Category Archives: Government Waste

Ethanol — A Spendy Mistake

Every now and then, advocates make extraordinarily stupid remarks while defending a position.   Yesterday I watched (FOX Business)  in stunned silence as an ethanol advocate argued that corn based ethanol was a good thing because  increased food costs were offset by reduced energy costs.   Ethanol was cheaper than gasoline, so blending it reduced costs.

Give that man 5 gold stars for arithmetic.

The Chicago Board of Trade provides the wholesale price of both Ethanol and Gasoline.  On July 31st. Ethanol was selling for $2.63 cents a gallon.  Unleaded gasoline was selling for $2.78 on the same day.

It sure looks like Ethanol blended with gasoline is reducing energy costs….until you study the details just a bit.

Import tariffs and subsidies for domestic ethanol producers expired at the end of 2011, but there still are incentives and tax credits available.  NBC estimated those credits at a bit over $1 per gallon.

The Oil Industry gets all sorts of special deals too.   I’m sure the amount is less than $1 per gallon, but it is not zero.   Let’s ignore the subsidies and just compare prices.

This is a 2 step process.

  1. Adjust for  energy content.  Gasoline averages around 114,000 british thermal units (btu) per gallon.  Ethanol averages 76,000.  One gallon of ethanol is 76/114 or .6667 gallons or  2/3 of a gallon.
  2. Adjust the ethanol price to match energy content.   If both fuels are equally efficient, and they are if the engine is properly tuned, then btu equivalence is the fair way to measure them.  If ethanol is priced at $2.63 then it takes ($2.63/.6667)  or $3.94 worth of ethanol to match a gallon of gasoline at $ 2.78.  Ethanol is a whopping 42% more expensive.

And all our food costs more too.

Thanks Uncle Sam.

Renewable Energy — A Location Story

It’s easy to tell when the Salzburg to Munich train crosses into Germany.  There is no visible border crossing, but suddenly solar panels are everywhere.  Germany has been subsidizing the solar power industry for years…and it is the largest Solar power market in the world.  Austria has been less generous, so the solar panels show up at the border.

This experience underlines an interesting problem, Green Energy and geography don’t always work well together.  Would you expect to find solar panels in Minnesota or southern Canada?  All of Bavaria (southern Germany) has a latitude that is higher than Minneapolis.  Munich, were it moved due west to Minnesota, would lie just a bit south of International Falls.  Solar Power, International Falls, well.. uh…OK?   Northern Germany has the same latitude as Southern Alaska.

Roofs all over Germany are covered in Solar power panels.  The efficiency of those units must be terrible.  I can’t imagine climbing up onto the roof on a cold winter day to remove the snow so the solar panels can see the sun.  Munich has only 8 hours and 21 minutes of daylight on December 21st, and the sun angle is 18.5 degrees above the horizon, the sun angle to the panels must be terrible.

A wind farm has been constructed along I-65, north of Indianapolis, an area that is considered marginal for wind generation.  All of the Southeastern USA is considered unacceptable for wind power generation.   When I think about wind power in the USA, I see very long transmission lines everywhere.  Good wind generation locations are, for the most part in remote locations…like the middle of Lake Michigan or the mountains of Wyoming.

Let’s look at some USA Energy department maps.

We in the USA put wind farms at places that are acceptable politically and not too bad scientifically.   The result is relatively inefficient wind farms.

Whenever politics and science get mixed together we should all be prepared for strange results. Solar panels at latitude 48.1333 (Munich) and wind farms along I-65 in central Indiana (it’s not on the map because it was built after 2009) are just two of my favorite examples.

Government silliness — Highway mileage markers

Friday the 13th, a good day to change things up a bit and talk about government silliness. Today’s subject… road signs.

Our newest interstate highways have mile markers every .1 or .2 of a mile.  Why?

We used to have mile markers every mile….seemed reasonable to me.  Then half mile markers made an appearance.  I was touring New Hampshire a few years ago  and saw my first .1 mile marker.  I figured New Hampshire is small and they must like to count everything they have.  The markers are showing up everywhere now.  I wonder if  sign companies and defense companies share lobbyists?

I have difficulty figuring out what problem is being addressed by the additional signs.  Governments love to spend money in the name of safety…but I can’t think of a safety angle here.  Were people getting lost in between mile markers on interstate highways?  At 70 miles an hour, and .1 mile spacing, a marker goes by every 5.2 seconds.

All I see are capital and maintenance costs rising.  Sure the installed cost of each sign is probably less than $100,  but if there is no benefit it is pure waste.  I can’t imagine a favorable cost/benefit analysis cost argument.

In Ohio, and other places too I’d guess, there is a sign along the curve on cloverleaf off ramps.  The sign is  a label for the off ramp. One might  say   E 270  S Sawmill Road ramp or something equivalent telling the reader the off ramp they currently occupy.

I am at a loss, I cannot for the life of me understand why the sign is there.    The signs are small and come at you quickly which makes them difficult to read.   I’m not too sure reading the sign while negotiating the off ramp is a good idea.   Perhaps there is another purpose.   OK, but what could it be?

There is a stretch of the Pali Highway in Kailua, Hawaii that has 6 speed limit signs in a quarter mile section of the roadway.   There is no additional traffic entering the highway between these signs.   I wonder what the engineer that placed those signs must have been thinking.  Maybe he had an uncle in the sign business.

I have a theory for why this is happening.

All these projects are funded with Federal  Highway Trust Fund dollars.  The bureaucratic red tape associated with those  funds is substantial (I used to work on these projects so I have first hand experience).  That red tape encourages the various highway departments around the country to do a few large projects rather than many smaller ones because the red tape is a much bigger percentage of a small project’s total cost.

If they have a little extra money left over, they add crap to a big project.   It takes years to get a project approved…and having small projects in the wings to soak up extra money is just too much work.

States don’t want to return extra federal funds to the treasury….so they put crap they don’t want or need into the projects so they can spend the available  funds. After it has been added a few times,  the here to fore unwanted stuff  becomes a necessary part of all future road projects.

And as the states compare notes with each other, the dumb ideas work their way around the country.

Sometimes signs are just plain stupid.   The H1 Freeway in Honolulu used to have signs that said Do not throw rubbish over bridge.  Under the bridge or onto or off the bridge was OK, but not over.   A few years ago the signs were replaced with more pedestrian no littering signs and a fun little bit of Hawaiiana went away.  Every now and then I see one of the old signs on a bridge in an out of the way location and I smile.

Canada dumps the penny, go Canada

I was looking for an excuse to write about my second favorite subject in the world, government waste…when the calendar cooperated.  April Fools Day.  Perfect.

I’ll warn you ahead of time, I’m a bit nuts on this subject.

Canada has just announced that they will no longer make the penny.  It costs the government 1.6 cents to make a penny and Canada is losing 11 million dollars a year manufacturing the item.  In 2011 the US Mint manufactured 4.9 billion pennies and lost a cool $50 million dollars in the process….and we loose money on the nickel too.

The penny has been the lowest denomination coin available since 1858 when the Philadelphia mint quit manufacturing the half penny.   Inflation has worked its magic over time and the lowly penny of 1858 would  have the equivalent buying power of  $2.80 today.

As I think back to 1858, eliminating the half penny was the modern day equivalent or rounding to the nearest $1.40…and cash was the only way to pay.

We haven’t changed the shape or value of coins in over 100 years.  Sure we keep trying to get Americans to use a dollar coin…but we do it so stupidly.   Message to Uncle Sam…the dollar coin needs to replace the dollar bill not supplement it.  People are creatures of habit and we are going to keep using paper dollars as long as they are available.

But no…we make both ….and then run commercials trying to get people to switch….and then when they don’t….we store the coins in vaults…because we don’t have the wherewithal to get rid of the paper dollar.   Lucky thing we live in a credit card world.   We really don’t need coins…or currency for that matter.  Just charge it!

We really need to start over when it comes to coins….and currency too.  A good place to start would be to dump the penny and nickel and stop manufacturing the paper dollar.   I’d add a $5 coin too if I were king.   And a $500 bill.  Inflation exists and will continue.  If we assume 3% inflation, then the currency loses 50% of its value every 26 years….we might as well get started, it’s only going to get worse.

I’d be the first to admit that in a world of trillion dollar budget deficits, a billion here and a billion there doesn’t add up to much….but little every bit helps.