CO2 - Health - Education...

It strikes me a little amusing that politicos who last month piled on the Cap & Trade band wagon, knowing full well that the intent of the bill is to raise energy prices dramatically and quickly in order to help alternative energy be more competitive, under the guise of saving the world from global warming (or climate change or what ever they call it now), are now piling on the Universal Health Care initiative (or is it now called Health Care Reform? - I can't keep up), taking about and using cost-benefit issues to weigh it down. Where was cost-benefit in the Energy Bill? We think you should beware of those who want to "save the world" at "any/all cost".

Increasing the cost of energy here, in the US, will simply drive more widget manufacturing to other "friendly" countries (and won't reduce the offending pollution on a global scale). Destroying the powerhouse economies of the world on the other hand potentially will have a tremendous effect on global pollution, it will spread the pollution and wealth flat across the globe, to places outside of the EPA's control. If we can't afford widgets (or food), well, the widget, jobs, and benefits will go away. But will the world will be a better place?

CO2... plants breath it, the earth exhales it, we use it to make pop fizzy, make cool smoke at concerts, keep ice cream and steaks cold when we ship them, and we emit it from planes, trains, automobiles, coal plants, factories, etc. Even still, unbelievably (which is why CO2 is such a powerful fund raising tool) at the end of the day, we are responsible for a very small proportion of CO2 in the atmosphere. A total dead stop will have negligible effects on total atmospheric CO2. The simple truth is, we don't know. More research is definitely needed, to understand the earth model and to develop new technologies to be cleaner and more efficient.

Why are there no cost barriers for energy reform yet there are cost barriers to Universal Health Care, or Public Education?

Perhaps the only way to get people to properly value their way of life and conveniences (energy, environment, health, education) is to start taking it away. Is that what is going on today? It sure feels like it...

We really don't understand why it is palatable to the American public to intentionally more than quadruple the cost of energy, but bicker over nickles and dimes at the School Board...

Socialism is a very nice ideal, it is easy to get lulled into it's beauty and whisperings. A successful democracy should lean on socialist values as affordable. Goverment should not exist to raise money (which is all Cap & Trade actually does), it exists to create an environment where as individuals we can prosper, as living beings.

We can ALL do better, and likely have more impact on our energy use, environment, health, education than allowing the taxing authority to make those decisions for us. We have a personal responsibility to respect the earth and its resources, our environment, and our money.

The solution is indeed in the mirror. We continue to try improve our lives and impact, how about you?

Energy and Taxes

America needs American energy.

Natural gas and oil provide 65 percent of America's energy needs.

When the sun doesn’t shine, and the wind isn’t blowing, natural gas keeps the lights on.

American natural gas provides roughly 85 percent of America's natural gas needs; most of the rest comes from Canada.

Oil is a different story; America only provides 35 percent of US needs - but the more it can provide, the less Americans must pay for oil from foreign nations (foreign economies).

Independent producers, that’s us, and thousands of other small family and locally owned business, are hard working Americans, striving to farm home grown energy. Independents are essential to providing American natural gas and oil. These independents develop 90 percent of American wells, produce 82 percent of American natural gas and produce 68 percent of American oil.

Over the past several years independents have been reinvesting 150 percent of US cash flow back into new US production. Independents get their capital three ways - from selling their natural gas and oil, from obtaining credit and from investors willing to invest capital in high risk ventures.

The dramatic swings in prices of natural gas and oil are challenges that the independents recognize and respond to, like any good business they adapt and overcome. Projects that were economic ventures at $10 are in a holding pattern at $5. The credit crunch obviously limits access to capital. Investors are cautious, banks are even more cautious. This reality is already constricting activity (and available supply). The Obama Administration's signals to the energy industry are scary. They cut into the core of a uniquely American industry that has been serving the nation since the 1880’s.

The Obama Administration tax proposals will radically shift investment incentives for development of American natural gas and oil - changing policies that have been in place since 1913 in some cases. Let's be clear - it will mean less American natural gas and oil, it will mean more quality job losses and it will result in increased costs for basic public utilities, for everyone.

These results run counter to the Obama Administration's own agenda of cleaner energy and less foreign oil dependency. The proposed changes are unjustified to energy tax policy and we oppose them vehemently. We STILL need to develop rational national energy strategies - strategies that rely on American energy first, including American natural gas and American oil.

Over our careers here, our discoveries, principally in Ohio, are 80% natural gas and 20% oil. Energy produced through the hard work of Ohioans in support industries too numerous to note here, from Ohio farms and lands, sold in Ohio, and in most cases consumed in Ohio. Ohio is experiencing a steady decline in production in recent years, and so for Ohioans, the financial burdens will be particularly costly, funding for new wells will be more scarce, production declines will accelerate as fewer wells are drilled to replace depleting reserves. Ohioans will be forced to purchase more and more energy resources from other states and other markets, with an assuredly increased cost.

The wrong policy shift, at the wrong time, and bad for Ohio.

Ohio needs Ohio’s energy.

ExxonMobil does not drill or operate wells in Ohio, Ohioans do. The Ohio oil and gas industry is driven by small, locally and family owned independent businesses, not Big Oil. Please help your friends and colleagues understand this clearly, demand that our representatives explain to us what the realized cost of the loss of jobs, activity, and home grown Ohio energy will mean to us, and why it is a sacrifice worth making at this time when the American economy needs plentiful energy to help claw back to relevancy.

Conservation is at the foundation of the energy business - it simply is. Conservation is also an obvious component to the solution of the energy problem. The natural gas and oil industry is a quintessential American industry, as American as apple pie and baseball. Small family and locally owned businesses, in your communities, your neighbors. Unfortunately, carpet bombing an ultimate American industry, which will affect the American way of life in a plethora of ways, to follow the idealistic idea that it will save the world, is simply wrong.

For more information on the plight and perspectives of the American Independent, visit www.ipaa.org.

State Resources

Would you believe the State of Ohio doesn't know and can't tell you who many acres we own, or even where it all is? Neither can they tell you specifically what minerals interests that we own.

This isn't really that strange or uncommon in fact. Often fractional property interests are conveyed and through time is widely distributed in tiny pieces.

Furthermore, each state agency who owns property, basically manages that property itself. All the property, that means their mineral interests as well. Certainly the Department of Transportation can assess and evaluate it's own mineral estate interests, right? And I am a doctor, let me write you a prescription. If you had an expert in the family you would ask, right? How often do you think the the Ohio Division of Geological Survey is asked about mineral resources from other state agencies? The Survey is home to the experts within state government and they are rarely, if ever consulted, on mineral (geologic) resources.

Nor can they tell you the total value of the property they are managing (particularly the mineral estate). And by value, we mean tangible value to the citizens of Ohio. A value that considers all potential revenue generating resources. This is not to say just because we know the value of something that we are somehow obligated to exploit it. It is like your home, you kind of like to know its value, so you know how much equity you have in it. Whether you chose to access that equity, well, that is a separate and distinct question.

What we are really talking about here is oil and natural gas, although the same applies to any potential resource (coal, peat, limestone, gravel, etc.). With respect to these mineral interests we don't know what the value is, and state government are not the people to make those assessments. Reserve analysis can be excruciatingly simple, or excruciatingly complex (the product price has a huge impact on reserves - what will prices be in five years? Who knows?).

We applaud Ohio lawmakers for beginning to recognize that they are responsible for the management of the resources of the state. While the serenity and beauty of our natural areas, parks, preserves, lakes, etc seems boundless, we should temper a protective attitude with some reality. These areas have been farmed, timbered, dumped on, used, and abused since the colonization and industrialization of Ohio, so as beautiful as they are, pristine they are not. These areas are covered with trails, access roads, nature centers, cabins, and hotels, all of which have a significant and lasting footprint on the parks, not to mention the pollutants generated by the operations of the parks so that Ohio's can drive to and in, to hunt, fish, hike, and play (with smog spewing cars, boats, 4-wheelers, snowmobiles, etc).

We suggest that the oil, gas, and mineral interests of the parks, owned by the citizens of the state of Ohio, are also resources, potentially valuable resources. We believe the regulatory agencies in place can effectively manage wells on state lands as they manage the currently 50,000 producing wells that exist here today. The real risks are minimal, and the payoff enormous.

The economic impact of the energy extraction activities in the state is real and significant. Opening state lands and waters to development will create a significant economic impact, in jobs, in royalty revenue, all to produce a energy resource produced here, and used here, that reduce costly imports for the citizens of Ohio.

The states of Michigan and Pennsylvania have an excellent nomination system, by which parties who are qualified to assess value and are ready to assume the risk nominate properties that they are interested in. Once or twice a year the state holds an auction, for nominated properties which meet some criteria, and for which a minimum bid is established and we see what the market bares.

Don't believe the naysayers, the State lands contain significant energy resources, which like any other resource, should be managed. Make state lands, parks, natural areas, fee properties in any agency, available for reasonable resource development. It makes sense that these resource be managed by a central agency. Ohio needs Ohio’s energy, and we need, more than ever, every job we can keep or create here and every dollar we can save and keep within Ohio.

US Forest Service and Solar Panels, what would you do?

We are proponents of wind, solar, and other alternative energy generation and capture methods to supplement conventional sources. America needs to cultivate a diverse portfolio of energy supplies, for national security and the recovery and maintenance of our economy. America is now feeling the sting of decades of funding cuts to basic research and technology development. America's current reality is that there are few alternative energy options that are technologically and economically viable, and we have to take issue with bad math to support unrefined technology to justify decisions, particularly spending public dollars.

The news release from the US Forest Service is woefully devoid of information (http://www.fs.fed.us/r9/wayne/press_releases/contract_awarded_solarpanels.html), here it is:

"Nelsonville, Ohio (March 13, 2009) – The U.S. Forest Service has awarded a $398,000 contract to the Ohio-based D.J. Group from Beverly, Ohio. The contractor, a Service Disabled Veteran Owned Small Business is being hired to purchase and install more than 250 additional solar panels to the roof top of the Wayne National Forest Headquarters building, bringing the total to over 300 solar panels.The funding for the contract is coming from the American Recovery and Reinvestment Act of 2009. It’s estimated four jobs will be created by the Wayne National Forest six-month project that gives business to Ohio’s growing solar industry. The Wayne began its Solar Energy Program in 2007, by installing a 20-panel solar system. Last year, the Forest added 30 more panels to bring the total to 50. The current system is generating 7% of the facilities energy needs. Once the new expansion is completed later this summer, up to fifty-percent of the Wayne National Forest headquarters building will be powered by the sun."

Past references in the news to this project have included little additional information, until this morning.

The Columbus Dispatch published and article in the Business Section called "Solar Power Bolts Forward" (http://www.dispatch.com/live/content/business/stories/2009/03/31/moresolar.ART_ART_03-31-09_C10_MFDDBNP.html) which included some additional and interesting information.

The US Forest Service is outfitting a building with solar panels for $398,000 that will reduce the annual electric bill by (up to) half. The article states that the past twelve month's electric bill was $31,000. It also states that the project will pay for itself in 10 to 15 years.

That can't possibly be so.

Simply using last year's expense, and the quoted forecast, basic math show us that "payout" is between 25 and 40 years. The only way to make this expense payout somewhere within the reasonably lifespan of the solar panels, is to dramatically increase the cost of electricity, and soon. Here in Ohio, electricity means coal. About 90% of our electricity comes from coal (by the way, Ohio is one of the nations leading consumers of electricity).

Lets look at this. The total annual bill is $31,000. We don't know how much electricity that is, but using the Energy Information Administration (http://www.eia.doe.gov/) data in Ohio electricity costs about ten cents per Kilowatt hour, we can estimate that the US Forest Service Wayne National Forest Headquarters uses about 310,000 Kilowatt hours of electricity per year. For a point of reference, the best solar panel generated electricity runs around fifty cents per Kilowatt hour. Ohio is not Arizona or Hawaii, unfortunately we have clouds from time to time...

It will take about 126 tons of coal (one ton of coal will generate 2,460 Kilowatt hours) to generate the power for the HQ. Now coal costs about $30 per ton, so that is $3,780 worth of raw fuel to provide $31,000 of electricity for the HQ.

The DOE says coal fired power plants release two pounds of CO2 per Kilowatt hour. HQ currently is responsible for 620,000 pounds of CO2 "pollution", 310 tons.

We have two issues here. A financial problem, and an environmental pollution problem.

Financials. The US Forest Service says their $398,000 expenditure will payout in 10-15 years. Let's use their disclosed electric cost for lack of actual data. $31,000, and let's assume they can cut that in half with the solar panels, $15,500 per year. We are not going to considering time/value of money or future price fluctuations for electricity, we simple divide - 398,000/15,500 = ~25 years. We can tweak the financial model, but we doubt we can tweak it to get a 10 year payout. That would require, again ignoring the value of money, annual maintenance and replacement costs, and the balance of the electric bill which (at least half) , their annual electric bill would need to soar from $31,000 per year to nearly $80,000 per year, right away, and for the next ten years (forget about any maintenance service costs) to get an annual electric bill of $39,800 "saved" for ten years!

On the CO2 "pollution" side of the equation. They currently are responsible for spewing 310 tons of CO2 into the atmosphere per year. Again we are halvsies, so the solar panels will replace 155 tons of CO2 emissions. Did you know that you (or they) could buy offsetting CO2 credits for between $2 and $15 per ton? So for no more than $2,325 per year they can offset the CO2.

We suggest putting the $398,000 in a savings account and using the interest to offset the CO2 and the account will never run out, EVER, in fact it will probably GROW.

Why is almost a half a million dollars being spent on this project? 2 net jobs for the year? Another future property maintenance liability? In the most basic sense there is no justification, financial or environmental (for this site specific case).

We propose that America's efforts are better spent practicing conservation (reduce consumption!), to ramp up research funding, and work diligently to keep the flow of affordable energy moving so that we can climb out of this economic hole stronger than before.

Increasing the cost of energy to make stale technology viable is wasteful, and bad policy, and at this strained economic time, a potential death knell for our high quality of life.

Survival of Print Media

I am a consumer, not a reporter or publisher. I only know the print media business as a consumer. For this discussion I am talking about newspapers. Here is are a couple of thoughts or observations regarding the demise of print media.

I don't think it will happen.

I think the business of print media is in for some challenges as it tries to evolve and recapture market share from other sources. What do I mean? These comments are not based on data, just perceptions - which I don't like to do generally, but in this instance a dose of common sense is in order.

The realm of newspaper has been constricting for quite some time. Columbus used to have multiple papers, with morning and evening editions. We (like many other major markets) now have one. Which in itself should worry us as consumers, but for the moment, I am going to let that lie.

If the Dispatch is to survive, it needs to make sure it is reaching the consumer. What do I mean? For the last week, our carrier has delivered the paper to the house about the time I am leaving for work.

I am a creature of habit, and I am up early in the morning, and a good, normal, quality day for me starts off with a cup of coffee and the Dispatch. I will read it cover to cover, if it is on my doorstep. I really like reading words on paper. I am sure there is psychological research out there to support me on this. The printed word is just different from a monitor. I have a Kindle, and I read books on it. I love my Kindle, and the ability to carry the Bible, the Koran, War and Peace, How to Coach Youth Basketball, ad nausea, at my fingertips. It is just a different reading experience. I don't 'feel' the characters the same way, I don't remember the content the same way. It is different - and that is one reason print media will never go away.

We are trying to be a paper free office too, what a joke, you should see this place!

Anyway, if the Dispatch isn't on my doorstep when I get up in the morning, my whole day is kind of thrown off kilter. Yes, I get more laundry done, I read National Geographic an extra couple times, all good stuff. But I will my news from some other source during the day, and not from the Dispatch. Your advertisers are going to catch on to this. They are paying you because I read the paper, not simply for you to deliver it at an inconvenient time for me (because in that case, I won't even take the rubber band off).

The Wall Street Journal is delivered, wireless, to my Kindle every morning. So when the Dispatch is tardy, I read the WSJ in the morning. Normally I scan the WSJ headline online during breaks and lunch at work. I get the printed WSJ delivered to the office also (it is never late) - but 'donate' it to the barber shop across the street.

I don't think I am unique. Most consumers of print media are educated, connected people. If they are not getting their paper in the morning , they will get their news from other sources. We don't read the Dispatch to get their indispensable perspective on the news, we read it because it is out morning paper. I think the Dispatch has some outstanding writers and photographers, but realistically am I seeking them out specifically? No, not usually.

Newspapers have to fix this delivery issue (maybe though it is just our route, I don't know). Perhaps it is an earlier deadline for stories, perhaps it is better, more reliable and faster printing presses, perhaps it is making sure the delivery people understand the importance of their role in the survival of the Dispatch (or other newspapers).

UPDATE: Great action and attention from the Distribution team at the Dispatch, the paper delivery issues have been eliminated at our house, the habitually late paper is now delivered on-time, hanging on to at least one loyal print subscriber!