Do you want to have some idea about your carbon footprint? You can look at your energy bills but most people do not have all those in one place. Furthermore there are often many sources of energy that we use and all are billed by different parties. And to make it even more complicated, all are expressed in different units that are often quite confusing.
There are numerous online calculators that can estimate your energy use and your CO2 production, but after you try one of these you wonder, what do I do now ? Or maybe you just don't care. But just in case, here are some practical guidelines based on common averages. If you keep these in mind you can really watch what you do day to day. And that can make a difference.
Electricity it turns out is one of the easiest to remember. It is expressed in kWh or kilowatt-hours. A kilo watt is 1,000 watts and a kWh is anything using 1,000W that stays on for a full hour. Nearly all electrical devices have stickers with power ratings expressed in W. It will read something like 120V, 60Hz, and 100W. The W is the important number.
And here is an easy rule of thumb that is both handy and reasonably accurate. Every 100W device that stays on for 24 hours uses 2.4 kWh. If it stays on all year that will cost you about $100 per year. On average it will also produce 1,100 pounds of CO2 per year -more if you have dirty coal-based electricity and less if your power company uses solar or wind.
100W = 1,100 pounds/year
or
$1 spent on electric = 11 pounds
Every gallon of gas for your car produces 20 pounds of CO2 and if you have a 15 gallon tank, that is 300 pounds per fill-up. If you gas up once a week that will total 15,600 pounds of CO2 per year. That is equivalent to nearly 1500W of electric power or an electric space heater or hair dryer running 24h per day, 7 days a week, 365 days a year.
If your car gets 20 mpg -the average US passenger car gets 21.5 mpg- then you produce one pound of CO2 for every mile you drive. The average passenger car in the US, driven for the average distance produces 11,500 pounds. The "average" light truck produces 16,000 pounds.
CAR = 1 pound/mile
Natural gas is usually expressed in Therms on your bill. A therm is 100,000 Btu. Burning a therm of natural gas produces roughly 12 pounds of CO2. If you use 0.5 therm per day you will spit out almost 2,200 pounds of CO2 per year. 0.5 therms per day is common for households with a water heater and a gas range.
WATER HEATER = 2,000 pounds/year
Propane is just a bit dirtier than natural gas. It produces 14 pounds of CO2 per therm. So for the same amount of heating you would be producing 2,555 pounds of CO2. Fuel oil is even dirtier. It produces 16 pounds per therm. For equivalent heating, fuel oil produces almost 3,000 pounds of CO2.
But the worst offenders are the cozy, heart-warming fire-places burning wood. Or barbecues using charcoal. Wood produces 3,814 pounds of CO2 per short ton (2,000 pounds). That is 22.2 pounds per therm. That is just slightly better than coal at 22.7 pounds per therm. Burning municipal solid waste is slightly less dirty at about 19 pounds per therm.
WOOD = 1.9 pounds per pound
(if you wonder how 1 pound can produce 1.9 pounds, don't forget that you add oxygen from the air when you burn something. Oxygen is heavier than carbon)
These guidelines only express CO2 produced, not total pollution. Apart from CO2, burning fossil fuels also produce other pollutants. Some of these are gaseous and others are particles. And once again, coal and wood are some of the dirtiest fuels you can use.
Some might argue that wood is better because you are just releasing carbon that was captured from the atmosphere recently, not carbon that was stored millions of years ago. The same argument is often used for other ethanol and other biofuels. This is a feel-good argument that is largely irrelevant however. What matters is how much absolute CO2 we produce, not how efficient we are.
Friday, December 14, 2007
Thursday, December 13, 2007
high definition energy guzzling
Several important news stories appeared in the last few days. Yesterday I saw a news report on California's new emission rules where many people voiced support for tougher legislation while standing in front of big SUV's and pickup trucks. I kept thinking the reporter should say, look around buddy. If you drove a smaller, more sensible and more practical vehicle, we wouldn't be having this conversation. But at least the consumer wanted to do something. The big car makers and their unions do not.
And then the Wall Street Journal, in an article about Saudi oil use, confirmed what we all know. Higher prices mean less consumption. Our Saudi friends, having the cheapest energy on the planet, are wasting it like there is no tomorrow. The saudis consume more than 32 barrels of oil per person per year. 60% of it goes to always-on air conditioning.
We "only" consume 25 per person per year. But there are 300 million of us versus only 24 of them. Yet they have grown from under 8 million to 24 in 30 years. And apparently there is no end in sight. Scary stuff!
But let's forget the Saudi's for a while and focus on the holiday spirit. That spirit is bringing another energy hog into our lives this Christmas. The monster HDTV. And how did we get there? Once again a familiar scenario played out. First people moved to replace old energy inefficient CRT's with newer LCD monitors. That was the good move. We went from 100W down to about 25W. It did not last long.
The move to LCD was not really fueled by energy efficiency, but more by bulk, heat, noise, etc. The energy savings were a bonus. Until someone started thinking, why not make the screens bigger and bring a movie theater into our house? We have this oversized house in any case, and all these rooms we hardly use, let's get a viewing room. And there you go. We replaced or are about to replace an item that consumed about 100W of energy with an item that uses in excess of 500W. That is what a large plasma screen uses. LCD's are a bit better and projection TV's better still, but even those exceed 100W rather handily. But HD doesn't stop there.
To view HD programs we need a box. Be it a cable box or a satellite box, take a look at the back. Chances are it too uses more than 100W up from 25W for earlier versions. Especially if it includes at DVR or TiVo. And that box stays on all day and all night. You can hear the disk spinning when it is off. So, whether on or "off" it consumes about the same amount of power. You may have noticed that off is acquiring a whole new meaning. It does not mean off like it used to. It means "ready to pounce the instant you need me." 100W around the clock is 2.4kW per day, versus 25W at 5 hours, or 125Wh. A 19-fold jump.
And what would an HDTV be without some form of audio amplification and surround sound? And there goes another 500W easily. And these devices too prefer to be on the ready. Ever touch one of these amps when they are off? Like radioactive materials, they are hot at all times of the day or night. Their consumption may drop a bit, but once again you are adding 19 extra hours of burn.
All this excess costs money of course. Every round the clock 100W you add costs you roughly $100 per year. And it adds on average about 1,100 pounds of CO2 to the atmosphere.
Let's do a little back of the envelope calculation here. Say you replace your old 28 inch box with cable with a new 60 inch plasma with HD receiver and surround sound with subwoofer. Here are some rough numbers, assuming your TV stays on for 5 hours a day as is apparently the average use.
Your old set and box used about 625 Wh per day or about 228 kWh per year. At 12c per kWh that is $27 per year. And at 1.34 lbs of CO2 per kWh that is 305 pounds of CO2.
Your new setup probably uses as much as 1,250W for the big screen, HD box, amplifier and subwoofer. That is 6.25kWh per day or ten times as much. The yearly cost is now $270 per year and you are emitting 3,050 lbs of CO2 to "enjoy" it.
But in reality the costs are MUCH higher. If your setup is in sleep mode or standby mode, the costs could be hundreds of dollars more. The cable box alone could cost you $120 per year, because DVR boxes use almost as much energy when they are off as they do when they are on. Instrument companies could save money by removing the switches because these really do not matter.
The real costs are more like $350 or about $1 a day. And that probably makes you laugh. What is $1 a day after all? Surely you deserve this much entertainment? Unfortunately it all adds up. To say nothing of pollution. Your home theater is now producing almost half as much CO2 as an average passenger car. Or a third as much as a light pickup truck.
And then the Wall Street Journal, in an article about Saudi oil use, confirmed what we all know. Higher prices mean less consumption. Our Saudi friends, having the cheapest energy on the planet, are wasting it like there is no tomorrow. The saudis consume more than 32 barrels of oil per person per year. 60% of it goes to always-on air conditioning.
We "only" consume 25 per person per year. But there are 300 million of us versus only 24 of them. Yet they have grown from under 8 million to 24 in 30 years. And apparently there is no end in sight. Scary stuff!
But let's forget the Saudi's for a while and focus on the holiday spirit. That spirit is bringing another energy hog into our lives this Christmas. The monster HDTV. And how did we get there? Once again a familiar scenario played out. First people moved to replace old energy inefficient CRT's with newer LCD monitors. That was the good move. We went from 100W down to about 25W. It did not last long.
The move to LCD was not really fueled by energy efficiency, but more by bulk, heat, noise, etc. The energy savings were a bonus. Until someone started thinking, why not make the screens bigger and bring a movie theater into our house? We have this oversized house in any case, and all these rooms we hardly use, let's get a viewing room. And there you go. We replaced or are about to replace an item that consumed about 100W of energy with an item that uses in excess of 500W. That is what a large plasma screen uses. LCD's are a bit better and projection TV's better still, but even those exceed 100W rather handily. But HD doesn't stop there.
To view HD programs we need a box. Be it a cable box or a satellite box, take a look at the back. Chances are it too uses more than 100W up from 25W for earlier versions. Especially if it includes at DVR or TiVo. And that box stays on all day and all night. You can hear the disk spinning when it is off. So, whether on or "off" it consumes about the same amount of power. You may have noticed that off is acquiring a whole new meaning. It does not mean off like it used to. It means "ready to pounce the instant you need me." 100W around the clock is 2.4kW per day, versus 25W at 5 hours, or 125Wh. A 19-fold jump.
And what would an HDTV be without some form of audio amplification and surround sound? And there goes another 500W easily. And these devices too prefer to be on the ready. Ever touch one of these amps when they are off? Like radioactive materials, they are hot at all times of the day or night. Their consumption may drop a bit, but once again you are adding 19 extra hours of burn.
All this excess costs money of course. Every round the clock 100W you add costs you roughly $100 per year. And it adds on average about 1,100 pounds of CO2 to the atmosphere.
Let's do a little back of the envelope calculation here. Say you replace your old 28 inch box with cable with a new 60 inch plasma with HD receiver and surround sound with subwoofer. Here are some rough numbers, assuming your TV stays on for 5 hours a day as is apparently the average use.
Your old set and box used about 625 Wh per day or about 228 kWh per year. At 12c per kWh that is $27 per year. And at 1.34 lbs of CO2 per kWh that is 305 pounds of CO2.
Your new setup probably uses as much as 1,250W for the big screen, HD box, amplifier and subwoofer. That is 6.25kWh per day or ten times as much. The yearly cost is now $270 per year and you are emitting 3,050 lbs of CO2 to "enjoy" it.
But in reality the costs are MUCH higher. If your setup is in sleep mode or standby mode, the costs could be hundreds of dollars more. The cable box alone could cost you $120 per year, because DVR boxes use almost as much energy when they are off as they do when they are on. Instrument companies could save money by removing the switches because these really do not matter.
The real costs are more like $350 or about $1 a day. And that probably makes you laugh. What is $1 a day after all? Surely you deserve this much entertainment? Unfortunately it all adds up. To say nothing of pollution. Your home theater is now producing almost half as much CO2 as an average passenger car. Or a third as much as a light pickup truck.
Wednesday, December 12, 2007
arguing about climate
Recent data show that the Arctic Ice is melting faster than previously thought. If the current trend persists the Arctic could be free of ice in summer as soon as 2013, or some five and a half years from now. The previous estimate wasn't much better in the scheme of things, putting the first occurrence in 2040, but it makes a difference. That difference is 27 years, hardly worth mentioning, yet it may turn out to be quite pivotal for a number of reasons.
First off, 27 years is a long time for humans, and it is well beyond the attention span of a nation like the US. Second, and perhaps quite a bit more important for most decision makers of today, 27 years is outside their window of interest. The majority of these people are baby boomers pushing 60 and 27 years is longer than their remaining life-expectancy. Six years is not. Thirdly, and this is the most critical, it appears that our predictions are off and that trends are accelerating. That means we may be further along our heating curve than we previously thought.
When the Arctic Ice melts it is predicted to set in motion another serious acceleration of trends. The ice normally reflects up to 80% of the sunlight striking it, and when it is not there, much additional heat gets absorbed. In this case, the replacement of shiny ice with nearly black sea water that absorbs better than 90% is about as bad as it gets. You can rest assured that this will be the topic of much debate. And if by some statistical fluctuation, the melt does not materialize in 2013, the naysayers may gain an important political victory.
Unfortunately, climate change is but one symptom of a much larger problem. And that problem is the rapidly growing world population. And the even more rapidly growing appetite of that population to live a grand life. And given our advanced technology and the vast reserves of accessible energy, that population is free to increase its largely irrational and wasteful consumption. Such consumption is usually called the standard of living. It sounds much better and quite a bit more encouraging to raise your standard of living than to be wasteful and irresponsible.
First off, 27 years is a long time for humans, and it is well beyond the attention span of a nation like the US. Second, and perhaps quite a bit more important for most decision makers of today, 27 years is outside their window of interest. The majority of these people are baby boomers pushing 60 and 27 years is longer than their remaining life-expectancy. Six years is not. Thirdly, and this is the most critical, it appears that our predictions are off and that trends are accelerating. That means we may be further along our heating curve than we previously thought.
When the Arctic Ice melts it is predicted to set in motion another serious acceleration of trends. The ice normally reflects up to 80% of the sunlight striking it, and when it is not there, much additional heat gets absorbed. In this case, the replacement of shiny ice with nearly black sea water that absorbs better than 90% is about as bad as it gets. You can rest assured that this will be the topic of much debate. And if by some statistical fluctuation, the melt does not materialize in 2013, the naysayers may gain an important political victory.
Unfortunately, climate change is but one symptom of a much larger problem. And that problem is the rapidly growing world population. And the even more rapidly growing appetite of that population to live a grand life. And given our advanced technology and the vast reserves of accessible energy, that population is free to increase its largely irrational and wasteful consumption. Such consumption is usually called the standard of living. It sounds much better and quite a bit more encouraging to raise your standard of living than to be wasteful and irresponsible.
Tuesday, December 11, 2007
the trouble with evolution
Evolution is one of the most misunderstood concepts in science. Even biologists often get it wrong. Part of the blame goes to the word itself: evolution. It evokes images of moving ahead, getting better, optimization. It lends itself well to a world view that is very prevalent and reassuring. So reassuring that all major religions have adopted it. It is a view where humans stand on top of everything else as the most "evolved" species. Although the religions put us there by the act of creation and not by some act of speciation. But that is besides the point. It is the view of us on top that matters. And it is wrong of course, very wrong.
The second problem is the idea that evolution somehow stops when a new species develops. While many would disagree with this statement, it is clear that they subscribe to it. For example, they will not flinch at explaining human behavior in terms of caveman ecology. You have heard such statements before. Whenever people explain our behavior they say, this evolved because our ancestors blah blah blah. And that is silly.
Why ? Because in doing so they act as if humans, once established, became static items. It is very much the view of creationism that many scientists try to battle. Man was created and voila, here we are, to stay the same forever. And the same applies to monkeys, cats, dogs, etc. Once these develop they are forever stuck with their inheritance. Until either the end of time, or the birth of an even better species. For humans that species is often called superman. The static view is wrong too.
We are evolving every day of course, and the more of us there are the faster we evolve. Human evolution is speeding up, not slowing down. That by the way was the "shocking" conclusion of a recently published study. A study that went into PNAS, a prestigious journal. Probably because people were so amazed at these findings. But why? It is entirely logical and expected. The more humans there are, the more opportunities there are for us to change. Because every individual is a role of the dice. Every new one is different, and every one has the chance to express a new mutation, a new rearrangement, a new insertion or deletion. And every one can be the beginning of a new branch.
Let's set the record straight for a minute. Biological organisms change. They change all the time. What is so amazing is not that different species develop, but the fact that species stay species for a while. I.e. it is not the change but the fact that things stay constant enough that is remarkable. And we can only stay similar because strong forces keep us there.
Most of the changes are irrelevant and many are detrimental, but a fair number are beneficial. Not beneficial in the sense of making progress or getting better, but beneficial because they allows us to temporarily outwit the parasites. Competition is what drives evolution and competition is ever present. The microbes change and so we have to change to outwit them. That change is not directional. It goes back and forth. We change an important protein and it makes us immune to attack. But then the microbe changes or we become susceptible to new ones that can now take advantage of us, and so we have to change again. After a while we may end up where we were before. We run around in circles a lot.
This happens at all levels but it is controlled at all levels too. Controlled in a sense that changes at a lower level may not make much of difference at the next level up. One reason is that we consist of robust circuits. Robust or immune to change that is. And that part is important too. Otherwise we would never see a multi-cellular organism. But occasionally changes break through levels. These are most always detrimental. It is just the law of large numbers here.
Everything on the planet evolves all the time. All living species today are as evolved as we are by definition. You may think the tigers outlived their welcome, and that may well be possible. We are destroying their habitats and they may not recover. But we are destroying our own habitat at an even faster rate. But then again, everything alive is dying by definition. It just matters how quickly.
There are limits to what species can do, and so they invariably go extinct after some time. One way to go extinct quickly is to fully exploit your niche. Use it all up or pollute it out of existence. That is what we are doing right now. Our problem is that we are too successful. We are so good at exploiting our niche that we will outrun ourselves. At some point conditions will change abruptly and like a big aircraft carrier, we won't be able to turn around quickly enough.
The unfortunate fact for us as individuals is that our aircraft carrier is totally bloated. It is bloated with waste and overindulgence. And that makes it much more vulnerable and a lot more likely to crash much sooner than it would have to.
The second problem is the idea that evolution somehow stops when a new species develops. While many would disagree with this statement, it is clear that they subscribe to it. For example, they will not flinch at explaining human behavior in terms of caveman ecology. You have heard such statements before. Whenever people explain our behavior they say, this evolved because our ancestors blah blah blah. And that is silly.
Why ? Because in doing so they act as if humans, once established, became static items. It is very much the view of creationism that many scientists try to battle. Man was created and voila, here we are, to stay the same forever. And the same applies to monkeys, cats, dogs, etc. Once these develop they are forever stuck with their inheritance. Until either the end of time, or the birth of an even better species. For humans that species is often called superman. The static view is wrong too.
We are evolving every day of course, and the more of us there are the faster we evolve. Human evolution is speeding up, not slowing down. That by the way was the "shocking" conclusion of a recently published study. A study that went into PNAS, a prestigious journal. Probably because people were so amazed at these findings. But why? It is entirely logical and expected. The more humans there are, the more opportunities there are for us to change. Because every individual is a role of the dice. Every new one is different, and every one has the chance to express a new mutation, a new rearrangement, a new insertion or deletion. And every one can be the beginning of a new branch.
Let's set the record straight for a minute. Biological organisms change. They change all the time. What is so amazing is not that different species develop, but the fact that species stay species for a while. I.e. it is not the change but the fact that things stay constant enough that is remarkable. And we can only stay similar because strong forces keep us there.
Most of the changes are irrelevant and many are detrimental, but a fair number are beneficial. Not beneficial in the sense of making progress or getting better, but beneficial because they allows us to temporarily outwit the parasites. Competition is what drives evolution and competition is ever present. The microbes change and so we have to change to outwit them. That change is not directional. It goes back and forth. We change an important protein and it makes us immune to attack. But then the microbe changes or we become susceptible to new ones that can now take advantage of us, and so we have to change again. After a while we may end up where we were before. We run around in circles a lot.
This happens at all levels but it is controlled at all levels too. Controlled in a sense that changes at a lower level may not make much of difference at the next level up. One reason is that we consist of robust circuits. Robust or immune to change that is. And that part is important too. Otherwise we would never see a multi-cellular organism. But occasionally changes break through levels. These are most always detrimental. It is just the law of large numbers here.
Everything on the planet evolves all the time. All living species today are as evolved as we are by definition. You may think the tigers outlived their welcome, and that may well be possible. We are destroying their habitats and they may not recover. But we are destroying our own habitat at an even faster rate. But then again, everything alive is dying by definition. It just matters how quickly.
There are limits to what species can do, and so they invariably go extinct after some time. One way to go extinct quickly is to fully exploit your niche. Use it all up or pollute it out of existence. That is what we are doing right now. Our problem is that we are too successful. We are so good at exploiting our niche that we will outrun ourselves. At some point conditions will change abruptly and like a big aircraft carrier, we won't be able to turn around quickly enough.
The unfortunate fact for us as individuals is that our aircraft carrier is totally bloated. It is bloated with waste and overindulgence. And that makes it much more vulnerable and a lot more likely to crash much sooner than it would have to.
Monday, December 10, 2007
scary stuff
ExxonMobil is running ads entitled Energy Security. These ads are meant to convince us that we should be open minded when it comes to energy. Open minded in this context means we need to "keep our doors open." We need to get energy from more places. Places like Iraq. We also need to "Increase access to energy resources in our own backyard." That is corporate lingo for drilling in the Alaska Wilderness, if you didn't know. And no matter how you feel about that, it is not the really scary part. Sooner or later we will do it in any case.
The evil government -the government is always evil as you know, even though we voted it in place- is preventing access to 31 billion barrels of recoverable oil and 105 trillion cubic feet of natural gas. All of it in our backyard. And why would our government do such evil deeds ? It must be infiltrated by left-wing environmental terrorists. Or maybe aliens from outer space who are engineering our demise. Or maybe the U.N.? Or maybe they are all in it together?
Because according to ExxonMobil, with "the advanced technologies of today," we could recover all this oil and gas without damaging the environment. If you believe that you also believe in Santa Claus. But even if we managed to recover it without damage to the environment, we couldn't really use it, read burn it, without damaging the environment. But then again, regardless how you feel about that, it is not all that scary. Because that too will eventually happen.
No, it is the reassuring part of the ad that is scary. The part where ExxonMobil tries to convince us of the value of its approach. The part that reads, "Put another way, that much oil equates to over 8 years of current US crude oil imports." If eight years impresses you -as no doubt it is meant to do - think of it this way. If your doctor told you you have only eight more years to live, how would you feel ? Eight years is peanuts really. It is a blip. If eight years is all we have, we may as well forget it.
But wait, the ad is an ad, and so it engages in some subtle massaging and distortion of the facts. That is only 8 years of imports, not 8 years of use. We import only half of what we use. So four years is more like it, give or take a few months. And at present rates too, never mind the inevitable growth that ExxonMobil is preparing to "serve."
It is truly scary that we have less than five years worth of oil in our backyard. And that we feel the urgent need to exploit it now to fuel over oversized vehicles, and heat our oversized homes and otherwise waste it in excess.
It would be rather trivial for America to cut its energy use in half. And we wouldn't even have to take drastic measures. We would not even have to buy anything new or develop new "cutting-edge" technologies. All that is needed is for us to drive less, heat and cool less, and in general be sensible about life. And that doesn't mean we couldn't splurge every once in a while. But right now we are splurging each and every minute of every day. And it doesn't even bring us any enjoyment. Quite the opposite really. All we get is endless traffic delays, road rage, obesity, high blood pressure and the like.
We are this grossly overweight giant, who keeps eating and eating for no reason other than to consume more. And we all know what happens to such giants: their life-expectancy is dramatically reduced. Here is to your health, America !
The evil government -the government is always evil as you know, even though we voted it in place- is preventing access to 31 billion barrels of recoverable oil and 105 trillion cubic feet of natural gas. All of it in our backyard. And why would our government do such evil deeds ? It must be infiltrated by left-wing environmental terrorists. Or maybe aliens from outer space who are engineering our demise. Or maybe the U.N.? Or maybe they are all in it together?
Because according to ExxonMobil, with "the advanced technologies of today," we could recover all this oil and gas without damaging the environment. If you believe that you also believe in Santa Claus. But even if we managed to recover it without damage to the environment, we couldn't really use it, read burn it, without damaging the environment. But then again, regardless how you feel about that, it is not all that scary. Because that too will eventually happen.
No, it is the reassuring part of the ad that is scary. The part where ExxonMobil tries to convince us of the value of its approach. The part that reads, "Put another way, that much oil equates to over 8 years of current US crude oil imports." If eight years impresses you -as no doubt it is meant to do - think of it this way. If your doctor told you you have only eight more years to live, how would you feel ? Eight years is peanuts really. It is a blip. If eight years is all we have, we may as well forget it.
But wait, the ad is an ad, and so it engages in some subtle massaging and distortion of the facts. That is only 8 years of imports, not 8 years of use. We import only half of what we use. So four years is more like it, give or take a few months. And at present rates too, never mind the inevitable growth that ExxonMobil is preparing to "serve."
It is truly scary that we have less than five years worth of oil in our backyard. And that we feel the urgent need to exploit it now to fuel over oversized vehicles, and heat our oversized homes and otherwise waste it in excess.
It would be rather trivial for America to cut its energy use in half. And we wouldn't even have to take drastic measures. We would not even have to buy anything new or develop new "cutting-edge" technologies. All that is needed is for us to drive less, heat and cool less, and in general be sensible about life. And that doesn't mean we couldn't splurge every once in a while. But right now we are splurging each and every minute of every day. And it doesn't even bring us any enjoyment. Quite the opposite really. All we get is endless traffic delays, road rage, obesity, high blood pressure and the like.
We are this grossly overweight giant, who keeps eating and eating for no reason other than to consume more. And we all know what happens to such giants: their life-expectancy is dramatically reduced. Here is to your health, America !
Sunday, December 9, 2007
collision course
We are on a collision course with China. Yet nobody is taking any corrective action. Quite to the contrary. We keep on pouring money into China in the hopes of making a quick buck. And so far that has been a highly successful strategy. At least for those lucky enough to have an inside track. But sadly enough, we are once again funding something that we will have to deal with later on in a rather unpleasant way. Only this time it could be quite serious.
The trouble is that China is not some small middle Eastern country, or a banana republic. It is a formidable empire, whose strength is intensifying daily. It occupies a vast area that is only slightly smaller than the US, and it has well over 1.3 billion people. Its population is also younger than ours. The Chinese government can easily mobilize these people to do what ever it desires to do. And the Chinese won't flinch for a mere 3,000 casualties like we do. It won't even make headlines over there.
Although China has vast natural resources, and especially dirty coal, it needs to import many necessary items. And by increasing its standard of living it is putting undue stress on global supplies of basic materials. And that means there will be less to go around for everyone. Given what we currently know, there are not enough readily accessible resources on the planet to bring everyone up to our standard of living. Every significant step China, or India, takes will mean a step back for us.
That will not go over well. But we won't be able to bully the Chinese around like we do with Iran, Libya, Iraq, or any Latin American country that does not toe the line. Quite the opposite. The Chinese are already throwing their weight around and we are cautiously avoiding confrontation. Not because we are afraid of them (at least not yet) but because we do not want to antagonize what our businesses see as their best future growth market. Ironically enough we are locked in with the Chinese here.
From a US (or any Western) corporation's perspective, China represents a tremendous growth opportunity. And it is one of the very few left. China is where we can open millions of Starbucks, or sell millions of cars, or cellphones, or computers. Because the Chinese market is vast and it has huge unmet needs. Here, the words "unmet needs" refer to whatever the Chinese would need to come up to our standard of living. And perhaps most importantly, the Chinese consumers increasingly have the cash to buy these goodies.
But delivering the goodies will mean shortages in basic materials. And those shortages will drive up prices of everything else. But we will no longer be able to bully the supplier into giving us things for free (or nearly free). Already oil is in short supply and that drives up oil prices. We can move into the Middle East and secure our claim, but that has proven rather pricey, and so far we have seen little payback.
We also responded by looking into ethanol and that has driven up food prices everywhere. Especially in poor countries that can ill afford to pay for food. Poor countries that have lots of young adults, who are also out of work. Young adults that can quickly be converted into terrorism.
Chances are none of that has had any -or only a very minor- effect on you and me. But you can see where we are going. And it is only a matter of time before it does.
The trouble is that China is not some small middle Eastern country, or a banana republic. It is a formidable empire, whose strength is intensifying daily. It occupies a vast area that is only slightly smaller than the US, and it has well over 1.3 billion people. Its population is also younger than ours. The Chinese government can easily mobilize these people to do what ever it desires to do. And the Chinese won't flinch for a mere 3,000 casualties like we do. It won't even make headlines over there.
Although China has vast natural resources, and especially dirty coal, it needs to import many necessary items. And by increasing its standard of living it is putting undue stress on global supplies of basic materials. And that means there will be less to go around for everyone. Given what we currently know, there are not enough readily accessible resources on the planet to bring everyone up to our standard of living. Every significant step China, or India, takes will mean a step back for us.
That will not go over well. But we won't be able to bully the Chinese around like we do with Iran, Libya, Iraq, or any Latin American country that does not toe the line. Quite the opposite. The Chinese are already throwing their weight around and we are cautiously avoiding confrontation. Not because we are afraid of them (at least not yet) but because we do not want to antagonize what our businesses see as their best future growth market. Ironically enough we are locked in with the Chinese here.
From a US (or any Western) corporation's perspective, China represents a tremendous growth opportunity. And it is one of the very few left. China is where we can open millions of Starbucks, or sell millions of cars, or cellphones, or computers. Because the Chinese market is vast and it has huge unmet needs. Here, the words "unmet needs" refer to whatever the Chinese would need to come up to our standard of living. And perhaps most importantly, the Chinese consumers increasingly have the cash to buy these goodies.
But delivering the goodies will mean shortages in basic materials. And those shortages will drive up prices of everything else. But we will no longer be able to bully the supplier into giving us things for free (or nearly free). Already oil is in short supply and that drives up oil prices. We can move into the Middle East and secure our claim, but that has proven rather pricey, and so far we have seen little payback.
We also responded by looking into ethanol and that has driven up food prices everywhere. Especially in poor countries that can ill afford to pay for food. Poor countries that have lots of young adults, who are also out of work. Young adults that can quickly be converted into terrorism.
Chances are none of that has had any -or only a very minor- effect on you and me. But you can see where we are going. And it is only a matter of time before it does.
Saturday, December 8, 2007
consumer economy
Here is how the US economy works. Consumer spending accounts for seventy percent of it. Housing, health care, education, travel, restaurants and other services totaled $4.6 trillion last year. Yes, you read that right, trillion. That is a million million or a one with 12 zeros. A mere $3.6 trillion went into food, gasoline, clothing, electronics, cars, and other goods.
To keep this economic engine running, we need more consumers and more spending per consumer. The US population is growing at less than 1% a year according to the latest estimate. The exact number given by the CIA is 0.894%. There are now 301 million people here with a median age of 36.6 years. The birth rate is 14.2 per 1,000 and the net immigration 3.1 per 1,000. That means we are adding 5.19 million individuals per year. We lose 2.5 million per year. From an economic perspective this rate of growth is worrisome.
So we need to resort to the second option: spend more per consumer. And there are two good ways to do that. One is to make sure things don't last all that long and the second is called fashion. Make it so consumers will want to ditch their old stuff for fear of looking out of date. A corollary option is to add new must-have features. The latter is extensively practiced by car manufacturers who have turned cars into driving living rooms with complementary office.
Common sense would tell you that most manufacturers will quickly combine both methods. They make goods that are not meant to last so they probably skimp on quality too. Why bother if consumers will dump items within a year or two anyways. And besides, it helps profit margins. Let's take a look.
First, what do you do with durable items such as housing ? You can get some "help" from natural disasters, and the US has its fair share of those, but unless global warming really delivers on its wildest predictions, natural disasters alone won't cut it. Fortunately, the country has a high housing turnover rate. Unlike other societies, Americans are constantly on the move. They may buy their homes but they rarely stay in them longer than renters do. That is why adjustable mortgages with a short fixed interest period are so popular. Most people figure they will move before the rate adjusts. Since they rarely pay down more than a few percent of their mortgage, they are in effect renters. And government subsided renters to boot, because they get a tax break on their payments.
And every time people move, they are highly susceptible to home improvements. Most upgrade as well, that is they buy ever bigger homes and so they need to buy more goodies to fill these homes. In 2004, the market for home improvements was $271 billion according to the Home Improvement Research Institute of Tampa, Florida. It was growing at better than 6% a year at the time. Housing turnover correlates with sales of furniture, appliances, home electronics, and other home related goodies. And these have been growing rapidly too. That is what worries economists when they look at the subprime crisis. Because we have overspent a bit of late.
We need not dwell too much on cars and electronics. Everyone knows these items rarely last more than a few years. High tech is especially beneficial. With its built-in obsolescence it is an economist's dream. As for food, the trend of eating out continues in full swing. Take a look at the obesity numbers here as obesity is strongly correlated with eating out.
Health care spending is another winner and one where the US clearly excels. In 2005, it rose nearly 7% to $2 trillion, or $6,700 per person. It now represents 16% of the gross domestic product and is expected to rise to $4 trillion or 20% of GDP by 2015. Although an aging population is often blamed, a fair chunk of it goes to elective procedures. It is fashion driven. The American Society of Plastic Surgeons reports that Americans spent $15.4 billion on plastic surgery fees, facility fees, and anesthesia fees in 2006. That is almost 10% as much as the total prescription drug market.
And what may surprise you even more is that Americans spent nearly as much on pet foods, services, and medicines. And those markets are growing even faster than human healthcare. Elective procedures for pets are now commonplace in some areas of the country. And while most of it is out of pocket, pet insurance grew at 25% last year. Some employers are starting to offer pet insurance as a benefit. That while the number of uninsured Americans is at an all time high of 46.6 million.
Education is another area where Americans like to send their cash. In 2002, the US government spent $732 billion on education, directly and indirectly. That averages to nearly $7,000 for every student in elementary and secondary education. To say nothing of private money. The US joins Denmark, Iceland and South Korea in spending nearly 7% of its GDP on education.
When it comes to both healthcare and education, many would agree that despite all the money we spend, we do not seem to get very good value for it. Nearly everyone would agree our education system is lacking. When it comes to healthcare though, opinions are more divided and there is a strong feeling that we are the best in the World. Objective measures tell otherwise.
As indicated before, common sense will tell you that high turnover leads to mediocre quality. Unfortunately, it also leads to high waste and pollution. This is the price we all pay to keep our economic engine alive and well.
To keep this economic engine running, we need more consumers and more spending per consumer. The US population is growing at less than 1% a year according to the latest estimate. The exact number given by the CIA is 0.894%. There are now 301 million people here with a median age of 36.6 years. The birth rate is 14.2 per 1,000 and the net immigration 3.1 per 1,000. That means we are adding 5.19 million individuals per year. We lose 2.5 million per year. From an economic perspective this rate of growth is worrisome.
So we need to resort to the second option: spend more per consumer. And there are two good ways to do that. One is to make sure things don't last all that long and the second is called fashion. Make it so consumers will want to ditch their old stuff for fear of looking out of date. A corollary option is to add new must-have features. The latter is extensively practiced by car manufacturers who have turned cars into driving living rooms with complementary office.
Common sense would tell you that most manufacturers will quickly combine both methods. They make goods that are not meant to last so they probably skimp on quality too. Why bother if consumers will dump items within a year or two anyways. And besides, it helps profit margins. Let's take a look.
First, what do you do with durable items such as housing ? You can get some "help" from natural disasters, and the US has its fair share of those, but unless global warming really delivers on its wildest predictions, natural disasters alone won't cut it. Fortunately, the country has a high housing turnover rate. Unlike other societies, Americans are constantly on the move. They may buy their homes but they rarely stay in them longer than renters do. That is why adjustable mortgages with a short fixed interest period are so popular. Most people figure they will move before the rate adjusts. Since they rarely pay down more than a few percent of their mortgage, they are in effect renters. And government subsided renters to boot, because they get a tax break on their payments.
And every time people move, they are highly susceptible to home improvements. Most upgrade as well, that is they buy ever bigger homes and so they need to buy more goodies to fill these homes. In 2004, the market for home improvements was $271 billion according to the Home Improvement Research Institute of Tampa, Florida. It was growing at better than 6% a year at the time. Housing turnover correlates with sales of furniture, appliances, home electronics, and other home related goodies. And these have been growing rapidly too. That is what worries economists when they look at the subprime crisis. Because we have overspent a bit of late.
We need not dwell too much on cars and electronics. Everyone knows these items rarely last more than a few years. High tech is especially beneficial. With its built-in obsolescence it is an economist's dream. As for food, the trend of eating out continues in full swing. Take a look at the obesity numbers here as obesity is strongly correlated with eating out.
Health care spending is another winner and one where the US clearly excels. In 2005, it rose nearly 7% to $2 trillion, or $6,700 per person. It now represents 16% of the gross domestic product and is expected to rise to $4 trillion or 20% of GDP by 2015. Although an aging population is often blamed, a fair chunk of it goes to elective procedures. It is fashion driven. The American Society of Plastic Surgeons reports that Americans spent $15.4 billion on plastic surgery fees, facility fees, and anesthesia fees in 2006. That is almost 10% as much as the total prescription drug market.
And what may surprise you even more is that Americans spent nearly as much on pet foods, services, and medicines. And those markets are growing even faster than human healthcare. Elective procedures for pets are now commonplace in some areas of the country. And while most of it is out of pocket, pet insurance grew at 25% last year. Some employers are starting to offer pet insurance as a benefit. That while the number of uninsured Americans is at an all time high of 46.6 million.
Education is another area where Americans like to send their cash. In 2002, the US government spent $732 billion on education, directly and indirectly. That averages to nearly $7,000 for every student in elementary and secondary education. To say nothing of private money. The US joins Denmark, Iceland and South Korea in spending nearly 7% of its GDP on education.
When it comes to both healthcare and education, many would agree that despite all the money we spend, we do not seem to get very good value for it. Nearly everyone would agree our education system is lacking. When it comes to healthcare though, opinions are more divided and there is a strong feeling that we are the best in the World. Objective measures tell otherwise.
As indicated before, common sense will tell you that high turnover leads to mediocre quality. Unfortunately, it also leads to high waste and pollution. This is the price we all pay to keep our economic engine alive and well.
Subscribe to:
Posts (Atom)
