Change the Gas Tax

Posted on January 4, 2009 by bfarrey

This is a follow up to a post from a couple of months ago <Green Fee Now>.  Lower gas prices have come as I predicted in this article, and I suspect the commitment to investing in green alternatives to fuel our transportation will wane.  Hopefully, I am wrong.

I differ in how much to change the gas tax, where to spend the money, and how to distribute the money, other than that I agree with the study by the National Commission on Surface Transportation Infrastructure Financing (only in Washington can they come up with a name like this).

I propose a variable federal gas tax which would create a more fixed retail gas price, how is that for political speak.  I think it is simple, let me explain.  Set a target retail price for gasoline, and vary the federal tax collected as the price of oil increases or decreases.  If market based oil prices rise, and the subsequent gas at the pump goes up then the federal tax is lower to maintain a gas price within a range.  Since the current federal tax is 18 cents on $1.60 average price, the ability to control the retail price is somewhat limited but it make logical sense to me that in the time of $4.00 per gallon pricing the tax should be less if not zero, and at $1.60, the tax should be more.  There is math required here to make sense of this and I am sure economists can come up with a model to implement.

Second, I don’t think the money should go to ‘infrastructure’ projects, whatever that means.  I say that because it is one of the overused words in Washington D.C., now.  That and ‘Investment’, tag a spending idea with one of those terms and it should be smooth sailing.

Here is the point, the Federal Government spent $50B dollars last year from the gas tax to support ‘Infrastructure’ projects in the states.  This represents 25% of ‘infrastructure’ spending last year, so the States chipped in the rest (remember the state gas tax is in many cases more than the federal), so that would equate to $200B spent last year on highways, bridges etc. These numbers are from the NCSTIF mentioned above.  Similar amount over the last five years also.  Ok, and our roads and bridges are a mess?  Why are they still a mess?  Has anyone looked into how this money is spent?  I have a simple point of view, however it is distributed, it is NOT working.  So, why would we put more money into this system?  As a business person, this current approach is not worthy of new funding.

I propose creating a Green Financing Fund.  The annual federal gas tax would be loaned out to private industry, working on alternative, cleaner, more sustainable transportation systems.  It is targeted investment (see even I can’t avoid the word!), in replacing oil based fuel.  Loans from this fund would be made to qualified companies, at a low interest rate.  Interest paid would be returned to the federal government and used for federal highway projects (the old way).

This would create a wave of Venture capital flocking to new ideas.  Low cost capital is one of the many things inhibiting growth for these companies.

We need different, bold ideas to turn things around.  Spending more money in an ineffective system is not the way to go, no matter, if the projects are ’shovel-ready’ or not.  I can assure you the job sectors most effected by the current recession is not road builders, or bridge repairers.  These recent proposals in Washington, wrapped in the ’save our jobs’ flag is nothing but marketing and political speak.

There is inherent waste, bureaucracy, and cronyism in the system now and we should not support it.  Shake things up !

Filed under: Policy Ideas | Tagged: , , , , , , | Leave a Comment »

A Green Snowblower

Posted on December 12, 2008 by bfarrey

To continue my migration to all things green, my big, heavy, smokey snowblower has found it’s new home under my deck.  Yes, I might have to get some exercise this winter.

Here in New England we expect anywhere from 75 to 120 inches of snow each year, and it needs to be removed from driveways and sidewalks.  In true American style, we have built some monster snowblowers, to do the heavy lifting for us.  Gas powered, noisy, newspaper eating,  propellors throwing the snow 30 feet in the air.  Fun, yes. Green, no.

Since I couldn’t find a nice battery operated snowblower, I had to resort to looking at manual alternatives, and I found it.  The Wovel.  Yes, the Wovel.

Other than strange looks from my neighbors, which I am already used to, I expect to be able to clear the snow in about the same time as the snow beast.

I am actually excited about the first snow fall.

I will keep y0u up to date on how it works.

www.wovel.com

Filed under: Alternative Energy, Home Energy, Uncategorized | Tagged: , , , , | Leave a Comment »

Residential Solar – A Real World Example

Posted on October 19, 2008 by bfarrey

I am in the process of designing and quoting a solar electrical system for a house I recently purchased.  This is a ‘Split Level’ Home of approximately 1900 sq feet.  The heating systems is electric baseboard.  I researched several local companies that provide a soup to nuts service and installation.  Some sites to find a solar installer;

http://www.findsolar.com/

http://www.getsolar.com/

Once you have selected a provider, the first step is usually a quick suitability review from the installer.  With an address, they can pull up google maps and get a view of your house, determine the orientation and roof structure.  From that initial review you get some immediate feedback about solar applicability on your house.

A site review is usually next, some firms will charge for this survey.  I imagine in their mind it is a way to determine the seriousness of customers.  The survey in my case, consisted of a 90 min review of the house.  The technician was looking at potential places for the installation, roofing and support structure, trees and shading issues, sun orientation, location of the inverters in the basement – a vented cabinet size area is needed for that and finally a review of my electric bills for the past year. This cost me $100.

About 10 days later, I received a detailed proposal.  The proposal contained pictures of the proposed installation, it’s orientation, any trees or shading that would need to be addressed, estimated energy production on my specific installation, savings and the most importantly the state and federal credits available.

A well structured ROI ( return on investment was included), and a cash flow over the life of the system were included.

The details of this installation;

Rooftop Solar Array:
Azimuth (Direction of array): 240º
Inclination: 22º (flush with roof)
Solar Access: 92%
Derate factor: 0.708
Size of solar installation: 4.94 kW DC. (26 solar panels model ES-190)

Price of Solar Installation (all costs) $35,243
Instant Savings (Commonwealth Solar Rebate) -$20,995

Upfront Cost to You $14,248

Recovered costs in year one: (Tax Credits)
State Income Tax Credit1 -$1000
Federal Income Tax Credit2 -$4274

Cost to you after rebates and tax credits $8,974

Estimated savings over 25 year life of solar panels: $85,600
Estimated increase in home value $22,500 – (based on a study by the Appraisal Institute)
Payback including increase in home value Immediate
Payback not including increase in home value 5 years
Usable life of solar panels 25+ years
Estimated annual energy production 4900 KWH
Carbon Dioxide emissions displaced per year 4510 lbs

I know that I would believe in the increase in home values in today’s economy, but the payback without that is still only 5 years.  I also don’t know if I believe the 25 year life of the panels.

I am meeting with the installer to review the proposal and get more details on what I would need to do ahead of time.  They are recommending I remove some trees, and also replace the roof prior to installing the units.

The panels are from Evergreen, which is a quality company.

Some initial questions;

Review the tax credit and or rebate process, income level qualifications, paperwork process, and timing, when does paperwork need to be submitted when would I see a check

Part guaranty and installation guaranty.

Licensing and insurance of installers

Maintenance needed

Snow and ice

What else should I be asking?

Filed under: Alternative Energy, Home Energy | Tagged: , , , , , , | Leave a Comment »

Green Fee Needed Now

Posted on October 12, 2008 by bfarrey

Impose higher federal and or state gasoline taxes now.  Ok, I said it.  Call it a ‘Green Fee’ if you want.  Call it anything you want, but provide funds to continue the recent progress toward a greener economy.

Some background and assumptions which I used in recommending this;

BACKGROUND

The federal gas tax has been in place since 1932.  Contrary to popular belief, all monies do not go to highways or infrastructure, in fact that didn’t even start until the 50’s, prior to that it was used to fund wars.  Since 1980 the tax has increased dramatically from 4cents to 18cents per gallon.  Yet, we still have a call from Obama and congress for Infrastructure spending for roads, bridges and the like.  What have you been doing with the money Congress? Another post on that topic.

Starting in 1919 with Oregon, states started to get on the bandwagon with this new tax approach.  All states have some type of tax, whether it is a gas tax, sales tax, or excise tax (call it what you want) on gasoline.  Here is a map with all states combined taxes on gasoline from http://www.taxfoundation.org/publications/show/1054.html



On average around 40cents per gallon and $281 per person per year.

ASSUMPTIONS

  1. The US economy and consumers can handle a gasoline price of $3.50 per gallon without substantial economic slowdown
  2. The price of Gasoline will fall below $3 per gallon by the end of the year.
  3. Funding of green initiatives from both candidates will be delayed due to funding for the economic crisis and the continued war
  4. The government, federal and state, has limited spending discipline with gas tax revenue
  5. Higher retail gas prices encourage a ‘green consumer’

PROPOSAL

Impose a scaling green fee on gasoline prices. The fee would scale with the underlying per barrel of oil price.  As oil prices fall the fee increases, as it increases the fee would decrease.  The intent is to maintain a retail price around $3.50 per gallon.  The federal government would collect the fee.

Pay the Federal government a processing fee of 10% for collecting and enforcing the collections.

On a quarterly basis, the federal government will distribute the funds to an agreed upon ‘Green Investment Council’, which is managed by US Venture Capitalist firms.  Investments are made by this council in ‘green’ technologies and companies that meet the specific goals of alternative energy production, job creation, and investment return.  The overriding goal is investment return as it is with most Venture capitalists.

At no time will these fee funds take a majority position in any company, all use of these funds need to be along side private investment and will be non-voting shares.  Funds will be managed similar to the way investment funds are managed now. Contributors buy into an investment fund, expecting a return.  The revenues from this fee will be treated the same.  Congress will sit at the table as the investor.

In this way the Government is directly investing the fee from consumers in ‘Green Technology’, not funding wars or social security or corporate greed, or whatever they have been spending money on lately.  It is similar to a charity that can prove that the monies go directly to the recipient and not to the bureaucracy.  I would rather give money to those charities.

If ideas such as the Cash for clunkers http://mygreensuit.com/2008/08/03/cash-for-clunkers/

or Conservation Corps http://mygreensuit.com/2008/04/07/conservation-corps/

or Incent to Invent http://mygreensuit.com/2008/04/07/incent-to-invent/

have any standing they will need to prove themselves to the ‘Green Investment Council’

SCOPE

At current prices of $3.29 we are talking about a 20cent fee, which would equate to around $25 billion annually in the investment fund.  If the gas price actually reflects the falling oil price then we would double the investment amount per year to $50 billion.  This money, in the right hands, and please understand, Congress is not the right hands, would go a long way in funding businesses that can meet the environmental objectives, provide jobs and get the job done quicker than any government run program.

Filed under: Policy Ideas | Tagged: , , , , , , | Leave a Comment »

Keep it Green

Posted on October 12, 2008 by bfarrey

Don’t stop now.  Don’t get comfortable again. Keep it Green.

Like a dieter who loses a few pounds after the first week, let’s not settle back into our old habits and think we will keep it off.

Good progress has been made making the public aware of the need to reduce our dependency on oil by looking for alternative, sustainable alternatives.  Politicians talk about it, CNN reports on it, Newspapers write about it.  Now that oil prices are falling http://mygreensuit.com/2008/10/12/oil-prices-falling/ again let’s not get lazy. We need to keep the momentum going.

The current political campaign has not discussed energy alternatives very well.  There has been too much time and discussion on more drilling, clean coal and nuclear.  Hopefully, as a country that rises to challenges, that has the best workers that are innovative and creative,  we can do better. This are a sad statement to our current capabilities if we think we have to use the crutch of coal and nuclear.  Leaving this aside, and giving kudos to the millions spent by T.Boone Pickens  www.pickensplan.com , discussion of alternatives have become mainstream.

People are expecting progress.  I am expecting progress.  From venture capitalists to scientists, to the residential owners, to commuters we are all expecting the excitement to continue.  Are we so shallow that the fact that gas prices come down 25% that we will no longer look for more efficient cars?

I think things have fundamentally changed.  The fat, greedy, energy hungry American has to change.  This is a forced diet, an intervention by the globe that must continue. We have already moved towards solutions.  Automakers have adapted their designs to be more energy efficient, venture capitalists have funded billions of dollars into the green economy.  They will expect a return on their investment.  Assuming they produce good products at a reasonable price, consumers will buy them and we can ‘Keep it Green’.

Filed under: Alternative Energy | Tagged: , , | Leave a Comment »

Oil Prices will continue to fall

Posted on October 12, 2008 by bfarrey

I wish I could predict more things like this.

Oil prices have fallen to below $80 a barrel as of Friday October 10.  The sell off has been in place for several weeks but was accelerated on Friday due to a widening economic crisis. I expect oil prices to continue to retreat, between $40 and $50 dollars by the end of the year would not surprise me.  Why ?

1.) The slowdown is real, this time.

Inventories are building at businesses, which means the consumer is not buying and businesses will then not need to buy new inventory.  Historically this statistic has been highly correlated to short term economic growth.  It has become somewhat less accurate as businesses have moved to ‘Just in Time’ inventories, but the fact that efficient businesses are left holding product does not bode well for the short term.  Expect big Christmas discounting.

2.) OPEC is hurting.  Not just OPEC countries but all propped up dictators and economies built on oil prices are feeling the global pinch.  The Russian stock market, which is built mostly on oil and natural gas prices, has fallen more than the US stock market over the last several weeks.  Hard to believe but, true.  The faster the rise, the faster the fall.  Venezuela is substantially slowing major social initiatives, due to slowing oil revenues.  The next OPEC meeting is November 18.  Expect OPEC Leaders to message that they are cutting production, lots of news conferences and statements and then return to their countries and exceed their production quotas.  They have nothing else.  They are a one trick pony and have been for almost 40 years, economies built of natural resources.  Boo Hoo, poor Vlady.  Go practice your Judo.

3.) Speculation works both ways.  The outcry from financial market geniuses that speculation drove the oil price so high in the first place, that the market does not work, should be eating their words now.  It is not a workable policy to have ‘one-sided capitalism’.  You can’t stop speculation or regulate oil prices from rising quickly and then remove those regulations to let it fall quickly.  You can’t let everyone win by letting housing prices rise quickly and then regulate and protect consumers by not letting them fall as quickly.  Either have consistent regulation on both sides, which will lead to a muted market, or allow the swings up and down.  People can benefit from swings either way.

4.) The ‘Green Economy’ will continue.  This is my hope that the progress we are starting to make will not get slowed down by a dropping oil price.  Read more about this in my next article.

Now if my retail gas price will reflect this price decrease I would be happy.  The per barrel price has fallen 46% since the peak.  I think my peak price per gallon was around $4.29 for regular grade.  I just paid $3.29 a gallon this week.  A decrease of 23%.  It would help the economy if this moved to the consumer quickly.

Filed under: Policy Ideas | Tagged: , , , , , , , | 3 Comments »

Simple Device on Cars and Trucks boosts Fuel Economy by 20%

Posted on September 29, 2008 by bfarrey

Temple University researchers have proven out a new device to add to your fuel line in any car or truck.  This device ties into your battery and creates an electric field.  The gas line or diesel line is then routed through this device and the electrical field lowers the viscosity or basically vaporizes the gas into smaller droplets.  This ‘thinned out’ fuel is then processed normally in your car.

The Temple University team has tested this for six months on a diesel powered car and increased fuel efficiency for both highway and city driving by 20%.

They are actively working with a local trucking company to test it further.  Diesel trucks are a logical use of this, but the same technology works safely on gasoline, kerosene and other fuels.  Exciting stuff.  Innovation and Engineering will lead us out of this energy mess !

Original Publication

Filed under: Alternative Energy | Tagged: , , , | Leave a Comment »

Solar Power from your Windows

Posted on September 10, 2008 by bfarrey

The research and innovation teams working on Solar power are making progress with practical and effective solutions.  Multiple teams across the globe are focused on thinner materials and concentrators that can take sunlight and turn it into electricity.   Marc Baldo at MIT and John Bell at Queensland University in Australia have different approaches but fundamentally the same practical idea.  Instead of solar panels on the rooftop, use the existing window surface to collect sunlight and generate power.

John Bell and team’s work focuses on a thin film of titanium dioxide layered into the window.  This is coated with a dye to increase light absorption.  The windows have slight red hue, but are completely see through.  This same glass could be used on skylights, atriums, doors or windows.  An average home in Australia would require about 10 square meters of this glass to provide it’s power.   Assuming US houses are bigger and we get less sun (a good assumption), you are talking about 10-15 standard double hung windows.

This technology is a few years away from production and you would still need the inverters and electrical systems in the house.  But imagine the possibility for new home, mall, and office building construction.  What premium would they have to pay in price to add this power generation into their facilities?

Marc Baldo and team, approach the problem with different thinking.   It is more of a solar concentrator.  His team still uses the window surface, but instead of a film, they use the absorption dye to push the sunlight to the edges of the surface where solar cells convert the sunlight into power.  The potential for this recent discovery is absolutely huge.

Existing solar panels could add these units on and increase their efficiencies by up to %50.  Any surface where you collecting sunlight could be used.  This approach would lower the cost of solar installations, since it is using many less expensive photovoltaic cells.  Again, timing is three years away.

The discoveries are out there.  We need the initiative and money to get these to market.

Filed under: Alternative Energy | Tagged: , , , , , , | 1 Comment »

Drill, Baby, Drill !

Posted on September 7, 2008 by bfarrey

Coal companies and Oil companies are defining the future energy plans of this country.

We are at a key moment in our economic, political and environmental futures.  There is an increasing awareness of the need for energy independence and environmentally friendly energy.  We have an opportunity to solve these legitimate issues in a far reaching, planet saving, approach or fall back on the easy way.  I, for one, do not want to be part of a generation that takes the easy way.  We owe it to ourselves and our children to fight the right fight, however difficult that may be.  The right fight is one that makes these two issues into one issue.  We can find solutions that free us from foreign dictators AND are environmentally friendly.

Our energy plan for the future needs to be one that relies on efficiencies in our distribution and use of electricity, comes from renewable clean energy sources, and is local to the electrical users.  It will require innovation, new technology and a consumer commitment to make this happen.  The government needs to provide guidance, lofty goals, limited support where needed, and for the most part get out of the way.  Tom Friedman in his new book, “Hot, Flat and Crowded”, is calling it the ‘ET’ revolution or Energy Technology.  He compares it to the IT revolution which led to amazing productivity enhancements across our economy.

Whatever we call it, how we move forward on these issues will define us as a generation.

Drill, Baby, Drill, is a sad commentary of how things work now.  Oil companies and lobbyists, that both campaigns swear off as having no place in Washington, have made oil drilling a top topic and wrapped it in the, ‘Energy Plan for the Future’ blanket.  Although it may help with reducing oil dependency on the Axis of Oil, it does not do it in a way that is respectful of our planet. The more time we discuss this in public debates, the less time we spend on real solutions.  Solutions that can meet both goals of energy independence and renewable, clean energy.  Drill, baby, drill does not meet the basic principles outlined above, it is not clean, it is not local, and it is not renewable.

Let’s change the debate to a discussion of how we as Amercians can show humility, by admitting we have a problem, show fortitude, by applying our best resources to solving the problem, and show respect, for our planet and all of it’s residents.

Filed under: Policy Ideas | Tagged: , , , , | 2 Comments »

Clean Coal ?

Posted on September 6, 2008 by bfarrey
American Clean Power ?

American Clean Power ?

Please stop talking about Clean Coal as some kind of solution for energy independence and/or global warming issues.  It can not do either of these.  Let’s use some common sense.  Coal to replace gasoline ?  Coal to replace home heating oil?  We could build more coal fired electricity generating plants, but that does not reduce our dependency on foreign oil for the other two needs.

The picture used on the left comes from the ACCCE, a new group funded by Coal and Energy companies.  They are in the process of spending millions of dollars on ad campaigns to tell you

1.) Coal generates %50 of our electricity 2.) Coal is cleaner and can be even cleaner with investment in technology.  They run ads on TV, they have a web site http://www.americaspower.org/ Thanks for Sharing!

Clean coal !  Please.  Is there such a thing as clean coal ? It does seem peculiar to me that both Presidential candidates highlight Clean Coal, some oil drilling and nuclear plants (McCain, not Obama), for our short term energy solutions.  Other technologies are always mentioned as an afterthought, oh, yeah, “some of that Solar and Wind stuff too”. One characteristic of the commonly mentioned technologies is they exist (not clean coal), and they are backed by large existing corporate and union interests. I am sure that is just a coincidence.

Clean Coal is NOT ready for prime time.  The more we try to make old solutions work, the more money, time and energy we take away from building RENEWABLE solutions.  What is renewable about Coal, even if it was Clean.  Nothing.  It is currently plentiful so let’s use it, is the logic.  Talk about clinging to beliefs.

The same reasons many conservatives knock newer renewable energy sources, such as ‘it is not ready’, ‘it will not scale’, ‘it is to expensive’, ‘it is unproven technology’…. All apply to clean coal.

The three technologies currently being researched and mostly in a pilot phase are;

Clean it, Filter it, and Capture it.

‘IT’ is nitrous oxide, sulfur dioxide, carbon dioxide and of course your everyday mercury and other metals.

Clean it, consists of a bath for the coal prior to using.  It removes much of the sulfur, and some of nitrous oxide, BUT, it leaves a nice slurry of waste water that goes somewhere…oh yeah, in the ground, in a river, in the environment.  It does nothing to reduce carbon dioxide.

Filter it, means catalytic converter type filtering on the smokestake, or new oxygen purification systems where they cook the pollutants in a bath of oxygen.  This second approach is more effective but expensive.

Capture it, means Carbon Sequestration.  Even Al Gore talked about this during his powerpoint theater.  Is it just me, or does capturing the carbon dioxide and pumping it into the ground or better yet into active oil reserves make any sense ?  What a stupid idea.

I want to believe technology can solve most problems, and maybe it can reduce emissions so that Burning Coal produces NO pollutents.  But until that comes closer to reality, just shut up, and focus on alternative energies that actually work NOW and are clean.

Filed under: Alternative Energy, Global Warming, Policy Ideas | Tagged: , , , , , | 1 Comment »

Next Page »