Energy: A Methane Economy

Posted on 7 May 2012 by Erik Hare | 16 Comments

Natural gas has always been the bane of oil production. The processes deep in the earth that create oil over millions of years tend to produce even more volatile gases than liquid oil. These have typically been “flared”, or burned off to get rid of them, since they are difficult to transport or do anything with.

The value of this great resource is finally being tapped around the world, and with some new technologies there are processes in place which can make suitable fuels directly from natural gas. These systems need development and refinement, which can only come from implementation. That, and a bit more research in the lab can revolutionize gasoline – and open the market to a vital new source of supply.

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Energy: The Market

Posted on 4 May 2012 by Erik Hare | 19 Comments

This is the first in a small series on energy in the US, focusing on energy independence and renewables.

There is nothing more fundamental to the health of economy than energy costs, particularly the price of gasoline. There are more important things in life, especially food, but that cost does not rise and fall as rapidly and unpredictably as the cost of the gasoline that keeps our whole system running.

The cost of gasoline is determined by a very open market that is functioning about as well as it can. A critical analysis of this market shows that there are key trends that will constantly drive up the price in narrow bands. The largest problems with this market are barriers to entry, in particular the available refineries, and the single source of raw material in the form of crude. Opening up this system to new technologies and sources of energy is the only way it can be improved to produce more stable, reliable costs.

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GDP: The Bet

Posted on 27 April 2012 by Erik Hare | 12 Comments

Is the economy growing? The short answer is “Yes”, but the long answer is “No”. Real Gross Domestic Product (GDP) growth rate for the first quarter of 2012 came in at 2.2% annualized, which is at least a positive number. The UK and Spain can’t claim that, falling into recessions for the second time since 2008. But this is nowhere near enough growth to create jobs and keep the forward momentum building at the end of 2011.

Some will blame rising gasoline prices and others will cite the sharp declines in government spending, especially at the state and local level. Still others will refer to ongoing investor unease and unwillingness to put money into new projects. But this is all speculation. What we do know is that job growth has led the recovery so far and probably will have to in the next quarter if this will turn around. And that’s exactly backwards from what you typically see in a recovery.

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K-Waves

Posted on 25 April 2012 by Erik Hare | 34 Comments

The possibility of the world ending this December still makes the rounds, often as a joke. Very few people believe it will happen, and certainly no Mayan ever predicted such a thing. But the idea caught on for an obvious reason: we do appear to be at the end of some kind of cycle.

Then again, we’re also at the start of another.

While there may be morbid comfort in the idea that the world might end, an emerging new world should be much more comforting. That’s why the K-Wave concept is likely to catch on. This theory is not only more hopeful, it’s robust enough to explain an awful lot about our world from investing to generational identification – and more.

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Job Dynamics

Posted on 20 April 2012 by Erik Hare | 14 Comments

Data comes in from an amazing variety of sources telling us just what is up or down in the economy. If it can be measured, it probably is. You want jobs information? There’s information on unemployment, job creation, job destruction, hours worked … just about whatever you want. Deciding what is useful is always the hard part – and that is the great skill any of us have to develop in this information age.

A year ago Barataria was focused on Unemployment Initial Claims as a good proxy for total job growth figures that would come out later in the month. It worked for a while because in 2010 through the summer of 2011 we were at or near the bottom of job creation, picking up steam very slowly. This figure stopped being a good indicator for reasons that suggest large employers are still laying off people (those who are eligible for unemployment benefits) while small companies are hiring.

But it would be wrong to drop our study of Initial Claims completely, so let’s take another look.

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