PETA: Their doing it right

I always questioned the effectiveness of advocacy groups means to promote their agenda like PETA members throwing red paint onto fur coats  or Greenpeace members tying themselves to a tree to keep foresters from harvesting for wood.  In these cases, it has been hard for me to take them seriously.  Even with their more pragmatic solutions, it still seemed like they didn’t get it.   Now it looks like PETA finally understands how they can truly make an effective, meaningful change to advance their advocacy: embracing the new corporate stakeholder model for business organization.  PETA realized that the best way to make a change was to meet eye to eye with those they advocate against.  Profit is the driver of many corporations and why they do the things they do that many PETA members criticize.

So what did PETA decide to do? They decided to become major shareholders in companies such as McDonalds and Kraft.  Their aim is to have some weight in future decisions of the companies.  Unlike their previous attempts at trying to push their agenda on individuals to make a change, PETA finally realized that the best way implement change was a more pragmatic, top down approach.  With PETA realizing that the ethical treatment of animals was an easier fight to win rather than changing peoples dietary habits, PETA may be able to make a meaningful and effective change.   Coming to terms with the fact that other individuals chose to eat meat must have been a tough sell for PETA but on the upside they can now work together with food companies to help humanize our food production system – something that any compassionate person would support.

In many cases, shareholders were “horrified” when they learned of some of the production methods used by their companies’ suppliers, Byrne said.

“Many shareholders are average people who are compassionate and who don’t want to be supporting practices that are inhumane,” she said.

I hail this as a groundbreaking achievement for advocacy groups moving away from their radical paradigms and more towards the center as they meet eye to eye with the average, using the capitalist system to their advantage.   Making political change is hard since the currency is votes.  Cash is a much more effective means of making system wide changes for the better.  And apparently, the organization is already making waves:

“It gives us a new forum in which to present the research we’ve done to company executives, their shareholders and the public,” said Ashley Byrne, a senior campaigner for PETA.

PETA tries to negotiate agreements with companies behind closed doors, but if that fails, the group submits shareholder resolutions with its proposed changes at shareholder meetings.

Companies don’t always change their policies, but Byrne said the effort has paid off. After PETA bought stock, Safeway grocery stores and restaurant companies Ruby Tuesday, Sonic and Burger King agreed to give purchasing preference to suppliers that abide by what the group says are more humane rules, such as not confining chicken and hogs in small cages, she said.

I applaud PETA for taking the first step that I hope many should do as well.

What drives us?

An incredible, animated presentation on what motivates us to do innovative, valuable work.  The results are surprising.

Waste products after-market: EV’s Lithium Ion Batteries

Intercon wrote an interesting article today highlighting a solution for the high cost of electric vehicles: by transitioning drained lithium ion batteries from used EVs to function as stores of energy for alternative power sources such as wind and solar.   As Intercon notes, the high cost of manufacturing lithium for EVs can be subsidized by the aftermarket sale to energy producers:

Estimates in vehicles prices have seen these costs naturally passed onto customers to make EVs just as expensive—if not more expensive—than comparable gas vehicles or hybrids. But an afterlife for batteries that paid dividends could put a dent in those high costs for producers and consumers alike. Apparently, when batteries degrade from levels necessary for driving they still hold large amounts of charging capacity (perhaps as high as 75%)—a commodity that could be captured by another industry. Realizing an after-market value of batteries could shift some of that excess cost away from customers into other willing buyers at wind or solar farms. According to GM, the situation is a triple-win because although deconstructing the batteries to safely harvest their components is possible, it is expected to be intensive in both labor and capital.

Intercon believes that the greatest benefit alternative energy producers stand to gain is to provide a store of energy for a more reliable source of energy.

At the same time, renewable power has its own drawback, namely its intermittent nature. Wind turbines and solar farms can provide power that is clean but often unreliable. The result is needing large amounts of dirtier power kept in the grid spinning reserve (plants that are running but not producing electrons for the grid) meaning that the net benefit of the greener installations is marginal. When paired with power storage, however, renewable energy advances quickly against into the marketplace. Power storage systems made up of recycled EV batteries could help the output of renewable systems remain more consistent allowing for more grid systems to be powered down. The UK Times reports that 25 recycled car batteries could store up to 1 MW of power and yet may be an incremental additional cost added to a wind turbine.

While novel in it’s pursuit, I see some issues with the idea for this as a magic bullet for alternative energy. If lithium ion batteries can retain their value past being used in an EV, wouldn’t the value be more useful in consumer electronics? Spreading the bulk of the car battery across more sell-able units  would bring economies of scale, decrease cost per unit and increase margins. Given the high value of lithium, any discount on used lithium would nonetheless still make it expensive, making it a boon for already struggling clean energy providers to compete with cheap, dirty power. It would only make economic sense to push an after-market of used lithium towards consumer electronics rather than utilize them in alternative power schemes.

This is a consequence of the power industry’s structure, not exactly a failed idea.  This would be a great way to utilize post-consumer material for efficient means (if it is possible) in order to help cushion the cost of utilizing lithium ion batteries as a store for power.  Of course alternative energy providers would want whatever is available now, but can’t due to cost.  A lot will depend on the shape of the power industry in the future, which is currently unknown at the moment, but positive given the newly awaited American Power Act.  This shouldn’t detract from the fact that lithium in EVs is  still recoverable for after-market uses, (either for renewable power or consumer electronics) which should help cushion consumers from high lithium prices, making the shift to EVs more attractive.  Not everyone will be able to get a Tesla, (Pictured above) but Nissan’s new Leaf is a start.

More on the positives of the European Crisis

Via Mark Thoma, a more well written thorough (fact backed) perspective on the net positives for the European crisis: here.

Bottom Line:  The European crisis, by keeping US interest rates in check and oil prices low, may do more to help the US recovery than hurt it.  In the process, however, we would expect the flip side of the resulting capital inflows into the US to emerge – namely, a rising external imbalance.  Arguably, this simply shifts the ultimate adjustment to sometime in the future.  Again.

Same ideas, but I published first!

Seeing the Positives from the European Debacle

What happened in the stock market two weeks ago was scary: the Dow dropped 1,000 points in a matter of minutes.  Greece was on the brink of defaulting on it’s debt; a country I might add, that has it’s currency denominated in Euros.   Investors were worried that if Greece went down, it might drag down the Euro with it.  Luckily, the EU finally pushed politics aside and realized that in order to keep the EU from causing a European Lehman chain reaction, they had to bail out Greece.  If Greece went, so the saying goes, the rest of Portugal, Italy and Spain would go with it.  As the bail out was announced, U.S. stocks surged.  But the damage was done.

Stocks are still up since a year ago, but a lot of that equity was lost.  Some say it was a much needed market correction.  In a way, I agree.  Investors started to feel that they were being left out of the party (considering that stocks rallied considerably since March 2009) and wanted to get into the action, driving up valuations.    The market correction has left some worried that the lost momentum from the stock market and the teetering European situation means that the U.S. is going to lose steam in it’s recovery.  But it won’t; it will only make our recovery stronger.  There are several positive indications that Europe’s struggle is in America’s benefit.

1. A stronger dollar against the Euro should help bring in an influx of investment.  While a weaker dollar sent investors over seas, most wealth generated outside of the U.S. will start seeking to invest here.*
2. The Fed funds rate is still around 0% to .25%.  Inflation hawks are going to have to start rethinking their position as deflationary pressures continue to rear its ugly head.  Mean trimmed CPI is on a downward trend, and with energy and commodity prices pointing lower, it will only continue to send overall prices downward.   This type of environment will keep the Fed from raising rates, making borrowing cheap.  With mortgage rates continuing to be low, buying a house is still attractive.
3. The potential benefit for having low interest rates is that foreign investors looking for returns will look towards equity markets.  This means more potential growth for U.S. companies and the stock market.
4. The stock market wasn’t the only thing that experienced slides.  So did commodity prices, especially oil.  Oil was moving up to around $90 a barrel until the market correction happened.  Now, oil prices are down to $75 a barrel.   Any increase in gas prices is taxing on consumers, but so far, gas prices have stagnated and won’t be increasing any longer.  The cost of inputs are now lower across the board thanks to declines in commodity prices, providing cushy margins for companies that lowers the pressure to raise prices, resulting in an absence of pain for the consumer.

As you can see, there is upside to the European situation.  I agree that it is still a gloomy situation for Europe in general.  Greece (and the like) face long-term structural issues that will make resolving their situation an incredibly hard task and I won’t be surprised if in 6 months Greece begins to default on its debt again.  But will it really drag down the EU? The rest of the countries such as Portugal, Spain and Italy should benefit from a lower Euro, helping wages that outpace productivity come to parity.  So should Germany and the rest of Europe, as a lower Euro will stimulate exports.  What needed to happen was a devaluation of the Euro  to a value more inline of what it is worth.  Yes, it is unfortunate that these irresponsible countries are essentially a drag on the EU, but that doesn’t mean the U.S. will have to suffer for it.

While the EU is a major trading partner to the U.S., I doubt there will be significant drops in demand for U.S. goods. There are more, higher growth areas for the U.S. to consider.  In terms of the U.S. recovery, if exports were the upside to the U.S. downturn, then U.S. exports to Europe is going to be the downside to the U.S. recovery.  But there is going to be a recovery nonetheless.

*And in minutes, this pops into my RSS reader: China boosts holdings of US Treasury debt by 2 pct

Where every science fiction story went wrong

Well, most of them anyways.  OK, specifically only those of the militaristic variety.  Boeing just announced its new unmanned jet figher titled the Phantom Ray.

The full press release from Boeing can be found here.

Most science fiction I have read (and watched) always had manned fighters, whether in the realm of space, air, sea or land.  Why didn’t they think of this? Most likely because the story would lose its emotional, character driven element.

There is one science fiction story that reigns as the greatest of them all. (#1 in this list)  Before you click the link, do you know what it is?

Yep, Ender’s Game by Orson Scott Card.  I don’t want to spoil anything if you haven’t read the book but Mr. Card’s science fiction story is the greatest of all time for a reason; he was the most accurate when it came to predicting our military future.

HT: Engadget

Internalizing Externalities: How to clean up the BP oil spill the right way

The Environmental Economics blog has been covering the oil spill really well, so I suggest heading to their blog and keeping up with it. They just posted a video on a way to help soak up the oil in the gulf:

How cost effective would this be?

Just from eyeballing the video, let’s say a pound of hay and can soak up a pound of oil.   How many pounds of oil is being spewed by BP’s mishap?  According to the NYtimes, 5,000 barrels per day seems to be the rate.  At 5,000 barrels per day, that amounts to 210,000 gallons of oil.  At 7 pounds of crude per gallon, (give or take) your looking at  1.47 million pounds of oil being dumped per day.  Now, price of hay varies depending on amount, type and time of year.  Given some googling on the internet, hay can run from $0.02 to $0.10 dollars per pound.    Let’s say it can get as a bad as $0.50 per pound.  In that case, it would cost around $29,400 to $147,000 to $735,000 pounds, given the price of hay.  Add in the labor that would be needed to disperse the hay and then clean it up plus the equipment and manufacturing and you would have a pretty pricey cleanup.  But compared to the alternative, some say the clean-up will total $12.5 billion for BP.  In addition, using hay is more enviromentally friendly than the alternative AND it can be implemented now.

So, what would be the total cost if the hay solution was implemented? Assume it would take a month tops to absorb all the oil. Note once the oil is absorbed in the hay, environmental damage is limited – basically because oil doesn’t have to be cleaned from anything else.  Note that the alternative chemical dispersant not being used won’t have to harm the environment.  Note that the oily hay can be retrieved and then either burned for energy or maybe even refined so that the oil is turned back into a usable source.  Not counting capital and labor, the input prices would cost: $882,000 to $4.41 million to $22 million per month. That’s it.

Worst case for the year: $264 million < $12.5 billion

How much more could the thousands of shrimp boats cost to implement it and the seaweed rakes to clean the stuff up on the beach? Certainly not more than what many have projected, even if a traditional, yet smaller clean-up will be implemented.   Even if the $12.5 billion figure is taking into account ALL costs such as the lost product and actual equipment cleanup, variably hay would be cheaper and much easier to implement given community wide mobilization.

Yes, I know this analysis is too generalized and is not taking into consideration many factors such as… blah, blah, blah.  The point is this: If BP or the government won’t stand up, then the local community will, dat’s who!*

*Apologies for the very terrible impression of how Cajun people act.  For more information, please visit stuffcajunpeoplelike.com.

Breakthrough Spotlight: Biofuel from microbial organisms

Unlike cellulosic ethanol made from foodstuffs and grasses, bio-fuel makers are on their way to creating a commercially viable bio-fuel made from microbial organisms. From Techpulse 360:

Now a third-generation of biofuel makers is showing progress with novel laboratory work. This new wave is a sharp departure from the ways of the past and has interesting potential. It hopes to simplify manufacturing by avoiding the fermentation step of first and second generation companies and convert organisms directly into fuel using just carbon dioxide and sometimes sunlight.

It is an exciting prospect. Not only could these new ventures remake an industry, they could open the door to new ways to store solar energy (in a fuel!) and help remove CO2 from the atmosphere.

Why is this a breakthrough relative to other bio-fuels? Most of it has to do with the ease of implementation within our existing infrastructure and limited burden on current resources.

Renewable sources of energy such as solar are geographically specific and currently, are unable to effectively store the energy on a large scale for that energy to be transported elsewhere.  While bio-fuels capture that energy from the sun and transforms into an effective storage vehicle that can be easily implemented with our current infrastructure, bio-fuels created from foodstuffs and grasses put a strain on available land and resources, usually translating into higher prices for food. Combine that with several production steps to create it, and you can see where bio-fuels become economically disadvantaged.

With microbial organisms such as these, the combined inputs of solar power and carbon dioxide add the benefit of reversing our carbon emissions. Add the fact that bio-fuel can already be easily implemented within our infrastructure and you can see why commercially viable bio-fuels from microbial organisms are a breakthrough.