A brief history of energy

The energy news in New England isn’t great. Electricity prices are expected to rise 9.6% this summer relative to last. The average cost of a gallon of gasoline in Massachusetts last week was $3.68, up 4% from the same period in 2013. In this recent brutal winter of polar vortexes, extreme, extended cold pushed our heating bills through the roof. And while natural gas at the central Pennsylvania hub was $3.37 per million BTUs, it was $24.09 in Boston. (This is due to a lack of pipeline capacity, a situation that towns along the northern tier of Massachusetts are striving to perpetuate).

Why the concern over energy prices? Because energy is at the very root of the economy. High energy costs destroy job growth, increase the cost of everything we consume, and act as a terribly regressive tax on the poor and middle class. Since you will be asked to make many decisions, both politically as a voter and commercially as a consumer, it is worthwhile to understand and consider energy carefully.

We are often presented with a menu of energy types with a dizzying array of sources. Wind, solar, hydroelectric, oil, natural gas, coal, biomass, nuclear, geothermal, tidal – and each with multiple variations, it’s enough to make your eyes cross. Let’s go back to basics.  

According to current thinking, the universe sprang into existence nearly 14 billion years ago in a blinding flash of pure energy. Within a fraction of a fraction of a second, this energy expanded in all directions, slowly coalesced and began to form matter. As we can tell from Hubble Space telescope images, great spiral galaxies formed, organizing and spinning and creating vast numbers of stars, each a microcosm of spinning planets and moons. The universe is a vast playground of energy, mainly star fusion and angular momentum (spin).

Let’s take a brief tour of our plethora of energy sources here on Earth.  

Solar. Our star, like all stars, creates heat and light from a process of nuclear fusion, where hydrogen atoms, under great pressure, fuse to create helium, thereby releasing energy. Deep within the star, heavier elements are produced in this enormous furnace, such as iron and uranium. Here on earth, we can collect radiated solar energy and convert it directly to electricity or use it for heating water. Solar energy is available, of course, only when the sun shines. Clouds and dark of night necessitate the use of storage or alternative energy sources.

Wind. Believe it or not, this is also fusion (solar) energy. The sun heats the land, the sea, and our atmosphere creating great currents of air. The wind blows because of the sun. If our planet hung in a dark, cold, void of space, there would be no wind.

Hydroelectric. Surprise, also fusion (solar). While some would say that this is gravitational energy, gravity is not an energy source. The water that falls must have been raised in the first place. As the sun evaporates water into the atmosphere, it eventually falls as snow or rain. Lifted by the sun, the water now flows through lakes and rivers and dams and generates electricity.

Fossil. Now you’re beginning to get it - also solar fusion. Over a billion years, the sun’s rays bathed the earth. Trillions of tons of bacteria and plankton and grasses and trees and animal life thrived, died, decayed, and became buried under hundreds and thousands of feet of rock and sand. Compressed and cooked, this biological mass stored the solar energy that originally created it in the form of natural gas, oil, and coal. Fossil fuels, because of their concentration, have an extremely high energy density which is why they are among our cheapest fuels.

Biomass. As the sun shines on corn or sugarcane or a number of other fuel crops, fusion energy is converted to organic compounds by photosynthesis. This stored solar energy can then be processed into fuel. This technology can also be adapted to bacteria and plankton. Biofuels have the potential to create cheap, plentiful fuel, but if we’re not careful, can compete with foodstocks thereby driving up food prices.

Nuclear. Yes, solar fusion energy, though not from our star. Other, older stars created radioactive elements which were incorporated into the crust of our earth when it was formed. We can mine uranium, for instance, to create power by nuclear fission. As we know from Fukushima, Three Mile Island, and Chernobyl, this presents risks. Properly managed, nuclear energy can provide vast amounts of power with no effluents other than radioactive waste (not to be minimized, this waste can be very dangerous). The holy grail of nuclear researchers is to create fusion reactors, the same as in the stars. This would be much safer and cleaner than nuclear fission.

Geothermal. Another byproduct of solar fusion. According to the Department of Energy, 80% of geothermal energy comes from the decomposition of radioactive elements in the earth’s crust (which originated in a solar furnace). The remaining 20% is residual heat from the formation of the earth 4.5 billion years ago. Geothermal energy can produce gases and pollutants from fluids withdrawn from the earth, but most geothermal plants contain emission control systems.

Tidal. There is great potential for capturing the energy of tidal currents for power generation. While opponents decry the potential impact on navigation and sea life, supporters proclaim the virtue of clean, sustainable power. Unlike solar energy, the tides run day and night. This energy source is not from solar fusion – it is much older. Look at the Hubble spiral galaxy image again. The amount of rotational energy stored in the universe is immense. Part of that energy is represented by the moon’s orbit around the earth, dragging the tides with it as it goes. Tidal energy is as old as the universe itself.

This is just a brief overview of energy and its sources. You owe it to yourself to become informed. Understand that all energy enterprises have risks and benefits. Become familiar with such concepts as reliability, renewability, and sustainability. Appreciate the impact of energy costs on jobs and the cost of living.

Energy is too important, too fundamental to our survival, to deserve less.

Obamacare - Mind-numbing Complexity

"Professor Butts and the Self-Operating Napkin"

The implementation of the Patient Protection and Affordable Care Act is causing some considerable perplexity and dissension among the citizenry. But its goal is crystal clear.  According to Kathleen Sibelius, Obamacare’s primary objective is to “make coverage more secure for those who have insurance, and extend affordable coverage to the uninsured.”

This presumes that expanded insurance coverage will improve health, and well it might. But this is not a given – there are many other factors affecting the nation’s health. (Hint – obesity, alcohol, tobacco).

A secondary goal of Obamacare is to “bend the cost curve”, that is, to make health care (and hence insurance premiums) cost less than it otherwise would have. Again, this is within the realm of the possible, perhaps over a long time frame. But early experience shows 2014 insurance premiums increasing at an alarming rate, often double the cost of 2013.

A key feature of Obamacare is its complexity: a multitude of tightly interdependent moving parts. The inauspicious roll out of Healthcare.gov (termed a "debacle" by the administration) is only a symptom of the law's impenetrable convolution. 

One might make reference to Rube Goldberg, whose contraptions were fantastically complex. But in the end, they could actually be made to work. The administration is fervently hoping for such good fortune.

As well meaning as it is, Obamacare has two fundamental shortcomings:

1. Mind-numbing complexity

1. Valiant but misdirected goals

To the first point, Obamacare features a flurry of economic features intended to fund the program. These include requiring all policies to provide a broad range of “essential” services regardless of whether the policyholder wants or needs those services. For instance, young single men do not require maternity coverage but will be forced to pay for it. Older folks do not need pediatric care but are obligated to purchase it. This is not “essential” coverage at all but, rather, hidden taxes.

But Obamacare has plenty of obvious taxes, too. From a sympathetic website (www.obamacarefacts.com), here is a partial list of Obamacare taxes:

• 2.3% Tax on Medical Device Manufacturers

• 10% Tax on Indoor Tanning Services

• Blue Cross/Blue Shield Tax Hike

• Excise Tax on Charitable Hospitals which fail to comply with the requirements of Obamacare

• Tax on Brand Name Drugs

• Tax on Health Insurers

• Elimination of tax deduction for Rx drug coverage with Medicare Part D

• Employer Mandate $2000 to $3000 per employee

• Medicare Tax on Investment Income of 3.8%

• Medicare Part A Tax increase of 0.9%

• 40% Excise Tax on "Cadillac" plans

• Annual $63 fee per subscriber to fund “risk corridors”

• Medicine Cabinet Tax (OTC medicines no longer qualified as medical expenses for HSA/FSA)

• Additional Tax on HSA Distributions

• Contributions to FSAs are Reduced

• Medical Deduction Threshold tax increase

• Individual Mandate (the tax for not purchasing insurance if you can afford it)

Using static scoring, the Congressional Budget Office has projected the revenue to be garnered from these sources. But humans aren't static and behavior easily morphs. Another source of complexity and uncertainty.

This combination of mandates and complicated funding sources (not to speak of over 11,000 pages of regulations) has made the program mind-numbingly complex and led to the first of many unintended consequences (the recent cancellation of millions of “non-conforming” policies). People are perplexed, puzzled, and, perhaps, a little bit scared.

To the second point, the stated goals of Obamacare are misdirected in that what we want, what we really really want, is to directly improve the health of the American public. Obamacare assumes that insurance for all will improve general health. And it might.

But if we’re in a mandating mood, then let’s mandate that sugar and fructose and salt and unhealthy fats be removed from our diets. Require that people eat high fiber, low glycemic-index diets under threat of penalty. Demand that everyone walk 10,000 steps per day (age adjusted) or pay a sloth tax.

According to Harvard Health, the medical costs of poor diet and obesity run nearly $200 billion per year to treat diabetes, cancer, heart disease, etc.  That amount, if even partially avoided, would most assuredly “bend the cost curve”.

But we are Americans, free of spirit in our loose fitting clothes. We’d rather purchase mandated “essential” insurance coverage than have our love affair with junk food disrupted. As voters, that’s our prerogative. And who knows - it just might work.

A Canticle for Hadiya

Hadiya Pendleton

The story of Hadiya Pendleton is heart rending. The 15-year-old girl was known as a star student, a loving daughter and big sister, and a talented majorette. That latter aptitude resulted in her performing, along with her King College Prep High School team, at President Obama’s inauguration, an honor of which she was deservedly proud.

But several days later, on January 29^th, she was senselessly killed by a purported gang member in a south-side Chicago park. Hadiya and her friends had taken shelter from the rain under a canopy in Harsh Park when Michael Ward, 18, allegedly opened fire on the group in a tragic case of mistaken identity – he thought they were rival gang members when in fact they were just a bunch of kids out celebrating after completing their mid-year exams.

The pathos of Hadiya’s death was overwhelming to her family and the community. President Obama recognized the event in his State of the Union address, remembering Hadiya while calling for stricter gun controls.

But what was it that made Ward, just a few years older than Hadiya, think it was acceptable to indiscriminately spray a group of young people with gunfire? Ward was in the company of one Kenneth Williams, 20, who had been shot in the arm by another gang last year. In his confession, Ward claimed that he was seeking revenge against that gang. What is it that allows young men to shoot each other with impunity in a city that registered over 2400 shootings and nearly 500 homicides in 2012? And this in a city with some of the toughest gun laws on the books?

There is a theory that addresses this and it has to do with “certainty of punishment.”  While it might seem odd, it turns out that criminals are very savvy about applying economic risk/benefit analysis to their decisions. Criminals calculate (intuitively, as their actual math skills are typically lacking) an “expected value” of punishment by applying the probability of being punished to the extent of the actual (not on paper) punishment.

For instance, while the law might call for 5 years in prison for carrying an illegal gun, they observe that the probability of being caught is very low. Hence, they calculate that the “expected value” of the punishment is far less than 5 years.  Further, even if caught, they see that the typical punishment is only a year of probation with no prison time at all. So in spite of the seemingly tough sanction against carrying an illegal gun, the criminal calculates that the “certainty of punishment” is actually very, very low. Hence, in their warped but canny minds, the benefits of carrying a gun far outweigh its costs.

All this is actually going on in Chicago. While having very tough laws on the books, the cops are dismayed to see offenders they manage to apprehend back on the streets within days. Williams, who provided the gun that killed Hadiya, should have been in prison for parole violations following an earlier gun offense. The cops blame prosecutors and judges, but the judges blame state and local budgets that limit available prison beds. So it comes down to a type of “guns vs. butter” argument – social welfare and pension spending vs. cops on the street and prison beds.

In our zeal to pass new gun laws, it might be worthwhile to ponder how effectively existing laws are being enforced, how certain the punishment for violations are, and how severely the actual punishments are adjudicated. Criminals must assess the “certainty of punishment” as being very, very high if we want to change their behavior.

In the case of Hadiya, her assailants’ long criminal records give sad testimony to ineffective execution of the law. Another toothless law on the books would not have helped, no matter how good it made us feel.

Dreams of the sovereign

We’re an odd bunch, we Americans. We prize our individuality, our liberty; we compete, we like to win. But when the situation demands, we coalesce and pull together, then separate again as the crisis passes. World War II was a great example – individual liberty was sacrificed to the greater good of protecting and perpetuating our country, our values, our way of life. We willingly bought War Bonds, submitted to rationing, hung blackout curtains, and joined the services in droves. But after the war, sailors and soldiers and Marines shed their uniforms and returned to the bustling, unruly competition of civilian life.

The key to this collectivization is its voluntary and temporary nature. When we recognize a threat to “us,” we willingly take up the traces. But when subservience is tyrannically imposed, we bristle, resist, and subvert. It's human nature. Note the Arab Spring, the French Revolution, and our own Revolutionary War.

Societies vary in the degree of individualism permitted. For instance, under Islamist rule, thou darest not be Christian. In China, you must not speak your mind unless you are in alignment with the Party. Even in England and Canada, you may be prosecuted for the offense of “offending” another. And many countries on Earth demand that their citizens be disarmed (hint – subservient).

Much to the dismay of the United Nations, we in the United States come from a much different mindset. Our Founding Fathers, reacting to the strictures of the English sovereign, turned that paradigm on its head and declared that “all men are created equal.” Gasp – a concept unknown in the world at that time, and still unknown to vast reaches of the Earth today.

We have something special, folks. Think about it. You are the boss of your life. If you want to be Christian, so be it. If you want to be Muslim, that’s cool. “None of the above” is a perfectly acceptable alternative as well. The government is subordinate to you – you are the sovereign!

So how does a nation of over 300 million individual sovereigns accomplish anything? In spite of the protestations of those of the liberal bent, our system rewards individual effort and risk taking, and the sum of those parts is enormously powerful in giving us all the benefit of a brisk, growing, and munificent engine of wealth. Oh, to be poor in America – the reason that our borders are overrun.

Financial dislocations, depressions, recessions are wholly due to foolish governmental interventions. There are no exceptions. If we were free to each pursue our individual dreams, the sum of our efforts would provide increasing wealth and employment and security. It is government policies, distorting market forces, which cause us pain. Social engineering, the holy grail of progressives, is our bane. With the exception of equal rights for all humans (black, white, female, male, gay, or Episcopalian), they are wrong on all other counts.

Leave us our individual dreams; have faith that the collective result will be excellent. We are each, after all, sovereign.