Saturday, October 29, 2011

Peter Navarro on the Failure of Regulating Electric Utility Companies

Peter Navarro is a famous economist who has written numerous books and given multiple lectures on economics. (Note that you can download his lectures on economics for free from his website.)
He got his start working for the Department of Energy, studying why electric utilities continued to use high-priced oil in power plants, even after the Arab Oil Embargo of  1973-74. In this post, I will be summarizing and analyzing a book he wrote in 1985 titled "The Dimming of America: The Real Cost of Electric Utility Regulatory Failure," because I think that understanding how best to regulate the generation, transmission and distribution of electricity is one crucial way for our to grow our economy. The reason that I'm analyzing a book written in 1985 is that this book gives a series of 'lessons learned' and 'policy suggetions' that apply to today's world just as much as they did in 1985. In fact, the California Energy Crisis of ~2001 can in large part  be understood by comprehending the  basic theme of Navarro's book, "Regulating electric utilities so that they can not pass on increased costs to customers will cause an increase in electric shortages and blackouts." It's a pretty straightforward theme, and the book shows why regulating the price that a public utility can charge for electricity will eventually cause electricity shortages and blackouts. (Note: the same can be said for regulating the price of natural was done between 1938 and the mid-1980's.)

Before discussing his book, I think that it's important for you to know the inflation-adjusted price of electricity in the US for commercial customers between 1960 and 2010 in 2005 US dollars. The general trend was a decrease in prices in the 1960s, and increase in the prices in the 1970s. This was followed by a decrease in prices between 1982 and 2000, and then followed by an increase in prices between 2000 and 2008.


Monday, October 24, 2011

Fuel cells, Thermoelectric Generators, Solar Photovoltaics, and the Origin of Life

In a previous post on fuel cells, I mentioned that you are a fuel cell.  Meaning that you are made up of billions of fuel cells, i.e. mitochondria. You are not a piston engine, nor are you a steam turbine. What's fascinating is that, of the multitude of different types devices that humans have designed over the years to generate electricity and transportation (such as turbines, rockets, reciprocating engines, MHD, solar cells, fuel cells, thermoelectrics, and thermionics), biological creatures have only come up with two type of generators of work: fuel cells and photosynthesis. To my knowledge, there has not been a single biological creature that uses mechanical generators, like piston engines or turbines, and it appears that there have not been any biological creatures that use thermoelectric generators to provide power from a temperature gradient. Why haven't non-human life forms developed mechanical combustion based systems to generate work and power? (Examples of work and power are: movement against friction, moving chemicals against a chemical gradient, and moving mass against the force of gravity.)
Instead, biological life forms use a combination of fuel cells in combination with photovoltaic cells to generate work.
Why did biological creatures only developed a narrow range of different generators of electrical or mechanical work until humans evolved means of generating work from the wide range of devices we use today? Is a high temperature combustion device out of the question for a biological creature?

This means that learning about fuel cells can help us understand more about ourselves. But while I think that fuel cells are fascinating devices and will find certain niche applications in the short term, I realize that what's worked in the past is not always what will work the best for the future.  In particular, fuel cells are unlikely to lower the cost of getting into outer space, and once we start sending self-replicating solar robots to the Moon, these robots probably won't be fuel cell based. They will likely be either solar photovoltaic or solar thermoelectric based self-replicating robots. Why?

The robots will have to self-replicate using the materials available to them. Biological fuel cells, such as bacteria, are unlikely to grow on the Moon, because of the lack of carbon and nitrogen. And human-designed fuel cells (such as PEMFC's or SOFC's) require platinum or other hard to mine metals, such as Yttrium, as well as a fuel source. Instead, it seems possible to make solar panels, thermoelectric generators, and batteries using only the most abundant chemicals on the Moon, such as silicon, iron, aluminum, titanium, and sodium. The silica on the moon can be used to make silicon, which is used in solar PV's, in thermoionics, and in batteries. The iron, aluminum and titanium would comes from iron oxides, alumina, titanium dioxide, and would form the casing and structure for the solar panels and batteries. The sodium would be used as the ion carrier in the batteries. Also, the iron would be part of the electrode of the battery. Phosphate might be one of the difficult materials to find, so there might need to be some change in the battery chemistry for these self-replicating solar robots, i.e. solar auxons.

Thursday, October 13, 2011

Addicted to Oil? The Case against Calling it an Addiction

Can we in any way truthfully state that we are addicted to oil? It's almost turned into a cliche to say that we're addicted to oil. As if the proper response is supposed to be "Dah!"
But I'd like to step back and take a serious look at why we use the word addiction to describe our use of petroleum liquids. Once you start digging a little deeper, you'll see that all of the major arguments break down for using the word 'addiction' to describe our use of oil. And after you realize that the arguments fall apart, you might ask yourself: why would we want to stop using oil if there is so much good that comes from its use?

So, here's a list of the major arguments, and then my critique of the reasoning.

1) The money goes to terrorists...this is one of the most absurd arguments. There are terrorists in every major country. Should we stop buying anything? Or is it just Muslim terrorists that scare us? Do we boycott all products made in the Middle East?  Of course not.

2) OPEC has too much leverage over the price of oil...while it's true that OPEC is a cartel that has control of ~40% of the world oil market, we don't the stop buying cell phone just because Verizon has ~40% of the market. Same holds for Microsoft.

3) Oil is a global commodity and so we're at the whims of global demand. Local fuels like biodiesel are better because they aren't a global commodity...This is an absurd argument because if we really started using non-petroleum liquids like biodiesel or ethanol in any significant quantity, these fuels would become a global commodity. Even now, ethanol is starting to become a global commodity as now that Brazil exports some to Europe.

Sunday, October 9, 2011

Summary and Table of Contents of the Blog

Table of Contents for  “Grow, Baby, Grow: How to expand life in the universe”

My goal is to communicate how life can expand and grow, both on this planet and on others. To grow, we need to obtain a large rate of return on investment from our electricity generating technology, so a main focus of this blog is on the economics of electricity generation.
To summarize, the goal of life is to expand. Life requires mechanical or electro-chemical work to survive, and to grow, it requires a large, positive rate of return on work invested.

The goal of this post is to present a table of content of the posts created for this site, and to highlight the connections between the posts.  Each of the major themes is numbered below:

1)    A detailed summary of my philosophy of life can be found at the following post.

A Summary of My Philosophy of Life: How Best to Expand Life?


2)     One of the main themes throughout the blog is that we don’t face an “energy” or an “exergy” crisis, but rather a crisis of decreasing rates of return on investment. We suffer from a ‘growth’ crisis in the US, Japan and Europe.

There is no Energy or Exergy Crisis. It's a Problem of Low Rates of Return on Investment. Understanding the Problem by Correctly Defining Energy, Exergy and Entropy

The Cause of the 2007/2008 Recession: Our Decreasing Return on Work Invested and How to Fix the Problem

And the following is a book review and critique of Power Hungry for Robert Bryce. This post shows that it’s important to know what the problem is before you write a book discussing possible solutions.

Cherry-picking 'figures of merit' to suit your argument


Thursday, October 6, 2011

Adam Smith on the Real Measure of Exchangeable Value

In my opinion, the only sound monetary policy is one that maintains a constant average price of work [kWh], such as electricity, by increasing or decreasing the amount of currency in circulation. The ability to arbitrarily print or remove currency from circulation would be taken away from private banks (i.e. the Federal Reserve.) In this post, I'd like to show that Adam Smith was perhaps one of the first people to realize that wealth can measured by the amount of labor (i.e. work) it can purchase. It is labor (i.e. work done by humans, animals, and power plants), and not gold or paper currency, that is the best way to measure the value a commodity.

In this post, I quote from Adam Smith's "The Wealth of Nations,"  while making a few changes to modernize Smith's words. The goal of this post is to show that Adam Smith was on the right track when he stated, "Labour is the real measure of exchangeable value." While quoting Adam Smith, I'll stop every so often to expand upon his thoughts by using brackets [ ], and to discuss what he's saying by replacing the term 'labour' with the term 'work', which has units of [kW-hr]. (Note: a work-based currency maintains a constant average price for purchasing electrical & mechanical work [kW-hrs].) By replacing the term 'labour' with the term 'work', we'll see that the real measure of exchangeable value is work. In Adam Smith's society, the main sources of work were: a) the wind, b) rivers, c) human labor and d) animal labor. In our society, the main sources of work are:  a) electricity and b) mechanical work in our vehicles. We generate different types of work and orders of magnitude more work globally today than back in 1776 when Smith's book was first published. But the idea that both work and the rate of return on work invested should be the measures of value is timeless.
And so, now we start with Chapter V of Book I of "An Inquiry into the Nature and Causes of the Wealth of Nations." (Note that the italics are subsection titles.)

Ch V. Of the Real and Nominal Price of Commodities, or their Price in Labour and their Price in Money

Labour is the real measure of exchangeable value.  Every man is rich or poor according to the degree in which he can afford to enjoy the necessaries, conveniences, and amusements of human life. [Note: I disagree with Smith's last statement. He seems to be implying the wealth has something to do with happiness.] But after the division of labour has once thoroughly taken place, it is but a very small part of these with which a man's own labour [work in kWh] can supply him. The greater part of them he must derive from the labour of other people [or machines], and he must be rich or poor according to the quantity of that labour [work in kWh] which he can command, or which he can afford to purchase. [Now Smith is back on track. A person is rich according to how much labour he or she can purchase.] The value of any commodity, therefore, to the person who possesses it, and who means not to use or consume it himself, but to exchange it for other commodities, is equal to the quantity of labour which it enables him to purchase or command. Labour, therefore, is the real measure of the exchangeable value of all commodities.

Sunday, October 2, 2011

You are a Fuel Cell

"Know thyself."  Inscribed at the temple of Apollo in Delphi.

I want you to know why it's important to study fuel cells and why it's important to know how they operate. While fuel cells vehicles and fuel cell power plants are still not a major player in energy markets, and honestly, they aren't even a minor player in the energy markets, this wasn't the case roughly a hundred years ago. Fuel cell power plants used to dominate the transportation market.

The reason that fuel cells used to dominate the transportation market is that humans as well as all animal species are made up of trillions of fuel cells. Each of the mitochondria in your body is a fuel cell, capable of turning chemical exergy (i.e. sugars in the presence of oxygen) into work as well as CO2 & H2O. [In fact, some researchers have started using mitochondria in lab-scale fuel cells.] The mitochondria in animals use proton conducting membranes and concentration gradients to generate ATP from ADP and AMP. Just as in a PEM fuel cell, in order to generate work, the electrons can't travel through the proton conducting membrane, or else the electrons would short out the circuit, and no work could be generated. Instead the electrons have to travel outside of the proton conducting membrane and be consumed by oxygen molecules at the cathode along with the protons travels through the membrane to form liquid water. The electrons travel through what's called protein electron transport chains. The reaction at the cathode is the reduction of oxygen, i.e. O2+4H++4e <> 2H2O and the reaction at the anode is the oxidation of NADH, i.e. 4NADH <> 4NAD+4H++4e. The NADH was generated from sugars in the Krebs cycle.

Saturday, October 1, 2011

The Cause of the 2007/2008 Recession: Our Decreasing Return on Work Invested and How to Fix the Problem

I still hear everyday that the cause of the recession was a housing bubble, or even that the cause of the recession was all of the money that the Federal Reserve printed.

The real cause of the US recession in 2007/2008 was high oil prices. Or put another way, the cause of the recession has been the slow decrease over time in the return on work invested for getting oil out of the ground and into a chemical form whereby it could be used in our transportation vehicles. While the Federal Reserve didn't help matters, i.e. some of the increase in the price of gasoline was due to the Federal Reserve's inflationary monetary policy in the last decade, the overall problem we face has been the increase in the average amount of work required to get gasoline into your car. (This is the amount of kWh of work required to get the gasoline into a form that your car can use...including the 'work' transferred to the government in the form of taxes...and should be compared with the amount of kWh's of work that can be generated from the combustion of the gasoline in your car. The last term divided by the first term is the total return on work invested.)

The costs (and hence the work consumed) have been increasing for the following main reasons, which I will expand upon in a later post. The easy to access, low sulfur, low viscosity petroleum liquids have largely been already tapped. What remains requires some combination of:

1) Drilling to greater depths
2) Horizontal drilling
3) Fracturing with explosives and sand
4) Forced flow with steam or carbon dioxide
5) Drilling off-shore
6) Increased removal of sulfur
7) Increased chemical conversion (such as using high viscous oil sands as input products)
The other main causes of the increasing price of gasoline have been:
8) US government spending/debt problems affecting interest rates
9) Inflationary monetary policy of our banks (i.e. the Federal Reserve prints money and gives it to bankers and the US government)

We don't face an energy crisis or an exergy crisis. We face a return on investment crisis.

Did Christianity cause the fall of the Roman Empire?

I'm taking a break from the topics of electricity generation and the Federal Reserve.

Note: this post should not be construed as an attack on the Christian faith. While I am not Christian, I respect most forms of Christianity because there are plenty of hard working people around me, like my wife, my mom, my dad, my grandparents, my extended family, my friends, my co-workers, and my neighbors who have learned to reconcile the tenets of Christianity with a love of their country and with a love for hard work. I care more about their actions than the details of their beliefs. The issue I want to address here is to what extent did the particular Christian faith of the second to fourth centuries A.D. lead to and stem from a hatred of the Roman state, and to what extent did this cause the decline and fall of the Roman Empire.

Edward Gibbon's main theme in The Decline and Fall of the Roman Empire was that Christianity was a major reason for the Roman Empire's decline and fall. He listed other reasons, including: (a) various abusive, almost independent military organizations; and (b) a series of inept, blood-line emperors who wasted the government's money on lavish parties and gladiator competitions. The history of Rome (as well as the extensive history of monarchy) teaches us that passing on power via birth is not as stable as it seems at first. While the idea of monarchy addresses the question of who follows next, the person chosen is often unfit for the job of managing the state, and often just leads to major and bloody fights over who should rule next.

But in today's post, I'd like to address the main theme that Gibbon addresses: did Christianity cause the fall of the Roman Empire? In particular, did the Church cause ordinary Roman citizens to give us their allegiance to the Empire in favor of an allegiance to God and the Church, such that Rome was left incapable of managing the affairs of such a large empire?