Keystone XL Pipeline Exposed

Keystone XL Pipeline Exposed

A better title to this Blog maybe “Keystone XL Pipeline Confusion” But first I’ll write about the expose. I have been confused by where the push is from for the Keystone XL pipeline and who is opposing it. Experience from my corn grower advocate work, I learned what you hear is not what is really happening. Or you can kill a program by supporting it. As a advocate I learned that from the trips to Washington to “communicate” with our “hired gun” i.e. lobbyist.

My confusion on the Keystone XL pipeline was amplified when I attended the North Dakota Energy Expo in Bismarck. One of the keynote speakers was Senator Hoeven, recently elected, replacing retired Senator Dorgan. The first part of his speech was enthusiastic and informative when he talked about the Bakken oil play. But his voice changed as he closed his speech promoting the Keystone XL pipeline ,like a school Boy  reciting something he memorized. It was obvious he was handed a script and still had not developed the skills to sound like he meant it. But who handed him the script?

I have been suspicious that Koch brothers were behind the Keystone XL pipeline. I know the Koch brothers own the refinery at Rosemont Minnesota and the crude oil comes from the oil sands of Alberta Canada. A Google search confirms the Koch Brothers have huge investments in the Alberta oil sands and the Keystone XL pipeline would supply crude to refineries in Kansas and Oklahoma, refineries owned by the Koch brothers. This can be easily verified by using this string in Google search “Koch industries Canada oil sands”.

The methods for someone of Koch Bros wealth to influence congress are many. The rewards from the oil sands are many. And it is widely known the Koch Bros contribute large amounts of money to any organization that promotes anti environmentalist activity. They probably will continue this activity until their homes in the Hamptons are flooded by glacier melts.

For those not familiar with the oil sand extraction, it requires huge amounts of energy to extract, which is highly polluting process. The crude oil is very low motor fuel yield and refining  results in high CO2 emmisions. For info use Google with this string “oil sands crude energy balance”. 

A disclaimer: the web site  from energy balance are written by people who take swipes at corn ethanol. They ignore two important facts. 1. Ethanol is about one half of the energy of the corn, the other half is a high protein poultry, hog or cattle feed. 2. All the carbon in corn is recycled carbon and the corn growing is renewable. Remove oil from the ground, burn it, its gone.

Now the confusion I mentioned in the opening paragraph. Since I attend many energy conferences, I get E mails from many sources. The latest was about lithium in the Canadian oil sands. A large amount of lithium will be used would be used for batteries in electric powered cars. Only known source of lithium is in South America. Is the oil sands lithium propaganda or fact? Or is this about some high paid Koch Industry publicist?

THE ELECTRICAL GRID

The first oil well I saw on my trip to Williston was just west of Stanley ND, 80 miles east of Williston. It was flaring off the natural gas. Energy is being consumed to pollute.

All but one oil well location was capturing the natural gas. It was located just east of Williston. A compression ignition CAT engine with a generator, was connected to the well using the natural gas as a fuel. In 2008 the plan was to capture all of the natural gas and use it to make electricity. Combined with wind and coal energy, North Dakota now has a electrical surplus. The Great Recession further amplified the energy surplus.

Another factor is the changing electrical demand. Efficiency programs inspired by global warming concerns are being implemented. As an example, five years ago the lighting in my office was 300 watts. Today the lumens are the same with only 78 watts. In the rest of our house incandescent are being replaced with CFL bulbs that use sixty percent less electricity. This is happening in many homes. We are using less electricity per household.

It is hard to find numbers on electrical production but electrical power is traded as a commodity. Therefore it is easy to see what electricity costs are in different area’s. Base load price is six to eight cents on both coasts and one cent in North Dakota. Peak load prices are as high as twenty-five cents and more.

Why isn’t North Dakota electrical power shipped east or west? Infrastructure! There are five grid areas in the United Stated not connected. A surplus of Electrical energy cannot be shipped across country. There is no incentive for more energy production in North Dakota if it cannot be sold at a profit. Therefore natural gas is flared and energy is wasted and only pollutes.

The solution is technically simple and but politically complex. At the 5^th Annual North Energy a typical United States grid map was shown. The question from the floor was why wasn’t this implemented. The answer given was “no one is in charge.” This is an over simplification of the problem. A better answer is many are in charge, with personal agenda’s, and when a leader that emerges they are immediately politically and personally persecuted. The leaders of this persecution are people like Koch Brothers, Peabody Coal, Harold Hamm of Continental Industries and many others.

The benefits of a National Grid are many and will be the topic of next Blog.

The solution? The next time we vote look up the monetary contribution received by a candidate. And if received by a energy company you could have identified a politician who is owned by that energy company.

THE 5TH ANNUAL NORTH DAKOTA ENERGY EXPO

I had attended the Third Annual North Dakota Energy Expo and now the Fifth Annual North Dakota Energy Expo. My interest in energy goes back to my days as Plant Engineer at 3M Hutchinson, where I was able to reduce energy consumption by nearly fifty percent. That was some forty years ago! That interest in energy conservation was carried through my farming career where I promoted the production and use of ethanol.

Most energy conferences are about a specific form of energy, such as, solar, wind, biomass, coal, gas and oil. The ND Energy Expo is about all. This year we also heard about clean coal technologies at Washburn.

This year the Expo was held at Bismarck State College in an unfinished building called “National Energy Center of Excellence” with a panoramic view of the Missouri River. While the sun made PP presentations fade the view was spectacular and a photo through the window does not due it justice. This center will be finished this year.

I will start my report on the conference by defining two words used often in the presentations: “play” and “fracking”. “Play” defines an area in an oilfield where there is a lot of activity. “Fracking” is a method used to facilitate oil removal.

The Expo started out with opening remarks by the governor of ND (Dalrymple-R), and the two Senators (Conrad-D and Hoeven-R). While all energy produced in North Dakota was mentioned it was clear that the conference emphasis would be about oil production. All three politicians emphasized cooperation on policy issues between parties, contrasting Washington DC. Hoeven gave the best speech with the exception of the comments about the Keystone pipeline project. His comments were on the Keystone pipeline was identical to other comments and speeches I have heard on the subject. It was obviously handed to him by the Keystone project lobbyist. He even neglected to draw any benefit to North Dakota.

The two most interesting comments on opening remarks was that in the last decade of development of the Bakken oil play, there were 6000 oil wells in 2008, and now, there are 10,000. Further expansion rate will depend on infrastructure and available people. The people was the second comment, it is predicted North Dakota population will double. While numbers become vague at this point, it takes three to five people to support one production worker. Needs to be filled are teachers, doctors, retail store workers and, of course bar tenders.

Dr. Steven Koonin, Under Secretary of Science U. S. Department of Science, was the first keynote speaker. He discussed the affect the Bakken oil will have on US oil imports. He said oil imports have been reduced from 60% to 50% and that the oil from ND would have further impact. He also alluded to the fact energy use efficiency was increasing. For those not versed in the second law of thermodynamic, it is a fact that today, energy used to do useful work from oil, is only 10% taken from wellhead to use in the automotive engine. But that is changing! Transporting one person in a Prius versus a Suburban is at least twice as efficient. As more efficient cars are built less oil will be required per capita for transportation.

The next session was on people resources. I will comment on two Panelists. The first was Jan Morrison, focusing on STEM (Science, Technology, Engineering and Math) education in ND. She discussed the need for technically oil industry workers needed in the oil industry. She said most new technical workers would be from outstate ND. She made it clear ND students had great opportunities in science and math fields.

The next panelist Mellisa Blake was, who was mayor of Wood Buffalo, Alberta. Wood Buffalo is the near the oil sands of Alberta. Wood Buffalo is about 1500 miles North of Williston. She gave a picture of Williston in a few years. The focus of her speech was on development of infrastructure from education, transportation, to health care. One example she used illustrated problem of rapid population growth. For employees to get to work, was an hour and a half. Without traffic it was twenty minutes. They built an extra lane for bus travel only. As people started taking buses to work, travel time on the road was reduced to less than an hour. She used another example of housing prices. A $240,000 house in southern Alberta, an identical house in Wood Buffalo would cost $720,000. As she told this story there was a similar story in the Bismarck Tribune of a retired school teach in Williston, who could no longer afford her apartment when the rent was raised from $720 a month to $2200 per month.

A three member panel gave a presentation on fracturing. The first speaker was an expert in environmental rule making and a representative from Halliburton explained how environmental sensitive the were they were in the fracking process. The final presentation on fracking was by Kathleen Neset who is President of Neset Consulting service. She gave elegant presentation on the geology formation of the Bakken Basin and how fracking is used.

The next presentation was an environmental presentational on the Keystone pipe line benefits. I’ve heard this speech before and the message is the same: (The US pollutes a lot and Canada should be allowed to pollute a little.) Fact is, Canadian oil sand is not environmental desirable because of the extraction process excess use of energy and transportation fuel yield per barrel is very low. The Keystone project is primary reason I attended this conference. What I heard was a repeat of a lobbyist scribe.

The closing session on Monday was about the financing energy development in North Dakota. The most profound statement made was that new financing was difficult for new energy projects, other than oil, because North Dakota has an energy surplus. If changes were not made the biggest surplus would be in electrical energy. In the opening remarks on Monday, several comments were made about the lack of a comprehensive plan to connect the electrical grid east to west coast.

The electrical grid problem has been a subject of presentations and conversation at energy meetings for the last decade. Solutions opposed by many special interest group and no one is in charge. At the federal it is between DOE and Commerce. As I write this blog, an article appears in the Minneapolis Star Tribune (Sunday, November 20th) about Indiana blocking the transmission of western wind power into Indiana.

On the last day the Expo, focus was on environment. A paragraph would not do justice with this topic so I will write a follow up Blog.

A comparison of the fifth North Dakota Energy Expo to the to the Third North Dakota Energy was a comparison of what might happen to what is happening. The Third conference and previous was sponsored by now retired Senator Dorgan. Senator Hoevan, then Governor of North did not attend. The now recognized impact of energy production in North Dakota has now made this a must attend for politicians.

I am planning to attend sixth Annual North Dakota Energy Expo.

Visiting Williston

On Saturday morning October 29 I took a 400+ mile loop from Bismarck ND via Minot to Williston ND, down to Dickinson ND back to Bismarck.

Some sound bites from my tour.

1. A ethanol plant at Washburn ND is using waste heat from a coal fired electrical generating plant.

2. Wind generators to many to count, 100+ north of Washburn

on ND 83

3. Bright green Durum wheat fields as I approached Minot. (ND farmers don't farm acres, they farm sections)

4. Traveling west on ND 2, A farmer combining corn with 3 JD 9870 combines with 12 row heads, 4 semis and two grain carts. This could be a custom combiner.

5. ND 2 runs west about fifty miles south of the Canadian border

5. The durum wheat fields are more frequent as I traveled west. The bright green contrasted with the rest of the fall tan landscape.

6. About half way between Minot and Williston, West of Stanley ND, oil wells started to appear, as well as oil tankers.

7. Went by a ranch with a herd of twenty to thirty horses being rounded up by two cowboys on four wheelers.

8. Farmsteads seemed very well maintained with most appearing to have a fresh coat of paint.

9. Went by a abandoned farmstead with five fifth wheel trailers parked in a circle.

10. On the four lane ND 2 highway, speed dropped from 80 to stop and go in Williston due to oil tanker and construction equipment traffic.

11. To enhance the confusion there was a farmer with a nitrogen applicator, properly folded to 16 feet wide pulled by a quad trak 525 Case/IH.

12. Acres of temporary housing as ND 2 turned south to Williston.

12. Temporary housing was in many forms. From ten in a row bunk house size unit to a area with fifty or sixty ten by twelve individual travel trailers. These are called man camps. Entertainment is provided with temporary workers from Las Vegas, rumor has it.

13. At he Wall Mart store in Williston, as you enter there are pallets of winter ware for men. They say the turnover is several pallets a hour. Wall Mart reports it is the most profitable store they have despite a $20 per hour age for workers.

14. The McDonalds (fast food?) had a queue of about twenty people out side the store.

15. The vehicles of choice in Williston seemed to be Peterbilt or Ford F350 four door.

16. I was told not to take 85 south out of Williston as it was all broken up. Wrong! It was freshly paved to Watford City. Traffic was stop and go to 35 MPH with speed increasing as Watford was approached.

17. Filled up with gas in area. Unleaded $3.59. E-10 $3.39, E-30 $3.19 and E-85 $2.87. The E-85 was guaranteed to be at least 60% ethanol.

18. Some things seen on I94 headed toward Bismarck: two truck loads of generator powered lights for night work, all sorts of equipment for earth moving on trucks. Prefab housing of all sorts and pipe.

19. ND will be number one oil producer by 2014. The may be number one in energy production now with natural gas, oil, electricity, bio fuels and food.

The First Half of June Diary

On the first of June I left home, alone on my way to Naperville Illinois, returning on June 5. Leaving again on June 9 again with Joan to a wedding in Little Rock Arkansas, returning home on June fourteen. Follows is a chronological observation and commentary as seen from the window of a Prius, at convention, a few bars with menus, a church and a family gathering.

June 1: Headed for Maquoketa Iowa to visit a former college classmate. I will compare this to a identical trip taken two years ago using the backhoe indices, acres planted, corn height, gasoline price, bitching levels and GPS improvements.

In the year 2009 the recession was at its lowest level. On the way to Maquoketa backhoes were visible sitting in lots of dealers and construction companies. This year all were out working. The ones I saw were in motion with a full scope of dirt or on a transport moving to a new site.

Acres planted leaving Minnesota was fifty percent or less to one hundred percent at Maquoketa Iowa. Corn height, emerging in Minnesota to four inches at Maquoketa Iowa. This compares to four inches in Minnesota and over a foot in Iowa in 2009. The gasoline price was $3.34 per gallon.

My evening with friends is always a most enjoyable event. We discussed Obama vs. W's socialistic tendencies. The conversation stalemated at a comparison of the stimulus vs. the free Medicare drug benefit. Seems like this was the same discussion we had some forty-five years ago at 202 Showerman (my dorm room), except we switched party alliances.

June 2: Programed my GPS to my next destination to Naperville and it gave me an option of three routs. I selected the shortest that was cross-country with an amble view of Iowa and Illinois farm land. I stopped for breakfast at a restaurant on an island on the Mississippi. From there it was Illinois farming monoculture. Every tilled field was planted to corn. The only grasslands were waterways. The once farm feedlots were all empty. Corn height, about 4 inches. In 2009 a few miles south, corn was at least a foot. When I crossed I39 I saw my first soybean field.

Due to over 50 mpg I put in 9.7 gallons at Naperville. Cost per gallon $4.49. If the car had gotten poorer mileage I would have saved money filling it up at Maquoketa.

June 2,3 &4: The purpose of my trip was to attend the Illinois Convention of Home Educators. It was held at a Mega church with such facilities as a Starbuck coffee shop and a huge convention area. I had a first time assistant from the area that uses RightStart Math to home school her two children. She grew up in the south side of Chicago, educated in England where she meet her husband. She has a bachelors degree in English Lit and a Masters in Marketing. I enjoyed listening to her talk about her son in an honors math program after having a foundation in RightStart math.

The attendance was low for the show with high unemployment in the area. From many people we heard “I am going to buy, but I have to wait” How much the employment picture and price of gasoline was affecting buying decisions is hard to determine, but if one owned a minivan that only got 20 mpg, being filled weekly, would be money redistributed to oil companies instead of a sale for RightStart math curriculum.

June 5: My way home was all freeways from Naperville Illinois to the end of 212 freeways in Minnesota. From Naperville to I39 was the most change from two years ago.

In 2009 farmland was being converted to housing, sod farms and nursery stock. The house tracts are still there with no visible activity and the sod and nursery stock land converted to cornfields. Corn height this year, about four inches. In 2009 it was at least eighteen inches high.

Just west of Dekalp was a wind turbine site of 126 wind generators. And they are being sued according to this web site. http://archive.chicagobreakingbusiness.com/2010/06/dekalb-county-wind-farm-lawsuit-moves-forward.html

In Wisconsin on I90 and I94 I saw many untilled acres. It even appeared the cranberry bogs were not all planted. Plan for high priced cranberries this fall!

Trip gasoline mileage was 54.2 MPG on Toyota marketing designed MPG computer. Deduct 6% (according to Al’s five tank calibration) for real mileage of 51 MPG.

June 6, 7 & 8: This period was spent preparing for a trip to Arkansas. The corn is two inches tall with alot of drown out places and soybeans finally got planted in McLeod county.

June 9: Early in the morning Joan and I started our trip to Little Rock Arkansas with a planned stopover at Kansas City, Missouri. North of Mankato was less than 50% planted and a few fields untilled. As we traveled south on highway fifteen more was planted with a few field of soybeans up.

As we approached Iowa on I35 a large wind farm, without counting, over a hundred turbines. Passing into Iowa the Minnesota wind farm continued with at least another hundred. Corn was about four inches tall with an occasional field of soybeans emerging.

As we approached Des Moines corn was shorter, more standing water and fields untilled. It is difficult see the countryside because of very heavy rains.

North of Des Moines I thought the Prius was failing me. All of a sudden it slowed down, then speed up. The problem? The idiot driving had speed set at 75, the car was hydroplaning during rain burst, and the computer managed traction control was trying to slow down, in conflict with the speed control trying to maintain set point. When the connection between the seat and steering wheel finally computed and shut speed control off and with reduced speed the leg to Des Moines was concluded by lunch.

It was hard to determine how much rain fell south of Des Moines because the terrain becomes hilly, but waterways were full. As we entered Missouri it seemed dryer with corn about 6 inches tall. The wheat fields were turning and looked beautiful.

June 10: This leg of the trip between Kansas City Missouri and Little Rock Arkansas took us past Joplin Missouri. Tornado damage was very evident from the freeway. (Note: we were not officially on a freeway, but a previously two-lane highway with four new lanes. Work started in 2009 and lanes laid and now overpasses being built.).

The big surprise for Joan and I was when we entered Arkansas. Fifteen years ago when we were in Arkansas we concluded it was like a third world country, run down and underdeveloped. This time Arkansas seemed like a modern, well-maintained World Class area. As we traveled through Bentonville (home of Walmart) I cynically thought that Wal-Mart was responsible for this area and Arkansas will deteriorate as we drove toward Little Rock. It did not!

I now have to introduce a new indices, the Peterbuilt indices. On I40 traveling through Arkansas the truck traffic was heavy. The trucks were from Arkansas and faraway places like Minnesota. All this indicated a vibrant economy. Then I noticed truck makes. I have never saw as many new style aerodynamic Peterbuilt trucks vs. the old style Peterbuilts as seen on I94.

On our arrival to Little Rock was precise guided by the GPS in our 2010 Prius. This compares with the 2004 Prius and a Garmin GPS unit, which is a guide to being lost. My IPhone pinpointed our area and guided us to a Macaroni Grill for a relaxing dinner. Joan and I had no pasta, just a very delightful fishmeal.

June 11: After a tour of downtown Little Rock and the capital, Clinton Library we attended the wedding of Marietta Monday and Joshua Ward. After a beautiful ceremony, a reception was held in the church complex with an open bar. No additional comment need be made.

June 12: We traveled from Little Rock to a town of Subiaco. We attended Mass at Subiaco Academy, a large Catholic boarding and day school for young men in grades 9-12 based on Catholic- Benedictine values. When entering the church, one could easily imagine being in Germany or an Italy cathedral.

Enjoyable afternoon was spent at the home of Rod and Amy Monday and children, Jacob and Breanna. The day was closed at state owned and operated Mount Magazine Lodge with dinner and family. Fifteen years ago this location was grown up in weeds. Mount Magazine lodge is built on the highest point in Arkansas.

June 13 and 14: The trip home was uneventful except for another down pour at Des Moines. Crop conditions were not much improved from June 1. After leaving Missouri, ground was visible between rows. Upon arrival home corn was 6 inches tall with drown out places replanted.

The highest gas prices were in Naperville IL. Highest unemployment was in Naperville IL. Lowest unemployment was in Arkansas. Seemed windshield observation of strip Mall occupancy was suffering all over. Corn is two weeks behind all over. Wheat was being harvested in Arkansas. Best economy was Arkansas.

Did I mention that Southern Arkansas is considered in a drought area and the Arkansas River is in flood stage?

I get many web sites from friends because they know what my interests are. The other day I received this one. <http://www.kpcb.com/usainc/USA_Inc.pdf > with the notation “when you have time”. The subject was a “Basic Summary of America’s Financial Statement” by Mary Meeker published in February 2011. In the words of the Author “It includes a 2-page foreword; a 12-page text summary; data-rich observations. There’s a lot of material – think of it as a book that happens to be a slide presentation.”

I approached this report with the cynicism I often approach any report. This report was not a report with a patrician political agenda. It was a report on the US financial condition. It is a report well worth reading. For the very busy I recommend reading the summary only. This gives a insight into the dilemma of our federal budget.

Income and social tax and does not cover the cost of Social Security and Medicare! This is not sustainable. So what is the solution? This question has lead me to other web sites. Check this U tube site out. http://www.youtube.com/watch?v=fIqyCpCPrvU And watch one, two and three. (Note how the speaker things only the rich can invest)

As a balance check this site out for a more progressive view by a English economist. http://www.youtube.com/watch?v=0CjNlyiDAno&feature=related

The solution? My opinion on the next Blog.

2011 ECONOMICS: PART 2

Tea Party politicians have fostered a chant, “The 2008 stimulus spending program did not work”. Fact is it did work but not all.

Lets look at four parts; the General Motors (GM) bankruptcy bailout, money to local governments, tax cuts and infrastructure projects.

The GM bailout saved jobs! If GM had gone through bankruptcy many people would have been unemployed with no plan for employment. Who would maybe have bought the company? Kia or Hyundai? In bankruptcy would have the Volt project been cancelled? Some will argue that the Federal Government cannot run a car company. What has been proven is private companies can have dumb management. Case in point is the Hummer offer for sale, no one in the world was dumb enough to buy it. The GM bailout was a success in many ways. It reduced layoffs at a critical time and today a restructured GM with newly enlightened management is a viable company that is paying taxpayer back and providing a strong tax base for the future.

Like the bailout of GM, the stimulus money that went to state and locale governments prevented layoffs. As the money is used up, layoffs are now occurring, but the economy can better absorb the additional unemployed. John Taylor a Professor of Economics at Stanford, an economic advisor to Republican candidates and politicians did not stimulate the economy. Because it did not increase purchases of items or labor it was not a stimulant. This is like arguing if people must be laid of, then rehired for it to be a stimulus. This makes some sense in economic theory and provides good political rhetoric but is not good for a person who has house payments to make.

Income tax reductions are popular political policy, but is it good economic policy? Economic theory says individuals will spend money increasing economic activity. Or they will save it for future investment. Or will they buy a new Mercedes or Lexus with the tax savings? There is economic data that says individual tax cuts do little or nothing to increase economic activity. As a small profitable business owner we manage our profits for investment in manufacturing and marketing opportunities, deducting expenditures as a business expense. If we had small business tax cut would we park and store cash in a bank? Instead we invest in business growth. Tax cuts to individual may be good political policy, but there is no economic data that says it is good economic policy.

Today Tea Party Republicans are saying all government spending is money wasted with the exception of defense. In fact government of all levels are both good investors and wasteful spenders. In this paragraph I will focus on spending that is an investment that will increase the wealth and standard of living of all Americans. Looking at historical Federal spending program investments such as the federal land grant for railroads, federal land grant for colleges and public schools, Hoover dam, road construction in the thirties, GI bill, Interstate freeway system, a space program that gave us GPS, the internet and the list goes on. Some of those mentioned are grants and others are tax policy. For example to promote the exploration of oil, large tax credits were given to oil exploration and refining companies. Today the stimulus spending on infrastructure is working. As we continue to invest in transportation, research and education, our economy, will grow. And it is important to recognize, in our capitalistic economy, private companies are now running the stimulus investments.

The United States has a strong record of successful Federal government investments.

The 2011 Economics: Part One

Commentary on the 2008 and 2009 stimulus program.

In February 27, 2007 John Taylor wrote a op-ed for the New York Times justifying sending 360 tons of US currency in small bills to Iraq to assure US control of the Iraq government by bolstering the war torn economy. The value of the currency was $1.7 billion. And yes that was 720,000 pounds. The op-ed was written as the American public started to figure out that that the war in Iraq was about oil.

Who is John Taylor? John Taylor is a Professor of Economics at Stanford, a student of Milton Freidman, and a advisor to many conservative Republican congressman, especially the younger tea party Republican members. John Taylor is a prolific writer and on his web site he has a list of his writings. He also has a blog http://www.johnbtaylorsblog.blogspot.com/, which is a good read.

While much if not all of what he writs would be right on, if people reacting to economic situations were drones. His analysis is on the level of a sophomore Engineering student studying statics. The problem changes significantly when everything is in motion, with changing speed, direction and new factors are joining the equation. John Taylor says you can write economic rules to stabilize the economy. The problem with rules is some people believe a rule is really just a suggestion.

Looking at just two examples.

First the housing crisis. A well meaning George Bush promoted a campaign slogan, “the ownership society”. This immediately activated a loan industry and with incentives by banks to pay loan officers a commission for loans written. The number of houses built went up. The price of houses went up. This invited speculators in the market. It soon came to the point in 2007, a speculator would flib five or six houses a year and because of delayed first payment could own five or six houses. Builders were importing workers, legal and illegal to build houses to meet the demand for more houses. There were even commentators on TV saying that global warming would help house production by having a shorter winter season. Then along came 2008, and the crash began. John Taylor formula did not predict this. His creativity was now used making excuses.

Another problem of formula economics, is innovation. The other day Joan and I went to a concert in Minneapolis. We downloaded our tickets eliminating a printed ticket and a clerk to process our order. When we got to the parking ramp there was no attendant to receive payment. Just a station that dispensed a ticket. After the concert again no one to take payment. I put the ticket in the slot, I was asked by a recorded voice for my credit card, I put it in the slot, payment was approved and credit card returned. Two people without a job and I get to use $9.00 for another 20 to 30 days interest free. How does this fit into John Taylor’s formula’s?

Before I leave “Part one” of this Blog, I want to make one thing clear. I believe you can make economic forecasting with dynamic models. Using mathematical chaos theory, studying trends, probability and other methods. Part II of stimulus analysis coming soon.

The iPad, Tax cuts, Innovation, Dixiecrats, Renewable Energy and Ethanol

The year 2010 was a very eventful year! Some thoughts about 2010, from an almost 78 year old

Fire, Gutenberg press, the transistor and the iPad are key points of man’s evolution toward a civilized society. Well maybe not the iPad, but it was one of the highlights of 2010. The iPad is so new my 2011 copy of Word things iPad is a misspelled word. In early December I went to a Renewable Energy conference at The University of Minnesota and at the opening session at a table of six there were three iPad. If I had brought mine (actually Joan’s), it would have made four. This was the trend at the entire conference, it almost seemed like an iPad conference. The iPad was introduced in April 2010!

In the lame duck congressional session the Bush tax cuts were extended. Will this help iPad sales? Maybe, but they will also help Mercedes sales. Because those having earned income over $250,000, say $3,000,000 could buy a Mercedes S series with the tax savings, instead of a US made Lincoln Hybrid that gets 41MPG. The only redeeming virtue is sales tax would be recovered from the Mercedes sale. But if one believes in trickle down economics, maybe one could argue that a Mercedes Benz dealership is a small business.

Innovation is what drives the economy! Innovation is the core of the capitalistic economic system. It is the way to redistribute wealth. Without innovation the primary attribute needed to attain wealth was inheritance, stagnation and greed. The iPad was the work of Steve Jobs and a dedicated group of innovative engineers and scientist. They gained wealth but that was incidental to their goal of making “cool” products. But wealth was redistributed in the process. “Cool”.

Dixiecrats were a fragment of the Democratic Party organized in the 1950’s as a states right party and rejecting the Northern ever more liberal Democrat. The south became Democrat during the depression but did not want to be told how to spend the money from Washington. States rights party is south culture because one hundred fifty years ago they were divested of their property by the federal government. Many of the southern leadership then used fear politics to form the Christian Collation and now the Tea Party. Only a small percentage of the South votes Democrat. This explains the horror Senator Jim DeMint Republican from SC felt when Obama took the oath of office as President. What his relatives called property was now sleeping in the Whitehouse. And I wonder how many iPads were sold in the Deep South.

The most effective negative promotion I have seen in my seventy-seven years was the campaign used against ethanol. As a volunteer corn grower and a State Director Minnesota Corn Growers, I lobbied both Minnesota legislators and Federal Legislators for favorable legislation for corn based ethanol. The amateur corn growers were confronted with a professional team of lobbyist funded by big oil. They knew that we were after ten or twenty percent of their business. While we had a message of jobs, improving the environment and a renewable energy source they demonized our message with miss information and lies. The effectiveness of big oil still plays out its message today. Thomas Friedman, New York Times editorial writer often writes column about the need for better education, more innovation and protection of the environment, dissed corn-based ethanol. A simple search on Google reading recent data laden reports would have how corn based ethanol is a very good source of renewable energy. Simply stated it is one hundred fifty percent energy yield on corn ethanol compared to sixty to thirty percent equivalent yield on crude oil. And if crude is extracted from the oil sands the yield goes negative. It ‘s important to remember a pile of manure carefully spread on a farm field, grows an excellent crop of corn/ethanol while sequestering carbon. If you own an iPad use the Safari App to access Google and check it out.