Economics & Finance

The Myth of Alternative Power and Hydroelectric Storage

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Every time I get into a debate about “alternative” energy I point out it can’t be used for baseline power because it can’t provide reliable power, and it can’t provide reliable power because you can’t store the electricity that it episodically generates.

Immediately, someone will say, “We can use hydraulic storage!”

Hydraulic storage is basically a hydroelectric dam on a small or large scale, except instead of using water brought by a watershed, the water is pumped up behind the dam with pumps powered by the generator whose energy output you want to store. For example, you would have electric pumps powered by solar panels or wind turbines, the idea being that when the wind or cloud-free days produced a surplus of power (or you built in surplus capacity) the pumps would pump water from a lower reservoir uphill into a higher storage reservoir. The electricity would be stored as the potential energy in the elevated water. When you needed the power back, you would drain the water back downhill through turbines just like a hydroelectric damn.

Now, this certainly works and it has been done on a small scale. However, it will never, ever be a real-world, large-scale solution that can make alternative power work.

Why? Well, let’s just do some back-of-the-envelope calculations.

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Oil: The New Tobacco

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John Gapper,writing in the Financial Times about Obama’s arm twisting-of BP to put $20 billion into an “escrow” fund:

It has echoes of the 1986 tobacco settlement in which industry paid $246bn to states following legal action by their attorneys-general. Only 5 percent of that money was spent on tobacco-related initiatives with Virginia, for example, investing in higher education, fibre optic cables and research into energy…Willie Sutton, the robber, sagely observed that he raided banks because that was where the money was, and US politicians know this lesson well.

and

The tactics of Congress and President Obama against BP are reminiscent of tort lawyers, who are big funders of the Democrats.

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Drawing From The Well A Few Times Too Often

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I thought everyone here would like to have a little glimpse into the French national pension system.

The news item linked to above is both short and written in English. Click the link and read the sidebar for a few thumbnail facts concerning who gets a pension, and what kind of money they can expect. A comparison to Social Security in the United States is not a futile exercise.

What I found interesting is how French workers with private sector jobs have to make do with 50% of their pay, and the base figure is found by averaging the 25 top earning years during their career.

Public sector employees, by contrast, receive 75% of their pay, and the base figure is found by averaging the last six months of their career.

It seems that this is inviting fraud, as I would certainly try my best to work as much overtime as possible during that last six months. Inflate the pay and get a better pension than I deserve.

Those who avoid sucking at the government teat are shafted in a lot of other ways as well. Private sector employees have to give up over 10% of their pay in order to fund the pensions, while government workers are only taxed less than 8%. Pretty good work if you can get it.

Read the whole thing. Like I said, it is short and to the point.

On The Debt Crisis and Europe

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I am not an economist nor a formal, paid pundit on Europe. Here are some of my thoughts on the economy, countries and people that are impacted by the debt crisis.

Some observations:
– The debt problem in Europe isn’t a problem of liquidity (i.e. short term cash flow); it is a problem of solvency (i.e. debt has risen to a point where interest payments are unsustainable, and raising more debt is problematic). Fixing a solvency problem requires structural changes (like defaulting on your house or declaring bankruptcy), while liquidity problems are due to timing. Few seem to be treating the issue like a solvency one, however.
– By European history standards (“hot” wars and “cold” wars) the military climate between nations is benign; with a few exceptions in the Balkans where the borders never were straightened out and occasional puffery from Russia (also mild by historical standards)
– Many of the problems between nations have been “solved” by breaking up countries into component parts (Yugoslavia into ethnic components, Belgium likely ultimately the same) along ethnic group lines, meaning a larger focus on their own ethnic kin and less on overall assimilation of ethnicities into larger, conglomerated countries (there is absolutely no appetite for putting multiple ethnic groups into a larger “whole”)
– The benefits of the Euro are real; lower interest rates, lack of currency risk, and an ability for smaller countries to raise funds similar to the terms of larger nations (due to the implicit backing of the financially weak countries by the financially stronger countries)
– The level of government intervention in virtually all European countries is very high, with the state controlling many institutions directly through armies of rules and bureaucrats while significantly “capturing” other areas of the economy (the banks buying government debt, the power sector, and export-oriented industries like aircraft)
– Growth is slow and there seems to be little chance of it significantly heating up in the near term; the economy is not dynamic and entrepreneurial and some of the formerly most vibrant sectors (real estate, finance, tourism) are in a post-bubble rut
– It seems very unpopular to transfer funds from the stronger to weaker countries given that it is obvious that these weaker countries are not going to “grow” out of their problems nor significantly open or fix their structural economic problems; even the mildest measures in those weaker countries are met with strikes and unrest and even these plans don’t reduce debt, they only reduce the rate of growth on debt
– Youth unemployment is the “flip side” of a large governmental sector and heavy-handed regulation. Youth unemployment is near 40% in some countries like Spain; angry, unemployed youth are often the spark that can set a dangerous situation in motion very quickly

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Dumb Company Tricks

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Describing the dysfunctional management culture of Ford Motor Company during the later years of Henry Ford, Peter Drucker observed that a Ford foundry manager was not allowed to know the cost per ton of the coal being used in his furnaces. This was a function of the secretive and very controlling personality that Mr Ford had developed by this time, aided and abetted by his thuggish sidekick, Harry Bennett.

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