Is Coal the New Oil?

Something very strange is happening to coal prices in the US. A massive discrepancy has opened between prices east and west of the Mississippi, with the far west flat at around $12 to $15 per ton and the east soaring to nearly $150 ton, triple last year's prices.

Because coal is expensive to ship, and rail and barge transportation is limited, coal is usually three to four times more expensive in the east than in the west. But as you can see from the chart at the bottom, the current trends are extraordinary.

Coal matters because most of our electricity comes from coal. Higher coal prices inevitably mean higher electricity prices, which we all pay. But what could be causing such an odd and dramatic price increase? The usual market forces don't seem to explain things. Demand for coal in the US has been flat, exports haven't increased significantly, and inventories are reasonably high. This leaves market speculation as a real, and likely, possibility.

Speculation in energy markets tends to occur where there's the least regulation and, perhaps even more importantly in the Bush era, the least regulatory attention. After Enron it became very hard to manipulate the electricity market. Too many nosy people keeping an eye on things. As a result, over the past five years or so, speculators moved into oil, but given all the attention they've been getting in that market, perhaps they're starting to put their money elsewhere. Coal would be a logical choice. The coal market is much more geographically fragmented than oil, making it easier to control and manipulate. And, at least in the eastern US, the coal market is also fairly inelastic, again making it easier to manipulate.

Looks like coal could become the new oil. Enormous profits for the few, much higher energy costs for the rest of us. It's the American way.


Click on chart for a larger version. Source: EIA. The Powder River Basin is in Montana and Wyoming, and the Uinta Basin is in Colorado and Utah.

Jim Doyle Leaving, Barbara Lawton to Become Governor!

I'm jumping the gun a bit, but every indication is that Jim Doyle is packing his bags for an appointment in the Obama administration. The positions I've heard mentioned include AG, Health and Human Services, perhaps an appellate court judgeship, or maybe even ambassador to Ireland. Doyle really likes Ireland.

Normally the transition to a new governor in a situation like this would be fairly smooth. This one might be a lot more interesting due to the rocky relationship between Doyle and Lt. Governor Barbara Lawton. While I don't expect any big immediate policy changes, there might be an awful lot of Doylies looking for jobs when their patron saint leaves town.

No matter what position he takes in the Obama administration, Doyle is unlikely to bring more than a handful of people with him, and that means a bunch of folks who hitched their star to his are going to be out of luck. Few Doylies have ever shown Lawton much love, so she has little incentive not to roll heads at the capital and at party headquarters. Expect to see a lot of resumes floating around Madison during the next few months.

But it may not play out that way. Looks like Doyle has a plan in the works that would create a safe haven for many of his most loyal servants. A plan that would turn the Democratic Party power structure on its head. A plan that would also be an extraordinarily nasty parting shot at Barbara Lawton.

But more on that later...

Iowa Republicans Eating Their Own

The Iowa Republican Party is self destructing. It was taken over by Christian fundamentalists a few years ago, and they're rather successfully running it into the ground. Not that I'm complaining, of course.

Their latest faux pas was to boot their own US Senator, Charles Grassley, from their delegation to the Republican National Convention in Minnesota, and replace him with ... the President of the Iowa Christian Alliance!

Grassley's a moderate who isn't exactly loved by the nuts in charge of the Iowa party, but his real sin in their eyes seems to have been digging too deeply into financial irregularities surrounding certain prominent televangelists. Looks like the good Christians running the Iowa Republican Party see honesty as a virtue that only applies to the little people.

Love It!

Just When You Think Conservative Talkers Can't Get Any Worse...

...Michael Savage lowers the bar (again).

It's a new world's record! Listen to Savage mock and insult blacks, crippled kids, and women, all in less than two minutes of completely fact-free ranting!



(Download mp3 here)

And his audience loves it! Of course, they're too dumb to know that blacks die from asthma at a rate two-and-a-half times higher than whites. Or that the risk of autism is more than 90% genetically determined (sorry, paid link). Or even that being a women doesn't mean being a weak crybaby. If you don't believe me I'll send my little sister over to kick your butt.

And she can!

New High Voltage Transmission Lines - Needed or Not?

Yesterday the Wisconsin State Journal published an editorial in support of building new electrical transmission lines. While I don't agree with their damn-the-torpedoes-full-speed-ahead approach to the issue, they raise some important points.

Despite our best efforts at conservation, electricity usage will increase significantly over the next few decades as we move away from liquid fossil fuels. In twenty years most of us will drive plug-in hybrids or electric cars, and heat our houses with electricity.

Unfortunately, while the editorial mentions this increased demand, it misses the fact that increased electrical demand alone doesn't necessarily mean we need more transmission lines. Improved peak load control and distributed generation can let the existing electrical grid handle a lot more power, greatly reducing the need for new transmission lines.

But we're going to build a bunch of new transmission lines anyway. The main reason isn't demand, but supply. What the editorial gets exactly right is that increased use of renewable energy will result in significant geographical changes in electrical power generation. You build wind turbines where the wind is good, not next to existing power plants, and you need new transmission lines to get that green power to where it's going to be used.

This doesn't mean that every new transmission line is justified. But don't make the mistake of thinking that we're going to simply conserve our way out of this issue either.

Madison Robocall Credit Card Scam

Watch out! I just got a robocall from "Visa and Mastercard" saying that my credit card rate was going up, but that I had been selected to receive a lower fixed rate. To receive this special rate all I had to do was press six to talk to a customer service representative.

Of course I pressed six. I let the guy go through his spiel , then I asked him what company was doing the calls. He said "Visa and Mastercard." So I said, "No, what company are you working for?" He immediately hung up on me. Pretty safe bet this is an identity theft scam. If you get a call like this, particularly if you have caller ID and can get the originating phone number, please call the WI Department of Agriculture, Trade & Consumer Protection, 608-224-4949, and let them know about it.

Why is Gas So Cheap?

Gasoline is amazingly cheap. I know this sounds stupid, but bear with me. If you drive a car the implications are important.

Gasoline is made from oil. At the current price of $147 a barrel, a gallon of crude costs $3.50. Historically gasoline has retailed between 1.5 to 2 times the cost of the oil it's made from. Today that ratio is 1.2. By historical norms gasoline should be well over five dollars a gallon, and probably closer to seven. This means that even if crude oil prices stabilize or drop a bit, gasoline prices could still soar.

But they probably won't.

Diesel prices will go up. So will heating oil, and jet fuel. But we got lucky on gasoline. Most of the world is switching to diesel engines, and for good reason. They're a lot more efficient than gasoline engines. But the result is that there's a relative glut of gasoline, forcing prices down compared to other oil products. Refineries can't quickly or easily change the mix of products they produce, so as worldwide demand increases for diesel fuel, they end up with lots of gasoline that they need to get rid of, so they're willing to sell it cheap.

Eventually refineries will fix this problem, and gasoline prices relative to crude oil will increase significantly. But this will take years, and until then we're getting a break compared to the rest of the world. Gasoline prices are still directly tied to the price of crude, so if crude oil prices go up so will gasoline, just less than other fuels. Of course, if we do something stupid, like attacking Iran, you can expect gas prices to go through the roof.

The big question is if we'll use our temporary cost advantage compared to the rest of the world to smooth the inevitable and expensive transition away from liquid fossil fuels, or just piss it away by continuing to drive big cars and SUV's. Given that this is America, it's pretty safe to bet on the latter.

For a good, if rather wonkish, discussion of gasoline prices relative to other fuels check out this post and discussion on The Oil Drum. It's a great site if you're into peak oil and energy policy.

Get Your "McCain is Aware of the Internet" Shirt While They Last

At a Personal Democracy Forum event a few days ago, one of John McCain's technical gurus, trying to defend MCain's complete lack of computer skills, claimed "John McCain is aware of the internet."

Wow! Who knew McCain was so so sharp?

But it gets even better. CNN, which broadcast the event, apparently thought the comment was so newsworthy that they made a T-shirt out of it! Twenty bucks, including shipping. But you better get one soon if you're interested. I'm sure the McCain folks aren't very happy with the situation, and they're probably going to bring the hammer down on CNN.

America's Funniest Political Videos: Republican Logic!

Watch Mitt Romney try so hard to stick to his talking point that McCain is bipartisan and Obama isn't that he backs himself into a logical corner and is forced to claim that nuclear nonproliferation is a "liberal" position. Hilarious!

Hard to believe this guy was a serious contender for the Republican presidential nomination. Of course, I feel the same way about Mr. no-idea-how-to-use-a-computer McCain.

Nice catch by TPM TV!

FISA - Good Dems and Bad Dems

FISA, almost certainly including telecom immunity, is a done deal. The cloture vote to stop debate passed 80 to 15, and below I've listed the Dems who voted for and against cloture.

Although the vote on the actual FISA bill may not occur for a while, it's the cloture vote that really counts. The lopsided vote clearly shows that the Democratic leadership supported the bill, despite Senator Reed's "reservations".

It's now unlikely that telecom immunity will be successfully stripped out unless Obama personally leads the charge against it. And although some of the Democrats who voted for cloture will likely vote against the eventual bill, don't be fooled. They knew that cloture, which requires 60 votes, was the only real chance we had to defeat the bill and thereby obtain any meaningful compromise from the White House.

Senator Feingold, as usual, fought the good fight. Senator Kohl, as is too often the case, sold us out. Obama missed the vote, as did Hillary and McCain. Shame on them. Regardless of where they stand, every elected official should be on the record when it comes to important issues like this.

FISA GOOD DEMS

CA - Boxer
CT - Dodd
DE - Biden
IA - Harkin
IL - Durbin
MA - Kerry
NJ - Lautenberg
NJ - Menendez
NY - Schumer
OH - Brown
OR - Wyden
VT - Leahy
WA - Cantwell
WI - Feingold

FISA BAD DEMS

AR - Lincoln
AR - Pryor
CA - Feinstein
CO - Salazar
DE - Carper
FL - Nelson
HI - Akaka
HI - Inouye
IN - Bayh
LA - Landrieu
MD - Cardin
MD - Mikulski
MI - Levin
MI - Stabenow
MN - Klobuchar
MO - McCaskill
MT - Baucus
MT - Tester
ND - Conrad
ND - Dorgan
NE - Nelson
NM - Bingaman
NV - Reid
PA - Casey
RI - Reed
RI - Whitehouse
SD - Johnson
VA - Webb
WA - Murray
WI - Kohl
WV - Rockefeller

If any of my Democratic friends are considering letting loose on me in the comments, be aware that I fully understand the political calculus behind the vote. I just don't agree with it.

Democrats succeed when we stand up for Democratic values, not when we cower and pretend we're corporate Republicans. That's the fundamental political lesson we should have learned over the last thirty years. Unfortunately, far too many Dem leaders aren't smart enough to realize that, or are simply too comfortable with the status quo to risk change.

Stop FISA Telecom Immunity: Call Obama

The single most important thing you can do to stop telecom immunity is to call Obama's national campaign office and tell him how you feel:

866-675-2008

Obama's position is that while he opposes telecom immunity, he'll vote for the bill anyway. This is unacceptable. Call him:

866-675-2008

I spoke to the campaign folks earlier today, and they're getting lots of calls about FISA. They need lots more:

866-675-2008

Obama is the key. He's the nominal leader of the Democratic Party, and if he comes out strongly against telecom immunity the rest of the Democrats will fall into line. Do your part. Call Obama's campaign office and give them hell! (Politely, of course)

866-675-2008

Call now, or I'll have to repeat that number again!