“A Clean Car Boom” – New York Times, 11 August 2013

Sales of hybrid and electric cars are growing faster than expected, mostly due to cutting edge technologies and helpful government policy.

Twenty-eight percent of the US’s greenhouse gas (GHG) emissions derive from transportation, second to power plant emissions. Wider use of fuel-efficient cars has already curbed the 2005-2012 carbon dioxide emission rates by 16%.

In the first seven months of 2013, car manufacturers sold over 350,000 hybrid and electric cars, a 30% gain in sales from the same time, the first seven months, in 2012. Hybrid and electric cars are classified as light vehicles; and although they only comprise 4% of that classification, they have become very mainstream and accessible to the public. The Toyota Prius is the most popular hybrid car, and one of the 10 best-selling cars in America.

Unlike hybrids, electric cars are still a fairly specialized product, more often purchased by wealthier buyers. However, federal and state tax rebates are boosting sales by giving more people the opportunity to buy electric cars. Tesla Motors manufactures the best selling electric car, the Model S; other companies like BMW and Cadillac are following suit.

The federal government’s 2010 mandate that obligates car manufacturers to double new-car average fuel economy by 2025 has propelled the car industry to produce more fuel efficient cars at a faster rate; Obama’s loan guarantees to renewable energy and electric car companies have also accelerated car manufacturers’ timelines. Tesla has made enough money from its hybrid and electric cars to pay off its $465 million loan, nine years early.

Read our previous entry on fuel efficient trucks, GM planning strict diet for new pickup trucks.

Developed and Written by Dr. Subodh Das and Tara Mahadevan

August 30, 2013

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“A Shuffle of Aluminum, but to Banks, Pure Gold” – New York Times, 20 July 2013

Before the 1980s, banking institutions weren’t allowed to own non-financial businesses — Congress wanted to reduce the risks banks take, as well as safeguard depositors. However, in the 1990s, Congress and the Federal Reserve’s will weakened, soon permitting some banks to develop businesses in storing and transporting commodities.

In 2010, Goldman Sachs bought Metro International Trade Services, one of the US’s biggest metal storers, housing over a quarter of the aluminum on the market. Goldman is making a pretty penny from their new endeavor, mainly by shuffling the millions of 1,500-pound metal bars between the 27 warehouses that make up Metro International; moving the bars between warehouses more often than actually delivering any.

Goldman’s shuffle takes advantage of pricing regulations made by overseas commodities exchange, like the London Metal Exchange (LME); and a will to influence various commodities markets, a benefit of liberal federal regulations. Loading and unloading the bars allows for more storage time, which fattens the pockets of Goldman, since the banking institution owns Metro International and charges manufacturers and metal owners rent to house the metal. Goldman’s shuffle ultimately adds to prices paid by manufacturers and consumers, regardless of whether the metal came from Metro International or not.

While only around a tenth of a cent of aluminum can’s cost can be drawn to Goldman’s methods, that tiny amount has commanded a price of over $5 billion in the last three years. And Goldman Sachs isn’t the only company to exploit federal regulations — JPMorgan Chase and Morgan Stanley have also invested in oil, coffee, cotton and wheat markets, requiring consumers to pay more.

Before 2010, when Metro International wasn’t Goldman-owned, customers only had to endure six week waiting periods for their metal bars to be found, fetched by a forklift and delivered. But with Goldman, the wait has increased tenfold, to as long as 16 months. Metro blames the delays on truck and forklift driver shortages, and administrative difficulties.

Industry rules obligate metal warehouses to move at least 3,000 tons of metal per day; and while Metro complies with the rule, most of its stored metal is shifted between warehouses, and not actually delivered. Metro charges rent by the day for housing metal; storage costs are a key part of the “premium”, affixed to the price of all aluminum on the market. Since 2010, due to Metro’s long delays, premiums on all aluminum in the market have doubled. Extended delays mean higher price tags for everyone, even if the metal doesn’t pass through Metro.

Last year, it switched hands from Goldman, Barclays and Citigroup, now currently owned by a group of Hong Kong investors who have introduced new regulations that would reduce the bottlenecks at Metro. Still, LME has a large stake in what Metro charges: LME is given 1% of the rent amassed by all its warehouses, including Metro.

However, the Federal Reserve could revert its current position on exemptions, and disallow Goldman, JPMorgan and Morgan Stanley from invested in non-financial businesses. Speaking of pennies, these same banks are expanding their interests from aluminum to copper: last year, the SEC agreed to let JPMorgan, Goldman and BlackRock buy 80% of the copper accessible on the market.

As delays become longer and longer, manufacturers are beginning to purchase aluminum from mining or refining companies, instead of warehouses. Still manufacturers pay the price, as Metro’s delays increase manufacturers’ costs.

Developed and Written by Dr. Subodh Das and Tara Mahadevan

August 6, 2013

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“Climate Change Will Cause More Energy Breakdowns, U.S. Warns” – New York Times, 11 July 2013

The US’s energy system — oil wells, hydroelectric dams, nuclear power plants — is becoming more and more defenseless to the effects of climate change; a prime example were the blackouts experienced during the aftermath of Hurricane Sandy. The condition of our energy system will only worsen, as the world endures harsher storms, climbing temperatures and drier seasons.

At the beginning of this year, the NOAA reported that 2012 was the hottest year on record for the lower 48 states. The effects are seen from power plants, which are either shutting down or downsizing, to barges transporting oil and coal, which can’t make it through waterways due to low water levels.

Last year’s record-high temperatures led way to a record-setting drought, affecting large portions of the Southwest and Midwest, and leaving litter water available to cool fossil fuel plants and generate hydroelectric power. Almost 60% of the nation’s coal plants can be found in parts of the US with possible water deficiencies spurred by climate change.

The US Department of Energy predicts that air conditioning demand on the west coast will necessitate an additional 34 gigawatts of electricity production by 2050 — equal to building 100 new power plants — and will come with a hefty price tag of over $40 billion.

Steps towards reducing the emissions that have greatly reshaped our climate are much needed, but won’t be felt for a long time. The increasing levels of carbon dioxide in the atmosphere have shifted our climate into total disarray, the last 150 years of rising emissions built into our energy system.

In the meantime, states and the federal government should begin efforts to reinforce their cities against the increasingly relentless weather.

Developed and Written by Dr. Subodh Das and Tara Mahadevan

July 18, 2013

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“Fracking Tests Ties Between California ‘Oil and Ag’ Interests” – New York Times, 1 June 2013

The Monterey Shale oil reserve, a large untapped resource, lies underneath the southern half of the San Joaquin Valley, a mainstay for California agriculture. For years, hydraulic fracturing has been a lucrative business in the area; however, the likelihood of it having a negative affect on agriculture and the environment has led farmers and environmentalists to oppose fracking.

Although California’s oil generation has abated since 2010, a portion of the Monterey Shale reserve, called the North Shafter oil field, has shown a 50% increase in output. As a result, more oil companies are coming to the San Joaquin Valley, setting up new operations adjacent to farms — testing the relationship between oilmen and farmers.

Fracking is something these oil companies can’t give up: it’s the only way for the companies to extract crude from the Monterey Shale, where two-thirds of the US’s shale oil reserves can be found. Tapping into the Monterey Shale could transform California into the US’s top oil-producing state, allowing the state to experience an oil boom similar to those in North Dakota and Texas.

In order to extricate the crude oil, fracking technology infuses water, sand and chemicals into the shale rock to release the oil and gas underground; and uses an enormous amount of water and chemicals that could potentially contaminate the groundwater that is vital to the farmers’ crops. New fracking techniques are introducing more powerful chemical mixes, and drillers aren’t forced to publicize what they use. California barely regulates fracking activities.

While the US has been in an oil and natural gas frenzy, the environmental impact of fracking has been ignored. The State Department of Conservation is now working to enact regulations for fracking, one of which could be groundwater testing both before and after fracking, in order to guarantee quality.

But sometimes the issue isn’t just groundwater — it’s compensation. According to state law, California farmers don’t own their property’s underground rights, but are often paid for permission to use the surface.

It is a precarious balance between oil and ag — oil can be largely beneficial economically, but could also destroy California’s most fertile region.

Developed and Written by Dr. Subodh Das and Tara Mahadevan

June 13, 2013

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