic standpoint we will never run out of oil--to make that claim is akin to saying that we emerged from the stoneage because humans ran out of usable stones and not because of their discovery of bronze, iron etc.
Current market prices are not any indication that the supply of oil or of proven reserves is at or anywhere near an end. Its is simply that demand has grown faster than supply--not surprising given the explosive growth of the Chinese and Indian economies coupled with the Luddite stranglehold the environmental whack-jobs have placed over domestic production.
Yukimura's county solar mandate (& Hooser's state version) does one thing well--it narrows the range of free choice that people have and the range of choices we have is an excellent proxy for freedom.
"The USA uses roughly 20 MMBD of petroleum. That's almost 25% of world production for just 5% of the world's population."
This quote misses "rest of story"
Reason US uses 25% of production is because we represent appx 27% of world GDP (according to IMF and World Bank)
Energy use far more function of economic output then of people
As far as forcing solar - what is next in Socialist Republic of Kauai?
In itself not a bad idea - but as mandate - and a very expensive one upfront - extremely bad ...
Not certain if I support a mandate. Yes it adds a few thousand to the cost of the home, yes it is another government interference in our lives. But solar water on these islands is a no-brainer. You are simply an idiot if you do not have a solar water heater on the house.
We installed ours a couple months after buying the house. The cost was 5 grand up front, but we recouped all but about $1500 on the tax rebates. The electric bill dropped over $50/mo for only two people. The installation is absolutely trouble free, as are the much older units on our neighbor's houses. How can you argue with economics like that!
You would add a few thousand to the mortgage of the average buyer, but the reduced utility bills would more than make up for this. Don't tell me you expect oil prices to go down ever again!
The public benefits of 100% solar water heating on the islands would be considerable, lower utility infrastructure costs, lower emissions, etc, etc.
Yes, it should be on the agenda.
I'd have one hell of a hard time coming up with $5000 up front, even if it pencils out great in the long run.
If you think that makes me and the many people like me "idiots," then we're in trouble.
What about renters and people who are just getting by and running out of money before they run out of month?
The rental market is a good reason why installation should be mandated when built. A landlord has no financial incentive to install something that save their tenant money.
Likewise developers will not install these units even if they could get the cost down dramatically through a multiple unit buy. Installation when the walls are open and the plumber is doing the remainder of the piping is far cheaper than a retrofit.
Mandating install on build would address getting these units to those who would not otherwise be able to afford the upfront costs.
Otherwise the options are limited, I agree. But there are ways for someone determined enough to save money. Buy a used/refurb unit, do-it-yourself, etc. You might forego the E-Company rebates, they require a pro install, but the tax credits are still available, they require little documentation.
It seems that this is a good place for a discussion of mandates vs. incentives. Not that I'm going to start one. But even if there's agreement that some real world problem demands a regulatory response, it's still premature to leap on mandates without an airing of the alternatives. I think, anyway.
I understand that HELCO (here on the Big Island) just ran a pilot program whereby 50 customers could sign up to have solar water units installed with the cost distributed into their normal electric bill. No upfront costs, just savings after the unit was paid for.
The program was immediately oversubscribed. There is consideration of expanding the program. What about requiring this model for anyone who requests it?
Rather than "mandate" far more sense to make affordable for all - carrot vs stick
It is mostly "no brainer" - but many cannot afford - and that includes new devel as well (if buyer won't spend more for it etc)
On other hand program with elect company that installed at no charge - but then charges same monthly electric as paying without solar - until solar install paid for - is a great idea
Allow elec company to make small profit and reasonable inetrest on install & offer same system for cash discount if paid at install
This would allow all to participate regardless whether they had cash
The elec co. benefits as well as reduces load/demand and delays need to build more capacity
Pretty amusing to be compared to the Birchers only to have the real thing show up right on cue.
If all this angst was because "the paper reported ....Joanne's rationale..." then this rant was just a waste of electrons. Our paper is notorious for missing the main thrust of any issue and reporting the errata. Did you consider she might have offered a number of reasons but only the oil price one sounded sexy for the paper?
And one last question for you Charley. If you are so sure Joanne is crazy for predicting oil going ever higher are you taking a short position in oil yourself?
Later posts suggesting using a revolving fund to pay for solar units with the savings repaid to the fund seem reasonable. That's a good idea for low income housing to avoid burdening the struggling. I see no point in offering such a plan for expensive structures though. The rich can afford to increase their home prices 0.5-1%. The cost of a solar water heater is less than a Viking range or a pair of sub Zero fridges.
How is JoAnn's lack of knowledge of future oil prices a reason to go short? That makes no sense.
your bleating that she's an idiot for suggesting prices are going to rise inexorably implies you know better.
really crappy effort on this issue overall. Excessively loaded language and sloppy logic throughout.
I have to say, you are a hoot to debate with.
Let's see...
She's not an idiot for having an opinion about the future direction of prices. There are intelligent arguments that they will rise, there are intelligent arguments that they will fall. The commodity markets are full of educated people, lots of whom are not idiots, with various opinions about the future prices of things.
Now then - my recognizing that none of these people (JoAnn included) actually knows the future of prices in no way implies that I do know.
For example, you could say, "tomorrow, it will rain," and I might say, "you have no idea whether it will rain or not." Now, that does not imply I think it will not rain tomorrow. It doesn't imply that I have any opinion at all one way or the other. It only means that I don't think you know whether it will rain or not. You see what I mean?
I'm not taking the opposite position just by saying you don't know what the future holds. Of course, that goes without saying, except, well, moving on...
Now, even if it somehow logically followed that my doubting JoAnn's ability to foresee the future meant that I believe prices will not go up (of course, it does not at all logically follow, but let's say you still believe it does) that does not imply ("inexorably" or otherwise) that I believe the opposite will occur. There are lots of things prices can do besides go up. They could, for instance zig zag sideways. They could go up a bit, then fall, then go up, then fall in some random fashion. There's no end to what they might do.
So, even assuming anything I've said at all implies that I have an opinion about future prices and that I believe prices will not go up (forgetting for the moment, of course, the illogic of deriving that from anything I've actually said) that still does not represent a rational reason for "going short."
I must say, though, that I did get a kick out of being accused by you of excessively loaded language and sloppy logic.
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