Convicted One oltmannd: If you automate 80% of everyone's job, then we only have to work one day a week to earn a whole week's pay. Same total economic output with only 20% of the effort. Won't work that way. What will happen is that (in your example) they will lay off 80% of the work force, convert all remaining positions except a handful to non-benefit accruing part time positions, and the stockholders will pocket the margin
oltmannd: If you automate 80% of everyone's job, then we only have to work one day a week to earn a whole week's pay. Same total economic output with only 20% of the effort.
If you automate 80% of everyone's job, then we only have to work one day a week to earn a whole week's pay. Same total economic output with only 20% of the effort.
Won't work that way. What will happen is that (in your example) they will lay off 80% of the work force, convert all remaining positions except a handful to non-benefit accruing part time positions, and the stockholders will pocket the margin
Unless they stuff it in a mattress, it winds up back in the economy in one form or another.
There have been HUGE productivity increases in the 20th century and during the periods of greatest productivity increases (the 1920s, the 1950s and 60s, the 1990s), the US was at full employment. Periods of greatest unemployment were not caused by productivity improvements.
Your theory is blown....
-Don (Random stuff, mostly about trains - what else? http://blerfblog.blogspot.com/)
Regarding high fuel prices:
How high will they go this year?
Could gasoline get to $8 per gallon this year?
Railway Man garr: The cost of environmental compliance is insignificant next to the cost of labor, machinery, raw materials, and energy. Even for a very dirty process such as oil refining, environmental compliance is less than 1% of operating costs. The American Petroleum Institute (the industry's own advocacy group) calculates that environmental compliance costs about $0.14 per barrel of refined products sold. Cancelling every possible environmental regulation tomorrow wouldn't move significant jobs back to the U.S. RWM I believe this is painting with too broad a brush. If cost of enviromental compliance is only 1%, why is Georgia Power/Southern Company seriously considering closing coal burning Plant Harlee as well as a number of other coal powered power plants instead of installing the new scrubbers? This decision is also being repeated by power companies across the country. If the cost of compliance is truly only 1%, these plant closures will be an extreme case of the tail wagging the dog! Jay First, I noted that the cost of environmental compliance as a cost of goods in the U.S. is less than 1%. (Well, actually I didn't say it, it's what others calculated.) For some specific goods the cost of environmental compliance is very high, for others very low. Looking at the system as a whole, it adds up to less than 1%. Second, look at the utility's total cost of operations -- fuel, labor, overhead, capital equipment, etc. Add up all of these. Subtract out the cost of environmental compliance. See how much it compares to the cost of fuel alone (it's very small for most utilities) The Edison Electric Institute (the electric utilities trade organization) estimates the environmental compliance for all utilities for the years 2007-2025 will be $47.8 billion, or $2.5 billion per year. The cost of buying fossil fuels for all utillities in 2010 was about $45 billion for coal, $4 billion for oil, and $43 billion for natural gas per the EIA. Doing the math, environmental compliance is 2.71% of fuel cost. That percentage doesn't include labor, capital and consumables -- add those in an the number has to drop further. These are somewhat messy numbers because the EEI document is unclear about exactly what it classifies as a utility, whereas EIA rolls in independent power producers into its numbers as well as commercial and industrial sector generators. But it indicates that as a whole, environmental compliance is a small component of the total cost of electricity. See http://www.entergy.com/global/documents/utility/industry/EEi_rising_electricity_costs.pdf and http://www.eia.doe.gov/cneaf/electricity/epm/tablees2a.html RWM RWM
garr: The cost of environmental compliance is insignificant next to the cost of labor, machinery, raw materials, and energy. Even for a very dirty process such as oil refining, environmental compliance is less than 1% of operating costs. The American Petroleum Institute (the industry's own advocacy group) calculates that environmental compliance costs about $0.14 per barrel of refined products sold. Cancelling every possible environmental regulation tomorrow wouldn't move significant jobs back to the U.S. RWM I believe this is painting with too broad a brush. If cost of enviromental compliance is only 1%, why is Georgia Power/Southern Company seriously considering closing coal burning Plant Harlee as well as a number of other coal powered power plants instead of installing the new scrubbers? This decision is also being repeated by power companies across the country. If the cost of compliance is truly only 1%, these plant closures will be an extreme case of the tail wagging the dog! Jay
The cost of environmental compliance is insignificant next to the cost of labor, machinery, raw materials, and energy. Even for a very dirty process such as oil refining, environmental compliance is less than 1% of operating costs. The American Petroleum Institute (the industry's own advocacy group) calculates that environmental compliance costs about $0.14 per barrel of refined products sold. Cancelling every possible environmental regulation tomorrow wouldn't move significant jobs back to the U.S. RWM
The cost of environmental compliance is insignificant next to the cost of labor, machinery, raw materials, and energy. Even for a very dirty process such as oil refining, environmental compliance is less than 1% of operating costs. The American Petroleum Institute (the industry's own advocacy group) calculates that environmental compliance costs about $0.14 per barrel of refined products sold. Cancelling every possible environmental regulation tomorrow wouldn't move significant jobs back to the U.S.
RWM
I believe this is painting with too broad a brush. If cost of enviromental compliance is only 1%, why is Georgia Power/Southern Company seriously considering closing coal burning Plant Harlee as well as a number of other coal powered power plants instead of installing the new scrubbers? This decision is also being repeated by power companies across the country.
If the cost of compliance is truly only 1%, these plant closures will be an extreme case of the tail wagging the dog!
Jay
First, I noted that the cost of environmental compliance as a cost of goods in the U.S. is less than 1%. (Well, actually I didn't say it, it's what others calculated.) For some specific goods the cost of environmental compliance is very high, for others very low. Looking at the system as a whole, it adds up to less than 1%.
Second, look at the utility's total cost of operations -- fuel, labor, overhead, capital equipment, etc. Add up all of these. Subtract out the cost of environmental compliance. See how much it compares to the cost of fuel alone (it's very small for most utilities)
The Edison Electric Institute (the electric utilities trade organization) estimates the environmental compliance for all utilities for the years 2007-2025 will be $47.8 billion, or $2.5 billion per year. The cost of buying fossil fuels for all utillities in 2010 was about $45 billion for coal, $4 billion for oil, and $43 billion for natural gas per the EIA. Doing the math, environmental compliance is 2.71% of fuel cost. That percentage doesn't include labor, capital and consumables -- add those in an the number has to drop further. These are somewhat messy numbers because the EEI document is unclear about exactly what it classifies as a utility, whereas EIA rolls in independent power producers into its numbers as well as commercial and industrial sector generators. But it indicates that as a whole, environmental compliance is a small component of the total cost of electricity.
See http://www.entergy.com/global/documents/utility/industry/EEi_rising_electricity_costs.pdf
and http://www.eia.doe.gov/cneaf/electricity/epm/tablees2a.html
Using averages oversimplifies the issue. I do not know the actual percentage that compliance represents in the various power companies profit/loss statements, however it would have to be significant if they are considering converting/abandoning existing plants instead of updating with the latest mandated environmental equipment.
Plus, indirect costs of compliance are not factored in the 1%--the increased per therm cost of natural gas for all customers caused by the shift of power plants from coal to natural gas. Another, the lost jobs for the railroaders and miners as well as the lost income for the railroads and mining companies. One more, if the scrubbers are installed, the increased cost of kw's for the customers. The list goes on...
A 1% average doesn't sound too bad, however it appears that the percentage is based on improving already existing infrastructure. It does not consider the economic costs of the projects that environmental regulations prevent from being built. Remember, back in '07 when refineries were running at peak capacity, how the price of gasoline flirted with $4.00 every time there was a hiccup in the US refining network. One of the repeated reasons was that no new refineries had been constructed in decades because of environmental regulations, permits, and costs.
To paraphrase the saying of "How long a minute is depends on which side of the bathroom door you are standing"---How much 1% compliance costs depends on which side of the checkbook one sits! Don't get me wrong, I want clean air and water as much as the next guy, but an oversimplified, enticingly low average figure is too easily used to mitigate overzealous regulations.
garr Using averages oversimplifies the issue. To paraphrase the saying of "How long a minute is depends on which side of the bathroom door you are standing"---How much 1% compliance costs depends on which side of the checkbook one sits!
Using averages oversimplifies the issue.
To paraphrase the saying of "How long a minute is depends on which side of the bathroom door you are standing"---How much 1% compliance costs depends on which side of the checkbook one sits!
That is a wonderful analogy for why you should not trust a statistic calculated by someone who has an interest in it. I live in a small city that is crowing about how they are holding the line on property taxes. No property tax increase here. But on the tax bill, the city’s portion is rising faster than any other component; rising about 30% per year.
So the taxes are either not rising, or they are rising, depending on whether you ask the taxer or the taxpayer.
From a response to a post by RWM earlier this week:
oltmannd You are no fun. Fact sure do have a way of getting in the way of righteous indignation!
"None of us enjoys witnessing a crime, particularly the murder of our beautiful theory by a brutal gang of facts." - Alfred E. Perlman My source: http://cn2-8-2.deviantart.com/ , post of Jan. 12, 2011.
(See also: http://c2.com/cgi/wiki?DifferenceBetweenTheoryAndPractice , which attributes the original to Thomas Huxley in the mid-1800's.)
- Paul North.
Nothing masquerades as objectivity more than “facts.”
Bucyrus Regarding high fuel prices: How high will they go this year? Could gasoline get to $8 per gallon this year?
Well I guess anything is possible, but I am wondering what to expect for an increase that reaches a level that persists for several months this year. With my question, I would qualify that I am only considering a general increase that is just part of the general world trend, without anything as radical as the overthrow of Saudi Arabia, a war between Israel and Iran, or the complete loss of Libyan production for example.
With those qualifications, it seems like $5-6 per gallon is quite likely. I am wondering how much impact that would have on the economy.
Is there some point of price rise that would trigger a response based upon it being a national security emergency? If so, what would that response be?
......Well, Muncie's price per gal. rose to $3.45 today.
And I remember when it was 6 GAL FOR $1.00 DOLLAR....!!!!!
Quentin
Bucyrus Well I guess anything is possible, but I am wondering what to expect for an increase that reaches a level that persists for several months this year. With my question, I would qualify that I am only considering a general increase that is just part of the general world trend, without anything as radical as the overthrow of Saudi Arabia, a war between Israel and Iran, or the complete loss of Libyan production for example. With those qualifications, it seems like $5-6 per gallon is quite likely. I am wondering how much impact that would have on the economy. Is there some point of price rise that would trigger a response based upon it being a national security emergency? If so, what would that response be?
Start tapping the Strategic Petroleum Reserve, no doubt.
Last I heard, the SOR would last a few months. It is not something that lends itself to emergency measures. Remember the oil embargo's in the 1970's?
C&NW, CA&E, MILW, CGW and IC fan
The last thing I would expect this administration and congress to do is tap into the Strategic Petroleum Reserve. One could argue that such an emergency response would reinforce the perception of scarcity and would therefore actually spook the markets into higher pricing.
What I would expect is a crackdown on driving once gasoline hits $6 per gallon. At that price, consumers will demand a government solution.
One idea will be to put a hefty new tax on gasoline to reduce consumption, thus causing the price to drop. It is kind of like setting a fire to stop a fire.
There will be a call for the subsidization gasoline for low-income drivers.
We could set up a new bureaucracy to monitor gasoline purchases at the pump. With that data, we could put in a conservation pricing rate structure that raises the price per gallon depending on the number of gallons a driver consumes in a given time period. That extra cost per gallon would then be used to subsidize the drivers who use less.
A lower speed limit will be another popular idea. The trucking industry will want an exemption from that.
Bucyrus A lower speed limit will be another popular idea. The trucking industry will want an exemption from that.
Not necessarily, if the cost of extra fuel consumption (and the cost of that fuel) for driving at 70 mph is greater than at say 60 mph. Of course you need to factor in things like driver pay , etc. They will either slow the trucks down or push for more intermodal, of course their prices will go up too. By way of example look at the fact that the new Maersk Ultra-large containerships are designed to sail slower than the current standard speed.
Maybe bring back the national 55 mph speed limit...slowing down saves money and reduces the liklihood and severity of accidents.
Ulrich Maybe bring back the national 55 mph speed limit...slowing down saves money and reduces the liklihood and severity of accidents.
I can remember that was first imposed in 1973. People stuck to it pretty closely at first but as time passed and the oil embargo ended, people who drove at the posted limit of 55 MPH stood a good chance of being run over by the majority who ignored it.
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