if you think that the housing price problems in the US are approaching their bottom, it may be worthwhile to keep the following in mind:
despite a drastically reduced Fed Reserve Rate over the last month, the 30 year fixed mortgage rate has actually gone up. because of this, house affordability is actually falling faster than house prices in most markets. with speculative fever strongly dampened, house prices will be guided by what is sustainably affordable to the market, rather than what some idiot can cover the teaser payment on.
new appraisal rules are being considered that will reduce a lender's ability to fudge the numbers to make things work. essentially, a loan can only be given for some percentage of the value of a house. the value of the house is determined by an appraiser. in the recent past, appraisers have become less and less independent because of immoral (and illegal) business practices on the part of lenders and brokers. the discussion today is that the appraisers will be made to be actually independent. so, house valuations will be guided by reality rather than being decided by a lender and rubber stamped by an appraiser who will get fired if they don't match the target appraisal.
on the other hand, the Fed Reserve Bank seems to be set on the idea of continued rate cuts, which effectively devalue the USD. having a long term loan that you get to pay back with an increasingly worthless currency isn't such a bad thing. and mortgage rates may get much higher before they get lower. so, prices will almost certainly be lower in a few years, but affordability may be lower as well.
Thursday, February 28, 2008
Wednesday, February 27, 2008
a small bit of crow pie re: public smoking
In my widely debated post on the 100% cigarette-banning actions of nanny states around the world and how Israel's 95% solution makes more sense to me, I made a lot of interesting points and drew attention to an innovative and perhaps more sensible approach to a worldwide problem.
I also somewhat minimized the health impacts of smoking and the cessation of smoking in all public places. As it turns out, the number of patients being admitted for myocardial infarction in France has fallen by 15% in just over 1 year since the 100% ban was enacted. While the source of the data is one of the proponents of the legislation and has every reason to massage data to support their own opinions, it is probably best to accept it at face value, since similar data has been collected elsewhere.
The weird thing is how the 15% reduction happened. According to the article, the number of smokers in France hasn't changed. I would guess that the number of cigarettes smoked probably has fallen. But my impression is that it takes a lifetime of smoking to cause something like myocardial infarction, so how could you have a meaningful drop in cases after just one year. Did they, in fact just remove the final trigger for some set of people?
In any case, I still think that a collection of consenting adults should be able to gather in at least a few public places around a city and smoke, so long as every reasonable effort is made to eliminate their impact on everyone else.
I also somewhat minimized the health impacts of smoking and the cessation of smoking in all public places. As it turns out, the number of patients being admitted for myocardial infarction in France has fallen by 15% in just over 1 year since the 100% ban was enacted. While the source of the data is one of the proponents of the legislation and has every reason to massage data to support their own opinions, it is probably best to accept it at face value, since similar data has been collected elsewhere.
The weird thing is how the 15% reduction happened. According to the article, the number of smokers in France hasn't changed. I would guess that the number of cigarettes smoked probably has fallen. But my impression is that it takes a lifetime of smoking to cause something like myocardial infarction, so how could you have a meaningful drop in cases after just one year. Did they, in fact just remove the final trigger for some set of people?
In any case, I still think that a collection of consenting adults should be able to gather in at least a few public places around a city and smoke, so long as every reasonable effort is made to eliminate their impact on everyone else.
Tuesday, February 26, 2008
the next bubble and why it has nothing to do with China
Harpers magazine agrees with me that the next bubble will be alternative energy at the end of a longish article about how the US is so screwed up that we can only grow through bubbles.
It won't be the same sort of bubble as housing or the internets, though. It will actually create real value to society for several years before hyperinflating itself into shameful oblivion. Considering how big, slow, and heavily regulated the energy industry is, it seems possible we may only see the growth part of the coming energy bubble, without the nasty crash.
Another, unrelated article, suggests that GE is an excellent stock to own if you expect the US (or anywhere else, really) to have a nuclear or renewable energy future, which, of course, seems nearly inevitable today.
Also, two separate articles recently suggested that China may be approaching the end of their meteoric economic growth for inevitable demographic reasons and various other factors.
It won't be the same sort of bubble as housing or the internets, though. It will actually create real value to society for several years before hyperinflating itself into shameful oblivion. Considering how big, slow, and heavily regulated the energy industry is, it seems possible we may only see the growth part of the coming energy bubble, without the nasty crash.
Another, unrelated article, suggests that GE is an excellent stock to own if you expect the US (or anywhere else, really) to have a nuclear or renewable energy future, which, of course, seems nearly inevitable today.
Also, two separate articles recently suggested that China may be approaching the end of their meteoric economic growth for inevitable demographic reasons and various other factors.
another good reason to become a power systems engineer
there simply aren't enough engineers in this country. over the last three decades the number of engineers graduating has decreased by 3%, while the number of people graduating with a degree in anything has increased by 50%.
the situation in the power systems field is more problematic because we have demographic issues. every utility that i know of has a pretty old workforce and a frequent gripe at the symposium i just went to is that as people retire, the utilities discover that they forgot to train someone to replace them. couple this with the fact that we are approach the scary end of the bathtub curve on a lot of our equipment and you've got a perfect storm situation.
the situation in the power systems field is more problematic because we have demographic issues. every utility that i know of has a pretty old workforce and a frequent gripe at the symposium i just went to is that as people retire, the utilities discover that they forgot to train someone to replace them. couple this with the fact that we are approach the scary end of the bathtub curve on a lot of our equipment and you've got a perfect storm situation.
Saturday, February 23, 2008
wind power mandates, PHEVs, and smart grid synergies
The problems created by large amounts wind power can be solved through the control of Plug in Hybrid Electric Vehicles (PHEVs) by way of Smart Grid Technology.
I'll get to what that means in a minute. First, though, lets cover who should care: if you do think CO2 is a problem and don't think biofuels are a silver bullet, or if you are an Electric Power Systems Engineer in the Pacific Northwest (PNW) of the US, you should care. I've tried to write this in a way that is understandable to anyone patient or bored enough to read it, without sacrificing too much detail or precision.
The basic idea is simple: adding large amounts of wind power to an electric grid also adds lots of problems, adding large numbers of intelligently controlled PHEVs to the same electric grid may help solve these problems.
The electric grid is the biggest, most powerful machine in the world. It moves very slowly. Before wind was introduced as a big player, it also moved very predictably. People consume more power during certain times of the day, so the system is set up to generate more power during those times of the day. A very precise equilibrium between production and consumption is always maintained. Any deviation from this equilibrium causes big problems. Up until today, the system can only control the production of power to maintain this equilibrium. It has no say whatsoever on how much power is consumed, by whom, or when so long as you pay your bill.
In the PNW, most of our power comes from large scale hydroelectric dams mostly built during the first half of the century. As it happens, the electric consumption in the PNW hasn't changed significantly in decades because we embrace conservation, so we have plenty of power to go around at some of the lowest rates in the world ($.02/kWh in some counties). We have no need whatsoever for additional production capacity. We do, however, have a new "Energy Independence Act" (independent from what, I have no idea, since virtually none of our electric energy is imported) I-937 that requires us to produce lots of power from wind. 15% of the energy delivered to customers will have to come from wind sources by 2020. I, along with the rest of the power industry in the state, think this is ridiculous but I won't be distracted from my theme. Instead, I'll pretend that it is a good idea and just try to figure out how to make it work.
The problem with wind power is that it depends on the wind blowing. Wind is difficult to forecast and changes rapidly. A given wind plant might go from 0% output to 100% back to 0% in the course of an hour. This is problematic for the system because it forces the other power sources to constantly adjust their power output so that the precise equilibrium between production and consumption can be maintained. This constant adjustment is expensive and requires that other power sources be run outside of their most economical range. In the PNW, running a plant outside of its most economical range often means spilling water over the top of a dam instead of running it through turbines to produce power, which is effectively the same thing as throwing energy away. Today, in the PNW, this cost is just starting to be imposed on the wind plants. Even though only 3% of the region's power comes from wind today, the problems caused by wind plants will increase the cost of wind power by 10% (about $23 million this year). By the time wind power represents 15% of the power consumed, this cost will probably have risen significantly, both in absolute and relative terms. The first part of the question, then, is how to minimize this cost.
The second part of the question is what to do with all of this new power that we don't need.
Conceptually, at least, the answer is simple: we increase the amount of energy consumed and stored. The best way to do this is with Plug in Hybrid Electric Vehicles (PHEVs). PHEVs are vehicles that run partially on electric energy stored on board that has been taken from the electric power system and partially on another source, usually a small internal combustion engine. The Chevy Volt is one example where all of the power to the wheels comes from the electric motor and the internal combustion engine is used only to charge the batteries. A Toyota Prius that has been modified so that it can recharge it's batteries from the electric grid would be an example where the power to the wheels comes from both the internal combustion engine and the electric motor. (I have strong opinions about both of these cars and how wrong they are, but I won't go into them right now.) The good part about PHEVs is that they can significantly reduce our fossil fuel consumption and CO2 output in the PNW. The really good part about them is that they would represent a huge new demand for this excess electric power that the wind energy mandate will force us to produce. The best part about them, though, is that they have the capacity to reduce the cost of integrating wind energy into our system by reducing the need to run our hydro dams outside of their most economical range. But these latter large benefits can only be captured by proceeding intelligently and with an understanding of the total power system. If we start using a large number of PHEVs without considering how they will impact the system, we will almost certainly make the cost of integrating new wind energy higher instead of lower.
Which brings us to the smart grid system. The idea behind the smart grid is that some consumers of power would be willing to make small modifications to the way they consume power if it benefited the environment, reduced their cost, and had minimal impact on their lifestyle. The mechanism for achieving this is a tool that looks at the market price of electricity and decides whether or not to consume power in a specific way at that moment. For example, you get home, park your PHEV and plug it in. You don't care when it recharges, as long as it is done before tomorrow morning, so you tell it to charge in the most economical mode. It looks at the current price of electricity and the expected overnight price and decides to run later and it saves you a little bit of money. If the price unexpectedly goes up while it is charging, it stops charging until the price comes back down again. If the price goes even higher, it may decide to sell some power back to the supplier. If you want to recharge now, you switch it out of the economy mode and it recharges right now. But you don't have to think about it. You just plug it in and set it in either the economy or the performance mode. The beauty of this mechanism is that it not only saves the consumer money, but it also provides a way for the power supplier to influence how much power is consumed and when by setting the price.
If it is the middle of a windy night in the spring in the PNW where all of the dams and all of the wind turbines are providing full power, the electricity to charge your PHEV might be nearly free. If it is a cold snap in the early winter, the dams are struggling to meet load and the wind turbines aren't running at all, electricity might be expensive enough that your charger decides you would be better off using the internal combustion engine to charge the batteries to power your commute. More importantly, there would often be borderline cases where the wind power increases and then decreases again repeatedly through the night. As the wind power increases, the market price for electricity would fall and your charger would turn on. As the wind power decreases, the price would rise again and your charger might stop charging your batteries.
Through this mechanism, you would get the most economical charge for your batteries and the power system would get the most economical way of maintaining the equilibrium between the power produced and consumed, thus reducing the integration cost of wind power, allowing a larger percentage of our energy consumption to be served by wind power.
There are a good number of details to be worked out (the PHEVs, the smart grid charger, and the market used by the smart grid charger are all still mostly theoretical, for example. and all have significant social, political, and bureaucratic barriers to overcome. I don't think there are significant technical barriers, but I am a bit of an optimist when it comes to technology), but I think that the potential benefits are so important that working them out is a high priority.
That is my excessively long, but hopefully understandable understanding of the subject. I hope somebody finds it interesting. Otherwise, I've just wasted the better part of a beautiful Saturday morning.
I'll get to what that means in a minute. First, though, lets cover who should care: if you do think CO2 is a problem and don't think biofuels are a silver bullet, or if you are an Electric Power Systems Engineer in the Pacific Northwest (PNW) of the US, you should care. I've tried to write this in a way that is understandable to anyone patient or bored enough to read it, without sacrificing too much detail or precision.
The basic idea is simple: adding large amounts of wind power to an electric grid also adds lots of problems, adding large numbers of intelligently controlled PHEVs to the same electric grid may help solve these problems.
The electric grid is the biggest, most powerful machine in the world. It moves very slowly. Before wind was introduced as a big player, it also moved very predictably. People consume more power during certain times of the day, so the system is set up to generate more power during those times of the day. A very precise equilibrium between production and consumption is always maintained. Any deviation from this equilibrium causes big problems. Up until today, the system can only control the production of power to maintain this equilibrium. It has no say whatsoever on how much power is consumed, by whom, or when so long as you pay your bill.
In the PNW, most of our power comes from large scale hydroelectric dams mostly built during the first half of the century. As it happens, the electric consumption in the PNW hasn't changed significantly in decades because we embrace conservation, so we have plenty of power to go around at some of the lowest rates in the world ($.02/kWh in some counties). We have no need whatsoever for additional production capacity. We do, however, have a new "Energy Independence Act" (independent from what, I have no idea, since virtually none of our electric energy is imported) I-937 that requires us to produce lots of power from wind. 15% of the energy delivered to customers will have to come from wind sources by 2020. I, along with the rest of the power industry in the state, think this is ridiculous but I won't be distracted from my theme. Instead, I'll pretend that it is a good idea and just try to figure out how to make it work.
The problem with wind power is that it depends on the wind blowing. Wind is difficult to forecast and changes rapidly. A given wind plant might go from 0% output to 100% back to 0% in the course of an hour. This is problematic for the system because it forces the other power sources to constantly adjust their power output so that the precise equilibrium between production and consumption can be maintained. This constant adjustment is expensive and requires that other power sources be run outside of their most economical range. In the PNW, running a plant outside of its most economical range often means spilling water over the top of a dam instead of running it through turbines to produce power, which is effectively the same thing as throwing energy away. Today, in the PNW, this cost is just starting to be imposed on the wind plants. Even though only 3% of the region's power comes from wind today, the problems caused by wind plants will increase the cost of wind power by 10% (about $23 million this year). By the time wind power represents 15% of the power consumed, this cost will probably have risen significantly, both in absolute and relative terms. The first part of the question, then, is how to minimize this cost.
The second part of the question is what to do with all of this new power that we don't need.
Conceptually, at least, the answer is simple: we increase the amount of energy consumed and stored. The best way to do this is with Plug in Hybrid Electric Vehicles (PHEVs). PHEVs are vehicles that run partially on electric energy stored on board that has been taken from the electric power system and partially on another source, usually a small internal combustion engine. The Chevy Volt is one example where all of the power to the wheels comes from the electric motor and the internal combustion engine is used only to charge the batteries. A Toyota Prius that has been modified so that it can recharge it's batteries from the electric grid would be an example where the power to the wheels comes from both the internal combustion engine and the electric motor. (I have strong opinions about both of these cars and how wrong they are, but I won't go into them right now.) The good part about PHEVs is that they can significantly reduce our fossil fuel consumption and CO2 output in the PNW. The really good part about them is that they would represent a huge new demand for this excess electric power that the wind energy mandate will force us to produce. The best part about them, though, is that they have the capacity to reduce the cost of integrating wind energy into our system by reducing the need to run our hydro dams outside of their most economical range. But these latter large benefits can only be captured by proceeding intelligently and with an understanding of the total power system. If we start using a large number of PHEVs without considering how they will impact the system, we will almost certainly make the cost of integrating new wind energy higher instead of lower.
Which brings us to the smart grid system. The idea behind the smart grid is that some consumers of power would be willing to make small modifications to the way they consume power if it benefited the environment, reduced their cost, and had minimal impact on their lifestyle. The mechanism for achieving this is a tool that looks at the market price of electricity and decides whether or not to consume power in a specific way at that moment. For example, you get home, park your PHEV and plug it in. You don't care when it recharges, as long as it is done before tomorrow morning, so you tell it to charge in the most economical mode. It looks at the current price of electricity and the expected overnight price and decides to run later and it saves you a little bit of money. If the price unexpectedly goes up while it is charging, it stops charging until the price comes back down again. If the price goes even higher, it may decide to sell some power back to the supplier. If you want to recharge now, you switch it out of the economy mode and it recharges right now. But you don't have to think about it. You just plug it in and set it in either the economy or the performance mode. The beauty of this mechanism is that it not only saves the consumer money, but it also provides a way for the power supplier to influence how much power is consumed and when by setting the price.
If it is the middle of a windy night in the spring in the PNW where all of the dams and all of the wind turbines are providing full power, the electricity to charge your PHEV might be nearly free. If it is a cold snap in the early winter, the dams are struggling to meet load and the wind turbines aren't running at all, electricity might be expensive enough that your charger decides you would be better off using the internal combustion engine to charge the batteries to power your commute. More importantly, there would often be borderline cases where the wind power increases and then decreases again repeatedly through the night. As the wind power increases, the market price for electricity would fall and your charger would turn on. As the wind power decreases, the price would rise again and your charger might stop charging your batteries.
Through this mechanism, you would get the most economical charge for your batteries and the power system would get the most economical way of maintaining the equilibrium between the power produced and consumed, thus reducing the integration cost of wind power, allowing a larger percentage of our energy consumption to be served by wind power.
There are a good number of details to be worked out (the PHEVs, the smart grid charger, and the market used by the smart grid charger are all still mostly theoretical, for example. and all have significant social, political, and bureaucratic barriers to overcome. I don't think there are significant technical barriers, but I am a bit of an optimist when it comes to technology), but I think that the potential benefits are so important that working them out is a high priority.
That is my excessively long, but hopefully understandable understanding of the subject. I hope somebody finds it interesting. Otherwise, I've just wasted the better part of a beautiful Saturday morning.
Friday, February 22, 2008
good stuff coming soon
i've got a pretty big post i'm thinking about. it may turn into two or three. i hope to have the chance to write it up this evening. it has been a couple of busy days
so, this is a teaser:
demographics are a pain. 1/3 of Japan's population will be retired in the near future.
Darpa still rocks.
all we need is energy. seriously, i'm pretty convinced that the only technical issue we face today is energy. there are plenty of huge social, political, and moral issues, but energy is the only technical issue that we really need to worry about. that, and maybe the next generation of environmental engineering.
reactivating the immune systems of people with HIV. which brings us back to demographics and how much of a pain they are. or will be.
anyway, i think i'll have fun writing it. hopefully tonight. at the moment, i have to head off to an energy symposium at my alma mater.
so, this is a teaser:
demographics are a pain. 1/3 of Japan's population will be retired in the near future.
Darpa still rocks.
all we need is energy. seriously, i'm pretty convinced that the only technical issue we face today is energy. there are plenty of huge social, political, and moral issues, but energy is the only technical issue that we really need to worry about. that, and maybe the next generation of environmental engineering.
reactivating the immune systems of people with HIV. which brings us back to demographics and how much of a pain they are. or will be.
anyway, i think i'll have fun writing it. hopefully tonight. at the moment, i have to head off to an energy symposium at my alma mater.
Friday, February 15, 2008
adblock plus
a recent announcement that google is getting into the video banner ad industry has reminded me that i really hate ads.
i understand that ads may be important to somebody and could theoretically benefit society in some way, but it seems to me they are a greater source of evil than good. at the very least, they are a huge source of distraction and annoyance for me. this is why i don't watch tv in the US (other countries only break for ads once or twice every 30 minutes, if you can imagine). it is also why i use mozilla with adblock plus installed. it blocks about 90% of ads.
unfortunately, as i understand it mozilla is funded by google and google only makes money by selling ads (seriously, they are a huge rich company that does all of this cool stuff that i love and stands for the free internet and seems so cool, but their only income is from their banner ads), so it is only a matter of time before adblock gets disappeared or subverted.
in the meantime, try it out. i think you'll find the internets far more enjoyable when experienced ad-free. it just looks so much neater and cleaner and stylistically consistent.
i understand that ads may be important to somebody and could theoretically benefit society in some way, but it seems to me they are a greater source of evil than good. at the very least, they are a huge source of distraction and annoyance for me. this is why i don't watch tv in the US (other countries only break for ads once or twice every 30 minutes, if you can imagine). it is also why i use mozilla with adblock plus installed. it blocks about 90% of ads.
unfortunately, as i understand it mozilla is funded by google and google only makes money by selling ads (seriously, they are a huge rich company that does all of this cool stuff that i love and stands for the free internet and seems so cool, but their only income is from their banner ads), so it is only a matter of time before adblock gets disappeared or subverted.
in the meantime, try it out. i think you'll find the internets far more enjoyable when experienced ad-free. it just looks so much neater and cleaner and stylistically consistent.
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