Sunday, May 30, 2010

The GOM Oil Spill

It's quite the live feed, the "spillcam" as Ed Markey has named it:

I've spent the week and  the weekend reading the devastating New York Times and Wall Street Journal coverage. People are pissed. Most probably, they damn well should be.  Our civilization should face the facts: carbon and uranium based energy are extremely dangerous on every level: political, social, environmental, geo-strategic, health, economic.  The benefits of deriving energy from these two elements were never worth the risks and the side-effects. Time to heal the world, heal the environment, heal our bodies. Time for drastic change.

I should mention that I have been an "energy conservation junkie" for some time in my life.  I have some wild articles I have written on energy conservation that continue to get a lot of attention despite the fact that some of them need to be updated and others are just historical relics of the California energy crisis now.  Most of my stuff is "home power" style hands on experiments with energy conservation and production.  But I've done enough of it to conclude that the solutions to the problems of energy usage are much less finite than they are depicted. Energy is a political commodity. It determines the value of countries, monetary systems, and geo-political winners and losers. My guess is that a good chunk of the "power elite" like reality as such. It affords them cheap and easy profits and political control. The technology I have seen  in hybrids, heat-pumps, and photo-voltaics is exceptional.  Personally, I think clean, renewable, inexpensive energy is a choice that our civilization is being prevented from making. I don't have much faith in the numbers that lock us into the carbon and uranium industry and  most centralized production of energy. My guess is that we can make the choice to solve the conflict, poverty, environmental degradation and hopelessness of the world if we garner enough support, sacrifice, and courage to choose clean renewable energy over carbon and uranium.  Stare at that spill cam  feed awhile and tell me if you don't agree.

The use of carbon and uranium based energy sources have left environmental, political, social havoc and destruction across our globe for that last 100 plus years. They have enriched the prosperous few at the expense of the impoverished many. It should be remembered that oil emerged as primary energy source when it was apparent battleships run on diesel and not coal were the most effective "force projection" tools of their day. The exploitation of uranium, of course, is still heavily tied to military action. Despite carbon and nuclear industry rhetoric, clean and renewable energy sources have always been available. They are even more so today : geothermal, hydro-electric, solar thermal, photovoltaic, wind, wave, and heat pump. Storage options (fuel cells, hybrid lithium batteries, underground steam storage) are vastly improved.President Obama needs Roosevelt style "war authority" to wrap the energy industry of the United States under the national control. Once the majors are nationalized, production can be redirected to a sustainable energy future that can be used to leverage the movement for global peace and not competition for energy sources. Ultimately, we are going to have to realize as a species that using dense elements like carbon and uranium for energy sources has imperiled our very existence. Energy as a commodity should be internationally regulated; the use of energy should be subject to global environmental review.

Saturday, May 29, 2010

"Bank Contagion Spreads to Northwest"

The title page in today's WSJ section on "Money and Investing" is the article "Banks Contagion Spreads to the Northwest".  The article describes the closing of Frontier Bank (Everett) and the (functional) buyout of Sterling Financial Corp. by Thomas H. Lee Partners LP and Warburg Pincus LLC.  The article uses FDIC data to rank US. States with the most bank failures since 2008. Washington ranks third (behind Georgia and Florida) with 10.5% of all banks in the WA state in failure. The article comments:

"The six Washington banks to fail in 2010 represent about 7% of the state's banks at the start of this year. One Oregon bank has failed. The largest financial institution in terms of assets to fail, Frontier Bank of Everett, Wash., had $3.5 billion in assets and 51 branches when it was seized by regulators April 30. Frontier succumbed to the weight of its construction-loan portfolio. ...
Another measure of the distress can be found in the Texas ratio, [I added link-RMF ] which assesses the probability of failure based on nonperforming loans, reserves, capital and other factors. Some 25 banks in Washington, Oregon and Idaho had a high probability of failure based on that ratio in early 2010, more than double the number a year earlier, according to McAdams Wright Ragen."

I am not sure if  a full accounting of how much Whatcom County has contributed to the nation's banking crisis has ever been done. At a cost of $539M, the closure of Horizon Bank (Bellingham est. 1922) ranks as one of the most costly bank failures in the Pacific Northwest since 2008. However, the closure of Washington Mutual is the largest bank failure in U.S. history period. Other notable Western Washington bank failures include, WestSound, Evergreen,Venture,Rainier Pacific, Frontier, City Bank.  Nearly all of these are attributed to the mortgage/construction speculation and over-building crisis that still plagues the nation and our county.   Of the 451 "troubled banks" on the latest MSNBC/Investigative Reporting Workshop list, 23 are from WA state, although some of these have already been closed/reorganized.  This is from this morning:
Or if you prefer google maps real estate view:

Economist Naomi Klein has argued that the banking and housing crisis should be the swan song of Milton Friedman and neoliberalism's influence upon economics.  I think here in the Northwest we should argue that the collapse of our banking infrastructure should be the swan song of the influence of the construction industry as a mainstay of our economy.  If you don't build high paying jobs, your populace cannot afford mortgage payments.  Construction of housing is a service provided to a strong economy; an economy that has to be stabilized by a versatile, high tech, and stable employment. 

Discussion of the value of home construction for the economy is ongoing in the nation. An excellent summary at Seeking Alpha: "Does Housing Construction Drive Employment?" points out some of the benefits and disadvantages of using housing to drive the local economy.  However, we have to make this discussion pertinent to our local economy in Bellingham/Whatcom County. For example:

  • Does over-reliance on the housing economy bring us an economic future that we want here? 
  • Who are the winners and losers in such an economy? 
  • What do the alternatives look like?
[to be continued]

Wednesday, May 26, 2010

$15,000 for the (passage of) 109,500,000 barrels of oil?

06.08.10 Update to the original post
After some digging (and with the help of County Councilman Ken Mann and County Prosecutor Daniel Gibson, I learned this:
"We do charge a franchise application fee which is intended to recoup our costs for processing an application for a new franchise or a franchise renewal.  State law allows franchise fees only to the extent necessary to recoup administrative costs incurred by the government, which explains our franchise application fee.  The Council could reset that application fee upward but would have to be able to justify the fee by reference to a demonstrable and reasonable administrative cost that it has incurred or will incur in the processing of the application and/or administration of the franchise agreement.  Here is what the Municipal Research Services website says on the topic:
Franchise Fees
Note that franchise fees allowed under current state laws are limited to the recovery of actual administrative expenses incurred by the jurisdiction. Cities can, however, impose a utility tax on the revenue of the company from services provided within the jurisdiction (see RCW 35.21.860 and RCW 35.21.865)."

So currently, according to WA state law, and unlike CA state law, we cannot collect anything like an "energy transit fee".  If true, this needs some reconsideration at the state level.  If Whatcom County could collect fees on the basis of "energy transit", we would a have a significant new source of county and possibly city revenue. I have created a page on this subject to continue research.

05.28.10 Update to the original post:
Here is the original 1985 Franchise document with Trans Mountain. 
Here is the 2010 Bill C18814 passed on March 25, 2010.

Original Post
There are clearly moments in the life of a citizen of Bellingham and Whatcom County where you wake up wondering whether or not you are living in some shadowy, age-old, patriarchal universe; where "old boys" sit in quiet boardrooms glad-handing one another the public's wealth  while deciding the fate of the entire city. The public,  apparently lulled to compliance by the commercial news outlets that seem to publish/broadcast to a sixth grade education level, often sit like quiet lambs awaiting their economic slaughter.

This week has been one of those moments for me.  Cascadia Weekly Editor/Publisher Tim Johnson and Jess  Worth published an excellent environmentalist article "Tarmaggedon" on the destructive  effects of the Albertan oil sands whose product the refineries in Whatcom and Skagit County are now adding to their international mix of oil imports.  The destructiveness of the oil sands mining is hardly novel.  National Geographic Magazine published a blistering and controversial photo-shoot  of the place in March of 2009.  Nor is it news that American refineries are now importing and becoming reliant on this environmentally and energy expensive bitumen goo.  What was astounding to me is that the city of Bellingham, with 2 miles of the recently upgraded Trans-Mountain pipeline buried beneath Whatcom Falls Park, apparently missed a golden opportunity to gather lucrative franchise fees for the ~109 million barrels of oil (300,000 bo capacity * 365 days??)  that may pass under our park next year. Let me explain.

Energy transit fees have created a lucrative worldwide market. From every third world country (like Ukraine) to the major American cities (like Los Angeles), government entities have learned how to take material advantage of their strategic geo-locations. Here is an example from the "city of angels":

"Starting in fiscal year 2005-06, the Administrative Code also allowed council members to pad their respective trust funds by collecting half of the franchise fees paid by companies running oil pipelines in their districts. It required, however, that the money be used solely for street and sidewalk infrastructure improvements. Greuel's audit showed council members have collected a combined total of $7.3 million in such revenues so far.The largest share - 30 percent, or $2.12 million - went to the 15th District represented by Hahn."

So what franchise fee did the city of Bellingham settle for with this newly upgraded "Trans Mountain" pipeline now capable of carrying 300,000 barrels of oil per day across our fine city? :  $15,000 per year. for each of the next ten years.   Bill C18814 was approved 6-1 (with only Jack Weiss opposed.) on Tuesday as Ordinance #2010-05-032.

On Monday, I had e-mailed the entire city council and two county council member in response to my disbelief; I wanted to find out how this number was chosen.  Was it by law, by foot, by SWAG? Only city council member Michael Lilliquist was concerned enough to write me back and his answer was that the city attorney thought that $15K was "market value" for such a franchise fee at the time of negotiation and that the city had secured  $100M liability insurance from the Trans-Mountain company. (I would think they would be materially liable and insured in any event of spill regardless.)  I am astounded that we settled for such a low franchise fee. As I wrote both council members Mann and Lilliquist:

"(300K Barrels/day * $80/Barrel * 365 days ) = $8,760,000,000 of product value per year?   
(As a note, $15K is 1.7123287671232876712328767123288e-6 percent of $8.7B !)"

As far as I am concerned, or until someone explains to me otherwise, this is our good money that COB  left on the table. I can imagine an appropriate fee could have easily been seven figures for each of the next ten years for such a valuable commodity's passage.   What exactly are the economic counter-arguments for negotiating such lightweight franchise fees in times of economic crisis? The council members and the mayor's office may not have been caught red-handed taking brown bags of cash from the oil industry, but they are certainly doing them (not us) a great favor.

Tuesday, May 25, 2010

Great use of Google Maps...

(1) Goto
(2) Choose Satellite
(3) Choose More
(4) Check "Real Estate"
(5) Check "For Sale" and "Foreclosures"

Monday, May 17, 2010

Blaine plays a bit 'car hacking' paper...

Blaine, WA (Whatcom County) has played a  bit part in an emerging field of security research - "car hacking". Researchers from the University of Washington and UC San Diego, funded by NSF grants,  have published a seminal paper on "Experimental Security Analysis of a Modern Automobile". The paper is  being presented this week at the Claremont Hotel in Oakland, California.  Their efforts have received national press in the New York Times. To test "remote hacking" on a live vehicle, the researchers obtained permission to use an abandoned airstrip in Blaine, WA. The researchers thank the City of Blaine for their co-operation in their paper, which includes a brief shot of the Blaine decommissioned airport runway as so:

Entire subdivisions of high-tech office parks have probably started with less inspiration than this. May this be an omen of future wealth and income creation in Blaine,WA.

Saturday, May 1, 2010

Blog Traffic at Six months...

In six plus months this blog has received (according Google Analytics) :
1,888 visits from 897 visitors in 240 cities in 30 countries.
The top cities list out like this in Google Analytics for visits:

1. Bellingham 821
2. Bellingham 376
3. Seattle 161
4. Seattle 48
5. Ferndale 34
6. (not set) 33
7. Portland 33
8. Burlington 30
9. Moscow 8
10. New York 8
11. Tacoma 7
12. Bellevue 6

Looks to me like I need more outrageous political comment or scandal if I want to increase readership!