Month: January 2010

Today on Hardball with Chris Matthews, Jim Cramer and Robert Reich discussed unemployment and getting the economy back on track.  Matthews eventually brought up the idea that America should make a large capital investment and amortize it over a very long time.  He then proceeded to pitch high speed commuter rail as the solution because they’re state of the art.  Cramer on the other hand said we should build new roads using US made steel and Caterpillar equipment.  Cramer touts US Steel and Caterpillar stock all the time so it isn’t surprising.  Matthews speaks of a north east corridor where a maglev train system could ferry people to DC, NYC, Boston, Philadelphia, etc. instead of being tied up by airplanes and terrorists.

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Business and recreational travelers do not want to be stuck on a 300mph train when a Boeing 717 can go 600mph.  Most tickets on Airtran and Delta start at $49 each way.  To make the train reasonably priced, it would have to be in the $5-15 range each way.  Matthews also forgets that terrorists can blow up trains just as easily as planes.  This would mean putting the TSA in every train station, which would be expensive and inconvenient for the traveler. 

A much better investment than high speed rail would be to invest in slow rail for cargo.  Freight train is more efficient than moving goods by 18 wheeler to distribution hubs where the 18 wheelers can then pick up the cargo and deliver it to the final destination.  Trains are 2-4x more fuel efficient than trucks per ton-mile and emit 1/3 the NOx of trucks per ton-mile.  Cramer’s picks of US Steel and Caterpillar are right on target with slow trains, high speed trains, or roads for trucks, but we need something sustainable after the construction is over.

Another reason high speed commuter rail is not the solution is the use of technology to eliminate the need to commute.  GenX and GenY are more comfortable with running a virtual office.  Whether these groups are business owners or executives at established businesses, they will influence the workforce to become more decentralized.  Instead of meeting in person in a conference room, you can use GoToMeeting, WebEx, or the open source tool DimDim.  The last time we ordered a nifty IT appliance a Sales Engineer didn’t come out to set it up.  We placed the device in the server room with an IP address.  Then the Sales Engineer took control of  our PCs through WebEx Remote Support and did all of the configuration from California.  They could have sent a real person, but why do that when it’s more efficient and green to do work over the internet?  Skype and SIP based calling allow workers, vendors, and customers to communicate across the world for the same price as it would cost to call across town. In the near future there will be no reason to go to the office which is good for workers, good for the environment, and bad for high speed commuter rail.

Biodiesel manufacturers will have to make serious cut backs in 2010.  A $1/Gallon tax credit for manufacturers of biodiesel expired January 1.  The House of Representatives voted to extend the tax credit, but the US Senate was not able to come to consensus on extending the tax breaks for American business.    There are approximately 180 biodiesel producers in the US that could benefit from extending the tax breaks.  In addition the European Union has implemented a high tariff on imported biodiesel which has hurt US exports.  The largest refinery in Houston sits idle and many producers will likely shut down as a result of the higher costs. 

Unfortunately it was the Democrats that indirectly torpedoed the extension.  According to Charles Grassley (R-Iowa), the Democrats tried to bring back the estate tax along with the tax credit for biodiesel producers.  They also decided to put it into a defense bill for some strange reason.  Something as divisive as the death tax was sure to not win support from the Republicans.  By taking this approach the Democrats have shown that they are not committed to green energy reform.  Since this would be a tax break for small business any Republican would be behind the bill if that were the only topic.  Democrats can show their commitment to renewable energy by creating a bill that brings back a minimum of $1/Gallon tax credit for biodiesel manufacturers.  This bill should carry out no other actions than the tax cut. 

Republicans want to see lower taxes and less dependence on foreign oil.  Democrats want to protect the environment and bring manufacturing jobs back to the US.  Passing the tax cut will benefit Democrats and Republicans.  It’s time to drop the red state/blue state partisan bickering and get to a green state.  Write your Democrat Congressman and Senators and tell them to support renewable energy in a way that brings the Republicans to the cause.