Cartoon of the day

Special mention

 

This is how a market is supposed to work—or not

It’s not often that I write admitting the validity of the mainstream story about markets. But the case of the Big Sandy power plant is a good example of how that story is supposed to work. The relative price of coal rises, based on environmental regulations and the declining price of alternative sources of energy, and the owners of Big Sandy decide to switch from coal to natural gas.

The decline is largely because new pollution rules have made coal plants more costly, while a surge in production of natural gas through the process of hydraulic fracturing, known as fracking, has sent gas prices plummeting. Together, the economics of coal have been transformed after a century of dominance in Washington, state capitals and the board rooms of electric utilities.

“The math screams at you to do gas,” said Mr. Morris, whose company is the nation’s largest consumer of coal.

Price-induced substitution among inputs in action!

But then there are all the other parts of the story that are usually missing from the mainstream account. Litigation, lobbying, contributions (to politicians and environmental groups), and advertising by both Big Coal and the natural gas industry. The attempt to pass on the cost of environmental retrofitting to electricity consumers. The negative effects of coal mining on miners and local communities and the negative effects of fracking on a different set of local communities. And so on.

In other words, what the mainstream story misses is perhaps more important than what it captures: poverty and unemployment make it difficult for miners and local landowners to survive without coal or natural gas, while large corporations vie for control over markets and energy policy.

That’s how a market works in the real world.

Cartoon of the day

Special mention

Cartoon of the day

Special mention

Cartoon of the day

Special mention

Cartoon of the day

 

Special mention

Gambling with the planet

We’re gambling with our planet—but not everyone is losing the bet.

According to Joseph Stiglitz, we’re gambling on three “black swan” events: finance, nuclear power, and global warming.

In the end, those gambling in Las Vegas lose more than they gain. As a society, we are gambling – with our big banks, with our nuclear power facilities, with our planet. As in Las Vegas, the lucky few – the bankers that put our economy at risk and the owners of energy companies that put our planet at risk – may walk off with a mint. But on average and almost certainly, we as a society, like all gamblers, will lose.

That, unfortunately, is a lesson of Japan’s disaster that we continue to ignore at our peril.

This is how Badtux the Ruminant Penguin [ht: lmb] sees it:

In the future there will be two kinds of people: The filthy rich (the top 1%), and the rest of us, who will make our living as gleaners upon whatever junk they’ve thrown out. Perhaps I should have been making an effort to talk to some of the people gleaning stuff off my street and get some tips, given that I was looking at the future of America, and indeed probably my own future at some point, right outside my front door. . .

In both cases, those in the top 1 percent are making the bets and walking away with the winnings, while  the rest of us will end up picking up the scraps and losing our shirts to the house.

Capitalist oil spills

According to a recent report, the disaster in the Gulf of Mexico is bad, and is getting worse.

Already, 11 workers are dead and 9 million gallons of oil have been released from the 20 April explosion on the Transocean/BP Deepwater Horizon oil rig. And a solution to close off the underwater geyser may be weeks, if not months, away. The oil spill is right now despoiling the environment along the Gulf Coast, threatening the livelihoods of thousands. From what I’ve read, if it’s not brought under control soon, the spill may escape from the Gulf and travel up the East Coast of the United States, and even further afield.

Here are photos of the disaster. Here’s a timeline. And here’s a list of the the worst oil spills in history.

In terms of sheer volume, the Exxon Valdez spill ranks as the 35^th worst oil spill in history. As frightening as that spill was, it’s even more frightening to consider that there are 34 oil spills even worse.

The current disaster in the Gulf and the history of oil spills around the world undermine all arguments for oil—for off-shore drilling, including “energy independence,” and for oil use generally, since it involves transoceanic shipments and wars fought over oil. In other words, allowing capitalist industry (especially oil and automobiles) to dictate U.S. energy policy either means importing oil, and letting the disasters take place “over there,” or drilling off the coast of the United States, and suffering the disasters “here.” Either way, workers are killed and the natural environment ruined by a series of “accidents.”

FOLLOW-UP

Others, like John Podesta and Joseph Romm, get it, too.

As people in the affected Gulf states are now learning — and people in West Virginia learned earlier this month, when 29 coal miners died in an explosion at the Upper Big Branch mine — limited government can, and often does, lead to unlimited pollution and unlimited disasters.

Radioactive commons

The zone of groundwater contaminated by the radioactive tritium leak at the Vermont Yankee nuclear power plant is now estimated to be about the size of a football field and 30 feet deep. And it’s headed toward the Connecticut River.

Local newspapers have had daily reports about the leaky plant (here’s a compendium). And now the national media, from CounterPunch to the Wall Street Journal, are watching. That’s because there’s a resurgence of interest in “clean” nuclear power—but Vermont Yankee (owned by the Entergy consortium) is demonstrating that capitalist nuclear power is simply not safe for the groundwater or the rest of the commons.

The Journal has one set of concerns:

The closure could ripple beyond the Green Mountain State to New England’s wholesale power market, the broader nuclear-power industry and Entergy itself. Several reactors were shut across the U.S. in the 1990s, but more recently the trend has been to prolong the life of plants because they produce low-cost, power with practically no greenhouse-gas emissions.

Vermont itself has another set of concerns: one one hand, jobs (about 670) and electricity (1/3 of what the state uses); on the other hand, contamination of the groundwater and a renegade company, one that has deliberately lied to state regulators.

Fortunately, the future looks less radioactive: First, the plant, whose license expires in 2012, needs the approval of the state legislature to renew its contract. Second, all 5 of the current Democratic candidates for governor are opposed to renewing the contract—in contrast to the current governor, who has stood behind Vermont Yankee. Finally, the state could replace Vermont Yankee by purchasing electricity from Hydro-Quebec. The province-owned company already provides about a third of Vermont’s power now, and Hydro-Quebec’s growing low-emissions power from hydro-electric dams and wind farms is certainly appealing.

Those are good omens for safeguarding the commons of the Green Mountain State.