The Federal Weatherization Assistance Program has been around for decades and funding has been increased as part of the stimulus bills. This type of spending is better than much of what government does. It actually invests in something with positive externalities. It targets spending to those that need help (instead of say those that pay politicians to give their companies huge payoffs and then pay themselves tens of millions in bonuses).
The Depart of Energy provides funding, but the states run their own programs and set rules for issues such as eligibility. They also select service providers, which are usually nonprofit agencies that serve families in their communities, and review their performance for quality. In many states the stimulus funds have increased the maximum funds have increased to $6,500 per household, from $3,000.
The weatherization program targets low-income families: those who make $44,000 per year for a family of four (except for $55,140 for Alaska and $50,720 for Hawaii).
The program provides funds for those with low-income for the like of: insulation, air sealing and at times furnace repair and replacement. Taking advantage of this program can help you reduce your energy bills and reduce the amount of energy we use and pollution created. And it employs people to carry out these activities.
The Weatherization Assistance Program invests in making homes more energy efficient, reducing heating bills by an average of 32% and overall energy bills by hundreds of dollars per year.
Weatherization is also often a very good idea without any government support. If you are eligible for some help, definitely take a look at whether it makes sense for you. And even if you are not, it is a good idea to look into saving on your energy costs.
Related: Oil Consumption by Country in 2007 – Japan to Add Personal Solar Subsidies – personal finance tips – Kodak Debuts Printers With Inexpensive Cartridges – Personal Finance Basics: Dollar Cost Averaging
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The largest oil consuming countries (and EU), in millions of barrels per day for 2007. China increased use by 1 billion barrels a day, the USA and Europe decreased use by 100 million barrels a day from our post last year on Oil Consumption by Country.
| Country | consumption | % of oil used | % of population | % of World GDP | % of oil used in 2006 |
|---|---|---|---|---|---|
| USA | 20.7 | 24.3 | 4.5 | 21.0 | 25.9 |
| European Union | 14.4 | 16.9 | 7.4 | 21.9 | 18.1 |
| China | 7.9 | 9.2 | 19.9 | 10.8 | 8.6 |
| Japan | 5.0 | 5.8 | 1.8 | 6.5 | 6.7 |
| India | 2.7 | 3.1 | 17.3 | 4.5 | 3.0 |
| Russia | 2.7 | 3.1 | 2.0 | 3.1 | 3.6 |
| Germany | 2.5 | 2.8 | 1.2 | 4.2 | 3.3 |
| Brazil | 2.4 | 2.7 | 2.9 | 2.8 | 2.6 |
| Canada | 2.4 | 2.7 | 0.4 | 1.9 | 2.9 |
| Mexico | 2.1 | 2.4 | 1.6 | 2.0 | 2.6 |
| South Korea | 2.1 | 2.4 | 0.7 | 1.8 | 2.7 |
Data is from CIA World Factbook 2009 (downloaded August 2009). GDP calculated using purchasing power parity from 2008 fact book with estimated 2007 data.
Related: Government Debt as a Percentage of GDP – Global Manufacturing Production by Country – Manufacturing Contracting Globally (March 2009)
Growing Crude Storage in China
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Bernstein estimates that the amount of crude entering the SPR ports in China—the world’s second biggest oil consumer after the U.S.–has increased by around 400,000 barrels a day since November, based on its assessment using the satellite imaging services of Google, the search engine company.
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There’s likely more to come. Bernstein says satellite images show a marked increase in oil-storage construction over the past few years and estimates that China’s number of days of forward demand–a gauge of oil storage–amount to just 28 days of imports and 14 days of total demand.
China is targeting storage capacity that will hold demand cover of around 90 days. (The U.S. currently has storage for about 62 days of oil imports.) In other words, there’s a lot more oil still to be packed away in China now and in the coming years as more facilities are built.
This is another smart move by China, in my opinion. With the huge amount of cash they are holding, I would rather hold more of it as crude than dollars. And stockpiling the crude also protects the domestic demand from supply shocks. I would also take other steps they are taking, like investing heavily in adding wind power capacity.
Related: I Wouldn’t Sell Oil at These Prices – Who Will Buy All the USA’s Debt? – Oil Consumption by Country – South Korea To Invest $22 Billion in Overseas Energy Projects
U.S. Gas Fields Go From Bust to Boom
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Huge new fields also have been found in Texas, Arkansas and Pennsylvania. One industry-backed study estimates the U.S. has more than 2,200 trillion cubic feet of gas waiting to be pumped, enough to satisfy nearly 100 years of current U.S. natural-gas demand.
The discoveries have spurred energy experts and policy makers to start looking to natural gas in their pursuit of a wide range of goals: easing the impact of energy-price spikes, reducing dependence on foreign oil, lowering “greenhouse gas” emissions and speeding the transition to renewable fuels.
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new technologies and a drilling boom have helped production rise 11% in the past two years. Now there’s a glut, which has driven prices down to a six-year low and prompted producers to temporarily cut back drilling and search for new demand.
The natural-gas discoveries come as oil has become harder to find and more expensive to produce. The U.S. is increasingly reliant on supplies imported from the Middle East and other politically unstable regions. In contrast, 98% of the natural gas consumed in the U.S. is produced in North America.
Related: Oil Consumption by Country – posts on energy economics – Forecasting Oil Prices – South Korea To Invest $22 Billion in Overseas Energy Projects – Wind Power Provided Over 1% of Global Electricity in 2007
Oil at $50 Looms as OPEC Plans Cut, Keeps to Quota
OPEC states have more of an incentive than ever to restrict output because the combination of declining prices and the global recession will reduce earnings 59 percent this year to $402 billion, according to the U.S. Energy Department. Crude demand will drop for a second year, the first back-to-back decline since 1983, the International Energy Agency said.
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Dubai crude, a benchmark for OPEC oil exports to Asia, now costs more for immediate delivery than in the months ahead. The so-called backwardation is a sign of tightening crude supplies. In the last two weeks, BP Plc, the world’s third-largest oil company, sold and unloaded more than 2 million barrels stored on the supertanker Eagle Vienna it had moored off Scotland’s Orkney Islands.
“The market is going to have strong upside, 10 or even 15 percent, even if OPEC doesn’t cut,” said Johannes Benigni, chief executive officer of Vienna-based consultant JBC Energy. “The contango is slowly, but surely, disappearing and that shows the earlier cuts are working.”
Still, the deepening global economic slump may erode oil demand faster than OPEC can cut as chemical plants shut, cargo ships sit idle and motorists stay at home
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The IEA in Paris forecasts a 1 million barrel-a-day drop in consumption this year because of the recession. In the second quarter, demand will contract by 600,000 barrels a day to 84.2 million a day, as refiners perform seasonal maintenance work, the agency said.
Contago is the name for when investors buy oil and sell futures contracts for the oil at a latter date. They then rent a container ship to store the oil until delivery. In the past few months the future price of oil has been nearly $20 a barrel over the current price, meaning investors could make a tidy profit even after paying to rent the ship. As current excess supply is reduced the profit in contago is likely to disappear.
Related: Curious Cat Investment Dictionary – I Wouldn’t Sell Oil at $40 – Forecasting Oil Prices – posts on energy and economics
Oil has fallen to $40 a barrel from nearly $140 less than a year ago. Now that $140 level was the result of a huge spike in the price. But if I owned a bunch of oil (as a country or a company) I sure wouldn’t want to sell it at $40. I would much rather just keep it in the ground and sell it later.
OPEC has reduced quotas in an attempt to react to the global recession. But it strikes me as bad management to sell your resources at these low levels. Now you might have to sell some to service debt and meet fixed expenses. But continuing to sell at these levels instead of just keeping it in the ground and waiting a year or two (or longer) just seems like a very shortsighted action.
Now you would have great difficulty acting on my opinion if you don’t plan ahead. To do so you would need to bank profit when you are selling at high prices so you can ride out low prices without being forced to sell to meet your obligations. And it seems many countries are unable to do that. And my guess is many oil company contracts require production based on what the country wants done.
It just doesn’t seem to me that the I would do much better waiting to sell my oil than sell it at these prices.
Related: Forecasting Oil Prices – Oil Consumption by Country – South Korea To Invest $22 Billion in Overseas Energy Projects – Curious Cat Science and Engineering Blog posts on energy
I believe in the management at Google is doing as good a job as the management at any company. They are not afraid to pursue their convictions even if conventional wisdom says they should not. I believe in Google more than the conventional wisdom. And I have been buying Google stock as it has declined the last 6 months.
I am perfectly happy for Google’s stock price to continue declining: I will continue to buy. I have no intention of selling for decades. Things could change, that would lead me to sell but right now I am firmly a believer in owning a piece of Google for the long term. I am thrilled to have very smart engineers effectively guiding a company (including sustaining a culture where engineers can provide value without the amount of pointy haired boss behavior found elsewhere) to provide value to customers and users of their services while profiting quite nicely. And at these prices the investment opportunity looks great to me. I still believe in following prudent diversification practices (far less than 10% of my investments are in Google stock)
Google CEO defiant in defending energy interests
He was quick to add that Google has a material interest in lower energy costs to help power its crucial data centers. “We’re going to likely consume more [energy], and we’d like the prices to go down,” he said.
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Schmidt said the bulk of spending on necessary research and development for Google’s ambitious energy plan will have to come from the government. The CEO added that he’s almost certain that an opportunity to tap government largesse is now at hand, as he believes a “stimulus package” will follow the $700 billion Wall Street bailout
I have written about Google’s focus on energy previously: Google Investing Huge Sums in Renewable Energy and is Hiring – Google.org Invests $10 million in Geothermal Energy – Reduce Computer Waste.
With most companies I would be very skeptical delving into area pretty far removed from their core business would likely not prove an effective strategy. But I believe Google can be successful with such efforts. Some will certainly fail but Google will manage that fine and have at least one or two payoff in such a large way that all the investments are paid off quite well.
Related: Google Believes in Engineers – Google’s Underwater Cables – Data Center Energy Needs – 12 Stocks for 10 Years Update – June 2008
Forecasting oil futures by Justin Wolfers (Wharton School, Univ. of Pennsylvania) on Marketplace (a great show by the way)
Others ignore the professional forecasters and focus instead on what futures markets are saying. But it turns out that even futures prices are not as accurate as our simple formula. Even sophisticated econometric models don’t yield better forecasts than our simple no-change rule.
The truth is that forecasting oil prices is so darn hard that complicated formulae add nothing but complexity. And so the simplest forecasting rule also turns out to be the best.
This is another example of how tricky it is to predict financial markets. I am a bit surprised for relatively longer periods (like a year) the professionals do so poorly. My father, a statistician (among other things), challenged me to predict the movement of stocks on a daily basis better than his prediction (which was no change). I can’t remember the result – which makes me think I failed. I think I would be more likely to remember if I succeeded.
Related: Prediction Markets at Google – Illusion of Explanatory Depth – 30 Year Fixed Mortgage Rates Graph – Randomization in Sports
Energy and food prices have obviously been increasing dramatically. The economist has a nice chart showing where people spend most on food and fuel. In the USA, Canada, Western Europe and Australia people spend less than 25%. In Brazil, India, China, Mexico, South Africa, Turkey… they spend 25-40%. In Argentina, Saudi Arabia, Russia, Pakistan… they spend 40-50%. And in Mongolia, Nigeria, Iran, Kenya, Madagascar… they spend over 50%.
The data is from the IMF. As with any economic data there are issues to consider about comparing across countries. Still this is a stark illustration that the impacts those in the wealthy countries feel from rising energy and food prices are felt to a greater degree in poor countries (that already have economic difficulties).
Related: Food Price Inflation is Quite High – Helping Capitalism Make the World Better
The race has barely begun – finished plants are years away – but it’s blazing fastest in the Mojave, where the federal government controls immense stretches of some of the world’s best solar real estate right next to the nation’s biggest electricity markets. Just 20 months ago only five applications for solar sites had been filed with the BLM in the California Mojave. Today 104 claims have been received for nearly a million acres of land, representing a theoretical 60 gigawatts of electricity. (The entire state of California currently consumes 33 gigawatts annually.)
Related: Solar Thermal in Desert, to Beat Coal by 2020 – Solar Tower Power Generation – Global Wind Power Installed Capacity – real estate investing articles