The Next Bull Market [Archive]

FRED

11-14-08, 08:34 PM

http://www.itulip.com/images/altenergybullmarket.jpgThe Next Bull Market

by John Rubino (DollarCollapse.com (http://www.dollarcollapse.com/))

Editor's Note: I've been talking about an alternative energy investment boom since I did my research and wrote in the summer of 2007 the Harper's Magazine article The Next Bubble (http://www.harpers.org/archive/2008/02/0081908) that was published six months later in March 2008. When I was interviewed on CNBC in February (http://www.youtube.com/watch?v=0STYMrQPm6E), the month the magazine issue hit the stands, when asked what solar and other alternative energy stocks to buy I responded, Not yet. Investors should be in cash. We're at the start of a long bear market.

That may not have gone over so well with the show's producers but that was my opinion based on analysis that led me to write December 27, 2007 that a Debt Deflation Bear Market was to commence in 2008.

We will update our Debt Deflation Bear Market forecast in December this year (see Debt Deflation Bear Market Update Part I: 2009 Windup (http://www.itulip.com/forums/showthread.php?p=61898#post61898)). For this year the forecast of a 40% decline in the DOW, in line with the Nikkei in the first year of the Japanese debt deflation in 1990, has come to pass. Not only was that forecast greeted with skepticism at the end of 2007, but I get the sense from comments that I have seen recently that some iTulip readers did not get their heads around the idea of a boom in alternative energy stocks will only occur, in my opinion, after the long, ugly bear market in stocks.

Here, just to make certain that readers are clear on my position, I'll repeat my assertion that before the boom occurs the US economy will first experience a transformational depression that turns the US economy from what it was into something else. How long that takes is hard to say because it depends on the national and international political response, but we don't see a silver bullet returning the global system to its imbalanced 1971 - 2007 past. To make sure that iTulip readers do not see our decision to reprint this fine article by our friend John Rubino on a future alternative energy investment opportunities as a suggestion that a boom in alternative energy stocks is imminent, we supply the time-line to the left. We expect that after the depression and transformation but before the end of the recovery alternative energy stocks will boom–in, say, 2020; that little speck off in the distance with the circle around it is the alternative energy bull. In the mean time, there will be tactical opportunities primarily driven by government spending programs.

Between now and then a large drop in energy consumption due to global economic contraction will, however, create demand for energy conservation short and medium term long before the economy needs fossil fuel alternatives such as solar, unless there is a war or other major supply shock. Energy is a tax on an economy, and raising taxes during a global economic bust is as unwise as it is unlikely. Unfortunately, pollution will take a back seat to the more mundane task of supplying affordable transportation. Besides the fact that most Americans will in ten years be driving the same cars they are driving today, diesel will begin a resurgence due to the relative abundance of heavy, sour crude oil, and the diesel hybrid will be the car of the future.

Across that vast expanse of economic pain and change between the end of the FIRE Economy and the American Consumer Fantasy it produced, and the beginning of the Next America, some of the solar and other alternative energy companies you invest in today may have gone out of business, either because of the depression or a new company with better technology out-competed them. Likely the solar company we want to invest in for the long term boom does not even exist yet. In sum, we don't think now is the right time to invest in alternative energy as a group. That said, we do not underestimate the ability and willingness of our government to waste our money on unnecessary energy infrastructure development, so we will have to watch these stocks and their anticipation of fiscal stimulus programs. So far, unlike home builder stocks in 2001 and 2002, they are not pricing in major government stimulus; they have gone down with everything else, or more, during the Debt Deflation Bear Market. More likely government infrastructure programs will focus on making buildings and homes more energy efficient by installing more new heating and cooling systems, insulation, and lighting. Those are the areas we will explore in detail for subscribers that is relevant for short term and medium term investing opportunities to take advantage of the flood of government money into alternative energy development that I forecast last year.

Ka-Poom Theory offered a theory eight years ago of how the current debt deflation occurring now and subsequent reflation in the coming years. If you are going to look that far ahead you are going to be wrong on the details but if you can accurately outline the underlying economic, market and monetary processes, you can avoid making the big mistakes, such as staying in the stock market this year. Likewise, this alternative energy investment time-line is intended to make clear to readers that while we see an opportunity off in the distance and tactical investment opportunities along the way, that does not mean we can grab that bull by the horns today.

For the next few years the name of the game is follow the legislation. For tactical opportunities for investing in government spending driven energy programs, John Rubino developed the list below. - Eric Janszen

_____

It took a few decades longer than it should have, but the world has finally figured out that leveraged speculation is not the path to lasting prosperity. Investment banks and hedge funds are dying, and the concepts upon which they were built--derivatives, gullible pension funds, sycophantic financial media--are being shoveled into the landfill of history.

Now the survivors have to come up with ways to feed, clothe, house, and entertain seven billion people without the help of mortgage-backed bonds, CDOs, and black box trading models. The answer (not the correct answer but the inevitable one) is pretty obvious: The governments of the world will run the printing presses in an attempt to stave off Depression until some miracle happens to put us on a sustainable track, or at least until the current crop of leaders retires. This won’t work in the long run; instead it will simply destroy today’s paper currencies. But in the meantime a lot of newly-created dollars, euros, and yen will be flowing somewhere, financing growth and pumping up share prices. The question is, which shares? In a prescient March 2008 Harper’s article (http://itulip.com/forums/showthread.php?p=23725#post23725), iTulip’s (http://www.itulip.com/forums/../) Eric Janszen cast his vote as follows:

<table style="width: 85%;" align="center" border="0" cellpadding="1" cellspacing="1"><tbody><tr><td>“There are a number of plausible candidates for the next bubble, but only a few meet all the criteria. Health care must expand to meet the needs of the aging baby boomers, but there is as yet no enabling government legislation to make way for a health-care bubble; the same holds true of the pharmaceutical industry, which could hyperinflate only if the Food and Drug Administration was gutted of its power. A second technology boom - under the rubric ‘Web 2.0’- is based on improvements to existing technology rather than any new discovery. The capital intensive biotechnology industry will not inflate, as it requires too much specialized intelligence. There is one industry that fits the bill: alternative energy.” </td></tr></tbody></table>
Yep. With the election of Barak Obama, the U.S. will almost certainly come to the above conclusion, because it’s a double winner: A massive clean-tech public works program will simultaneously create jobs and restructure the energy economy along sustainable lines. So in coming years look for a varied and relentless parade of subsidies, tax breaks, public/private partnerships, and mandates designed to bolt solar panels onto rooftops, build power lines connecting wind farms to cities, and replace internal combustion engines with batteries.

Combine this coming tsunami of public cash with the fact that plunging oil prices and the general market decline have crushed even the best clean tech stocks, and the result is an interesting, maybe unique situation. The clean tech crash was a bloodbath for the hot money that piled into solar and wind in the expectation of $200 oil. But it’s a once-in-a-generation opportunity for those who kept their powder dry.

To get you started, here’s a list of clean tech mutual funds and ETFs, all of which are down in the past year. They generally own the strongest companies in their sectors, and offer diversification that is crucial, since there’s no telling where the final bottom will turn out be for any individual stock.

Claymore/MAC Global Solar Energy (http://finance.yahoo.com/q?s=TAN) (TAN)
First Trust ISE Global Wind Energy Index Fund (http://finance.yahoo.com/q?s=fan) (FAN)
Guinness Atkinson Alternative E (http://finance.yahoo.com/q?s=GAAEX) (GAAEX)
New Alternatives Fund (http://finance.yahoo.com/q?s=NALFX) (NALFX)
PowerShares Cleantech (http://finance.yahoo.com/q?s=pzd) (PZD)
PowerShares WilderHill Clean Energy (http://finance.yahoo.com/q?s=PBW) (PBW)
Power Shares Wind Global Energy Portfolio (http://finance.yahoo.com/q?s=pwnd) (PWND)
Winslow Green Growth (http://finance.yahoo.com/q?s=WGGFX) (WGGFX)
Winslow Green Solutions (http://finance.yahoo.com/q?s=WGSLX) (WGSLX)
Market Vectors Solar Energy ETF (http://finance.yahoo.com/q?s=kwt) (KWT)

iTulip Select (http://www.itulip.com/forums/showthread.php?t=1032): The Investment Thesis for the Next Cycle™
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jimmygu3

11-14-08, 09:42 PM

The Next Bull Market

by John Rubino (DollarCollapse.com (http://www.dollarcollapse.com/))

It took a few decades longer than it should have, but the world has finally figured out that leveraged speculation is not the path to lasting prosperity. Investment banks and hedge funds are dying, and the concepts upon which they were built--derivatives, gullible pension funds, sycophantic financial media--are being shoveled into the landfill of history.

Now the survivors have to come up with ways to feed, clothe, house, and entertain seven billion people without the help of mortgage-backed bonds, CDOs, and black box trading models. The answer (not the correct answer but the inevitable one) is pretty obvious: The governments of the world will run the printing presses in an attempt to stave off Depression until some miracle happens to put us on a sustainable track, or at least until the current crop of leaders retires. This won’t work in the long run; instead it will simply destroy today’s paper currencies. But in the meantime a lot of newly-created dollars, euros, and yen will be flowing somewhere, financing growth and pumping up share prices. The question is, which shares? In a prescient March 2008 Harper’s article (http://itulip.com/forums/showthread.php?p=23725#post23725), iTulip’s (http://www.itulip.com/forums/../) Eric Janszen cast his vote as follows:

<TABLE style="WIDTH: 85%" cellSpacing=1 cellPadding=1 align=center border=0><TBODY><TR><TD>“There are a number of plausible candidates for the next bubble, but only a few meet all the criteria. Health care must expand to meet the needs of the aging baby boomers, but there is as yet no enabling government legislation to make way for a health-care bubble; the same holds true of the pharmaceutical industry, which could hyperinflate only if the Food and Drug Administration was gutted of its power. A second technology boom - under the rubric ‘Web 2.0’- is based on improvements to existing technology rather than any new discovery. The capital intensive biotechnology industry will not inflate, as it requires too much specialized intelligence. There is one industry that fits the bill: alternative energy.” </TD></TR></TBODY></TABLE>
Yep. With the election of Barak Obama, the U.S. will almost certainly come to the above conclusion, because it’s a double winner: A massive clean-tech public works program will simultaneously create jobs and restructure the energy economy along sustainable lines. So in coming years look for a varied and relentless parade of subsidies, tax breaks, public/private partnerships, and mandates designed to bolt solar panels onto rooftops, build power lines connecting wind farms to cities, and replace internal combustion engines with batteries.

Combine this coming tsunami of public cash with the fact that plunging oil prices and the general market decline have crushed even the best clean tech stocks, and the result is an interesting, maybe unique situation. The clean tech crash was a bloodbath for the hot money that piled into solar and wind in the expectation of $200 oil. But it’s a once-in-a-generation opportunity for those who kept their powder dry.

To get you started, here’s a list of clean tech mutual funds and ETFs, all of which are down in the past year. They generally own the strongest companies in their sectors, and offer diversification that is crucial, since there’s no telling where the final bottom will turn out be for any individual stock.

Claymore/MAC Global Solar Energy (http://finance.yahoo.com/q?s=TAN) (TAN)
First Trust ISE Global Wind Energy Index Fund (http://finance.yahoo.com/q?s=fan) (FAN)
Guinness Atkinson Alternative E (http://finance.yahoo.com/q?s=GAAEX) (GAAEX)
New Alternatives Fund (http://finance.yahoo.com/q?s=NALFX) (NALFX)
PowerShares Cleantech (http://finance.yahoo.com/q?s=pzd) (PZD)
PowerShares WilderHill Clean Energy (http://finance.yahoo.com/q?s=PBW) (PBW)
Power Shares Wind Global Energy Portfolio (http://finance.yahoo.com/q?s=pwnd) (PWND)
Winslow Green Growth (http://finance.yahoo.com/q?s=WGGFX) (WGGFX)
Winslow Green Solutions (http://finance.yahoo.com/q?s=WGSLX) (WGSLX)
Market Vectors Solar Energy ETF (http://finance.yahoo.com/q?s=kwt) (KWT)

I think Rubino has a great point. EJ has said it's still too early for AE stocks and that he's still just in cash & PMs. Does iTulip have an opinion on Rubino's "once-in-a-generation opportunity"? Is it time at last to go long Alt Energy?

Jimmy

santafe2

11-15-08, 12:12 AM

I think Rubino has a great point. EJ has said it's still too early for AE stocks and that he's still just in cash & PMs. Does iTulip have an opinion on Rubino's "once-in-a-generation opportunity"? Is it time at last to go long Alt Energy?

The reports we're getting indicate that Alt-e will be challenged in 2009. More so outside the US but then a kWh of energy is a kWh of energy wherever it's used. We compete with fossil fuel and it's half the price it was four months ago. How can this be the time to invest in Alt-e?

iTulip members should be careful to walk a line between this idea that now is the time to invest and 2012 is the end of the world. I read that nonsense on another thread here recently. The next year will not be easy. The tendency will be toward extremes and it is a time to either keep your powder dry or continue to make slow and steady investments in investments with which you're confident.

EJ is in the dry powder crowd. I've tended toward investing slowly and so far have been crushed. Overall it's not a great loss but it's still not fun being wrong about companies I'm sure are great long term in the Alt-e world. I reviewed several of the hobo-stews listed in this post and it looks like a game of darts to me.

GRG55

11-15-08, 12:42 AM

The reports we're getting indicate that Alt-e will be challenged in 2009. More so outside the US but then a kWh of energy is a kWh of energy wherever it's used. We compete with fossil fuel and it's half the price it was four months ago. How can this be the time to invest in Alt-e?

iTulip members should be careful to walk a line between this idea that now is the time to invest and 2012 is the end of the world. I read that nonsense on another thread here recently. The next year will not be easy. The tendency will be toward extremes and it is a time to either keep your powder dry or continue to make slow and steady investments in investments with which you're confident.

EJ is in the dry powder crowd. I've tended toward investing slowly and so far have been crushed. Overall it's not a great loss but it's still not fun being wrong about companies I'm sure are great long term in the Alt-e world. I reviewed several of the hobo-stews listed in this post and it looks like a game of darts to me.

Agree completely. Among other things the USA has to engineer a proper next petroleum energy crisis as part of the government enabling of the Next [Alt-e] Bubble [the last one was all talk, no line-ups...not good enough]. So far Paulson and Bernanke are doing a fine, fine job in that regard...;)

laphroaig

11-15-08, 12:52 AM

We compete with fossil fuel and it's half the price it was four months ago. How can this be the time to invest in Alt-e?

That's precisely why now might be the right time to invest in Alt-e. If you wait until oil is back up at $140 you'll have missed the boat.

I am with you on the drip-feed approach to investing, because I believe it's very difficult to know the right time to make a big move. Having made that decision, I am still left worrying that my drip-feed is either too fast or too slow...! :)

*T*

11-15-08, 04:32 AM

I'm still under my golden umbrella. If the green boom has legs, it won't matter if you miss a little of the beginning.

Tulpen

11-15-08, 05:00 AM

I doubt that in a global recession or perhaps even depression there will be much room for discussing alternative forms of energy. Consumption of energy collapsed and is likely to collapse further.

It's like convincing people to eat organic fruit when they have hardly anything to eat.

we_are_toast

11-15-08, 07:39 AM

We compete with fossil fuel and it's half the price it was four months ago. How can this be the time to invest in Alt-e?President elect Obama will not make the same mistake Reagan, Bush, Clinton, Bush made. He realizes the impact of Peak Cheap Oil. The U.S. needs revenues. What better source of revenue than getting rid of tax breaks for oil, and taxing imported oil? The price of oil will be driven up for revenue to fund Alt-e and to make Alt-e more competitive. Alt-e will be the foundation for getting out of the depression. The oil economy will share the grave of the FIRE economy.

Maybe not now for Alt-e investments, but very very soon.

c1ue

11-15-08, 08:08 AM

jimmygu3

11-15-08, 08:16 AM

The reports we're getting indicate that Alt-e will be challenged in 2009. More so outside the US but then a kWh of energy is a kWh of energy wherever it's used. We compete with fossil fuel and it's half the price it was four months ago. How can this be the time to invest in Alt-e?

A bad 2009 for Alt-E stocks should already be baked in. GAAEX, the 'hobo stew' I have on my menu, is down 67% from its high a year ago. I'm continuing to wade in, as my time horizon is very long.

I opened my first brokerage account in 1998, which I liken to losing my virginity at an orgy. I remember knowing, even then, that these high-flying tech valuations (very often with a negative P/E) couldn't last. There was simply no reasonable future revenue stream that would justify the share prices. California homes selling for >10x median family income were the same thing. With Alt-E, I can easily look a few years ahead and see a time when high oil prices, carbon taxes and green energy subsidies create a very profitable market.

Jimmy

bill

11-15-08, 09:20 AM

santafe2

11-15-08, 10:17 AM

Agree completely. Among other things the USA has to engineer a proper next petroleum energy crisis as part of the government enabling of the Next [Alt-e] Bubble [the last one was all talk, no line-ups...not good enough]. So far Paulson and Bernanke are doing a fine, fine job in that regard...;)

The easiest way to levelize the cost of fossil fuel used for stationary energy consumption is to create a feed-in tariff for alternative energy. Germany built their Alt-e infrastructure using this strategy. If the US does not want to be pulled through the fossil fuel price wringer, attempting to create a program that chases traditional energy cost, a feed-in tariff is the most straight forward approach.

For those unfamiliar with this concept, it is a way to raise the value of energy produced by an Alt-e source by paying the owner of the system a fixed amount per kWh for a fixed amount of time. The owner if the Alt-e system may also be the consumer of the energy produced which can create an added benefit.

For a feed-in tariff to work properly it is coupled with legislation that sets a renewable portfolio standard, (RPS) and Net Metering. That is, a minimum percentage of energy which must come from renewable energy and a requirement that the utility credit, at retail value, the Alt-e producer for any unused energy.

Another important strategy that should be implemented at the utility is the concept of Time of Use. That is, energy created during peak demand periods is more valuable than energy created at other times of the day or times of the year. The concept is simple, a kWh produced at 5PM during a weekday in July has much more value than one created on a Sunday in February. The best TOU programs in the country are run by PG&E. These TOU programs incent owners to orient their systems to produce more peak energy.

If the President Elect has a firm understanding of how to drive the production side of the equation, he'll work with Congress to replace our Federal ITC structure with a feed-in tariff strategy.

The above does not begin to tackle consumption patterns/levels for stationary energy, much less consumption levels for mobile energy. C1ue and Toast noted the importance of dis-incentives for using fossil fuel, especially oil. If the new President pursues this idea he will need to be very clear why we're doing it and at the same time tie this tax rise to a program for transportation infrastructure build-out.

santafe2

11-15-08, 10:31 AM

What better source of revenue than getting rid of tax breaks for oil, and taxing imported oil? The price of oil will be driven up for revenue to fund Alt-e and to make Alt-e more competitive.

While I agree with the concept of raising taxes on non-renewable transportation fuels, I don't agree that these funds should be used to subsidize Alt-e as we generally think of it; solar, wind & geothermal. These taxes must be used for transportation build-outs to mitigate the need for cars and trucks for everyday transportation of people and goods. The tax must act to benefit individuals willing to switch to public transportation or move close enough to work, markets, etc. to make transportation less necessary. This tax will tend to be regressive so the benefits derived from the tax must tend to resolve costs for lower income earners.

santafe2

11-15-08, 10:38 AM

A bad 2009 for Alt-E stocks should already be baked in. GAAEX, the 'hobo stew' I have on my menu, is down 67% from its high a year ago. I'm continuing to wade in, as my time horizon is very long.

This fund makes the point I was trying to get across earlier. One of their top 10 holdings is all but bankrupt. We're closer to the beginning of this downturn than the end and many RE companies will not survive.

FRED

11-15-08, 10:45 AM

The easiest way to levelize the cost of fossil fuel used for stationary energy consumption is to create a feed-in tariff for alternative energy. Germany built their Alt-e infrastructure using this strategy. If the US does not want to be pulled through the fossil fuel price wringer, attempting to create a program that chases traditional energy cost, a feed-in tariff is the most straight forward approach.

The Harper's Next Bubble piece suggested a floating tariff to keep oil at $100.

For those unfamiliar with this concept, it is a way to raise the value of energy produced by an Alt-e source by paying the owner of the system a fixed amount per kWh for a fixed amount of time. The owner if the Alt-e system may also be the consumer of the energy produced which can create an added benefit.

For a feed-in tariff to work properly it is coupled with legislation that sets a renewable portfolio standard, (RPS) and Net Metering. That is, a minimum percentage of energy which must come from renewable energy and a requirement that the utility credit, at retail value, the Alt-e producer for any unused energy.

Another important strategy that should be implemented at the utility is the concept of Time of Use. That is, energy created during peak demand periods is more valuable than energy created at other times of the day or times of the year. The concept is simple, a kWh produced at 5PM during a weekday in July has much more value than one created on a Sunday in February. The best TOU programs in the country are run by PG&E. These TOU programs incent owners to orient their systems to produce more peak energy.

If the President Elect has a firm understanding of how to drive the production side of the equation, he'll work with Congress to replace our Federal ITC structure with a feed-in tariff strategy.

The above does not begin to tackle consumption patterns/levels for stationary energy, much less consumption levels for mobile energy. C1ue and Toast noted the importance of dis-incentives for using fossil fuel, especially oil. If the new President pursues this idea he will need to be very clear why we're doing it and at the same time tie this tax rise to a program for transportation infrastructure build-out.

Good ideas. However, are they practical or necessary while the global economy is contracting and energy demand and costs are declining? A contracting economy needs cheap not expensive energy, which acts as a tax on spending. These policies need to be deployed after a recovery begins but before the growing economy becomes dependent on cheap energy as it has been since the 1980s. Do you agree?

santafe2

11-15-08, 11:29 AM

Good ideas. However, are they practical or necessary while the global economy is contracting and energy demand and costs are declining? A contracting economy needs cheap not expensive energy, which acts as a tax on spending. These policies need to be deployed after a recovery begins but before the growing economy becomes dependent on cheap energy as it has been since the 1980s. Do you agree?

The US economy must be stabilized before we embark on a plan to raise energy costs at the consumer level. Against that we have to weigh the cost of a re-start in the world's nascent renewable energy business. It will not grow without subsidy so the question we might ask is how that subsidy will be provided without directly impacting consumers before the economy begins to turn around. I'm never completely comfortable talking my book on iTulip but I think renewable energy is too important to not be supported at a level that will allow the business to grow.

babbittd

11-15-08, 11:39 AM

More likely government infrastructure programs will focus on making buildings and homes more energy efficient by installing more new heating and cooling systems, insulation, and lighting.

Maybe it will come in the form of a WPA style program that employs an army of folks to sweep across the country updating buildings for LEED certification?

You've mentioned broadband too. The Congress passed a broadband bill a couple of months ago and Bush signed it into law on October 10th.

laphroaig

11-15-08, 11:45 AM

The Harper's Next Bubble piece suggested a floating tariff to keep oil at $100.

This would obviously have 2 effects
#1 -- changing consumer and business behavioural patterns so they use less oil
#2 -- encouraging development of Alt-E technologies.

What I am not clear on is the likely balance between these 2 effects.

Looking at Europe, their gas prices are high because of government taxes. Even today, gas in the UK is > $5 for a US gallon (3.6 liters). European consumers have had gas prices above the levels that $100 oil would produce in the US, for many years.

Looking at the differences that has resulted in between the US and Europe, there is a big difference in consumption, resulting from different lifestyle choices (Europeans live in denser cities, use mass transit etc.). While there is some Alt-E technology in Europe, the higher prices haven't yet triggered the kind of Alt-E boom we are anticipating for the US.

So my question is: what are the differences between the US and Europe that mean that $100 oil would be enough to trigger an Alt-E boom in the US, when equivalent prices have been standard in Europe for many years and have not triggered such a boom?

(one thing I wonder about is gas vs. electricity. Perhaps fossil fuel-derived electricity is not taxed in Europe to the same extent that gas is, and that's why Alt-E electricity generation hasn't developed rapidly yet in Europe? I'll see if I can find some numbers on this.)

FRED

11-15-08, 11:48 AM

The US economy must be stabilized before we embark on a plan to raise energy costs at the consumer level. Against that we have to weigh the cost of a re-start in the world's nascent renewable energy business. It will not grow without subsidy so the question we might ask is how that subsidy will be provided without directly impacting consumers before the economy begins to turn around. I'm never completely comfortable talking my book on iTulip but I think renewable energy is too important to not be supported at a level that will allow the business to grow.

EJ writes in:
That is our thesis, but the question is timing. The prices of alternative energy stocks and funds is not communicating meaningful investment by government in the medium term the way home builder stocks screamed "Housing bubble coming" in 2001 and 2002 by not correcting the way all other stocks did in 2003. The reason is that the crash of the equity-based bubble in 2000 - 2001 was hammer strike on the US and global economy while the debt deflation is a steam roller that will crush everything in its path for years until the gravity of the threat is finally understood and confronted. That is why we're holding back on alternative energy stocks, as with all stocks, for now.

Let's say we are correct and the leading edge of the government sponsored alternative energy boom is conservation, and let's say that insulation of existing structures is a key of that. What you'd look for is a national roll-up of some of the 1,360 insulation contractors in N. America (http://www.thomasnet.com/products/insulation-contractors-1227-1.html) to create economies of scale in volume purchases of material and replicatable installation processes developed to improve profitability. Also likely is that we see in two years' time several private-public partnerships that are fundamentally roll-ups of many small to medium sized privately held residential and commercial construction companies.

These are some of the ideas we plan to explore in the subscriber area next year.

zmas28

11-15-08, 11:50 AM

http://www.itulip.com/images/altenergybullmarket.jpgThe Next Bull Market

by John Rubino (DollarCollapse.com (http://www.dollarcollapse.com/))

Editor's Note: I've been talking about an alternative energy investment boom since I did my research and wrote in the summer of 2007 the Harper's Magazine Next Bubble article that was published six months later in March 2008. When I was interviewed on CNBC in February, the month the magazine issue hit the stands, when asked what solar and other alternative energy stocks to buy I responded, Not yet. Investors should be in cash. We're at the start of a long bear market.

That did not go over so well with the show's producers who found the advice "un-constructive" but that was my opinion based on analysis that led me to announce December 27, 2007 that a Debt Deflation Bear Market was to commence in 2008.

We will update our Debt Deflation Bear Market forecast in December this year. For this year the forecast of a 40% decline in the DOW, in line with the Nikkei in the first year of the Japanese debt deflation in 1990, has come to pass. Not only was that forecast greeted with skepticism, but I get the sense from comments that I have seen recently that some iTulip readers did not get their heads around the idea that a boom in alternative energy stocks could follow an ugly bear market in stocks. Here, just to make certain that readers are clear on my position, I'll repeat my assertion that before the boom occurs the US economy will first experience a transformational depression that turns the US economy from what it was into something else. How long that takes is hard to say because it depends on the national and international political response, but we don't see a silver bullet returning the global system to its imbalanced 1971 - 2007 past. To make sure that iTulip readers do not see this fine article by our friend John Rubino on a future alternative energy investment opportunities as a suggestion that a boom in alternative energy stocks is imminent, we supply the time-line to the left. We expect that after the depression and transformation but before the end of the recovery alternative energy stocks will boom–in, say, 2020; that little speck off in the distance with the circle around it is the alternative energy bull.

Between now and then a large drop in energy consumption due to global economic contraction will, however, create demand for energy conservation short and medium term long before the economy needs fossil fuel alternatives, unless there is a war or other major supply shock. Across that vast expanse of economic pain and change between the end of the American Consumerist Fantasy and the beginning of the Next America, the solar and other alternative energy companies you invest in today may have gone out of business, either because of the depression or a new company with better technology out-competed them. Likely the solar company we want to invest in does not even exist yet. In sum, we don't think now is the right time to invest in alternative energy as a group. That said, we do not underestimate the ability and willingness of our government to waste our money on unnecessary energy infrastructure development, so we will have to watch these stocks and their anticipation of fiscal stimulus programs. So far, unlike home builder stocks in 2001 and 2002, they are not pricing in major government stimulus; they have gone down with everything else, or more. More likely government infrastructure programs will focus on making buildings and homes more energy efficient by installing more new heating and cooling systems, insulation, and lighting. Those are the areas we will explore in detail for subscribers that is relevant for short term and medium term investing opportunities to take advantage of the flood of government money into alternative energy development that I forecast last year.

Ka-Poom Theory offered a theory eight years ago of how the current debt deflation occurring now and subsequent reflation in the coming years. If you are going to look that far ahead you are going to be wrong on the details but if you are accurately outlining the underlying economic and monetary processes, you avoid making the big mistakes, such as staying in the stock market this year. Likewise, this alternative energy investment time-line is intended to make clear to readers that while we see an opportunity off in the distance, that does not mean we can grab that bull by the horns today. - Eric Janszen

It took a few decades longer than it should have, but the world has finally figured out that leveraged speculation is not the path to lasting prosperity. Investment banks and hedge funds are dying, and the concepts upon which they were built--derivatives, gullible pension funds, sycophantic financial media--are being shoveled into the landfill of history.

Now the survivors have to come up with ways to feed, clothe, house, and entertain seven billion people without the help of mortgage-backed bonds, CDOs, and black box trading models. The answer (not the correct answer but the inevitable one) is pretty obvious: The governments of the world will run the printing presses in an attempt to stave off Depression until some miracle happens to put us on a sustainable track, or at least until the current crop of leaders retires. This won’t work in the long run; instead it will simply destroy today’s paper currencies. But in the meantime a lot of newly-created dollars, euros, and yen will be flowing somewhere, financing growth and pumping up share prices. The question is, which shares? In a prescient March 2008 Harper’s article (http://itulip.com/forums/showthread.php?p=23725#post23725), iTulip’s (http://www.itulip.com/forums/../) Eric Janszen cast his vote as follows:

<table style="width: 85%;" align="center" border="0" cellpadding="1" cellspacing="1"><tbody><tr><td>“There are a number of plausible candidates for the next bubble, but only a few meet all the criteria. Health care must expand to meet the needs of the aging baby boomers, but there is as yet no enabling government legislation to make way for a health-care bubble; the same holds true of the pharmaceutical industry, which could hyperinflate only if the Food and Drug Administration was gutted of its power. A second technology boom - under the rubric ‘Web 2.0’- is based on improvements to existing technology rather than any new discovery. The capital intensive biotechnology industry will not inflate, as it requires too much specialized intelligence. There is one industry that fits the bill: alternative energy.” </td></tr></tbody></table>
Yep. With the election of Barak Obama, the U.S. will almost certainly come to the above conclusion, because it’s a double winner: A massive clean-tech public works program will simultaneously create jobs and restructure the energy economy along sustainable lines. So in coming years look for a varied and relentless parade of subsidies, tax breaks, public/private partnerships, and mandates designed to bolt solar panels onto rooftops, build power lines connecting wind farms to cities, and replace internal combustion engines with batteries.

Combine this coming tsunami of public cash with the fact that plunging oil prices and the general market decline have crushed even the best clean tech stocks, and the result is an interesting, maybe unique situation. The clean tech crash was a bloodbath for the hot money that piled into solar and wind in the expectation of $200 oil. But it’s a once-in-a-generation opportunity for those who kept their powder dry.

To get you started, here’s a list of clean tech mutual funds and ETFs, all of which are down in the past year. They generally own the strongest companies in their sectors, and offer diversification that is crucial, since there’s no telling where the final bottom will turn out be for any individual stock.

Claymore/MAC Global Solar Energy (http://finance.yahoo.com/q?s=TAN) (TAN)
First Trust ISE Global Wind Energy Index Fund (http://finance.yahoo.com/q?s=fan) (FAN)
Guinness Atkinson Alternative E (http://finance.yahoo.com/q?s=GAAEX) (GAAEX)
New Alternatives Fund (http://finance.yahoo.com/q?s=NALFX) (NALFX)
PowerShares Cleantech (http://finance.yahoo.com/q?s=pzd) (PZD)
PowerShares WilderHill Clean Energy (http://finance.yahoo.com/q?s=PBW) (PBW)
Power Shares Wind Global Energy Portfolio (http://finance.yahoo.com/q?s=pwnd) (PWND)
Winslow Green Growth (http://finance.yahoo.com/q?s=WGGFX) (WGGFX)
Winslow Green Solutions (http://finance.yahoo.com/q?s=WGSLX) (WGSLX)
Market Vectors Solar Energy ETF (http://finance.yahoo.com/q?s=kwt) (KWT)

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All information provided "as is" for informational purposes only, not intended for trading purposes or advice. Nothing appearing on this website should be considered a recommendation to buy or to sell any security or related financial instrument. iTulip, Inc. is not liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. Full Disclaimer (http://www.itulip.com/forums/../GeneralDisclaimer.htm)
I'm struggling a little bit trying to understand this position. Does iTulip then see the depression as an era of greatly suppressed growth but one that is inflationary in nature?

Also, in this note from Fred
http://itulip.com/forums/showthread.php?p=59491#poststop
EJ says "When I was on CNBC in February in connection with the Harper's article, Erin Bernett asked me which stocks viewers should buy to play it. I said "go to cash" because I expected the bear market I called Dec. 2007 to be especially hard on Alternative Energy stocks. Most funds are off 50% to 80% since then.

I'll let you know when I think it's safe to come out and play. When I was on CNBC in February in connection with the Harper's article, Erin Bernett asked me which stocks viewers should buy to play it. I said "go to cash" because I expected the bear market I called Dec. 2007 to be especially hard on Alternative Energy stocks. Most funds are off 50% to 80% since then.

I'll let you know when I think it's safe to come out and play.When I was on CNBC in February in connection with the Harper's article, Erin Bernett asked me which stocks viewers should buy to play it. I said "go to cash" because I expected the bear market I called Dec. 2007 to be especially hard on Alternative Energy stocks. Most funds are off 50% to 80% since then.

I'll let you know when I think it's safe to come out and play. Maybe soon"

Is this not contradictory with the position in this note, which says that the right investment time is about 12 years in the future? Or if not, then a clarification would be most welcome...

FRED

11-15-08, 11:58 AM

I'm struggling a little bit trying to understand this position. Does iTulip then see the depression as an era of greatly suppressed growth but one that is inflationary in nature?

Also, in this note from Fred
http://itulip.com/forums/showthread.php?p=59491#poststop
EJ says "When I was on CNBC in February in connection with the Harper's article, Erin Bernett asked me which stocks viewers should buy to play it. I said "go to cash" because I expected the bear market I called Dec. 2007 to be especially hard on Alternative Energy stocks. Most funds are off 50% to 80% since then.

I'll let you know when I think it's safe to come out and play. When I was on CNBC in February in connection with the Harper's article, Erin Bernett asked me which stocks viewers should buy to play it. I said "go to cash" because I expected the bear market I called Dec. 2007 to be especially hard on Alternative Energy stocks. Most funds are off 50% to 80% since then.

I'll let you know when I think it's safe to come out and play.When I was on CNBC in February in connection with the Harper's article, Erin Bernett asked me which stocks viewers should buy to play it. I said "go to cash" because I expected the bear market I called Dec. 2007 to be especially hard on Alternative Energy stocks. Most funds are off 50% to 80% since then.

I'll let you know when I think it's safe to come out and play. Maybe soon"

Is this not contradictory with the position in this note, which says that the right investment time is about 12 years in the future? Or if not, then a clarification would be most welcome...

Maybe soon for conservation related alternative energy plays, not for fossil fuel alternative energy plays.

babbittd

11-15-08, 12:36 PM

EJ writes in:
That is our thesis, but the question is timing. The prices of alternative energy stocks and funds is not communicating meaningful investment by government in the medium term the way home builder stocks screamed "Housing bubble coming" in 2001 and 2002 by not correcting the way all other stocks did in 2003. The reason is that the crash of the equity-based bubble in 2000 - 2001 was hammer strike on the US and global economy while the debt deflation is a steam roller that will crush everything in its path for years until the gravity of the threat is finally understood and confronted. That is why we're holding back on alternative energy stocks, as with all stocks, for now.

Let's say we are correct and the leading edge of the government sponsored alternative energy boom is conservation, and let's say that insulation of existing structures is a key of that. What you'd look for is a national roll-up of some of the 1,360 insulation contractors in N. America (http://www.thomasnet.com/products/insulation-contractors-1227-1.html) to create economies of scale in volume purchases of material and replicatable installation processes developed to improve profitability. Also likely is that we see in two years' time several private-public partnerships that are fundamentally roll-ups of many small to medium sized privately held residential and commercial construction companies.

These are some of the ideas we plan to explore in the subscriber area next year.

- foundation, attic, wall and pipe insulation
- air sealing
- heat recovery ventilation
- condensing water boilers
- CFL bulbs

What else do you all have in mind?

- Third-party certification?

an interesting paper on the subject from Japan:

Policy Recommendations for Reducing Energy Consumption by the Building Sector - May 24, 2007 - Committee on Civil Engineering and Architecture Science Council of Japan (http://www.scj.go.jp/ja/info/kohyo/pdf/kohyo-20-t38-3e.pdf)

we_are_toast

11-15-08, 12:51 PM

We should not wait for some type of economic recovery before imposing a tax on oil and diverting those dollars to Alt-e/conservation! The dollars collected from this tax will be redirected into the economy into specific industries. They will not be removed from the economy and the net impact will be positive. This is a necessary part of the economic recovery, not something aside from it.

The current low price of gasoline is creating an incentive for consumers to continue or go back to their energy wasting ways which is harmful to the economy. Ford recently reported they are rehiring people at their F100 pickup factory. The tax would create a disincentive to use oil and create an incentive to conserve or use Alt-e.

The tax is regressive and compensation needs to be provided to those in need, but the incentive to use more oil that currently exists in the current low prices should not be allowed to stand. The move to Alt-e is imperative for the long term survival of our economy and our society. The risk of waiting, far exceeds any gain from leaving the oil needle in our arm for another day.

I don't believe President Elect Obama will wait.

santafe2

11-15-08, 12:55 PM

EJ writes in: ...Let's say we are correct and the leading edge of the government sponsored alternative energy boom is conservation, and let's say that insulation of existing structures is a key of that...I agree and we can likely judge our new government's acumen for managing our energy use and energy costs by how seriously they attack this issue. This is a point I've made here several times over the last year. Conservation is at least 3X as effective as renewable energy off-sets. Conserve first/then consider production off-set options. When done properly and insulation is combined with the elimination of thermal bridging, the payback is only a few years. The trick will be implementing national standards for measuring efficacy. REM Design by RESNET is a good starting point.

The above addresses space heating and should be distinguished from non-thermal strategies for offsetting energy use; i.e., solar, wind and geothermal. A massive deployment of conservation strategies to lower requirements for space heat should not deter us from our path to develop alternative, renewable fuel sources. The former can be widely deployed today while the latter maintains it's growth curve with minimal cost per capita. I don't see this as an either/or, mutually exclusive choice. Both are important.

santafe2

11-15-08, 01:14 PM

- foundation, attic, wall and pipe insulation
- air sealing
- heat recovery ventilation
- condensing water boilers
- CFL bulbs

What else do you all have in mind?

- Third-party certification?

an interesting paper on the subject from Japan:

Policy Recommendations for Reducing Energy Consumption by the Building Sector - May 24, 2007 - Committee on Civil Engineering and Architecture Science Council of Japan (http://www.scj.go.jp/ja/info/kohyo/pdf/kohyo-20-t38-3e.pdf)

Nice to see the Japanese discussing energy producing homes. This is where we should be pointed. Our homes should produce enough energy to allow us to be mobile without the use of fossil fuels. The technology is here. Expensive today, but available.

To your list I would add energy efficient openings, home orientation with a southern exposure and favoring electric energy sources to maintain energy source flexibility.

KGW

11-15-08, 01:31 PM

bill

11-15-08, 03:08 PM

Japan is the worlds most energy efficiency economy. The loss of its nuclear power plant last year left Japan in need of emission credits. Once you get to the “Japan energy efficiency” stage its very clear nuclear power is the heavy lifting high priority non-carbon based power supply you need to meet standards of Kyoto agreement and when lost it is costly regardless of the price per/b of oil.
Energy efficiency will be used as first phase to meet new carbon policy adopted by US and enforced by EPA. We have plenty of room for improvement in energy efficiency. After implementing energy efficiency the US will need a low carbon based energy supply to meet the demands and comply with a Kyoto replacement agreement.
I wouldn’t forecast a immediate building boom of nuclear power plants in the US, however the permitting stage is well under way. Japan is in a situation without many options, they have to build one to meet their non carbon power supply needs.

http://www.ft.com/cms/s/0/9803d098-b124-11dd-8915-0000779fd18c.html

Japan emissions bill to soar

By Jonathan Soble in Tokyo
Published: November 13 2008 02:00 | Last updated: November 13 2008 02:00

<SCRIPT language=javascript type=text/javascript>function floatContent(){var paraNum = "3"paraNum = paraNum - 1;var tb = document.getElementById('floating-con');var nl = document.getElementById('floating-target');if(tb.getElementsByTagName("div").length> 0){if (nl.getElementsByTagName("p").length>= paraNum){nl.insertBefore(tb,nl.getElementsByTagNam e("p")[paraNum]);}else {if (nl.getElementsByTagName("p").length == 3){nl.insertBefore(tb,nl.getElementsByTagName("p")[2]);}else {nl.insertBefore(tb,nl.getElementsByTagName("p")[0]);}}}}</SCRIPT>Japan faces ballooning costs to meet its greenhouse gas limits under the Kyoto protocol after data published on Wednesday showed that emissions last year increased to record levels more than 15 per cent above target.
The rise, caused by the shutdown of a major nuclear power plant, could add several hundred million dollars annually to Japan's bill for emissions credits – the market-traded pollution rights it has pledged to buy to close the gap between actual output and its Kyoto treaty commitment.
Japan boasts the rich world's most energy-efficient economy. It has promised to cut production of carbon dioxide and other dangerous gases by a further 60-80 per cent by mid-century. But it has fallen behind the shorter-term promises it made as host of the landmark environmental treaty talks a decade ago.

Under the Kyoto agreement, it promised to cut emissions by an average of 6 per cent compared with 1990 levels in the five years to 2012. In the fiscal year to March, however, emissions increased by 31m tonnes, or 2.3 cent, the environment ministry said.
Japan cut emissions in 2006 but was forced to burn more fossil fuels last year after an earthquake shut down the Kashiwazaki-Kariwa power station – the world's biggest nuclear plant.
The station remains closed for safety upgrades and Tokyo Electric Power, its operator, estimates that the extra oil, coal and gas it is using adds 30m tonnes of greenhouse gasses to the atmosphere a year, equivalent to virtually all of last year's increase. Japan has maintained that it will hit its target even if that means running up large costs for carbon offsets.
"We have to do it because we are the mother of Kyoto," an industry ministry official responsible for climate policy told the Financial Times.
The price of UN-certified emissions credits known as CERs – the gold standard for carbon trading – has fallen sharply since the summer, tracking the decline in oil prices. Even at the current price of around $18 a tonne Japan would have to pay $3.3bn annually to comply with Kyoto at its current emissions level.
The government has been pressing polluting companies to buy credits directly, but has stopped short of enforcing a mandatory cap-and-trade system. Last month it announced a new exchange on which companies will be able to trade credits voluntarily after setting their own targets.
Business argues that Japan is already energy-efficient – it is the world's second-biggest economy but only the fifth-biggest greenhouse gas emitter – and further reductions would be difficult and expensive.

Tulpen

11-15-08, 03:48 PM

President elect Obama will not make the same mistake Reagan, Bush, Clinton, Bush made. He realizes the impact of Peak Cheap Oil. The U.S. needs revenues. What better source of revenue than getting rid of tax breaks for oil, and taxing imported oil? The price of oil will be driven up for revenue to fund Alt-e and to make Alt-e more competitive. Alt-e will be the foundation for getting out of the depression. The oil economy will share the grave of the FIRE economy.

Maybe not now for Alt-e investments, but very very soon.
I would not touch any of those above mentioned funds, lots of those companies will likely go bankrupt.

metalman

11-15-08, 04:11 PM

I would not touch any of those above mentioned funds, lots of those companies will likely go bankrupt.

bingo. going through a 'transformational depression' with a portfolio of stocks is like going over a waterfall in a raft made out of dixie cups. cash, short term bonds, and gold, baby.

xtronics

11-15-08, 09:10 PM

I would not touch any of those above mentioned funds, lots of those companies will likely go bankrupt.

All of the alternative energy depends on government money. This is because the laws of physics do not make Wind, solar, Photo Voltaic, or Hydrogen viable in a real market place.

You may have noticed that GM was talking about producing a 'plug-in' car. This should make it clear to anyone that can run a few numbers on batteries, that the company is headed for zero.

The only thing in the short term that could be interesting is oil-sand .. but with a carbon tax looming - I think the fate of the economy is doomed for the rest of my life anyway.

santafe2

11-15-08, 10:48 PM

All of the alternative energy depends on government money. This is because the laws of physics do not make Wind, solar, Photo Voltaic, or Hydrogen viable in a real market place.

Guess we'll have to rely on biochemistry.

xtronics

11-15-08, 11:04 PM

Guess we'll have to rely on biochemistry.

Actually, there are some things that look interesting, but figure something like ten years for deployment. In the mean time - expect massive malinvestment in the 'alternative BS energy' I mentioned above.

Some genetic engineering of cellulose to simple sugars is progressing. There is also a guy at the University of Wisconsin that claims to have a thermally efficient method of taking sugars to a fuel you can burn in your car. (They don't want investors - I already checked). This will blow the ethanol industry out of the water if it pans out.

The talking heads didn't have a clue about what he was saying. If it is true - and not just venture vulture BS - it is huge.

GRG55

11-16-08, 01:39 AM

GRG55

11-16-08, 01:46 AM

...Consumption of energy collapsed and is likely to collapse further.

It's like convincing people to eat organic fruit when they have hardly anything to eat.

I agree about the organic food comment, but if indeed "consumption of energy collapsed" [and I for one would love to see some evidence of this] then there should be plenty of it around [e.g. "lots to eat"]. But just like food, there isn't.

Unfortunately if you look for evidence of collapse you may be disappointed. Global primary energy consumption has increased at a fairly steady 2.2 percent annual rate for the past decade. Despite the already collapsing housing construction bubble and the global credit seize up in August 2007, primary energy consumption worldwide actually increased slightly faster at 2.4% last year. Finally, primary energy consumption is defined as traded fuels and therefore does not include wind, solar or geothermal energy sources [also does not include wood, peat and animal waste]. When one considers the increase in the global installed base of all three of these renewable energy sources in the past decade, total global energy consumption must be increasing even faster than the 2.2% primary source figure.

A global recession will no doubt slow the rate of increase, may even flatten it to zero. A global depression could result in a modest, but temporary, decline in pace of global energy consumption. But to expect a collapse implies something much, much worse than even the 1930s experience. Possible I suppose, but not probable.

GRG55

11-16-08, 01:52 AM

Toast,

If Obama institutes a Japan- or EU- like tax on oil and/or gasoline, I will eat every cautionary word I've said about him.

A gesture like that will truly mean he is a stateman.

Of course, 3 months after he does so, he's going to get shot by some angry SUV owner...

The tax is a given. bill shows what form it will come in below. Taxing "carbon" is the only politically acceptable way to raise the cost of fossil energy in the USA, recession or no recession. And you are correct...just like Kevin Rudd in Australia, Obama will appear the statesman by contrasting his Kyoto cred and multi-lateralism inclinations with that of the outgoing President.

EPA

http://www.itulip.com/forums/showthread.php?p=55880#post55880 (http://www.itulip.com/forums/showthread.php?p=55880#post55880)

court ruled in favor of Massachusetts et al, finding that EPA has the authority to regulate CO<SUB>2</SUB> and other greenhouse gases.
http://www.pewclimate.org/epavsma.cfm
This opinion is important for national and local climate change policy. Not only does it open the door to regulation of greenhouse gases under the Clean Air Act, but is also likely to catalyze calls for more comprehensive federal climate change legislation (http://www.pewclimate.org/docUploads/Cap-and-trade%20bills%20110th_Feb5.pdf) (pdf) – legislation that covers sectors other than transportation as well as non-CO<SUB>2</SUB> greenhouse gases. This ruling could lend support for state efforts (http://www.pewclimate.org/what_s_being_done/in_the_states/state_legislation.cfm) such as the California legislation (http://www.pewclimate.org/what_s_being_done/in_the_states/vehicle_ghg_standard.cfm) intended to regulate greenhouse gases as a pollutant in the transportation sector. In turn, expanded state activity will likely build even more pressure for a more uniform federal program.
Read more about GHG emissions standards (http://www.pewclimate.org/global-warming-in-depth/all_reports/fuel_economy/) in the transportation sector.
Read the complete (http://www.supremecourtus.gov/opinions/06pdf/05-1120.pdf) Ruling (pdf).

http://www.time.com/time/health/article/0,8599,1859049,00.html?imw=Y

GRG55

11-16-08, 02:02 AM

- foundation, attic, wall and pipe insulation
- air sealing
- heat recovery ventilation
- condensing water boilers
- CFL bulbs

What else do you all have in mind?

- Third-party certification?

an interesting paper on the subject from Japan:

Policy Recommendations for Reducing Energy Consumption by the Building Sector - May 24, 2007 - Committee on Civil Engineering and Architecture Science Council of Japan (http://www.scj.go.jp/ja/info/kohyo/pdf/kohyo-20-t38-3e.pdf)

Every item you listed above, except CFL bulbs, is going into the "bunker". Some of these things have been code requirements up here for some time.

I am not sure how the USA statistics compare, but in Canada there has been steady improvement in all the components of home energy efficiency over the past 30 years. But at the same time as insulation, heating systems, appliances, and so forth individually got better, aggregate per home energy consumption has not declined.

Why? Because all the energy efficiency improvements have been completely offset by increased home size. So the average, smaller, family today is using just as much energy as their counterpart 3 decades ago.

GRG55

11-16-08, 02:32 AM

This would obviously have 2 effects
#1 -- changing consumer and business behavioural patterns so they use less oil
#2 -- encouraging development of Alt-E technologies.

What I am not clear on is the likely balance between these 2 effects.

Looking at Europe, their gas prices are high because of government taxes. Even today, gas in the UK is > $5 for a US gallon (3.6 liters). European consumers have had gas prices above the levels that $100 oil would produce in the US, for many years.

Looking at the differences that has resulted in between the US and Europe, there is a big difference in consumption, resulting from different lifestyle choices (Europeans live in denser cities, use mass transit etc.). While there is some Alt-E technology in Europe, the higher prices haven't yet triggered the kind of Alt-E boom we are anticipating for the US.

So my question is: what are the differences between the US and Europe that mean that $100 oil would be enough to trigger an Alt-E boom in the US, when equivalent prices have been standard in Europe for many years and have not triggered such a boom?

(one thing I wonder about is gas vs. electricity. Perhaps fossil fuel-derived electricity is not taxed in Europe to the same extent that gas is, and that's why Alt-E electricity generation hasn't developed rapidly yet in Europe? I'll see if I can find some numbers on this.)

I doubt the lifestyle differences are entirely "choice". Denser cities open the door to lower delivered costs for not only transit, but also roads, utilities, telecommunications, hospitals, schools, and virtually every other public or privately provided service.

The problem is that the USA [and Canada] are not Europe. And never will be. Here's why:

Population Density per square kilometre:
Netherlands........395
Belgium..............341
UK....................246
Germany............232
Italy.................193
Switzerland........176
Denmark............127
France..............109

EU average........112

USA...................31
Canada................3.2 [no typo]

Trying to "make over" the USA and Canada in some Euro inspired form is a futile exercise. The fundamental circumstances, cultural norms and history are just not the same. As the French would say "Vive la difference". High speed trains, as just one example, are only viable between very large population centres in relatively close proximity [e.g. NY to LA, fergeddaboutit]. Governments here in Canada regularly piss away tens of millions of taxpayer dollars on studies of high speed trains. The answer is always the same. Large taxpayer funding to build [which isn't such a bad thing given how much taxpayers subsidize the road and highway system], and large ongoing per passenger subsidies to keep it running [which is what causes the heart palpitations]. These things are so massively uneconomic because of our low population density that even the superbly well-connected [politically] Bombardier Inc. has never been able to move the discussion beyond the endless studies, even on the Montreal-Toronto corridor.

Surely we can do better. Let's shamelessly plagiarize from the Europeans [and anyone else] what is useful and good, but recognize we'll largely have to find our own unique solutions to the energy issue. Solutions appropriate to this continent.

Down Under

11-16-08, 02:37 AM

Germany had [still has?]What I find fascinating is that despite all this German foreign policy is still, after all these years, shaped by Germany's need to secure hydrocarbons. From the Russians.

I am highly, highly sceptical of any prognostication that the USA will execute an Alt-e policy any better than this. Especially if the funding is dependent on a government bureacracy established to oversee the taxing of hydrocarbon production and consumption, with the proceeds redistributed by the brains in Washington "in the national good". It'll happen, I have no doubt. But it'll be a mess.

Just to clarify, are you saying that you doubt the viability of alt-E or just that the government will screw up the implementation.

GRG55

11-16-08, 03:28 AM

Just to clarify, are you saying that you doubt the viability of alt-E or just that the government will screw up the implementation.

Some of both.
I doubt "renewable" forms of Alt-e can or will materially displace carbon fuels; non-renewable Alt-e, such as uranium, might make material inroads however. The Germans have made a well organized, well thought out effort to advocate conservation and to introduce non-carbon/low-carbon/non-nuclear" alternatives and make a real dent in their dependence on petroleum and coal. This has had some constructive effect as Germany's primary energy use has been in a slow downtrend for at least a decade. It declined almost 8 percent; from 337 million metric tonnes of oil equivalent in 1997 to 311 million tonnes in 2007. But we must also recall that Germany had one of the slowest growing economies in the developed world during much of that period. Also interesting is that while German consumption of oil, natural gas and nuclear energy declined between 2006 and 2007, coal usage was up almost 3% yoy. I point to Germany not to be critical, but because I believe that it would be difficult for many other nations, including the USA and Canada, to establish and execute an energy policy framework any better than Germany has [However, I am completely open if someone closely familiar with the German experience can show us where we could materially improve on that experience. At this point the only thing I think they did wrong was a misguided anti-nuclear stance, that is now being reversed].
Government bureacrats deciding who should be "winners" [receive subsidies/grants/loans] and who should not, is an absolutely certain path to a complete mess. Tax those behaviours that are to be discouraged, including fossil fuel production and consumption if those are deemed to be "bad things". But stay out of deciding where the money should be doled out. Put it in general revenue and ensure elected officials allocate it according to the normal budget process and channels [who's to say that the best use for fossil fuel taxes is not health care or education or bailing out another bank, instead of trains and windmills?]. Even that is no assurance however. Look what a mess the already protected and subsidized ethanol industry has become in the USA.

pksubs

11-16-08, 05:56 AM

some of you may have seen this article about Denmark's energy independence drive:

http://online.wsj.com/article/SB117649781152169507.html?mod=hps_us_pageone

It has all the features of our current narrative : crisis > government response > high tarrifs > slew of energy conservation measures > alternate energy sources such as wind and (believe it or not!) pig fat..

Denmark is tiny though, and with a high population density. Perhaps Brazil is more relevant

we_are_toast

11-16-08, 07:47 AM

EJ:
Let's say we are correct and the leading edge of the government sponsored alternative energy boom is conservation, and let's say that insulation of existing structures is a key of that.Santafe2
The above addresses space heating and should be distinguished from non-thermal strategies for offsetting energy use; i.e., solar, wind and geothermal. A massive deployment of conservation strategies to lower requirements for space heat should not deter us from our path to develop alternative, renewable fuel sources. The former can be widely deployed today while the latter maintains it's growth curve with minimal cost per capita. I don't see this as an either/or, mutually exclusive choice. Both are important.I am not at all convinced that the leading edge of the Alt-e/conservation effort will be space heating. This is not the 1970's. Huge gains in space heating efficiencies were made back then, mostly with insulation. Building codes across the country were changed to take advantage of what was learned. Many communities across the northern states now require R19 walls and R40 ceilings. Of course further gains can and should be made, but the bang for the buck isn't here anymore.

The immediate problem is OIL. Here is where we took a major step backward. Failure to increase CAFE standards, even exemptions from those standards. As you're driving down the highway, look around and see how many people are driving alone in a SUV.

The biggest government conservation effort, which at the same time would address the biggest energy problem facing the country, can be made in the transportation sector. Out of the box will be an increase in CAFE standards and a repeal of the giant SUV exemption. On the table will be outright taxes on gas guzzlers and gas guzzler buybacks for low income. Bailout packages for the auto industry will require retooling for more efficient vehicles.

santafe2
The tax must act to benefit individuals willing to switch to public transportation or move close enough to work, markets, etc. to make transportation less necessary.I'm afraid the window of opportunity for rapid expansion of mass transit closed in the 1970's and 80's. The urban sprawl of the past has now made the required capital expenditure for new rail or rail expansion extremely high. Even bus service expansion is expensive. Due to the vastly expanded distances needed to be serviced by mass transit, the daily operational costs are very high. Even though I'm a fan of mass transit, and even though some projects will go forward, there is far more bang for the buck in direct solar and wind subsidies. The transition to mass transit should take place as the suburbs and highways deteriorate and require replacement. Given the quality of how they were built, it won't take long to start the process.

GRG55:
Government bureacrats deciding who should be "winners" [receive subsidies/grants/loans] and who should not, is an absolutely certain path to a complete mess. Tax those behaviours that are to be discouraged, including fossil fuel production and consumption if those are deemed to be "bad things". But stay out of deciding where the money should be doled out. Put it in general revenue and ensure elected officials allocate it according to the normal budget process and channels [who's to say that the best use for fossil fuel taxes is not health care or education or bailing out another bank, instead of trains and windmills?]. Even that is no assurance however. Look what a mess the already protected and subsidized ethanol industry has become in the USA.The marketplace failed our nation and the world with the FIRE economy over the past 20 years. If you believe in Peak Cheap Oil, or even worse, Peak Production Capacity Oil, and you accept the absolute crucial role energy plays in our very existence, and you accept that the marketplace (which is more manipulated than free) has failed to transition us to sustainable energy, than if not the government, who?

c1ue

11-16-08, 08:09 AM

GRG,

I understand about the carbon tax attempt - but what really counts is how the population reacts once it is clear high gasoline prices are here to stay - and it is Obama's doing.

At present I very much doubt the majority of the population has connected the dots; the present precipitous gasoline price fall isn't going to help either as it will make the prior gasoline price rise seem like manipulation or a short term squeeze, when in fact it is the present price fall which should be described thus.

Does your bunker have a 10000 gallon gasoline tank? :p

11-16-08, 08:55 AM

I doubt the lifestyle differences are entirely "choice". Denser cities open the door to lower delivered costs for not only transit, but also roads, utilities, telecommunications, hospitals, schools, and virtually every other public or privately provided service.

The problem is that the USA [and Canada] are not Europe. And never will be. Here's why:

Population Density per square kilometre:
Netherlands........395
Belgium..............341
UK....................246
Germany............232
Italy.................193
Switzerland........176
Denmark............127
France..............109

EU average........112

USA...................31
Canada................3.2 [no typo]

Trying to "make over" the USA and Canada in some Euro inspired form is a futile exercise. The fundamental circumstances, cultural norms and history are just not the same. As the French would say "Vive la difference". High speed trains, as just one example, are only viable between very large population centres in relatively close proximity [e.g. NY to LA, fergeddaboutit]. Governments here in Canada regularly piss away tens of millions of taxpayer dollars on studies of high speed trains. The answer is always the same. Large taxpayer funding to build [which isn't such a bad thing given how much taxpayers subsidize the road and highway system], and large ongoing per passenger subsidies to keep it running [which is what causes the heart palpitations]. These things are so massively uneconomic because of our low population density that even the superbly well-connected [politically] Bombardier Inc. has never been able to move the discussion beyond the endless studies, even on the Montreal-Toronto corridor.

Surely we can do better. Let's shamelessly plagiarize from the Europeans [and anyone else] what is useful and good, but recognize we'll largely have to find our own unique solutions to the energy issue. Solutions appropriate to this continent.
when you point to the montreal-toronto corridor, you point to the limited value of those population density numbers you quote. the population is not exactly evenly distributed over the land mass. offhand, i don't know the density of the boston-providence-new york-philadelphia-baltimore-washington corridor, but i would think it high enough to justify a lot of public transit. 100 years ago people could take trolleys [!] to travel from new york to boston. perhaps that possibility will return once auto travel is expensive enough, and the "subsidies" accorded public transit are weighed against the subsidies and multi-faceted costs of ever-increasing car traffic.

GRG55

11-16-08, 09:17 AM

when you point to the montreal-toronto corridor, you point to the limited value of those population density numbers you quote. the population is not exactly evenly distributed over the land mass. offhand, i don't know the density of the boston-providence-new york-philadelphia-baltimore-washington corridor, but i would think it high enough to justify a lot of public transit. 100 years ago people could take trolleys [!] to travel from new york to boston. perhaps that possibility will return once auto travel is expensive enough, and the "subsidies" accorded public transit are weighed against the subsidies and multi-faceted costs of ever-increasing car traffic.

Yes, NY-Boston-DC may be perfectly viable for "lots of public transit". The problem is that NY-Boston-DC is NOT the USA any more than Toronto-Montreal is "Canada".

My problem, not to put too fine a point on it, is that too many people [some who obviously live in the Eastern seaboard metro area] make the simplistic suggestion that such solutions can easily be applied on some national scale. In fact copying Europe may only apply in a few anomalous situations, like NY-Boston-DC, where the corridor densities are similar to Europe.

And that is where I will object to your characterization that there is limited value in the population density numbers. They describe in quite clear terms the contrast between the USA/Canada and Europe. And that can be confirmed by driving [or railing] across a large chunk of Europe and contrasting that with a drive across a large chunk of the US or Canada. I have every confidence that you've done both, so you know it just ain't the same thing. Not by a long shot. And that means solving the transportation "problem" on our continent is going to be quite a challenge indeed.

So if we are going to debate national or continental solutions [and let's face it, people are looking to Obama to create effective national policies, not just something for the good folks in the blue states in the NE], let's recognize that wholesale swallowing the bogus "Europe is more virtuous than we are" arguments isn't a great starting point.

11-16-08, 09:24 AM

from an article written in 2005, re the u.s.: "Some 153 million people live in coastal counties, an increase of 33 million since 1980. An additional 12 million are expected in the next decade."

look at the country in terms of where the people are. a solution for the region within 50 miles of the coasts is a solution for more than 50% of the population. yes, there are other, low density, regions which require other solutions. but those "few" people living on the coasts are more than half the country.

WDCRob

11-16-08, 09:32 AM

A couple random asides...

A very large majority of Americans live within 100 miles of the U.S. border. I forget the exact number, but it's something like 70-80%. A recent article I read pointed out that the Constitution-free zones the government is trying to establish at the 'border' actually encompass most Americans.

Also, there was an article in The Washington Post recently by someone who'd tried to take local public transportation (as opposed to Amtrak or a bus service) from DC to NYC. IIRC there were a couple gaps, and even the successful legs were very painful.

Tulpen

11-16-08, 11:05 AM

At present I very much doubt the majority of the population has connected the dots; the present precipitous gasoline price fall isn't going to help either as it will make the prior gasoline price rise seem like manipulation or a short term squeeze, when in fact it is the present price fall which should be described thus.

Sorry but it seems to me you have not connected the dots.

Economic activity has fallen off a cliff, commodity prices have crashed and stocks have dropped massively. I wonder what planet you are on since you seemed to have missed all that. :confused:

We are just encountering one of the worse economic collapses on record and you guys are talking about the "opportunities" for alternative energy. Unreal!

FRED

11-16-08, 11:24 AM

EJ writes in:
Great comments, all. We provided the alternative energy bull market time-line to help calibrate readers. For the next several years the US energy intensity problem will be addressed by lower demand.

The fact of diminished supply remains true long term.

http://www.itulip.com/images/history_of_oil_discoveries.gif

But for the next several years, the predominant factor driving production will be demand, unless supply falls even more dramatically due to war.

http://www.itulip.com/images/oilproductiondepression.gif

The world may see the drop off in production projected here, but not due to declines in supply. As for prices, this will remain for the US more a factor of dollar demand than oil demand.

The double whammy of a weak dollar and economic contraction will make oil expensive in terms of purchasing power of incomes for Americans.

How will we cope short term?

Return of the one car family
Smaller, more economical cars

Widespread substitution of internet communications for business and personal travel

Paradoxically, the best alternative energy investment we know of is Cisco Systems.

Chris

11-16-08, 01:50 PM

I would really appreciate iTulip's view on the uranium story? Given the current build out of reactors (already commissioned) will this have a place in the Alt-E bubble or will it take a back seat to renewables?

Master Shake

11-16-08, 02:40 PM

Any thoughts on water/water infrastructure investments?

c1ue

11-16-08, 04:08 PM

Sorry but it seems to me you have not connected the dots.

Economic activity has fallen off a cliff, commodity prices have crashed and stocks have dropped massively. I wonder what planet you are on since you seemed to have missed all that. :confused:

We are just encountering one of the worse economic collapses on record and you guys are talking about the "opportunities" for alternative energy. Unreal!

Au contraire, Tulpen.

Many of the people spending time on iTulip have been considering the likelihood of a major recession/depression for quite some time.

I for one quit my job and started acting on a plan to protect myself and my family 2 years ago.

For me, and likely for many others here, the events unfolding are merely a confirmation on a hotly debated and thoroughly considered model of future events.

We're in stage 5: acceptance while apparently you are in stage 2: anger

metalman

11-16-08, 07:15 PM

santafe2

11-16-08, 09:11 PM

I am not at all convinced that the leading edge of the Alt-e/conservation effort will be space heating. This is not the 1970's. Huge gains in space heating efficiencies were made back then, mostly with insulation. Building codes across the country were changed to take advantage of what was learned. Many communities across the northern states now require R19 walls and R40 ceilings. Of course further gains can and should be made, but the bang for the buck isn't here anymore.

The first wave of green building took off in the late 70s and was dead by 1985. Much of what we know and deploy today in the residential green building space came from research, testing and deployment in that era. In fact, some of the best literature is from the early 80s. But to make the leap from that reality to the idea that the low hanging fruit of space insulation was consumed in the 70s is to ignore the political and economic realities of the last 30 years, not to mention the technological innovations over that period. There is still huge bang left in every insulation buck.

The immediate problem is OIL. Here is where we took a major step backward. Failure to increase CAFE standards, even exemptions from those standards. As you're driving down the highway, look around and see how many people are driving alone in a SUV. The biggest government conservation effort, which at the same time would address the biggest energy problem facing the country, can be made in the transportation sector. Out of the box will be an increase in CAFE standards and a repeal of the giant SUV exemption. On the table will be outright taxes on gas guzzlers and gas guzzler buybacks for low income. Bailout packages for the auto industry will require retooling for more efficient vehicles.CAFE standards are not the problem. Using oil for transportation is the issue we need to address. CAFE standards might have bought us another half generation of misdirection but in the end there's not so much difference between a Hummer and a Prius.

I'm afraid the window of opportunity for rapid expansion of mass transit closed in the 1970's and 80's.See the above argument. Mass transit is an answer to the wrong question. Live downtown and walk to work. Mass transit was a suburbs enabler and the subs are dead.

The marketplace failed our nation and the world with the FIRE economy over the past 20 years.I completely disagree. This is a republic, our nation failed the marketplace. I'll say it another way - we the people, failed. It's about time we take some responsibility for our situation.

babbittd

11-17-08, 12:55 AM

EJ writes in:
Let's say we are correct and the leading edge of the government sponsored alternative energy boom is conservation, and let's say that insulation of existing structures is a key of that. What you'd look for is a national roll-up of some of the 1,360 insulation contractors in N. America (http://www.thomasnet.com/products/insulation-contractors-1227-1.html) to create economies of scale in volume purchases of material and replicatable installation processes developed to improve profitability. Also likely is that we see in two years' time several private-public partnerships that are fundamentally roll-ups of many small to medium sized privately held residential and commercial construction companies.

These are some of the ideas we plan to explore in the subscriber area next year.

Deutsche Bank: Building a cleaner planet (http://www.dbresearch.com/PROD/DBR_INTERNET_EN-PROD/PROD0000000000233938.PDF;jsessionid=C2A84E3717C846 EAE34DEAA7C313CFC6.srv22-dbr-com)

bill

11-17-08, 08:02 AM

Deutsche Bank: Building a cleaner planet (http://www.dbresearch.com/PROD/DBR_INTERNET_EN-PROD/PROD0000000000233938.PDF;jsessionid=C2A84E3717C846 EAE34DEAA7C313CFC6.srv22-dbr-com)

Page 15 confirms what I posted above,,,nuclear to supply heavy lifting non carbon power capacity.

As far as Germany’s power supply is concerned, the emerging
blockade of new power plant construction is lent added urgency by
the agreed nuclear phase-out. However, a political constellation is
apparent that would revoke the phase-out agreement were the
parties to capture the necessary parliamentary majority at the next
general elections to the Bundestag. Against this backdrop it therefore
seems not only opportune, but indeed urgently necessary to
focus on the importance of extending nuclear power plant lifespans
as a central issue for power supply in Germany.

Chris Coles

11-17-08, 03:23 PM

The marketplace failed our nation and the world with the FIRE economy over the past 20 years. If you believe in Peak Cheap Oil, or even worse, Peak Production Capacity Oil, and you accept the absolute crucial role energy plays in our very existence, and you accept that the marketplace (which is more manipulated than free) has failed to transition us to sustainable energy, than if not the government, who?

I cannot resist answering this, and if I sound a little incensed, I am.:

Poor, idiotic, (if my local bureaucrats are to be believed. Oh! Yes!, they think I am an idiot), unfunded, grossly under capitalised inventors like me and from what I already know, many more of us that are sitting on our hands while we wait for restoration of our place in the value chain of the wider society. . . . . . Period.

It was not the marketplace that failed, it was government oversight of the banking and finance industry for the last few decades that has brought us all to this sorry mess..... all under the constant "watch" of government bureaucrats, paid a fortune with wonderful working hours and even more so, glorious pensions and not a single clue as to their true responsibilities in a free market economy. Bah! Humbug!

In deference to the Itulip code, I will not say more.

Chris Coles

11-17-08, 03:59 PM

And just to give you a quick taste of what I am trying to get across, this has just quite literally turned up in my inbox from Managing Intellectual Property. While US and European bureaucracies are constantly trying to pretend there is no way out, Japan continues to put their faith into the long term project, started some years ago, of creating as much new IP based industry from anyone that can invent and backing that intent up with action like speeding up the Patent process. It took me from 1989 to November 2000 to process one patent through the UK European and on to the US patent office and here in the UK ...... Arghhhhh! Reports like this really highlight the difference between a government that has a very clear perspective of what must be done, like Japan encouraging inventiveness throughout the nation, from schools onwards and those that believe government holds all the answers. It is the intellectual capacity of the outside population that creates new industry and thus prosperity. The original prosperity of the United States did not stem from any government department, it stemmed from its inventors. PERIOD.

Patent granted in 17 days in Japan (http://ems.euromoney.com/ems/r.asp?cIndex=222150&mIndex=586890187&hurl=http%3A//www.managingip.com/Article.aspx%3FArticleID%3D2046734)
The Japan Patent Office has granted a patent to a university just 17 days after the examination request was made More (http://ems.euromoney.com/ems/r.asp?cIndex=222150&mIndex=586890187&hurl=http%3A//www.managingip.com/Article.aspx%3FArticleID%3D2046734)

we_are_toast

11-17-08, 04:31 PM

I cannot resist answering this, and if I sound a little incensed, I am.:

Poor, idiotic, (if my local bureaucrats are to be believed. Oh! Yes!, they think I am an idiot), unfunded, grossly under capitalised inventors like me and from what I already know, many more of us that are sitting on our hands while we wait for restoration of our place in the value chain of the wider society. . . . . . Period.

It was not the marketplace that failed, it was government oversight of the banking and finance industry for the last few decades that has brought us all to this sorry mess..... all under the constant "watch" of government bureaucrats, paid a fortune with wonderful working hours and even more so, glorious pensions and not a single clue as to their true responsibilities in a free market economy. Bah! Humbug!

In deference to the Itulip code, I will not say more.

Isn't the Banking and finance industry a major part of the "free" market economy?

Isn't this kind of like saying the "free" market economy works great, as long as we have enough police to look over everyone's shoulder so they don't lie, cheat, rob us blind, and crash the whole worlds economy?

Don't get me wrong, I'm a firm believer in the entrepreneurial spirit and want as little regulation as possible. But many people equate the "free" market with an unregulated market. It is the lack of regulation and oversight that got us into this global mess, and got many homeowners into a personal mess.

95% of all businesspeople try to conduct their businesses in an ethical manor. But I wouldn't fly on an airline where 95% of the planes make it to their destination.

A primary purpose of government should be to provide as little regulation as possible to assure a fair and competitive marketplace. A marketplace without adequate regulation will ALWAYS fail the society in which it operates.

We need a "fair" marketplace, not a "free" marketplace.

While I'm here:
santafe2
I completely disagree. This is a republic, our nation failed the marketplace. I'll say it another way - we the people, failed. It's about time we take some responsibility for our situation. To say "our nation failed the marketplace" implies that the purpose of our republic is to SERVE the marketplace. We most certainly do disagree. I take the perspective that the purpose of the marketplace should be to provide for the needs and desires of the society and individuals. What kind of nation have we become when our concern is not to fail the marketplace?

Maybe the pain that our nation feels from the consequences of this failed marketplace will allow us to reevaluate what a truly great nation is.

santafe2

11-17-08, 09:02 PM

To say "our nation failed the marketplace" implies that the purpose of our republic is to SERVE the marketplace. We most certainly do disagree. I take the perspective that the purpose of the marketplace should be to provide for the needs and desires of the society and individuals. What kind of nation have we become when our concern is not to fail the marketplace?

Maybe the pain that our nation feels from the consequences of this failed marketplace will allow us to reevaluate what a truly great nation is.

You missed my point by 180 degrees. Not your fault, I was obviously not clear. One of the purposes of our republic is to regulate the marketplace. This was one of the great debates between early leaders like Jefferson and Hamilton. We obviously continue to struggle with it today. Our government has, again, over the last few decades, seen their job as serving business. Obviously it does not work.

Serge_Tomiko

11-17-08, 09:05 PM

jtabeb

11-17-08, 10:04 PM

EJ writes in:Great comments, all. We provided the alternative energy bull market time-line to help calibrate readers.

FRED with all much deserved respect (you and EJ have taught me a lot, you two have earned it) I think this time-line is WAY TOO pessimistic.

Let me explain.

You know that quote from EJ where he says he thought that "this would be it" after the collapse of the Tech bubble? That there would be a depression and that they couldn't find a way out. And, that he missed that the housing bubble would be the way the gov would do it (saw the bubble when it existed, was too pesimistic on the US economy for not seeing as the transition bubble as the economy was in collapse from tech bust?

I think there MIGHT be a parallel here.

Why?

Funding, I think I've got the funding mechanism for the next bubble figured out.

DIRECT LENDING from BANKS. No securitzation, DIRECT LENDING. (yes you can have a stock market boom with direct lending, just look at the 1920s).

You know how every thing (including Insurance companies now) are filing for TARP fund access and to become a "Bank Holding Firm". I think that that is the necessary step. The Funding infrastruture for the next bubble is being built right here, right now. If this is indeed the case, I'll bet you could move that timeline up by at least 5 years AKA sorta kinda like Tech.

I went to college in 1992, when I started no tech bubble (I'm a comp sci guy)

Buy 1996 It was starting to roll pretty good and 1997 was full on (my knowledge is mostly employment side info from grads at the time), then off to the races till bust-off at turn of the 2000s.

That being the case, and remeber we are talking during the BUSH recession here and the election of Bill Clinton in 1992, I think they could have this thing going in a similar time frame say 3-4 years vs 10-12years down the road. We'd better hope so at least because Peak Oil is going to kick us in the Ding-Ding hard core in the 2010-11 time frame. They Have GOT to get this thing well underway before we come hard under the knife for that lovely production peak around that time theat you have in your production/depletion chart.

Anyway, food for thought (not saying it's the same as 1992, but does rhyme, except things are more desperate this time).

V/R

JT

marvenger

11-17-08, 10:46 PM

there's definitely centralised lending gunpowder being built up. they just have to make sure there's the demand to keep the money flowing.

jtabeb

11-17-08, 10:52 PM

there's definitely centralised lending gunpowder being built up. they just have to make sure there's the demand to keep the money flowing.

The Deutsche Bank research was saying that the biggest revenue source of a green bubble would be "green" renovation of existing homes. So you have a "housing bubble" to make a lot of homes, then you have a "green bubble" to retrofit all those homes with green-tech/energy efficiency tech. You gotta love this stuff.

Can you say "gov tax credits" to fund retrofits? How about a "special" tax credit if you buy a foreclosed home and retrofit it with green tech. I can smell the $green$ possiblities. :)

santafe2

11-18-08, 12:25 AM

I can smell the $green$ possiblities. :)

http://www.youtube.com/watch?v=OaiSHcHM0PA

Smell it, see it, taste it....show me the money.

algerwetmore

11-18-08, 04:15 AM

I think you are right about acceptance. Some of us never moved into the big McMansion, because we thought the debt train had to end.
We are growing vegetable gardens, learning to repair clothing, taking up knitting, harvesting things other people don't want. (old firewood, junk silver, hickory nuts, etc.) There are innumerable ways to save and preserve capital. ( Keep your car for ten years is a great start!)
One has to remember that the great era of consumerism is a relatively new and short phenemona (sp.) I am not that old, but I do remember wearing hand-me-downs and many good wholesome meatless meals. I also remember many social get-togethers that did not involve mass media or gaming devices.

Glenn Black

11-19-08, 06:14 PM

Solar water heating has an efficiency of ~75%, and the best payback of all the alternative energy systems. For homes, 57% of energy consumption is used for space heating, 25% for domestic hot water (showers, dishes, laundry, etc.), adding up to 82%. Coupled with radiant floor hydronic heating, its a winner. Ground sourced heat pumps are similar ROI to solar hot water, but double the capital cost. The only drawback, solar hot water cannot economically produce enough heat during Dec, Jan, Feb in cold climates (ie. Canada, Minnesota, etc. as sun at winter solstice is only 37% of what it is at summer solstice). Supplemental heating is required in these colder regions. Wood fireplaces are recognized as GHG-neutral, and is the cheapest energy source after free solar fuel, fitting well with solar.

Radiant floor heating uses PEX plastic tubing & special fitting. See Wirsbo, Uponor, Vissmann, Viega, etc.. for suppliers who may ride this next wave.

During the railway development years, many people bought into railways, and lost their shirt. However steel rail suppliers were a sure bet, as they supplied to all the railways; there was a continuous shortage of rail, and they got their price, or else.

Bet on suppliers to the boom, not the boom itself. Let the pioneers take the arrows, you run the general store and be the outfitters/suppliers for the risk takers. These may be another opportunity areas.

My bet is on firewood + solar hot water.

The trees grow themselves. The price of firewood is mainly labor, with some energy for chainsaws and transportation. With recession/depression, lots of manpower is available, and is an ideal do-it-yourself past-time.

Buy a woodlot, and lumber it, and it more than pays for the land purchase price with the firewood produced. Locally, a face cord has gone from $55 to $85 in 1.5 years, a 33.67%/yr inflation.

Rural homes are easy. With the rising energy prices of 6 months ago, there is a backlog of 3 months to buy a wood stove or pellet stove from local suppliers.

Suburbia can readily add woodstoves in their basements for those who don't have one already. Apartments have no easy answers.

Second opportunity: wood stove manufacturers, WETT certification (Canada), and insurance claim restoration contractors (wood stoves are a major cause of fires & smoke damage, second only to kitchen fires).

Lighting is only 4%, which drops to ~2% when compact fluorescents are used (Big Deal!). Therefore focus on the big energy consumers.

As soon as the recession/depression starts to dissipate, Peak Oil will start to rapidly ramp up crude prices rapidly achieving $150/bbl or more. Studies show that tar sands are only feasible at $75/bbl or higher, AE is price competitive at $125/bbl and higher.

Glenn Black

11-19-08, 06:50 PM

Electricity generation in N.America is typically 35% to 42% efficient. Add in the line losses to get it from the power plants to the user is another 9% to 15%, giving a net efficiency as delivered to user, of ~30%. Utilities say "Electricity is 100% efficient, while a gas-fired furnace is only 75% to 92% efficient" Of course, that's only half the story, and mis-leads many. Electric heat and electric water heaters need to be used as a last resort, but the cost to buy an electric water heater is $320 vs. a gas-fired water heater at $1,200 but the energy used over a lifetime is much more expensive with electricity. Non-subsidized electricity costs 3 to 4 times more than the fuel cost used to generate the electricity.

Many homes in Germany and Japan now have an ultra-efficient diesel engine-generator with heat recovery to heat the home (ie. the primary heat source, instead of a furnace), and DHW production (Domestic Hot Water). This system is approx. 94% efficient overall, pushing electricity back to the grid when more heat than electricity is required by the home.

babbittd

12-11-08, 10:20 PM

Obama's Energy Secretary Dr. Steven Chu: Transform The Energy Landscape To Save ‘A Beautiful Planet'

via: The Wonk Room (http://wonkroom.thinkprogress.org/2008/12/06/steven-chu-beautiful-planet/)

http://www.youtube.com/watch?v=GfLaQUD86Mw

As Dr. Chu explains in the above video, the optimal way to reduce greenhouse emissions is to waste less energy, by investing in energy efficiency (http://eetd.lbl.gov/). He demolished the myth that we can’t reduce our use of energy without reducing our wealth by offering numerous counterexamples, or, in his scientist’s jargon, “existence proofs.” Applause broke out when he described how companies, after claiming efficiency gains and lowered costs were impossible, “miraculously” achieved them once they “had to assign the jobs from the lobbyists to the engineers.”

Chu continued by discussing what he has done to develop “new technologies to transform the landscape.” He discussed the Helios Project, the research initiative Berkeley Lab launched for breakthrough renewable energy and efficiency technology. In addition to research into energy conservation, Berkeley Lab researchers are pursuing nanotech photovoltaics, microbial and cellulosic biofuels, and chemical photosynthesis.

babbittd

12-15-08, 12:59 AM

'Meet the Press' transcript for Dec. 14, 2008 (http://www.msnbc.msn.com/id/28222119/page/6/)

GOV. GRANHOLM: Can I just say, I, I think that one other piece that is very important that is an opportunity right now is to give people the means to be retrained. And so we've got a lot of people in Michigan, for example, that have had the rug pulled out from under them, and maybe they could be retrained to do, you know, energy efficiency work by retrofitting homes or businesses with weatherization and, and a--you know, making sure that we reduce our carbon footprint. Maybe they could be retrained for healthcare jobs. We've done something in Michigan--you know, we have no, No Child Left Behind. We call it No Worker Left Behind, where we have taken the community colleges as the means of work force training and use them to be able to retrain people. We've got 35,000 people in the training system right now. But government can really help explode that because, as you create this knowledge economy, our goal is to double the number of college graduates in Michigan. We're in the middle of this paradigm shift where we tell people you can't just expect to go from high school to factory anymore. Well, as the, as the next administration considers the stimulus, work force training is a huge opportunity.

bill

03-10-09, 06:49 PM

EPA

http://www.itulip.com/forums/showthread.php?p=55880#post55880 (http://www.itulip.com/forums/showthread.php?p=55880#post55880)

court ruled in favor of Massachusetts et al, finding that EPA has the authority to regulate CO<SUB>2</SUB> and other greenhouse gases.
http://www.pewclimate.org/epavsma.cfm
This opinion is important for national and local climate change policy. Not only does it open the door to regulation of greenhouse gases under the Clean Air Act, but is also likely to catalyze calls for more comprehensive federal climate change legislation (http://www.pewclimate.org/docUploads/Cap-and-trade%20bills%20110th_Feb5.pdf) (pdf) – legislation that covers sectors other than transportation as well as non-CO<SUB>2</SUB> greenhouse gases. This ruling could lend support for state efforts (http://www.pewclimate.org/what_s_being_done/in_the_states/state_legislation.cfm) such as the California legislation (http://www.pewclimate.org/what_s_being_done/in_the_states/vehicle_ghg_standard.cfm) intended to regulate greenhouse gases as a pollutant in the transportation sector. In turn, expanded state activity will likely build even more pressure for a more uniform federal program.
Read more about GHG emissions standards (http://www.pewclimate.org/global-warming-in-depth/all_reports/fuel_economy/) in the transportation sector.
Read the complete (http://www.supremecourtus.gov/opinions/06pdf/05-1120.pdf) Ruling (pdf).

http://www.time.com/time/health/article/0,8599,1859049,00.html?imw=Y
update
http://money.cnn.com/news/newsfeeds/articles/djf500/200903102002DOWJONESDJONLINE000754_FORTUNE5.htm

EPA Proposes National CO2 Reporting System
March 10, 2009: 08:02 PM ET
WASHINGTON</LOCATION> -(Dow Jones)- The U.S. Environmental Protection Agency proposed a national system for reporting carbon dioxide and other greenhouse gas emissions by major emitters Tuesday.
The registry, which was originally proposed in a 2007 energy bill and is funded in U.S. President Barack Obama's 2010 Budget outline, would lay the foundation for regulation of CO2 and other gases thought to contribute to global warming.
"Our efforts to confront climate change must be guided by the best possible information," said EPA Administrator Lisa Jackson in a statement. "Through this new reporting, we will have comprehensive and accurate data about the production of greenhouse gases."
<LOCATION>Jackson</LOCATION> called the registry a "critical step toward helping us better protect our health and environment."

Obama's energy and climate czar,
Carol Browner</PERSON>, who is widely believed to be directing the president's global warming agenda, has told Dow Jones Newswires that the EPA would issue a finding that carbon dioxide was a danger to the public, and that endangerment document would trigger regulation.</P>"EPA...will make an endangerment finding," Browner said in an interview late last month. A White House aide said later Tuesday that the energy czar wouldn't be interfering in the scientific process the EPA is conducting to make that endangerment determination.
Business groups such as the U.S. Chamber of Commerce and the National Association of Manufacturers warn that if the EPA moves forward on regulation of CO2 under the Clean Air Act as proposed - and which the registry prepares for - it could force the entire economy to a grinding halt.
Some groups say that the Securities Exchange Commission should now require companies to disclose to investors the liability that carbon dioxide regulation represents to their earnings - as the agency does with lawsuits or other factors that could have a substantial impact on firms' bottom lines - and a registry strengthens their argument.
"The SEC needs to protect investors from the risks companies face from climate change, whether from direct physical impacts or new regulations," said Mindy Lubber, Director of the Investor Network on Climate Risk, a group of 77 institutional investors managing approximately <MONEY>$7 trillion</MONEY> in assets. " Shareholders deserve to know if their portfolio companies are well positioned to manage climate risks or whether they face potential exposure," she said.
For example, utilities such as <ORG>Duke Energy Corp.<ORGID value="NYSE:DUK" /></ORG> (DUK) or <ORG>Southern Co.<ORGID value="NYSE:SO" /></ORG> (SO) and oil majors such as <ORG>Exxon Mobil Corp.<ORGID value="NYSE:XOM" /></ORG> (XOM) or <ORG>Chevron Corp.<ORGID value="NYSE:CVX" /></ORG> (CVX) that know their approximate carbon dioxide emissions at their coal and refining plants could give the market guidance based on several different estimates on the cost of emitting carbon dioxide.
The EPA said around 13,000 facilities, accounting for about 85% to 90% of greenhouse gases emitted in the country, would be covered under the registry proposal.
In correspondence to Senators viewed by Dow Jones Newswires, <LOCATION>Jackson</LOCATION> said that the Clean Air Act, "when applied carefully and sensibly, (can) be an appropriate mechanism for regulating some sources of greenhouse gases."
She also said the Act gives her agency discretion to regulate emissions "in a way that does not necessitate direct regulation of all emission sources regardless of their size."
But legal analysts that have been battling environmental challenges to refineries and power plants say that the EPA's endangerment finding and greenhouse gas regulations would likely give many groups the legal foundation to challenge nearly any emitting source, such as schools, hospitals, and lawnmowers.
The EPA said the new reporting requirements would apply to suppliers of fossil fuel and industrial chemicals, manufacturers of motor vehicles and engines, as well as large direct emitters of greenhouse gases with emissions equal to or greater than a threshold of 25,000 metric tons a year, which is roughly equivalent to the annual greenhouse gas emissions from just over 4,500 passenger vehicles.
The vast majority of small businesses would not be required to report their emissions because their emissions fall well below the threshold, the agency said.
The direct emission sources covered under the reporting requirement would include energy intensive sectors such as cement production, iron and steel production, and electricity generation, and other energy-intensive operations.

"EPA may find it more difficult than it believes to limit greenhouse gas regulation under the Clean Air Act to only the biggest emitters," said
Peter Glaser</PERSON>, a partner at the lawfirm Troutman Sanders who represents utilities. Glaser said environmental organizations have told EPA that once the agency starts down the path of regulating carbon dioxide under the Clean Air Act, it will be under a mandatory legal duty to implement regulations that will impose requirements on a multitude of small and large sources in all sectors of the economy.</P>Businesses would have to report to the EPA in 2011 for the calendar year 2010, except for vehicle and engine manufacturers, which would begin reporting for model year 2011. The EPA said it expected it would cost industry around <MONEY>$160 million</MONEY> in the first year to comply with the reporting requirements and around <MONEY>$ 127 million</MONEY> in subsequent years.
The president said he would prefer Congress to pass legislation that would cap greenhouse gas emissions and create a market to trade the right to pollute. But political analysts say the administration is using the threat of regulation of CO2 through the Clean Air Act - a law that some believe is too blunt an instrument for regulation of a gas that would impact the entire economy - to encourage reluctant lawmakers on the Hill to pass its climate change agenda.
A registry would provide the data for both types of regulation - a Congressionally created law or EPA rules.
Obama's 2010 budget proposed increasing the agency's funding by <MONEY>$19 million</MONEY> to pay for the new registration. He also accounted for the government collecting around <MONEY>$646 billion</MONEY> in "climate revenues" over the next decade, starting in 2012.