Janszen Interview on NPR on 05/01/2009 - Power Hungry...Energy Green Bubble?

[stockman]

Re: Janszen Interview on NPR on 05/01/2009 - Power Hungry...Energy Green Bubble?

Stockman -

A lot of stocks are now priced at 20 - 25 times their trailing earnings. Unless there is significant wage inflation on the horizon (which I find difficult to believe), how is that sustainable? Also, how do we reconcile the wage inflation with rising unemployment?

I prefer Shiller's p/e 10.

Shiller 040309.jpg

My assumption is that we could see a mid single digit p/e (10) before this is over. But those 15-20 year valuation contractions don't usually happen in a straight line... so I am comfortable trading long if the odds look favorable. Note that in the last secular bear (1966-1982) the nimoinal lows in stocks were hit in 1974 AND some sectors and small caps offered great opportunities in the back half of that secular decline.

[EJ]

Re: Janszen Interview on NPR on 05/01/2009 - Power Hungry...Energy Green Bubble?

Amory Levins loves to talk about distributed energy, but the reality is, greentech has 0 productive advantage over fossils. The only value of greentech is if you can find a greater fool to pay for your "carbon" offset... I exaggerate, there's a slight BoP advantage, too, if you're an importer of fuel.

I remember having the same conversation EJ had with his folks as I did with a friend at SAC capital, who managed their alt e portfolio. He, too, had no doubt the incentives would survive into the following year.

Fwiw, EJ, Bob Hemphill has left AES to start his own solar firm. You should look him up... maybe interview him?

In my book I devote a large section on debunking alternative fuels. I compare most to dehydrated water: just add water. Same with most alternative liquid fuels, especially ethanol: just add energy. Those that can be produced by converting fossil fuels are more practical. Diesel is the fuel of the future.

In fixed applications, wind and solar will help where they are practical, but only nuclear stands a chance of making a dent in coal consumption for electrical power generation.

I'm not sure the global carbon cap and trade racket is going to fly. The Chinese won't play--they view it as a form of covert protectionism--and without them it's not all that relevant. The driver for adoption of alternatives to petroleum based fuels in the U.S. will be 1) a weak dollar and 2) lack of cash and credit.

[jk]

Re: Janszen Interview on NPR on 05/01/2009 - Power Hungry...Energy Green Bubble?

Jim,

Depends on what you mean by "immediate" and which asset and commodity prices you are observing.

Clearly we already have inflation in stock (asset prices within the FIRE Economy) and commodity prices within the P/C Economy.

Meanwhile, residential and commercial real estate (asset) prices continue to deflate, along with the securities that back the loans that financed purchases of the actual homes, condos, and commercial buildings.

The last place to look for evidence of broad based inflation or deflation in the prices of goods and services is in the prices of government bonds and in government measures. Treasury bond prices are being intentionally manipulated and BLS inflation measures are suspect.

As liquidation sales end and inventory is sold off, we expect to see inflation show up first in raw materials, then intermediate goods, then in finished goods, then in consumer prices, and finally in wages.

A common fallacy is that inflation comes from one place, money growth. Inflation is a complex phenomenon. The Warburton interview notes nine factors contributing to future inflation today. Under most circumstances falling demand reduces inflation pressures, but not always. In Zimbabwe unemployment exceeded 80% when inflation was in the millions and billions of percent annually.

[emphasis added]
then why not buy commodities? not yet? any thoughts on when or what the indicators will be for the buy signal?

[phirang]

Re: Janszen Interview on NPR on 05/01/2009 - Power Hungry...Energy Green Bubble?

[emphasis added]
then why not buy commodities? not yet? any thoughts on when or what the indicators will be for the buy signal?

Copper and oil are ultimate inflation hedges.

[Jim Nickerson]

Re: Janszen Interview on NPR on 05/01/2009 - Power Hungry...Energy Green Bubble?

• May 5, 2009, 8:45 AM ET

Bankers’ Worry: Worst Is Yet To Come

http://blogs.wsj.com/economics/2009/...s-yet-to-come/

By David Wessel

New loans may be profitable, given how cheaply banks can borrow today. But many banks are still worrying about whether they’ll get paid back on old loans.
The latest Federal Reserve survey of senior loan officers finds very few shoots of green in that garden. The Fed asked senior loan officers: What is your bank’s outlook for delinquencies and charge-offs on existing loans of various sorts in 2009, assuming that “economic activity progresses in line with consensus forecasts?” Short answer: Gloomy. Or as the Fed put it: “A significant majority of banks reported that credit quality for all types of loans is likely to deteriorate over the year” — and that’s assuming the economy doesn’t take another turn for the worse.
The specifics:

• Commercial and industrial loans: Of 52 banks responding, none said they expect improving quality, but seven said they expect delinquencies and charge offs to stabilize at current levels.
• Commercial real-estate loans: Only 1 of 51 banks (the other doesn’t make such loans) sees improving quality, and three see quality stabilizing at current levels. Of the 47 who see a worsening picture, 13 expected a substantial deterioration in 2009.
• Prime residential mortgages: Only 1 of 50 banks sees improving quality, and seven see quality stabilizing at current levels.
• Subprime mortgages: No bank sees improving quality, and only two see quality stabilizing at current levels.
• Home equity lines: No bank sees improving quality, though nine expect quality to stabilize around current levels.
• Credit card loans: None of the 31 banks who make such loans expects improvement, and three expect stabilization.
• Other consumer loans: Only one of 50 banks expects improvement, though 12 see loan quality stabilizing around current levels.

Whether or not most of the above is true, I have no idea, but it makes sense to me that much of it is true, and if so, then the debt-deflation doomajiggy is not about to be reinflated and ridden off into banker's Wonderland.

[Raz]

Re: Janszen Interview on NPR on 05/01/2009 - Power Hungry...Energy Green Bubble?

Thanks for that, Raz-ter. I will dig up a couple of alternate alt-energy funds. We can set up a thread and figure out a formula for averaging the rise or fall of three or four of them, and then take a comparative reading a year out or so. Should be interesting feedback on a lot of the theses we are arguing today.

And you're very welcome.

I just started a *NEW* thread as "Uranium" under Topics - Commodities.

If you start an Alternative Energy thread I'll be glad to contribute any research I come across.

[jimmygu3]

Re: Janszen Interview on NPR on 05/01/2009 - Power Hungry...Energy Green Bubble?

Those that can be produced by converting fossil fuels are more practical. Diesel is the fuel of the future.

Could you please elaborate on this? Why diesel and not gasoline? I thought petro-diesel burned dirtier than most anything. I know I breathed a lot of it living in London.

Jimmy

[Guest]

Re: Janszen Interview on NPR on 05/01/2009 - Power Hungry...Energy Green Bubble?

Jimmygu3 - you can synthesize diesel from multiple carbon feedstocks, and it has .25% or better mileage yield than gasoline. Standardize car and machine fleets on diesel and you free up the world's massive coal resources to be refined into diesel as well. Then there are the hybrid engines - diesel hybrids on the drawing board in Europe already achieve 80 MPG and probably can yield more than that if they become the object of concentrated development.

I read that diesel was the fuel of the future from Stephen Leeb, back in 2005, when he parsed all these same points out (Stephen Leeb is a bit obsessed with Peak Oil but a very astute cookie in his own right). EJ is spot on. Diesel, and diesel hybrids is what it is gonna be! I've got the "future dinosaur prototype" vehicle today in this category, the little 1.9 liter turbodiesel from VW. 48 MPG on the freeway doing 80 MPH all day long, and that's on a 2003 car.

When they slap a hybrid drive alongside a little diesel like that, these motors notionally can yield 125-150 MPG. What's not to like? They've got the emissions issue firmly battened down now (VW and I think Daimler-Benz and also FIAT!). In Europe the small CC diesel engines are everywhere. I think I recall reading they are already 40% + of the existing car fleets in some high tax countries (Italy).

FIAT have a lot of expertise in these small diesel engines (15-20 years expanding this specific segment in the EU), packaged into attractive smaller town cars with a little sporty (it's understood, that's "small car" sporty) zing. If they get active in their role as a new Chrysler partner, we could start seeing those Eurostyle turbodiesels all over the US markets as soon as oil's price starts to percolate again. Turbodiesels are a lot of fun to drive also, which does not hurt the theme.

Could you please elaborate on this? Why diesel and not gasoline? I thought petro-diesel burned dirtier than most anything. I know I breathed a lot of it living in London.

Jimmy

[Thailandnotes]

Re: Janszen Interview on NPR on 05/01/2009 - Power Hungry...Energy Green Bubble?

Every pickup in Thailand is diesel and has been for quite a while. GM, Ford, Toyota - all diesel. The price of diesel which used to be a fraction of gasoline when I was growing up is now often the most expensive fuel the station is selling.

[GRG55]

Re: Janszen Interview on NPR on 05/01/2009 - Power Hungry...Energy Green Bubble?

...The theme of the article: Re-inflation without restructuring...

A "national policy" that ranks right up there with Saudi Arabia's "Progress without change"...:rolleyes:

[we_are_toast]

Re: Janszen Interview on NPR on 05/01/2009 - Power Hungry...Energy Green Bubble?

In my book I devote a large section on debunking alternative fuels. I compare most to dehydrated water: just add water. Same with most alternative liquid fuels, especially ethanol: just add energy. Those that can be produced by converting fossil fuels are more practical. Diesel is the fuel of the future.

In fixed applications, wind and solar will help where they are practical, but only nuclear stands a chance of making a dent in coal consumption for electrical power generation.

I'm not sure the global carbon cap and trade racket is going to fly. The Chinese won't play--they view it as a form of covert protectionism--and without them it's not all that relevant. The driver for adoption of alternatives to petroleum based fuels in the U.S. will be 1) a weak dollar and 2) lack of cash and credit.

The future of our economy, and possibly of civilization itself (see this months scientific American) depends on the type of energy the world decides to use in the future. There have been some long and heated threads on iTulip about the types of energy we should be using and their impacts on the planet, civilization, and the economy.

You've dropped several hints about where you think our energy future is heading, and where you think our energy future SHOULD be heading. Since Energy, Economy, and Environment are so closely intertwined, how about a detailed article about our energy future? Think of it as a teaser for the book .

I also have several books by Amory Lovins and view him as one of the most innovative energy thinkers in the world today. He currently consults with companies and government agencies on how to lower costs by using Alt-E sources and Conservation techniques. An interview with Mr. Lovins would be very interesting.

[ThePythonicCow]

Re: Janszen Interview on NPR on 05/01/2009 - Power Hungry...Energy Green Bubble?

Every pickup in Thailand is diesel

Interesting data point - thanks.

When I was in Thailand in the 1970's, the pickups were gas powered, as best as I can remember.

I am convincing myself (though perhaps no one else here) that we in America will be facing a severe, more long lasting, gas price shock fairly soon. My experiences long ago with Thai transportation (bicycles, small pickups, scooters and crowded buses) has long been my working model for what transportation would evolve to when gas prices spiked up, and then went and stayed even higher.

I should keep my eye out for a small (very small by my American standards) diesel pickup that gets excellent mileage.

[bill]

Re: Janszen Interview on NPR on 05/01/2009 - Power Hungry...Energy Green Bubble?

In my book I devote a large section on debunking alternative fuels. I compare most to dehydrated water: just add water. Same with most alternative liquid fuels, especially ethanol: just add energy.

gov. needs a copy of the book.

http://www.greentechmedia.com/articl...ost-production

May 5, 2009 0 Comments
Feds Propose Controversial Biofuel Mandate, Offer $800M to Boost Production

Several federal agencies announced plans to fund biofuel research and production while proposing rules to include greenhouse gas emissions in the setting the national renewable fuel standard.



By 2022, the refineries are expected to produce 16 billion gallons of cellulosic biofuels, 15 billion of gallons per year of conventional biofuels (i.e., corn ethanol), 4 billion gallons of advanced biofuels (i.e., algal biofuel) and 1 billion gallons of biomass-based diesel, according to the new proposal.
Refineries, blenders and oil companies would be have to increase their biofuel output incrementally, the amount of which would be determined by the EPA each year.
Refiners must factor in the emissions results from the biofuel production, including the impact by farming, in order to get credit for meeting the biofuel mandate.
The government hopes the new DOE funding for biofuels would help the industry move quicker on meeting the national goal.
The funding is split into four parts. About $480 million is geared for pilot or demonstration projects that combine technologies at each refinery to produce biofuels, heat and power and other bioproducts, according to the U.S. Department of Energy, which is overseeing the funding process. The DOE plans to award money to 10 to 20 applicants that can take their projects up and running in the next three years.
Another $176.5 million is set for companies that received government funding in the last two years and could use more money to build demonstration or commercial refineries.
The DOE is setting aside $110 million for basic science research. Roughly $25 million would go to establishing a small refinery for researchers to experiment with their projects. Another $35 million would be used to set up a research consortium among national labs and universities. Algal biofuel research would receive $50 million.
Last but not least, the DOE plans to give away $20 million to promote the blending of ethanol with gasoline.

http://www.epa.gov/otaq/renewablefuels/index.htm

May 5, 2009: Renewable Fuel Standard Program (RFS2) Notice of Proposed Rulemaking
EPA, under the Energy Independence and Security Act of 2007 is responsible for revising and implementing regulations to ensure that gasoline sold in the United States contains a minimum volume of renewable fuel. The Renewable Fuel Standard program will increase the volume of renewable fuel required to be blended into gasoline from 9 billion gallons in 2008 to 36 billion gallons by 2022. The new RFS program regulations are being developed in collaboration with refiners, renewable fuel producers, and many other stakeholders.

http://sev.prnewswire.com/utilities/...5052009-1.html

As part of this call to action, the White House is directing the USDA to begin refinancing existing investments to maintain jobs, and within 30 days, make available all financing opportunities included in the 2008 Farm Bill including:

• biorefinery loan guarantees;
• expedited funding to replace fossil fueled boilers with biomass;
• expedited funding to biofuels producers to encourage production of next-generation biofuels from biomass and other non-corn feedstocks;
• combination and expansion of existing rural energy programs to include hydropower, energy audits, and higher loan guarantee limits; and
• guidance and support for collection/harvest/storage/transport of biomass.

[thedanimal]

Re: Janszen Interview on NPR on 05/01/2009 - Power Hungry...Energy Green Bubble?

In my book I devote a large section on debunking alternative fuels. I compare most to dehydrated water: just add water. Same with most alternative liquid fuels, especially ethanol: just add energy. Those that can be produced by converting fossil fuels are more practical. Diesel is the fuel of the future.

EJ, any update on a publish date for the book? Amazon.com now shoes December 31, 2025 as the release date! I sure hope we don't have to wait that long...glad to see the book now has a cover though:

[Munger]

Re: Janszen Interview on NPR on 05/01/2009 - Power Hungry...Energy Green Bubble?

In my book I devote a large section on debunking alternative fuels. I compare most to dehydrated water: just add water. Same with most alternative liquid fuels, especially ethanol: just add energy. Those that can be produced by converting fossil fuels are more practical. Diesel is the fuel of the future.

In fixed applications, wind and solar will help where they are practical, but only nuclear stands a chance of making a dent in coal consumption for electrical power generation.

I'm not sure the global carbon cap and trade racket is going to fly. The Chinese won't play--they view it as a form of covert protectionism--and without them it's not all that relevant. The driver for adoption of alternatives to petroleum based fuels in the U.S. will be 1) a weak dollar and 2) lack of cash and credit.

This is an interesting technology, and seems to, at least in theory, get most of its energy from sunlight - though the algae do need to be supplied with nutrients... Does anyone know details of this technology and where the rub may lie?

A California company is promising to deliver one billion gallons of algal biofuel a year by 2025, an aggressive goal for technology still in its infancy. That’s the promise from Sapphire Energy, which is positioning itself to lead an emerging industry by working with airlines on test flights and ramping up its production facilities in New Mexico. If all goes as planned, the company says, it will be in the position to supply one million gallons of biofuel annually by 2011, 100 million gallons annually by 2018 and one billion gallons each year by 2025.

“Fuel from algae is not just a laboratory experiment or something to speculate on for years to come,” Dr Brian Goodall, a Sapphire vice president, told the New York Times. “We’ve worked tirelessly, and the technology is ready now.”

Two airlines have already made test flights using Sapphire’s algal fuel. In January, Continental airlines flew a 737-800 for two hours using a blend of 50-percent biofuel in one engine. The flight included a full-power takeoff and climb, cruise at 37,000 feet, descent, approach and landing and was considered a success. The second test took place on a Japan Airlines 747 powered by Pratt & Whitney engines, with a biofuel blend of camelina, jatropha, and algae.

Sapphire, which has drawn backing from the likes of Bill Gates and the Rockefeller family, isn’t shy about talking up the benefits of fuel made from algae, saying it delivers 10 to 100 times more energy per acre than corn-based ethanol, which has gone out of fashion because it’s derived from food crops. Algae also uses less water than corn and can be grown on non-arable land. Another big benefit: algae sucks up lots of CO2. According to the Biodiesel Times,algae-based biofuel is considered carbon neutral because CO2 generated in its use is offset by what’s consumed during production.

While Sapphire’s high-profile aviation tests have gotten the headlines, the company says that because its biofuel is a “drop in” fuel chemically identical to crude oil, it is compatible with anything on the road or in the air right now. It also plays nicely with existing refineries and pipelines. That’s another benefit over ethanol, which is corrosive and typically transported to terminals via truck or rail and then mixed with regular gasoline.