Britain’s Secret to reducing the Carbon from their Electric Power Generation is Frequent Power Outages

Posted by PITHOCRATES - November 18th, 2012

Week in Review

It’s pretty sad when a nation’s green energy policies requires an energy bill to ‘keep the lights on’.  But that’s precisely what’s happening in Britain.  Because they agreed to give up good, reliable electric power generation for something that may not be able to keep the lights on (see Energy Bill: The Plan To Keep UK’s Lights On by Gerard Tubb posted 11/18/2012 on Sky News).

The energy and climate secretary, Ed Davey, has to balance the need to create new generating capacity with commitments to a low carbon future and more electricity from renewable sources.

Many power stations are coming to the end of their life and the Government estimates it will cost £110bn to replace and improve electricity infrastructure over the next decade…

Electricity use is increasing, with suggestions that demand could double by 2050…

The UK is signed up to providing 15% of electricity from renewable sources by 2020 and to reducing to zero the amount of carbon pumped into the atmosphere from electricity generation.

Electricity use is on pace to double by 2050 and the UK is decommissioning power plants and spending a fortune on electric generation from renewable sources.  Going from reliable power generation to intermittent power generation.  Which is nothing more than a step backward to a time before Margaret Thatcher.  And a return to the British Disease (strikes, industrial unrest and frequent power outages).  Or worse.  For the environmentalists would have Britain go back to the time of Stonehenge if they had their way.  A time when there was no electricity.  Or man-made carbon in the atmosphere.  Or indoor plumbing, air conditioning, refrigerators, telephones, etc.  Now that would make the environmentalists happy.  Abject misery for the human race.

Life was pretty precarious back in the 3rd century BC.  We’re lucky the human race survived to make it here today.  A time where life is not so precarious.  Thanks to technology.  Especially electricity.  Which helps keep our food safe, our water safe, our homes warm in the winter and allows hospitals to save lives.  Just look to the recent devastation of Hurricane Sandy.  And how the loss of electric power took away safe food, safe water, warm homes and life-saving hospitals from the victims of that storm.

Electric power saves lives.  And makes those lives safer.  We should not be compromising our electric power to ‘save the world’ from global warming.  At least not until man-made carbon moves the glaciers as far as Mother Nature did during the Ice Ages.

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Unable to win Union Concessions Hostess (Maker of Twinkies) goes out of Business

Posted by PITHOCRATES - November 18th, 2012

Week in Review

Twinkies are no more.  Hostess, unable to get their workers to leave the picket lines and return to work, are closing Hostess down.  Putting another 18,000 or so on the unemployment rolls.  And depriving kids from hereafter the joy of that delicious crème filled snack.  The one thing they eagerly looked forward to in their lunch bags.  But not anymore (see No more Twinkies? Others could buy Hostess’ brands by Matt Krantz and Jeff Swiatek posted 11/16/2012 on USA Today).

The company, which had been in and out of bankruptcy restructuring, was already struggling from a high cost structure and sluggish consumer demand for its products. Its fate was sealed by a confluence of negative events including rising commodity costs and competitive pressures, says Erin Lash, analyst at Morningstar.

The company had warned it would file a motion in U.S. Bankruptcy Court to shut operations if enough workers didn’t end a weeklong strike by 5 p.m. ET Thursday. On Friday, it followed through on that threat…

The shutdown will result in the loss of about 18,000 jobs…

Privately held Hostess filed for Chapter 11 protection in January, its second trip through bankruptcy court in less than a decade. The company cited increasing pension and medical costs for employees as one of the drivers behind its latest filing. Hostess contends workers must make concessions for it to exit bankruptcy and improve its financial position.

The company, founded in 1930, is fighting battles beyond labor costs, however. Competition is increasing in the snack market, while Americans are increasingly conscious about healthful eating. Hostess also makes Dolly Madison, Drake’s and Nature’s Pride snacks.

The Teamsters union is urging the bakers union to hold a secret ballot on whether to continue striking. Citing its financial experts who had access to the company’s books, the Teamsters say that Hostess’ warning of liquidation is “not an empty threat or a negotiating tactic” but a certain outcome if workers keep striking.

So who’s to blame?  Labor?  Or management?  Well, supporters of labor will say it was management’s fault.  And supporters of management will say it was labor’s fault.  But what do the numbers say?

According to Bloomberg Businessweek Hostess Brands, Inc., has 10 key executives.  If they paid each a million dollars that would be $10 million in executive pay.  If each executive gave up $500,000 in pay that would save the company only $5 million.  Now if they asked each of the 18,000 workers to give up $5,000 in pay and benefits that would save the company $90 million.  Which is a lot more than $5 million.

These numbers are just to illustrate the realities of a company with 18,000 workers.  And why management fights so hard to win concessions from these workers.  A little bit from each of them can save a lot of money.  Whereas a lot from the executives will save little money by comparison.  Which is something the Teamsters understood when they reviewed their books.  And why they were willing to lose a little of their pay and benefits.  Because losing a little is better than losing it all.  Like they will now.

Once upon a time people had the decency to die shortly after retiring.  Something actuaries took notice of when calculating the costs of defined benefit pensions.  And retiree medical costs.  So when companies started offering them they were able to fund them.  Then people started living longer into retirement.  Much longer than they were supposed to.  Longer than the actuaries ever thought possible when they first set up these programs.  They were living longer.  And because they were living longer they had a lot more time to come done with a whole bunch of health ailments.  Consuming a lot of health care benefits during a long retirement.   That cost an enormous amount of money.

Companies simply can’t afford these costs anymore.  Which is why most businesses in the private sector economy have gone to defined contribution retirement plans.  Like 401(k)s.  Only public sector workers and unionized workers enjoy pensions these days.  But even the unions are finding it hard to keep them.  As these costs are bankrupting the businesses they work for.  Like Hostess.  For if they have 18,000 workers now and have been around since 1930 their pensions and medical costs will be greater than their current labor costs.  Which was just too much in a competitive market place.  As there were other delicious snacks to buy out there.  Which prevented them from charging $25 for a pack of Hostess Twinkies.  So they had to cut costs.  And with 18,000 workers those costs had to come from them.  Because there are no other costs large enough to cut to make a difference.

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Cost Pressures in the NHS cause Ambulances to Wait for a Half Hour or more to Unload their Patients at a Hospital

Posted by PITHOCRATES - November 18th, 2012

Week in Review

National health care is very expensive.  And it’s more expensive if your population is aging.  Which the British population began doing after the inception of the National Health Service (NHS).  So fewer people were paying for more people as time went on.  Making it very difficult to provide health care for everyone.  As the population aged further the British had to ration service.  And increase wait times.  As the cost pressures of an aging population weighed heavily on the NHS.  Struggling under these cost pressures, the NHS had no choice but to make massive budget costs through increased efficiencies.  Looking for some £20 billion ($31.8 billion) in savings.  How has that worked?  It’s turning police cars intro ambulances (see Shocking state of the NHS: Half a million patients forced to wait 30 minutes on trolleys before admission to A&E by Jo Macfarlane and Brendan Carlin posted 11/17/2012 on the Daily Mail).

The number of seriously ill patients forced to wait more than half an hour on trolleys and in ambulances before being admitted to accident and emergency has rocketed by up to 300 per cent in just 12 months.

Figures uncovered in an investigation by The Mail on Sunday reveal mounting delays for 999 patients at hospitals across the country as casualty units struggle to cope with Government cuts and the closure and downgrading of other A&E wards.

Nearly half a million patients brought into casualty by ambulance last year were left for half an hour or more in vehicles or in corridors before they were officially admitted.

Several hundred waited longer than two hours. Guidelines state that patients should be handed over to A&E staff within 15 minutes of arrival at a hospital…

Most trusts said the number of patients waiting more than 30 minutes had soared by an average of  25 per cent in the past year.

But in the North East the numbers increased by 294 per cent, and in London by nearly 50 per cent…

‘The long waits are bad news for patients and for ambulance crews who are stuck outside hospitals where they are unavailable for new emergency calls.

‘The Government needs to think about the consequences of their demand for £20 billion in so-called efficiency savings from the NHS because the result is clear – patients are suffering.’

In London, one of the worst affected areas, campaigners are warning that the situation will get worse if proposals to close eight A&Es are approved, sending patients to already-struggling departments elsewhere. The London Ambulance Service revealed that 42,248  patients waited outside hospitals for longer than 30 minutes during 2011/12 – a rise of 47 per cent in 12 months – and 10,053 waited more than 45 minutes.

With ambulances stuck at hospitals for 30 minutes or more to unload their patients the police have been picking up the slack.  Some transporting people after waiting for an ambulance that never arrived.  Or being called upon to respond in the place of an ambulance.  Because all ambulances were parked at some hospital with a patient in back waiting for admission into an A/E department.

So this is the ultimate future of national health care.  Budget cuts, rationing and long waiting times.  And ambulances parked at hospitals with patients in back waiting for a half hour or more for admission.  This is what Obamacare will give us.  Or whatever Obamacare will evolve into.  For when it comes to national health care few can do it as well as the British.  So if the masters of national health care are having such difficulties so will some new young upstart when they enter the world of national health care.  Who also has an aging population.  So if you think things are bad now remember these times well.  For they will soon be known as the good old days.

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Britain’s Green Deal fails to attract a Single Homeowner to Exchange Higher Debt for Higher Energy Bills

Posted by PITHOCRATES - November 18th, 2012

Week in Review

The British have a program where they encourage homeowners to borrow up to £10,000 ($15,900) to weatherproof their homes in exchange for higher energy bills.  With the goal of combating global warming.  And saving the planet.  So how is that program going?  Not good (see Green Deal ‘in tatters’ as no-one registers by James Hall posted 11/16/2012 on The Telegraph).

The Green Deal encourages homeowners to take out a loan to make their house more energy-efficient. The project goes live in 10 weeks but households have had since October 1 to have their home assessed for the scheme prior to its launch.

However Greg Barker, the climate change minister, has admitted that “no assessments have yet been lodged” on the Government’s official register by homeowners…

Luciana Berger, the shadow climate change minister, described the Green Deal as a “shambles” and said its launch is “lying in tatters”. The Coalition hopes that owners of up to 14 million draughty homes will sign up to the scheme…

Under the Green Deal people can borrow up to £10,000 from a private sector loan provider and have loft and wall insulation fitted in their homes. The loan is repaid over a period of up to 25 years through higher bills. The idea is that bills will fall once the loan has been paid off because the houses need less energy.

They’re scratching their heads why not one of the 14 million homes signed up yet for this program?  Well, I’ll take a guess as to why.  How about that 25 year payback?  This means a couple could start a family and raise 7 kids and send them on to college before breaking even on their investment.  That’s not a good investment.  Why would anyone want to raise their energy bills for 25 years?  Especially when a lot of things can happen in 25 years.

People change jobs and move.  People lose their jobs and move.  People get divorced and move.  People get married and move.  People suffer a loss and move.  People suffer ill health and can no longer maintain a house and move.  Twenty five years is a long time.  A lot of things could happen to prevent people from remaining 25 years in the same home.  And, yes, you may be able to get that money out of your house when you sell it.  As long as there aren’t any houses selling in your neighborhood for £10,000 ($15,900) less.  And that’s the last thing a person wants when they’re trying to sell their home.  Trying to recover the cost of a home improvement when they’re selling.  Especially in a depressed housing market.

So there’s that.  Then there’s something else.  Energy bills have soared in recent years.  Which was the whole point for the Green Deal in the first place.  And if those energy bills are high now what’s to keep them from being higher later?  Especially with the government’s green policies to reduce global warming.  No, the British homeowner probably can count on few things in life with any certainty.  Taxes.  Death.  And higher energy bills.  So why would they want to add to those energy bills when they’re only going to continue to rise?  Because the government says those bills will be cheaper 25 years hence?  When it’s the same government who made those energy prices soar in recent years?

Many real estate experts will tell you there are few home improvements that an owner will get their money back on when they sell.  Kitchen and bathrooms lead a very short list.  But finished basements, dormers and sun porches?  Kiss that money goodbye.  Because when it comes to selling a house it’s all about location.  People pay what the location is worth.  Not what the house is worth.  If you build a $250,000 house in a $100,000 neighborhood guess what that house will sell for.  The same price all houses sell for in a $100,000 neighborhood.  Around $100,000.  If a buyer is choosing between two houses that cost $115,000 in the $100,000 neighborhood which do you think the buyer will choose?  The one with the new insulation that raised the energy bills?  Or the one with the new bathroom or the new kitchen that the new homeowners will use every day of their life in their new home?  They’ll choose the nice bathroom and kitchen.  For their energy costs will probably be a wash.  They’ll either buy more energy at a lower rate.  Or buy less energy at a higher rate.  Giving them no advantage in energy costs no matter which house they buy.

This is why no one is signing up for this program.  It’s just a horrible deal for homeowners.

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People beg the EPA to Waive their Ethanol Mandate to lower Food Prices but the EPA Refuses

Posted by PITHOCRATES - November 18th, 2012

Week in Review

People suffering from the high price of corn beg the EPA to waive the ethanol mandate.  To use corn for food.  And not for fuel.  To help hungry children in the US.  And around the world.  Whose parents have to pay higher and higher food prices thanks to a reduced corn crop thanks to those droughts this past summer.  The EPA’s response?  Kids are fat enough already and could stand to lose a few pounds.  Figuratively, of course (see EPA rejects request to waive requirements for corn-based ethanol by David Shepardson posted 11/16/2012 on The Detroit News).

The Environmental Protection Agency on Friday rejected a request from eight governors and nearly 200 members of Congress to waive requirements for the use of corn-based ethanol in the nation’s 240 million vehicles in the wake of this summer’s severe drought.

The move is a victory for corn farmers that have seen prices jump by 400 percent in recent years, but a loss for pork and beef producers who have seen the price of feed jump…

The EPA said it has not found evidence to support a finding of severe “economic harm” that would warrant granting a waiver of the Renewable Fuels Standard.

Can you imagine gasoline prices rising 400% and the government saying they see no economic harm in that?  Can you imagine prescriptions prices rising 400% and the government saying they see no economic harm in that?  Can you imagine the cost of health insurance rising 400% and the government saying they see no economic harm in that?  Of course you can’t.  So why do they not see harm in a 400% rise in corn prices?  Could it be because the ethanol lobby supports Democrat candidates and their environmental policies?  And higher corn prices mean more generous campaign donations?  Perhaps.

“We recognize that this year’s drought has created hardship in some sectors of the economy, particularly for livestock producers,” said Gina McCarthy, assistant administrator for EPA’s Office of Air and Radiation. “But our extensive analysis makes clear that congressional requirements for a waiver have not been met and that waiving the RFS will have little, if any, impact…”

In 2011, nearly half the corn grown in the U.S. was diverted to ethanol production to meet the RFS, critics say…

Food producers — including the makers of frozen food and restaurant chains — have criticized the mandates, saying it raises food prices…

The American Coalition for Ethanol praised the decision by the EPA…

The Michigan Farm Bureau had opposed granting the waiver, saying it doesn’t believe keeping the requirements in place “would severely harm the economy of Michigan at this time.” But Michigan poultry and livestock producers are affected by higher corn prices.

The governors of Maryland and Delaware, also home to poultry producers, told the EPA in October that without a waiver they would face “the loss of thousands jobs.” North Carolina, New Mexico, Georgia, Texas, Virginia, Utah and Wyoming also had asked EPA to waive the requirements.

The EPA conducted several economic analyses and concluded that on average waiving the mandate would reduce corn prices by 1 percent. EPA also said waiving the mandate would not affect household energy costs.

The Democrats talked a lot about arithmetic during the 2012 campaign.  Saying that simple arithmetic proved that they should raise tax rates on rich people.  Because collecting another 5% or so from high income earners would help balance the budget.  Even though we have trillion dollar deficits.  And the proposed tax rate hikes would bring in nowhere near a trillion dollars.  So it would appear the Democrats are arithmetically challenged.  Which probably explains why they say doubling the corn crop (by eliminating the methanol mandate) will only lower corn prices by 1%.  When doubling the supply of any other commodity in the world would cause the price to collapse.

These are the same people that place import tariffs on foreign made goods to restrict supplies to keep domestic prices high.  These are the same people that accuse other nations of anti-dumping violations for flooding the market with their goods.  Which lowers domestic prices.  So these people seem to believe that increasing supply will lower prices.   Except when it comes to corn.  Even if you double the size of the corn crop.  Amazing.

Of course, it’s about the money.  The corn and ethanol producers are getting rich.  Who are only getting rich because of their friends in government.  Which is the definition of crony capitalism.  Or corruption.  The government interferes with market forces.  So their friends and supporters can get rich.  And share that wealth with their friends in government.

And while the crony capitalists are getting rich the American consumer gets poorer.  As they pay more for corn, beef, pork, chicken, eggs, milk, cheese, etc.  Families have to cut back on their grocery budgets.  And cut back on going out.  Because they have less disposable income.  And restaurants have to raise their prices because of the increase in their food costs.  But this is okay as far as the EPA is concerned.  As they put big money political contributions ahead of American families.

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