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Archive for October, 2011

In the last session of the Delaware General Assembly, natural gas was defined as a renewable resource. Many people have, logically, scoffed at this definition, but, natural gas is truly a renewable resource. Every 50 to 100 million years or so, the planet has created more, which is why we have so much and why prices for it are so low.

So, DNREC has decided that the proper time horizon for public policy debate is clearly 50 to 100 million years. So, I was relieved when I saw the following notice from DNREC. I was afraid that they were going to initiate more job killing rules and recommendations in order to save Delaware from “man-made” global warming.

NEWS FROM THE DELAWARE DEPARTMENT OF NATURAL RESOURCES AND ENVIRONMENTAL CONTROL

Contact:  Susan Love, Delaware Coastal Programs, 302-739-9283; or Melanie Rapp, Public Affairs, 302-739-9902

Public invited to attend engagement sessions on sea level rise
Public comment encouraged on preliminary work of the
Delaware Sea Level Rise Advisory Committee

(Oct. 28, 2011) – Delaware residents are invited to attend public engagement sessions on sea level rise and the potential impacts to Delaware. Five sessions are scheduled at locations throughout the state – Nov. 9 in Middletown; Nov. 15 in Georgetown; Nov. 17 in New Castle; Nov. 21 in Dover; and Nov. 29 in Lewes. At each session, the work of the Delaware Sea Level Rise Advisory Committee will be presented.

DNREC Secretary Collin O’Mara formed the Delaware Sea Level Rise Advisory Committee to assess the risks posed by sea level rise and to develop recommendations for state and local governments, businesses and citizens.

So, what could the impact of sea level rise be on Delaware over the next 50 to 100 million years? The following map says it all…

Generalized paleogeographic map of the United States in Late Cretaceous time (65 to 80 million years ago) [Source: US Geological Survey]

This map clearly indicates that there are two logical recommendations for state and local governments: 1) Move to higher ground, or 2) Learn to swim. I guess that the committee can close up shop…

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Bloomberg News just covered the new Lexus CT 200h (h is for hybrid — aka battery plus motor). This car will compete head-to-head with the Fisker Nina, allegedly to be built in Delaware and available sometime in 2013. So, Lexus (aka Toyota) has a product to market 2 years earlier, with an extensive dealer network, an unparalleled history of reliability, and a cheaper price. Ouch. A couple of positive quotes from the article (that refers to the car using the Jefferson Airplanesque — Plastic Fantastic):

The Mini Cooper rules supreme to many urban dwellers, but the fact that I averaged more than 40 mph, even in the densest traffic, gave the 200h an edge. Around town, it’s almost deceitfully sporty…

The $1,100 premium audio package, with 10 speakers, made a pleasure of dawdling in traffic, and the leather seats are the most comfortable I’ve experienced since my all-time-favorite, the buckets in the BMW 7 Series.

The auto does not get a universal thumbs up — it is a little too plastic. Something that I suppose won’t affect the Fisker (if & when available). However, in 2 years time who knows how Lexus will have adjusted the trim, while increasing reliability, comfort, efficiency, etc.

Why is our Governor making risky venture capital investments with taxpayer money to compete against the top automobile manufacturer in the world? Who knows, but it was and remains a bad idea.

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I was trying to figure out how these things operate and came across something that I had never seen before. The operating temperature is 1,000 degrees Centigrade: that is over 1,800 degrees Fahrenheit. This is about the same temperature as volcanic lava! Once the reaction gets started, it sustains itself at that temperature.
How efficient can this reaction be if the “exhaust” comes out at 1,800 degrees. The burning temp of a natural gas flame is around 3,000 degrees F. I am suspicious.
I don’t believe I have ever seen a comparison of the amount of electricity produced by these magic boxes as compared to a modern combined cycle gas unit by the same amount of gas.
I would also be interested in the energy used in the production of the “special inks” that the plates are coated with. Could these things actually be more storing energy rather than producing it; not unlike a battery? Another way to analyze this would be if the Bloom factory runs exclusively on Bloom Boxes? Do they?
If anyone has data on this, I am curious.

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I have not even bothered to try to understand the details of Obama’s changes to the Student Loan program that he claims will help those impacted by his “recovery.”
A few of his other populist programs have been all PR with no actual effect:

  • No income tax on phantom income when you sell your house with a short sale.
  • Home Affordable Modification Program which was trumpeted as a solution to help people stay in their homes by paying lenders to reduce principle or interest.
  • Home Affordable Foreclosure Alternatives that was supposed to make the torture of a short sale more bearable and give you a few bucks to help you move.

What all of these programs have in common is that virtually no one qualifies or is actually helped by them.
Big press conference, claim credit and the press almost never follows up with any results. As long as the intentions are good, that is all that matters. Was the “Road to Hell” a shovel ready project?

An Update

Mike Flynn posted an article from The Atlantic which says that The monthly impact of the president’s new effort for most Americans paying off college debt will be between $4 and $8″.  As phony as all his other programs.

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PETA Sues SeaWorld For ‘Enslaving’ Killer Whales | Fox News.

Jeff Kerr, PETA’s general counsel, says his five-member legal team — which spent 18 months preparing the case — believes it’s the first federal court suit seeking constitutional rights for members of an animal species.

Just saying…

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Fisker: No misuse of federal loan | The News Journal | delawareonline.com.

The question that comes to my mind is whether Fisker has taken any of the DOE guaranteed funds.  If they have not, it is still there for domestic operations as they say.
If they have taken a dime of that loan, their statement does not conform with objective reality and our money is in Finland and in the pockets of the principals and investors. 

Regardless, this is just another Solyndra.  A reward for past contributions and an incentive for future campaign funds, speaking engagements and employment opportunities.

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The News Journal had an editorial today that endorsed the concept of governmental venture capitalism. The title of the editorial is “Where will manufacturing jobs come from?” In endorsing the concept of government-controlled venture capital, the Editorial Board discounts, out of hand, charges of crony capitalism, stating “It’s more a buzzword than substantial criticism, an automatic reaction to anything to do with government.”  The Board writes this despite the fact that Bloom & Fisker were both venture capital investments funded by the same venture capital firm; the Board writes this despite the fact that there are dozens of other top-notch venture capital companies with whom the State did not invest; the Board writes this despite the fact that Jack Markell has a long standing relationship with the head of the venture capital firm that invested in Fisker/Bloom. “Buzzword” indeed.

In short, the Board is creating a false argument while ignoring the very real concerns regarding a decision-making process that led to multi-million dollar, behind closed door, taxpayer-funded, extremely risky deals. The first concern is that there is a reason that professional venture capitalists make 10-20 investments per venture fund. Most of the deals fail to generate a positive return for the investor. Delaware only has two investments — meaning the chance of success is near zero.

The second concern is that these risky deals raise the question of why is our government making these types of direct investments? There are alternatives to government’s direct participation in funding private sector companies. For instance, the title of this post is “Bloom vs Kevlar” — Why that title? It seems that the Dupont Company is finishing up a Kevlar plant in South Carolina. This is the same Dupont whose corporate headquarters is in Delaware. South Carolina is a “business-friendly” state in which manufacturing jobs and private sector investments are actually welcomed. Other recent investments/expansions include: Boeing, Showa Denko, Continental Tire and others. These manufacturing jobs were not venture capital investments, but existing, strong companies expanding in a manufacturing friendly state called South Carolina.

The News Journal Editorial Board missed the mark, starting with the headline. The question isn’t “where will manufacturing jobs come from?”, but “where are the manufacturing jobs going?” The answer to that question is South Carolina.

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“Most states have seen job growth, but they’ve been in the energy technology fields and manufacturing.”

You mean after pulling a DNREC Secretary with specific expertise in “green energy”. After spending tens of millions of dollars in subsidies to Bloom Energy & Fiskers. After spending millions on the Sustainable Energy Utility. Delaware is an “abnormal” State? We’re shrinking (aka negative growth) because we’re not growing green technologies? Or manufacturing?

If the above Delaware State News article isn’t a total condemnation of the Markell Administration, I don’t know what is. Almost 3 years into the Administration, and even the Governor’s own Labor Department calls the State “abnormal”…

The caveat is that by the end of the year, it is forecast that we’ll have positive job growth. But, that is a bit tautological, isn’t it? We’ll see, I guess.

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Jack Markell continues to promote highly questionable “Green Energy” policies and programs that are politically appealing but economically unviable.  This is not in the best interest of the taxpayers of Delaware and will cost them hundreds of millions of wasted dollars and thousands of jobs.

At the sound bite level, helping Fisker buy the abandoned GM plant on Boxwood Road so that Delaware workers can be hired to build electric cars sounds like a no-brainer.  However, when you dig into the business plan for this venture, it quickly becomes apparent that this project is extremely costly to taxpayers and a very long shot at ever succeeding.  More than $650 million dollars of federal and Delaware taxpayer funds has already been spent.  If it is successful, and if 2,400 workers are employed there, the cost to taxpayers per new job will be a staggering $270,000.

But more importantly, Fisker defines the success necessary to hire 2,400 workers as the production of 100,000 cars annually.  If they sell fewer cars, they hire fewer workers.  Keep in mind that Fisker has no brand recognition, no quality reputation, no dealer network, and that it will be fifth to market with the most expensive product.  It will be competing with the Chevrolet Volt.  Chevrolet has brand recognition that ranks with baseball, hot dogs and apple pie, a good quality reputation, over 4,000 dealers and a lower-priced product that was introduced years ahead of the Fisker product. Yet Chevrolet’s first- year forecast is just 10,000 units.  Through September, year-to-date Volt sales were 3,895 cars.  Fisker’s sales forecasts are wildly optimistic and designed to secure government subsidies, not accurately predict future sales or employment levels.

Bloom Energy is another example of Jack Markell grabbing a green energy headline at taxpayer expense.  He bullied the state legislature into classifying the use of natural gas (a fossil fuel!) in a fuel cell as ”renewable energy” and now that the PSC has approved the plan, Delmarva customers will be paying the bill.  Electric rates in Delaware are already 50% higher than the national average.

The critical factor in determining the cost of Bloom Energy boxes is the lifespan of the fuel cell “stack” – the part of the device where the magic of converting fuel into electricity takes place. Useful life of the stack has been the Achilles Heel of fuel cell economic viability.  Replacing the stack if it goes bad is extremely costly and would severely affect the economic usefulness of Bloom’s devices.   Although Bloom claims to have achieved a breakthrough on stack life, we simply do not know how long they will last.  Regardless of the actual useful life of the product, our commitment to pay for them will go on until fulfilled.  Our Governor is willing to bet our tax dollars that Bloom’s claims of fuel cell lifespan will be achieved.  Jack Markell gets the sound bite and the glory; Delaware taxpayers get the risk and the bill.

Jack Markell continues to cling to the Regional Greenhouse Gas Initiative.  RGGI is a mini cap and trade program adopted among a group of northeast states.  It won’t significantly reduce carbon emissions unless all the states participate.  Presently, Pennsylvania is not in the program and New Jersey has announced its intentions to pull out of the program by the end of 2011.

Delaware’s continued participation in the program does little to reduce carbon emissions but costs families and businesses between $15 million and $35 million in inflated electric rates.  This is a strain on families and a job killer for businesses.  Continuing to participate in a program that will have no benefit but which will put Delaware at a competitive disadvantage with neighboring states is irresponsible.

Instead of investing Delaware funds on high risk green projects from out of state companies, Jack Markell should work at improving the environment for all businesses.  He should work toward reducing the cost of doing business in Delaware.   He could start by proposing to eliminate the archaic Gross Receipts tax.  That would benefit all Delaware businesses, not just a hand-picked few.

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According to ABCNews:

“DOE cannot be assured that the projects are on track to deliver the vehicles as agreed,” said the GAO report examining the department’s ATVM program. “It also means that U.S. taxpayers do not know whether they are getting what they paid for through the loans.”…

Between them, Fisker, at $529 million, and Tesla, at $465 million, have secured nearly $1 billion to jump-start production of their cars. Combined, the companies have already drawn down more than $300 million, Federal Financing Bank records show.

“Jump start”? But, according to the News Journal:

Fisker Automotive will not begin high-volume production of its second line of hybrids in Delaware until mid-2013,company executives said Wednesday.

This delays production for a year. I don’t know how many more jump starts I can stand… And rumors within the UAW state that there has been fundamentally no hiring.

So, 1/3 of the money gone, a minimum 1 year delay, and no jobs. Our “businessman” Governor has made another great investment. Makes one think back longly to the Minner-Carney days. At least we expected them to be incompetent. But what does this have to do with Bloom Energy?

According to PR Newswire, Kleiner Perkins was a 2nd round investor in Fisker Automotive to the tune of over $100 million. Around the time that the Federal government and Delaware’s State government ponied up over $500 million in loans and cash incentives, Kleiner Perkins put another investment in the 3rd round in financing.

Kleiner Perkins is also a major investor in Bloom Energy. The primary partner in Kleiner Perkins is John Doerr, who donated $1,200 to Governor Markell’s 2006 Treasurer’s re-election. I wonder how many State Treasurer races the most powerful venture capitalist in the Country, who is located in California, donated to???

In Jack Markell’s Blueprint for Change campaign book in 2008, he wrote:

The state should not be in the business of betting on the next great industry…. In no case should [business] investing decisions be made by state employees, elected officials, or anybody other than experienced investors with a strong track record of investing

I guess he wrote that before getting clearance from Kleiner Perkins — earning money the old fashion way — Crony Capitalism.

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