Keep the kids in WNY

From the 01 February 2010 Greater Niagara Newspapers

KEEP THE KIDS IN WNY
By Bob Confer

(Editor’s note: This is the second part of a series, “4 Ways to Save WNY”)

The vibrancy and future of a region are directly determined by how many young adults have staked a claim on the area, choosing it as a home and a workplace that fits into their personal and professional plans. The metropolises that attract and keep the most people aged mid-20s to early-40s end up being the greatest economic engines in both the short term and the long term.

It’s obvious that Western New York is not among those places. We don’t have the jobs that would keep kids here nor do we have the economic system that would put them at ease regarding the future realization of their full potential. It’s because of that malaise that our youngest residents flee the region en masse: Whereas the US population grew by 8% from 2000 to 2008, the Niagara County population shrank by 2.4% and Erie County contracted by 4.3%.

They weren’t the only young folk who left us. Their peers from around the globe come to WNY for a world-class education. The region is a hotbed for high-quality academics, the far western counties being home to 25 colleges and universities with total enrollment in excess of 75,000. Despite the attractiveness of that intellectual environment there’s little to keep them here once their studies are done.

In order to change WNY for the better we must reverse those trends. We must make this a life-long home for those who were raised here and those who educated here. If we could keep them engaged and interested then we can assure the vitality of the region.

This can only be done in baby steps. There’s no magic cure, no silver bullet that will change this situation overnight. It will take a deliberate effort and little victories to begin a slow but consistent path to an ultimately younger community. By giving incentives to and utilizing the resources of the current crop of youth we can open the door for future generations.

First and foremost in this cause should be the emphasis of college communities as the epicenter for economic development. Some of the greatest minds in the world come to area colleges – especially the University at Buffalo – and it would be nice if they could have a chance to apply what they’ve learned locally (rather than Dallas or New Delhi) to make the next best consumer product or achievement in medical technology. The leaders in the public and private sectors of the locales that realize this benefit (California quickly comes to mind) do their best to give those youth the backing in resources and finances that they need. It would behoove WNY’s leadership to bring together businessmen of deep pockets who are willing to serve as the angel investors or venture capitalists for the graduates, giving them the start-up funds necessary for their enterprises. WNY really isn’t home to such individuals (Erie and Niagara Counties have only 663 millionaires) but some slick marketing to millionaires in Manhattan (who number 16,000) or similar wealth centers could easily find generous souls interested in the financial and social return on investing in fresh-faced geniuses.

At the same time we need the private sector to share more than just seed money, voluntary and involuntary. Every taxpayer – corporate or individual – “invests” thousands of dollars every year in elementary and high schools, community colleges, and SUNY campuses through their property and income taxes, yet very few taxpayers take what you would call a vested interest in the final product. We need everyone – especially businessmen and women - to share their intellect and experiences and dedicate themselves to the development of our youth (and therefore our region). If more companies opened their doors to internships or more business owners mentored students or spoke to classes on a regular basis we could make them better students (and better workers) and maybe permanent residents of WNY. Who knows, the attentive businessman might find that key employee and bright idea he’s always been looking for. This endeavor would best be achieved if Chambers of Commerce and other business groups joined forces with local colleges to create a clearinghouse or partnership that would team schools and professors with the industrialists and retailers who could help them reach their educational goals.

There are countless other tasks that could be undertaken – such low-cost, state-provided student loans that offer lower rates for those who stay in NY – but these are a start. Basically, the leadership of this region really needs to focus on connecting area students with employers and investors in hopes of tempering the migration of the young minds which should represent our greatest asset.

Consolidate our governments

From the 26 January 2010 Greater Niagara Newspapers

CONSOLIDATE OUR GOVERNMENTS
By Bob Confer

(Editor’s note: This is the first part of a series, “4 Ways to Save WNY”)

Ask locals what they dislike the most about Western New York and more often than not the answer isn’t what an outsider might expect. Common national sentiment would have one believe that it’s the snowbound winter months that are most depressing about the Niagara-Buffalo region. Not so. It’s the taxes.

New York’s property tax burden is among the greatest in the United States, the fourth highest actually, at $3,622 per household. That’s a rather significant portion of household income that, before state and federal income taxes, has a median value of $44,064 in Niagara County. To put that into perspective, a family works one whole month out of every year just to pay for their school, county, and city/village/town taxes.

It’s rather disheartening to think that not only do we have less to spend but also that New York is among the very few states where housing represents a bad investment. Think about it: The median home value in Niagara County is $95,800. 10 years of taxes paid is $36,220. Would a Niagara homeowner be able to turn around and sell his house after 10 years at $132,020? It’s impossible and even then he would only break even and that’s not accounting for home improvements.

It’s this extravagant expense (among countless other taxes and fees) that has driven many a resident from our area to places much less expensive in which to maintain a home and support a family.

One would have hoped that the Great Recession would have forced the state government’s hand in bringing about much-needed change to this predicament in an effort to one, save families hit hard by the loss of jobs or retirement income and two, stave off the continued demise of the region. But, the state legislature, in typical short-sighted fashion, has failed to address the mandates (such as Medicaid and educational directives) that make property taxes so exorbitant.

So, what can be done? How can we reverse (or at least temper) this trend?

The answers may exist in a law that goes into effect on March 21. Lost amidst the chaos of the supposed Senate coup of June of last year was the passage of that law, the Reorganization and Empowerment Act. This powerful tool will allow municipal leaders and driven taxpayers to initiate a process of consolidation and dissolution of local governments including towns, villages and special districts. This can be achieved in two ways. In the first method, a town council can put the measure before voters. In the second method, concerned citizens can take up the charge and would need to collect signatures from only 10 percent of the affected voters in order to put it before the general voting population.

According to the commission that helped create the legislation, more than $1 billion in annual savings could be achieved through a variety of consolidation measures. Locally, you could see this wisely put to use in say the combination of the towns of Royalton and Hartland for example, cutting back on services and resources exercised and duplicated in neighboring communities of nearly-identical stature. Similarly, Niagara County’s incredible number of special districts should be on the chopping block. According to a 2007 study by the State Comptroller’s office, County taxpayers pay on average $687 per year in special district taxes. In comparison, that cost in Tioga and Cortland Counties is only $49.

It’s up to the people to move on this - whether it’s the representative small town board or a group of residents - in much the same way they have with Kevin Gaughan’s downsizing efforts that have taken Western New York by storm. When this tool becomes available it will be interesting to see where it is used, who uses it and just how much money is saved. It’s something that might prove significant in making a good number of communities in Western New York more affordable places in which to live.

McGwire and the steroid buzz

From the 18 January 2009 Greater Niagara Newspapers

McGWIRE AND THE STEROID BUZZ
By Bob Confer

Chances are good in this day and age that you know someone who has smoked pot. It would be difficult not to. The National Institute on Drug Abuse says 98 million Americans over the age of 12 have tried marijuana at least once in their lives. You may be one of them. Your spouse may be, too.

Does that make you, him, or her any lesser of a person? In the eyes of a few it may. But, in the eyes of most it does not. That’s because, for a good number of issues, Americans posses an intrinsically Libertarian mindset. We believe, as we should, that what adults do behind closed doors is their own business. They should be allowed to do almost anything they see fit as long as they don’t hurt anyone or infringe on others’ right to life, liberty and the pursuit of happiness.

So, based on that, can someone tell me what exactly Mark McGwire did wrong? How does what he did to his body differ from what a third of Americans have done to theirs? Just like them, he bought or acquired a controlled substance and used it to alter his well-being. And, just like a good many of the pot smokers, it was a result of overwhelming peer pressure.

Since the days of Babe Ruth, when a brutish figure single-handedly made them commonplace, Americans have been clamoring for home runs. We yearn for the combination of raw strength, a good eye and a quick mind that produces majestic and sometimes vicious drives that can change a game almost instantly. After many decades filled with powerful home run hitters from Jimmie Foxx to Reggie Jackson, home runs seemed to taper off in the 1980s. The skinnier players of the time struggled to rack up 30 homer seasons and without those blasts major league baseball looked a little tame in the newfound exposure it was receiving on cable and satellite TV. But, in 1987, a livelier ball yielded a surge in home runs and people wanted more. Much more.

The players obliged. Over the course of the 1990s they bulked up – something we now know was a result of chemical enhancement – and hit balls out of the park in bunches. They were rewarded for their efforts (and gambles) by owners who paid the most-powerful fellows handsomely and fans who threw adulation upon them.

Mark McGwire entered the game at just the right time. Fresh out of college in the late-80s he was a big yet lithe man who soon used steroids to aid in the transformation of his body from injury-prone to muscle-bound. He utilized this brawn with his equally-immense talent and dedication to become a modern day Babe Ruth. He was larger than life and answered the wishes of the fans and the prayers of major league baseball, saving it from its darkest days. He absolutely excelled at what every ballplayer from the little leagues to the major leagues had hoped to do: He hit home runs at a record-setting pace and in distances that the game’s best could only dream of. He was a spectacle at every at-bat…and even during batting practice. The eyes of a sports-loving nation were fixed on him from 1996 to 1999. In 1998 especially it was like the 1950s all over again as the average fan bee-lined like a kid to the morning paper (or the modern equivalent of Sports Center) to see what the big man did the night before. He satisfied our once insatiable home run addiction, something that could only be achieved through steroid use.

McGwire gave us exactly what we wanted yet just like when a marijuana high wears off (or so they say) the high associated with his accomplishments wore off and in the years since his retirement the fans have experienced similar regret and disgust for his actions. Most folks now have as much disdain for McGwire’s now-admitted steroid use as they once did love for his feats.

It is hoped that once the smoke clears people realize that McGwire wasn’t the monster they are now saying he is. We pressured him. The game pressured him. He just wanted to fit in and he misused a drug to do it, hurting no one but himself in the process.

By doing so, he’s no different than anyone else.

Obama's wise investment

From the 11 January 2010 Greater Niagara Newspapers

OBAMA’S WISE INVESTMENT
By Bob Confer

In recent weeks this column focused on the future of America’s economy and standard of living and how it hinges on our nation’s ability to develop technologies and alternative fuels to address constraints in the energy supply as predicated by growing global demand. Among the recurring themes in that series of columns was the need to improve our youngest citizens’ educations in science, math and engineering. It’s the very best way to guarantee our success in addressing any number of problems that will come our way: Intelligence (innate and acquired) breeds innovation.

Unfortunately, we need all the help we can get in that department. America is the world leader in almost everything from personal freedom to national wealth to the size of the military. Ours is far and away the preeminent society on Earth, both past and present. Yet despite our overall dominance – or maybe because of it – our citizenry are lacking in a rudimentary understanding of the critical subjects that let us know how the universe works or could work. The Organization for Economic Cooperation and Development has analyzed the performance of 30 countries and of them the US is 19th in math and 14th in science. The Programme for International Student Assessment has us ranked 21st in science and 25th in math. No matter the source of the rankings it’s obvious that America is grossly underperforming and downright disappointing.

Out of the system that produces such middling results, fewer and fewer pupils are moving on to the mastery of numbers and the sciences and into fields of the public and private sectors that use those skills to better mankind through technological advances. As a matter of fact, a developing country, India, has overtaken us in that category. Call it complacency or call it indifference, we have collectively lost focus of those important facets of education. You can blame the bureaucracy that governs our education (for emphasizing other studies while forcing teaching-to-the-test) just as much as you can blame popular culture and parents (for making science and math un-cool and finding “average” to be so comforting and rewarding).

Our leaders have done - and continue to do - little to address this problem. Back in 2001 then President George W. Bush and Senator Ted Kennedy unveiled No Child Left Behind, something that has served only to magnify the weaknesses of the current education system. Last week, New York Governor David Paterson did something rather unprecedented in his state of the state address, failing to outline any goals for the advancement or betterment of public education.

It’s that disturbing trend - repeated time and time again in statehouses across the United States – that makes President Barack Obama’s “Educate to Innovate” program such a welcomed sight. Originally introduced in November, it was a $260 million initiative designed to produce 10,000 new science and math teachers by 2015 while investing in the professional development of 100,000 current teachers in the sciences and technologies.

Obama announced last week that those efforts are going to another level. Working with some of the biggest players in corporate America – Intel, Xerox, Kodak, and Time Warrner Cable – he has procured another $250 million in financial and in-kind support.

He also noted that not only have a half-billion dollars been dedicated to these efforts but so have federal resources. He has charged 200,000 federal scientists to speak at schools, create hands-on learning opportunities and deliver other forms of outreach to youngsters as a means to ignite their curiosity. In total, that’s an intellectual army of some 310,000 strong who will be deployed to improve our academic performance.

Educate to Innovate represents one of the wisest investments of the Obama Administration and the final impact of it will far rival any of the supposed positive effects of the stimulus package. Like any good investment, the return on it will be a long time coming. We won’t realize its benefits until at least two decades from now after it has trained the teachers who in turn create the better students who in turn become the minds who advance our society. That represents a change of pace from the way things are done. Far too many government programs focus only on the short-term, almost always to the detriment of future generations. This one, on the other hand, is focused on the productivity of your children and theirs. It’s the shot in the arm they need to take on the Chinas and the Indias of the world as they look to supplant America as the world’s super power.

The ethanol fiasco

From the 04 January 2009 New American at:

http://www.thenewamerican.com/index.php/opinion/bob-confer/2685-the-ethanol-fiasco

THE ETHANOL FIASCO
By Bob Confer

Since his days as a U.S. Senator, Barack Obama has trumpeted renewable energy as the catalyst for the future growth of America’s economy. He believes to this day that investments in wind, solar, and ethanol energy will excite the marketplace and put Americans back to work.

He made this belief a key component of his platform while running for the office of President and his campaign website — which since the November 2008 election has been slightly modified to serve as advertising piece for his presidency — says:

President Obama has a comprehensive plan to chart a new energy future by embracing alternative and renewable energy, ending our addiction to foreign oil, addressing the global climate crisis and creating millions of new jobs that can’t be shipped overseas.

This far-fetched idea, that the economic impact will be significant enough to employ millions, is a recurring theme of his speeches regarding his plans for taking us out of the Great Recession, of which green energy consistently ranks among his top three initiatives. Similarly, the supposed positive domino effect of Green Economics was a key part of the Bush administration’s and its Democratic Congress’s combined efforts to relentlessly promote and subsidize ethanol. Rather than increasing the employment rolls, those efforts increased consumer prices and accounted for vast transfers of wealth, something that should be a lesson to learn from for the current President.

The economic weaknesses of corn-based ethanol have long been discussed by critics of the federal government’s ill-advised foray into the alternative fuel market. For years, they have said that its makes no sense to turn into fuel something that is such an important food both directly (as corn at the dinner table) and indirectly (as corn syrup and feed for livestock and poultry).

A negative impact on consumer prices was virtually guaranteed: A bushel of corn produces an average of 2.7 gallons of ethanol and federal mandates require that the nation uses at least 36 billion gallons (or some 13.3 billion bushels of corn) of the substance by 2022. The industry appears to be on its way to meet the high-water mark and it has far exceeded short-term goals. In 2006 the annual output of American ethanol plants nearly reached 5 billion gallons, three times what it was five years earlier. 2009’s totals were estimated to exceed that by twofold and 2010’s industry output is projected to surpass 13 billion gallons.

Following the laws of supply and demand, corn prices have gone out of control, reflecting the emphasis on ethanol. From October 2002 to September 2003 corn prices ranged from $2.15 to $2.35 per bushel. In the months leading up to the recession in 2007, corn prices exceeded $4.00 per bushel. During the first part of the recession prices fared no better, for in April of 2008 they surpassed the almost-mythical $6 mark and actually reached $7.88 in June of that year. With the collapse of the global economy in 2008/2009 and the associated declines in demand and prices for nearly all commodities, corn was in a stretch that saw it stay within the mid-$3 range. Projections for 2010 show another up tick that will take it far beyond $4/bushel.

This trend in increased ethanol production and the reliance on corn has had a detrimental effect on the consumer. Not only has corn itself gone up, affecting everything from sodas to cereals to tortillas, but so have the costs of meats and dairy products. At the turn of the century feed costs accounted for 50 percent of an average meat or dairy farm’s operational costs. As the price of corn doubled and even tripled, the beef, milk, and chicken producers had no choice but to pass on the higher costs to consumers. During the second half of 2007 and the first half of 2008 consumer prices at the grocery store grew at unprecedented rates and many maverick economists (who disbelieve misleading government statistics like the Consumer Price Index) had price inflation pegged at 12 percent, not the 5 percent as indicated by the government.

A 2007 study by Purdue University proved just that relationship in price growth. The university determined that agricultural prices to the end consumer were $22 billion greater in 2007 than in 2005, $15 billion of which could be attributed to the push to use crops for fuel. That value accounted for an annual impact of $130 per household, and that was prior to 2008’s even-greater escalation in costs.

Studies like that and other similar criticisms were met with a blind eye and a deaf ear by most in Washington. Recently, though, we saw the federal government actually admit to having inadvertently manipulated market prices through the emphasis on ethanol (something the administration has yet to comment on it). The Government Accountability Office has released a report that says feed costs for livestock producers more than doubled from 2006 to 2008 as a direct result of ethanol production.

With corn ethanol the fuel additive of the present and future, ongoing price tag growth is not out of the question and virtually assured. This, of course, despite the posturing of Bush, Obama, or Congress, has done nothing to create jobs or jumpstart the economy. Instead, it cost people their jobs and helped to escalate the rate of destruction of the recession. As noted in the Purdue study, some $15 billion was extracted from the economy. Rather than being spent on the purchase of more products in volume or invested in discretionary purchases of all sorts, all of which would have had positive economic impact in the capitalistic endeavors undertaken by all facets of our economy, those consumer funds were instead spent by individuals to only maintain the status quo in their diets. That’s $15 billion per year (plus that which is added annually to meet new ethanol requirements) that is lost in the ether of our economy, the direct result of unconstitutional and illogical government intervention into markets in which it does not belong. It is not a tax per se, but in practice it has the same effect as a tax: Wealth has been forcibly transferred away from the people by the government.

It won’t end there. The ethanol fiasco is only the tip of the iceberg. The government still has other green energy goals on its radar, including cap-and-trade and wind and solar goals, all of which will require the expenditure of public monies and a regression in our standard of living.

It is hoped that before pushing ahead with such endeavors the government reflects on the problems with ethanol and realizes that, both literally and figuratively, green energy will take the gas out of our economy.

Patriot Act debate on the horizon

From the 04 January 2010 Greater Niagara Newspapers

PATRIOT ACT DEBATE ON THE HORIZON
By Bob Confer

On December 14 the Speaker of the House, Nancy Pelosi, struck down a Senate plan to extend until 2013 provisions of the Patriot Act that were set to expire last Thursday. The extension clause would have been an add-on to the $636 billion defense spending bill agreed upon by the House and Senate. Understanding that a good many Americans do not relish having their rights to privacy trampled upon, she did not want the extensions forced through without satisfactory debate. So, Congress instead approved a 60-day extension, signaling a lengthy debate ahead regarding controversial records procurement methods and roving wiretaps.

The records rule is one of the most onerous of the Patriot Act, granting officials court orders that can force private enterprises (such a businesses, hospitals, and libraries) to turn over “any tangible thing” (such as business records and medical histories) that could be considered relevant to a terrorism investigation. Through this rule, once private and personal records of all citizens – both good and bad – are fair game to government inspection.

The equally-disturbing roving (or warrantless) wiretaps provision allows the government to eavesdrop on or intercept communications without the court orders traditionally necessary for identifying the target and the specific means and lines of communication. Under its scope, the government can freely use any method and tactic to observe and listen in on anyone considered a terror suspect (which, as we learned in 2009, could be almost anyone).

In theory, both rules face a rocky road ahead now that the Democrats – long the critics of the Bush Administration and its abuses of the Patriot Act – are in power. But, theory and reality are two entirely different things.

The reality of the moment, which is almost serendipitous to the cause of Patriot Act supporters, is that many elected officials and citizens who once decried the Act may find themselves supporting the renewal of the provisions with the attempted Christmas Day airline bombing so fresh in their minds. For many people, security trumps liberty especially with the horror of death in the sky so close to being realized. They will sell-out in order to guarantee their safety and the safety of their families (although there is nothing truly guaranteed in that regard).

There is also the reality of political force to contend with. Pelosi’s power is nothing in comparison to the power of President Obama, the media darling and rock star president who can alter a goodly portion of public sentiment at will. As a senator and presidential candidate Obama was strongly opposed to the Patriot Act. In 2005, when these same provisions came up for renewal, he was dead set against them, citing the government’s newfound power as being a threat to our rights and freedoms. But, since taking office, he has made a complete 180, throwing his support behind the reauthorization of the wire taps and records searches, something he has pursued in earnest since September, both publicly and behind closed doors. December’s scare will only make him more brazen.

Because of Obama’s powerful and popular influence, Speaker Pelosi and her alleged majority may end up being a minority, losing out in the end, showing how truly similar and nearly indistinguishable our country’s two main parties really are: Democrats are guilty of the behaviors of Republicans and vice versa.

In preparation for a prolonged standoff over the Patriot Act, if you value personal liberty you must make it a point to contact your Congressperson and Senators and ask that the nefarious rules face the sunset they deserve and do not get renewed. If they are allowed to continue it won’t be a victory against terrorism. It will be a victory for terrorism. The terrorists despise the American Way and our freedoms and want to see our personal rights squashed. The Patriot Act and its intrusiveness virtually assure that the terrorists’ goals are achieved. We can’t let that happen.

Developing answers to the oil shortage

From the 28 December 2009 Greater Niagara Newspapers

DEVELOPING ANSWERS TO THE OIL SHORTAGE
By Bob Confer

For the past month this column has focused on the limited supplies of and unlimited demand for oil. The future looks bleak with an oil shortage that we as a nation seem ill prepared to handle. But, given that our public and private sectors can gain a sense of urgency and take a more dedicated approach than we have in the development of new technologies and new energy sources, we can overcome what could be a significant obstacle to the betterment of our standard of living for years to come.

To put this complex issue into simple terms, here are 4 ways in which we can guarantee a brighter future for America by limiting the impact that oil has on our personal, corporate and national finances while ensuring that we have access to transportation, something that is instrumental to the pursuits of a free people…

Develop young minds: In America we do a very poor job of rewarding our brightest students who in turn have the potential to reward our society. Instead, we invest as much time and money in the most under-performing schools and students as we do in the cream of the crop. The next great scientist is more often than not lost in the shuffle as we teach him or her at the same level and with the same techniques as the lost causes who are in the same classroom. We need to do as other nations – both developed and developing – do and devote a greater amount of our resources to the gifted students. Investing in their minds is an investment in our tomorrow. The oil shortage is just one of many problems that need to be addressed in the coming decades and the best way to handle them is by making sure we have the keenest scientific minds prepared to work their magic.

Develop alternative oils: Mention alternative energy to the average motorist and the first thing that comes to mind is corn-based ethanol. That’s because at this time it’s basically the only alt oil available in volume. But, if there’s anything we’ve learned over the past 4 years it’s that corn ethanol is one of the federal government’s worst investments in recent memory: Who in their right mind would promote a fuel that is created from crucial foodstuff in a process that is as un-green as the crude it is supposed to replace? As a nation we are better off focusing on the continued evolution of processes that create ethanols from algae and cellulosic biomass, processes that are close to fruition but still a handful of years away from practicality.

Develop alternative technologies: There’s a reason why the Big Three – and especially General Motors - suffered so greatly before and during the Great Recession. They weren’t innovative enough. When the oil crisis came on strong in 2007 the products offered (inefficient large cars and SUVs) did not meet the needs of their customers who found themselves strapped for cash as gasoline consumed their paychecks. Had the companies had the forethought during and after the oil crises of the 1970s they would have designed cars capable of 60 to 80 miles per gallon of gasoline. But, they stuck with the status quo and some even say they suppressed new technologies (if that’s the case, the federal government, who owns about 60% of GM, should do society a huge favor and unearth those top-secret innovations from the bowels of the organization). The automakers need to think bigger than they have and put more money and mind towards the development of super-fuel-efficient cars and those that are powered by natural gas, hydrogen fuel cells or electricity.

Develop more nuclear plants: In order to make the electric automobile a sustainable option we need an unlimited supply of electricity on the cheap (as does our economy as a whole in order to keep up with population and economic growth). The most-efficient and cheapest way to meet our needs is with nuclear energy. And, despite general American sentiment to the contrary, nuclear energy is clean and safe. There’s a reason why a green-conscious country like France gets so much of its electricity from nuclear power (79 percent).

Through these and other tactics we can survive the oil shortage. Let’s not stop at ending our dependence on foreign oil as many in the political class say we should; let’s end our dependence on oil, both foreign and domestic. Solving problems as significant as this is old hat to America. We’ve been faced with threats of various sorts before and we’ve beaten them using the work ethic and ingenuity that has set us apart from all other societies both past and present.

The upcoming oil shortage: part three

From the 21 December 2009 Greater Niagara Newspapers

THE UPCOMING OIL SHORTAGE: PART THREE
By Bob Confer

Americans have been led to believe that the supply of oil is nearly limitless and for the next half century we will have more than enough crude to meet the growing needs of the global economy. The Republican Party’s national platform touts the availability of untapped reserves in Alaska and along our shores while the party currently in charge (the Democrats) seems genuinely unconcerned with future supplies.

But, as we go about our lives, guzzling gas at amazing rates and taking its presence for granted, the rest of the world is concerned about the long-term prospects for oil as the world’s preeminent energy source. Along those lines, in early November the United Kingdom newspaper, the Guardian, dropped a bombshell, quoting two unnamed oil industry executives who said that the International Energy Agency was willingly overstating oil supplies.

The IEA has, in recent years, said that oil production will rise from its current level of 83 million barrels per day to 105 million barrels per day by 2030, a growth of 27 percent. The whistleblowers said that many within the IEA know that this is impossible and maintaining oil supplies at even 90 to 95 million barrels per day is not achievable. They noted that back in 2005 the IEA was openly saying that 120 million barrels per day by 2030 was realistic but has since then tempered those proclamations to 105 million, an indicator of considerable disagreement within the organization. The whistleblowers said that some key IEA personnel believe that the oil peak is upon us, signaling certain disaster for sustainable economic growth.

That news caught the attention of the rest of the world but went almost unmentioned by the mainstream media in North America. That may be because it wasn’t sexy enough amongst other timely issues like health care or global warming or it may have been the fact that the report painted the US in an unfavorable light. The IEA sources said that senior officials have downplayed the rate of decline in oil reserves while overplaying the potential for new reserves because the US government and Wall Street have exerted considerable pressure on the organization because they did not want a more truthful report to trigger a buying panic that would cause a sudden spike in gasoline prices in turn tempering our nation’s recovery from the Great Recession.

If that’s true – which it very much could be - it’s a very poor way by which to manage a nation: The long-term health of our economy has been abandoned for short-term benefit. That’s a poor economic model that sets the stage for considerable, almost unfathomable, struggles by Generations X and Y and today’s youth when they encounter this disaster unprepared.

Although the fears for an oil shortage may be old hat to the rest of the world (this is not the first time that the concept of Peak Oil has reared its head in a trusted international news outlet) it remains as an underreported, almost conspiratorial, theory in the States. Fortunately, more voices are speaking up on the issue in the US, including the smart money. One of the more trusted names in personal investing, Raymond James, has noted the impending oil shortage. The company’s director of energy research Marshall Adkins was recently quoted as saying that the peak occurred in 2008 and, sometime in the next decade, $6 to $8 gasoline will be the norm. Tom Petrie, vice-chairman of Bank of America Merrill Lynch, agrees, saying that we have already hit Peak Oil and we are in a terminal decline of supply at the same time demand is on the rise courtesy of China who, by 2030, will account for 43% of demand (It should be noted that China clearly understands the reality of the oil shortage. They are aggressively buying up reserves and foreign assets while at the same time developing new technologies).

We can only hope that in 2010 we see more news outlets covering the reality of oil’s future. Then and only then, after being educated on an issue of grave importance, will our elected officials and businessmen develop the sense of urgency necessary to quickly address our untapped reserves and develop alternative energy sources, ensuring the economic vibrancy of future generations of Americans.

The upcoming oil shortage: part two

From the 14 December 2009 Greater Niagara Newspapers

THE UPCOMING OIL SHORTAGE: PART TWO
By Bob Confer

Last week’s column focused on the global demand for oil and how the supply constraints of the precious substance brought about significant price volatility during the second half of the decade. I made the claim that high oil prices were just as responsible for the Great Recession as were the mass of foreclosures.

One would think that a problem of such a scale (and one that we had already experienced twice before during the 1970s) would have initiated some action on behalf of the powers-that-be in Washington DC and other government thrones the world over considering that the situation is bound to repeat itself sometime very soon, maybe in 2010 and definitely in 2011, as the world’s most-populous economies continue to grow.

But, alas, we live in a world led by short-term memory and short-term planning. Just as our government never enabled the free enterprise system to pursue new oil reserves following the oil crises of the 70s, our leaders (and even most citizens) have so easily forgotten that the pain at the pump in 2007 and 2008 caused significant financial hardship. It seems that the issue has taken a backseat amongst bigger issues of the moment both real (the stagnant job market) and perceived (global warming) as promoted by Congress and its followers. Subterfuges such as this focus (if not waste) our nation’s intellectual and financial resources – and citizenry’s thoughts and hopes - on things that may not need immediate attention. When the oil problem does resurface, that same leadership will do as they have with anything of importance and use a short-term fix destined for long-term failure, but one with immediate rewards (though small) that captivate the voters at a time most advantageous for the polls. That cycle repeats itself and that is why, since the 1800s, we’re always revisiting the same real crises every few years be it oil, health care, immigration, national security or education.

Had the issue been addressed before or when it came to a head we wouldn’t be treading into an all-out oil shortage that is destined to prolong the recession on American soil. If, when the economy was in good health and moving full steam ahead, the private sector was equipped, allowed and encouraged to invest in and develop new technologies that either minimized or negated the need for oil we would be further ahead than we are now and the future might no look so bleak.

But, an oversized federal government has stymied progress, be it through oppressive taxes and regulations, the enabling of the status quo in the automotive technologies or the provision to our children science-deficient secondary educations. Those are some of the reasons why you see the world’s sharpest young minds now being Indians and Chinese who come to the US to be further educated in the sciences and engineering in our very best universities, only to go back home to once-oppressive governments that now pursue and promote innovation and intelligence with the same vigor that ours used to.

Sure, we still have far and away the most innovative and advanced people and processes on the planet, but we seem to have hit a plateau in that regard at the same time that those other nations are trying to catch up to us. Therefore, they may be far more equipped and flexible than we to quickly roll out a plan to adjust to the oil shortage, ensuring the continued vibrancy of their economies.

But enough of what got us there and will get us there again. You may be wondering about the specifics of this shortage I speak of. Just how big is it? What will it mean to the world? That, dear reader, I will discuss in next week’s column. You will be aghast at the wool that has been pulled over our eyes.

The upcoming oil shortage: part one

From the 07 December 2009 Greater Niagara Newspapers

THE UPCOMING OIL SHORTAGE: PART ONE
By Bob Confer

In last week’s column it was discussed that the primary reason for the strength and depth of the Great Recession was the sub-prime mortgage crisis. It should be noted, though, that there would have been a recession regardless – though considerably smaller and less damaging – due to incredibly high oil prices.

Economic output, as measured in units and not revenues (which were actually higher because of heightened energy input costs), tanked at the end of 2007 and in the first nine months of 2008 because the cost to recover natural resources, convert them into materials and finished goods, and get them into consumers’ hands increased considerably, making for higher prices at grocery and department stores. The consumers could not or would not buy as many of those goods because their spending power decreased in that same period, the result of gasoline prices reaching – even exceeding - $4 per gallon in the United States.

This energy-driven economic crisis (dwarfed by the financial crisis) was a result of the laws of supply and demand. In the years that led up to that peak Americans consumed oil at unfathomable levels thanks to multi-car households outfitted with so-called “gas guzzlers”. As they did that, they continued to buy astronomical amounts of non-durable and disposable goods that could be made affordably in China and India where peoples’ burgeoning personal wealth – a result of the nearly endless production jobs – caused them to develop the consumptive tendencies of Americans. They bought goods. They bought cars. They used oil. This put a serious strain on oil supplies as the world’s largest economy and its two most-populous nations devoured oil produced from a system that was not made to satisfy such impressive needs. Consequently, high demand for a limited supply made for higher prices. After breaking the $100 per barrel barrier in February of 2008 oil made steady gains to just over $145 per barrel during the summer months.

Since then, oil prices have ridden a roller coaster. In September of that year, ‘round about the time the financial markets started their free-fall, prices fell below $100 per barrel for the first time in 7 months. At the end of 2008 and into February of 2009 oil traded in the $30 to $40 range, a direct result of the breakage of the aforementioned supply constraints: Demand (real or anticipated) decreased as a result of consumers and businesses the world over cutting back (somewhat drastically) on their energy use.

But, as 2009 went on prices rose, reflecting an up tick in demand. The world outside of the USA has begun a slow recovery and China, quickly becoming the force to reckon with in regard to international politics and trade, has seemed almost impervious to the global recession. Its air of invincibility has equated to a growth in GDP that is expected to finish above 7 percent in 2009 and 8.5 percent in 2010. India has been just as productive, with its growth estimated to top 6 percent this year and 7 percent next year. Because of this return to economic development globally, oil prices have risen to around $80 per barrel.

When America’s economy gets back on track and the 7 million recently unemployed become employed again – thus commuting our roadways and buying things – it will burden the oil supply chain as it did prior to the escalation of the recession. But, by then, which is some years down the road, supply will be further strained by the newfound demand of millions of new consumers around the globe.

In 2007 and 2008 it was evident that the oil markets were ill-prepared to satisfy the needs of the world and the world suffered for it. And, as we’ll see in next week’s column, little has been done to address that situation, foretelling an inability to maintain a productive and sustainable economic recovery at home and abroad.