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 !

Wave energy is a large, widespread renewable resource that is environmentally benign and readily scalable. In some locations — the northwestern coasts of the United States, the western coast of Scotland, and the southern tips of South America, Africa and Australia, for example — a wave-absorbing device could theoretically generate 100 to 200 megawatts of electricity per kilometer of coastline. But designing a wave-capture system that can deal with the harsh, corrosive seawater environment, handle hourly, daily and seasonal variations in wave intensity, and continue to operate safely in stormy weather is difficult.

Chiang Mei, the Ford Professor of Engineering in the Department of Civil and Environmental Engineering, has been a believer in wave energy since the late 1970s. After the recent oil-price spike, there has been renewed interest in harnessing the energy in ocean waves.

To help engineers design such devices, Professor Mei and his colleagues developed numerical simulations that can predict wave forces on a given device and the motion of the device that will result. The simulations guide design decisions that will maximize energy capture and provide data to experts looking for efficient ways to convert the captured mechanical energy to electrical energy.

The Portuguese plan is to integrate the OWC plant into the head of a new breakwater at the mouth of the Douro River in Porto, a large city in northern Portugal. Ultimately, the installation will include three OWCs that together will generate 750 kilowatts — roughly enough to power 750 homes. As a bonus, the plant’s absorption of wave energy at the breakwater head will calm the waters in the area and reduce local erosion.

The challenge is to design a device that resonates and thus operates efficiently at a broad spectrum of wave frequencies — and an unexpected finding from the MIT analysis provides a means of achieving that effect. The key is the compressibility of the air inside the OWC chamber. That compressibility cannot be changed, but its impact on the elevation of the water can be — simply by changing the size of the OWC chamber. The simulations showed that using a large chamber causes resonance to occur at a wider range of wavelengths, so more of the energy in a given wave can be captured. “We found that we could optimize the efficiency of the OWC by making use of the compressibility of air — something that is not intuitively obvious,” Mei says. “It’s very exciting.”

He is currently working with other graduate students on wave power absorbers on coastlines of different geometries and on how to extract wave power from an array of many absorbers.

Mei continues to be enthusiastic about wave energy, but he is not unrealistic in his expectations. Although costs have been falling in recent years, wave energy is unlikely to be commercially viable for a long time — perhaps several decades. Nevertheless, Mei is adamant that more attention should be given to this renewable source of energy, and he would like to see a team of MIT experts in different fields — from energy capture and conversion to transmission and distribution — working collaboratively toward making large-scale wave energy a reality.

“Given the future of conventional energy sources, we need lots of research on all kinds of alternative energy,” he says. “Right now, wind energy and solar energy are in the spotlight because they’ve been developed for a longer time. With wave energy, the potential is large, but the engineering science is relatively young. We need to do more research.”

This article is adapted from a longer version that appeared in the autumn 2008 issue of Energy Futures, the newsletter of the MIT Energy Initiative.

http://www.sciencedaily.com/releases/2008/12/081216114102.htm

Jacobson has conducted the first quantitative, scientific evaluation of the proposed, major, energy-related solutions by assessing not only their potential for delivering energy for electricity and vehicles, but also their impacts on global warming, human health, energy security, water supply, space requirements, wildlife, water pollution, reliability and sustainability. His findings indicate that the options that are getting the most attention are between 25 to 1,000 times more polluting than the best available options.

Energy and vehicle options, from best to worst, according to Jacobson’s calculations:

Best to worst electric power sources:

1. wind power
2. concentrated solar power (CSP)
3. geothermal power
4. tidal power
5. solar photovoltaics (PV)
6. wave power
7. hydroelectric power
8. a tie between nuclear power and coal with carbon capture and sequestration (CCS).

Best to worst vehicle options:

1. Wind-BEVs (battery electric vehicles)
2. wind-HFCVs (hydrogen fuel cell vehicles)
3. CSP-BEVs
4. geothermal-BEVs
5. tidal-BEVs
6. solar PV-BEVs
7. Wave-BEVs
8. hydroelectric-BEVs
9. a tie between nuclear-BEVs and coal-CCS-BEVs
10. coal-CCS-BEVs (tied with nuclear-BEVs)
11. corn-E85
12. cellulosic-E85
    

Original Article http://www.sciencedaily.com/releases/2008/12/081210171908.htm

Adapted from materials provided by Stanford University..

I would double the investment below and create 1M jobs and not limit it to high school or other students.

Obama is ready to spend all the money from the war on new programs, whether it is 30 billion to bail out mortgage holders, health care, federal education dollars and Hillary will freeze rates and stop foreclosures for 90 days and then spend it on healthcare.  I appreciate that this is a campaign and people will say just about anything to people in pain.  The bigger picture is, we mess with the middle east because of oil, we should invest our hard earned money into ways to eliminate this dependency.

One way would be a summer program to drive conservation.  For how many years have you receive promotional materials from your electrical company to use lower use lighting, low flow shower heads etc..  There are probably tax dollars behind this if I were to look into it, but there is an incentive for the electrical company, it is called peak demand.  They can’t meet peak demand.  Their infrastructure is crumbling, we will not let them build any new plants, coal, nuclear, whatever, they need ways to reduce usage.  Well maybe we can help them.

Hire 500,000 high school and college students during the summer.  Provide them with all the materials, such as low usage lighting, window sealants, shower heads, a long list of materials.  Go from house to house and replace these units.  How much would this cost ?  500,000 x $10/hr x 40 hrs x 12 weeks = $2,400M, plus materials, guess of another 2,500M, plus management, coordination and Marketing of 500M. Program costs of just over $5.4B per year.  What do we gain?

Talk about a stimulus package, what are these young adults going to do with the income???  Yes, wouldn’t you like to believe save for college, not likely. They will spend it, several billion into the economy.

How many houses can they get to?  500,000 = teams of two = 250,000 teams, five places a day, two not home, they do three houses per day = 750,000 homes a day x 60 days = 45M homes.  Pretty aggressive, so say it is half that to be conservative, 22.5M homes.

111 million households in US - we get to 20% in one summer.  How much electrical savings? 1,139 (billion kWh) per year from all households.  We reduce by 10%-12%, which are numbers I have seen for conservation and what Germany has achieve with similar programs.  Per year electrical reduction = 20% of 1,139 billion x 12% = 27.3 (million kWh) or the equivalent elimination of 2,600 housholds from the grid.

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 you up to date on how it works.

www.wovel.com

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?

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.

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’.

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.

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