Friday, March 12, 2010

Small solutions to the energy problem

I was watching a panel presentation on the energy problem and how it might be resolved. This panel had big (i.e. important) people on it, (including an Assist Secretary of Energy), and was discussing big solutions that would cost big money and require big legislative approvals.

Let me diverge here for an anecdote.

If you were to have a traffic congestion (people moving) problem, the recommended action would be determined by the kind of expert you hired to develop a solution. A Highway Engineer would recommend additional lanes. A Transportation Planner would suggest mass transit. A Sociologist would point to developing car pools. And a Land Use Planner would recommend locating housing close to the jobs.

Each would be right as viewed from the expertise of his profession, but you could have any of four different solutions depending on who you selected. Remember, it’s important to understand an expert’s bias or focus before selecting him.

In the instance of the energy panel above, all the participants represented important players in energy industries, (including alternative and renewable sources) and government. It might be expected that they would all suggest large scale solutions.

But imagine what a different panel might recommend. A panel of knowledgeable amateurs might have recommended residential rooftop units tied into individual property generation alternatives.

Sounds good but it might be more difficult to implement than building a single, big one megawatt generator. Or would it?

Let’s go back to our hypothetical traffic congestion problem.
A constant frustration among transportation experts is the waste involved in people purchasing 4000 pound vehicles to transport one to five (usually no more than two) people around. These vehicles clog up our roads, burn more fuel per passenger mile than buses or trains, require 300+ square feet of valuable parking space per trip and, in general are inefficient in many ways compared to public transit.

BUT, who’s footing the bill for transit? Mostly John Q. Public as all mass transit has to be subsidized by some form of taxpayer funding. This means a big legislative decision and public approval is required to develop a transit system, especially an effective one.

The auto is purchased, maintained and driven by individuals. No legislation is required for him to get funding. No public process is needed for approval of the trip routing. Fuel and maintenance and the vehicle operator are provided by the owner at no cost to the public. No Environmental Impact Report is required for the above.

In a nutshell, while it might be economically inefficient for the individual owner, the public doesn’t shoulder any direct cost for an auto based system. Fuel taxes paid by the vehicle owner pay for road construction and maintenance of the roadway.

However it’s added up, no one has been able to find an acceptable alternative for the auto.

Oops, back to energy.

My case is that in might be better to have an energy policy focusing on individual power generation (the single auto) than centralized power generation (a rail transit system). A thousand one kilowatt generators might cost more for the same total power than from a one megawatt plant, BUT, it might be a quicker solution to the overall problem in the long run.

If the owner pays for it, who, other than himself, cares?

Friday, March 5, 2010

Taxing savings

The importance of savings in a personal financial package seems to vary with whose interest it’s in to encourage personal savings.

Several years ago, the media was bemoaning the fact that private individuals were not saving. Now, after the economic meltdown, the same media are lamenting that individuals are saving too much.

What happened?

Several years ago, the financial institutions (mainly banks) wanted people to put more money into savings because this would provide them with funds to lend out at a profit. Now, the thought is that any money put into savings would be better used to strengthen our financial system by being used to purchase goods.

A complete U-turn with little or no notice from anyone.

You might note that a major purpose of taxes is to encourage or discourage certain activities by the general population. Why wasn’t a tax policy in place several years ago when the lack of savings was seen to be a problem with economic development? We’ve never had a government policy to encourage and reward savings by exempting interest payments from taxation.

Conversely, capital gains, losses and stock dividends are granted tax adjustments to encourage financial investing.

There’s no where to go with this as there is no lobby or interest to look out for the average citizen except when it will directly benefit some other prime special interest.

Let’s just keep in mind that most legislators aren’t looking out for us.