Category Archives: Economy

Sticking it to the Chinese

factory manBy Peter Galuszka

This  is a review of “Factory Man,” a book about the Virginia furniture business and dealing with the inequities of Chinese trade by Beth Macy (Little Brown, 451 pages). This was first published in the October 2014 Bulletin of the Overseas Press Club of America in New York of which I am a member.

The hills around Danville Va. are blessed with some of the finest hardwoods around such as oak, hickory and cherry trees. It is those trees, and the people who work with them, that have made for one of the more vicious global trade wars in recent history.

They also represent one of the few trade victories American industry has had, according to Beth Macy, a Roanoke Times reporter who has written a lively and deeply reported book about Vaughan Bassett, a local firm that is now the largest American furniture maker. Boss John D. Bassett (“JBIII”) refused to succumb to an onslaught of cheap Chinese labor and government subsidies that helped shutter 63,300 U.S. factories and five million jobs from 2001 to 2012. By standing up to Beijing, he saved his company and 700 jobs.

Macy’s first book is of value to anyone who covers global trade issues. She punctures the conceit, held by many journalists in the New York-Washington axis, that globalization is a great and inevitable thing. I heard this constantly at BusinessWeek where I worked as an editor and bureau chief in the 1980s and 1990s.

What’s lost in the laud of so-called “free” trade is what happens to the people who lose. Their secure employment turned overnight into a new world of Medicaid, food stamps and family strife.

Big Journalism doesn’t seem to care much. “Even globalization guru Tom Freidman, writing in “The World Is Flat,” briefly acknowledges the agony caused by offshoring.” But she notes that it’s easy for him to say since Friedman, “lives in an 11,400 square foot house with his heiress wife” in Bethesda, Md., a “cushy” Washington suburb five hours by car from the turmoil farther south.

For years, Bassett and its sister factories were part of a network of Southern-style company towns with their own issues, such as paying African-American workers half of what whites got. By the 1970s, U.S. furniture quality and productivity were slipping. A Taiwanese chemist discovered how to make rubber trees useful for furniture after they stopped producing latex, giving rise to an expanded Asian export furniture business.

Chinese industrialists took over. They visited U.S. factories, where, according to Macy, naïve executives handed over their production secrets. In short order, cheap Chinese knockoffs were stealing market share from the Americans. A Chinese executive named He Yun Feng bluntly suggested to JBIII that he shut his plants and hand his business over. Proud JBIII didn’t turn tail. Instead, he shored up his production and cut costs while preserving as many jobs as he could. He also bucked his reluctant industry and challenged the Chinese for dumping and manipulating their currency to give them unfair trade advantages.

“The last thing they wanted to hear was that China may have been breaking the law.” Macy quotes JBIII as saying. That’s the nut of Macy’s excellent book. A tighter edit, especially in the early history of the Basset family, might have helped, but her story is powerful and well told.

OPC member Galuszka lives in the Richmond, Va. area and is author of “Thunder on the Mountain; Death at Massey and the Dirty Secrets Behind Big Coal” St. Martin’s Press, 2012.

Why Virginia Has No Renewable Energy

offshore wind By Peter Galuszka

For all the hew and cry over renewable energy sources and the “War on Coal,” it is extremely interesting to see just how much progress Virginia has made with renewable energy. The answer: hardly any to none.

A moment of clarity came when I was perusing blog postings by IvyMain, a D.C. area lawyer and Virginia Sierra Club activist who is quite often ahead of the curve on energy issues.

She posted a table of how Virginia compares with neighboring states in development of solar and wind power.

Leading her list is West Virginia with 583 megawatts of wind power. Next is North Carolina with 335 megawatts of solar power. Maryland is almost equally split between solar and wind with 262 megawatts.

And Virginia? A whopping 18 megawatts of solar and zip-o wind.

The State Corporation Commission has written against proposal EPA regs limiting carbon emissions saying it would shut down too many coal-fired plants. Solar and wind could make up some of it, but the SCC claims that “there is still zero probability that wind and solar resources can be developed in the time and on a scale necessary to accommodate the zero-carbon generations levels needed” to help meet the EPA’s carbon emission goals by 2030. Even more curious, the SCC used EPA figures that Virginia has 351 megawatts of renewable power. Hmmm.

One can almost see a clever and duplicitous scheme here. One reason why Virginia’s neighbors have remarkably more renewable power than Virginia is that they have mandatory renewable portfolio standards. In Maryland, 20 percent of all electricity generated must come from renewable sources by 2020. In North Carolina, it is 12.5 percent by 2021 and in coal-rich West Virginia, it is 25% renewable by 2025.

Virginia’s “voluntary” goal is 12 percent by 2022. Why so little and voluntary? Easy. Dominion Virginia Power has a legal deal going where it has a “monopoly” on electricity distribution and according to IvyMain cracks down wherever possible on independent solar generation. She notes that Dominion squelched a solar project at Washington & Lee University a few years ago and has attacked similar plans. After preventing renewable power from developing, Dominion and its allies can then say we must keep big, traditional  facilities (nuclear, natural gas and coal-fired) going because there’s so little available on the renewable front.

Dominion, of course, is a huge political contributor. According to the Virginia Public Access Project, Dominion and Dominion Resources combined are the No. 1 corporate donors in this state. They gave about $1,042,580 this year. The No. 3 corporate donor is Alpha Natural Resources, a major coal company based in Bristol that gave $218,874.

Conservative commentators regularly pin the EPA’s flexible but stricter rules on a so-called “War on Coal” led by President Barack Obama. Yet, Virginia is a small coal producer compared to West Virginia, which is presumably ground zero in the fight against the Black Diamonds. So, how come West Virginia, the No. 2 coal state, has mandatory renewable standards and leads the pack in renewable energy?

The answer is that West Virginia’ leadership knows that its coal days are numbered and this started long before Obama came to power. The Mountain state has plenty of, well, mountains that can be great foundations for wind. So, too, does Virginia – the exact same mountain ranges in fact. But that doesn’t seem to matter. One noted right-winger blogged about the supposed “War on Coal” and then tried to preempt responses that broadened the reasons for coal’s demise:

“No lectures about the coal industry, please. I understand that the current woes of the coal industry stem in large measure from coal’s loss of competitiveness to natural gas as a fuel and to cyclical movements in the market for metallurgical coal (used by the steel industry). However, the Appalachian coal industry still produces a lot of steam coal for power plants, and the EPA rules would destroy much of that market. Clearly, the EPA rules, which are not yet in effect, have not yet destroyed a single coal-mining job. Come back to me in 2020 and it will be a very different story.”

Today’s New York Times has a story about political races in West Virginia where coal and Obama are naturally issues. The story contains this revealing passage:

“The coal industry’s long decline is economically complex. When Alpha Natural Resources, one of West Virginia’s largest coal operators, warned 1,100 employees of potential layoffs in July, it blamed a worldwide glut of coal, competition from cheaper natural gas, and lower-cost coal from western basis – as well as Environmental Protection Agency regulations.

“But in the charged political arena, complexities fade and both sides identify a sole culprit for the industry’s struggles: the administration’s anti-coal regulations.”

So there you have it. In Virginia, rules are set up to prevent renewables from being established while political types and their conservative blogger handmaidens beat the drum against the EPA and Obama.

Tracking the Forgotten Virtue: Thrift

by James A. Bacon

More interesting data from WalletHub: In a ranking of 150 metropolitan regions by 16 metrics indicating the degree to which local populations adhere to responsible household budgeting practices, Virginians fare better than their peers in any other Southern state — and that’s not just a reflection of the outsized influence of Northern Virginia, which is wealthier, better educated and culturally distinct from the rest of the state.

Charlottesville ranked 11th nationally, followed by Washington at 23th, Roanoke at 25th, Richmond at 45th and Hampton Roads at 56th.

WalletHub’s metrics encompass average credit scores, non-mortgage indebtedness, foreclosure rates, percentage of population paying only the minimum on credit cards, percentage of the population spending more than they make, delinquency rates on loans, and related measures.

Education and income are important measures of economic well being but I would argue that household thrift is just as important. Social scientific surveys of happiness and well being consistently show that, beyond a certain point, additional income brings only increment gains in happiness. The pleasure gained from the acquisition of a flashier car, a bigger house or a newer big-screen TV is fleeting. The anxiety that stems from economic insecurity and the risk of losing one’s possessions is enduring. Households that live within their means and set aside some savings, I would hypothesize, tend to experience greater life satisfaction (or conversely, less anxiety) than households that spend money carelessly on frivolous or passing pleasures — even if they accumulate fewer material possessions.

This perspective is almost entirely lacking in the public policy debate in the United States today. Economic well being is measured almost exclusively by the rate of economic and income growth and, secondarily, the distribution of income. As a consequence, government policy is geared overwhelmingly toward goosing consumer expenditures. Anything that stimulates consumer spending, even if it means saving less and borrowing more, is regarded as beneficial to “the economy.” Thus, we witness today the revival of policies last seen during the real estate mania of the 2000s designed to lower mortgage borrowing standards and encourage more lending to the poor. The fact that these very same policies induced poor people into buying houses they couldn’t afford to pay for, much less keep up, and unleashed a wave of foreclosures that obliterated what little wealth most of these people possessed seems not to deter policy makers in the least. The idea that people of modest means can live perfectly happy lives without racking up debt seems alien to the American political psyche.

An ability to resist the siren call of excessive indebtedness, I would argue, is a major contributor to happiness and life satisfaction. The most responsible budgeters in the nation, by WalletHub’s standards, are clustered in the upper Midwest — in metropolitan regions centered in and around Minnesota and Iowa. It’s difficult to avoid the conclusion that cultural factors are at work, perhaps related to the Germanic and Scandinavian heritage of the populations. The other large cluster — not quite as thrifty, but more financially responsible than the country as a whole — is the Mid-Atlantic/Northeastern region, of which Virginia is a part. The South and parts of the Southwest are a budgetary disaster zone whose citizens, who are more likely to be poor, have shredded their household budgets. Thrift and frugality were never part of the Southern cultural tradition — either among the Anglo-Saxons or the African-Americans who settled there.

It would be interesting to know how Virginians came to embrace the household budgeting practices of states to the north rather than the south. Are cultural attitudes different here? Has state public policy played a role? Does the school curriculum, which teaches economics and personal finance, make a material contribution?

One last point: While it makes intuitive sense to link personal budgetary responsibility to life satisfaction and happiness, there may, in fact, be little correlation. Compare the map above with the happiness map published previously on Bacon’s Rebellion. The South is one of the happiest regions in the country! Maybe happiness is spending other people’s money.

Brat’s Strange Immigrant-Bashing

BratBy Peter Galuszka

It must have been an interesting scene. Congressional candidate David Brat had been invited to a meeting of the Virginia Hispanic Chamber of Commerce along with his Democratic rival Jack Trammell to outline his views on immigration and undocumented aliens.

Brat, an obscure economics professor who nailed powerhouse Eric Cantor in a Republican primary for the 7th Congressional District in June, danced around the topic, according to a news account.

It took several attempts to get him off his spiel on just how wonderful free market capitalism is to actually address the issue at hand. Before him were a couple dozen business executives, many of them Hispanic.

They, naturally, were interested in Brat’s views because of his over-the-top Latino-baiting during the primary campaign. One of Brat’s ads trumpeted: “There are 20 million Americans who can’t find a full time job. But Eric Cantor wants to give corporations another 20 million foreign workers to hire instead.”

Finally, Brat claimed, “I have never said I’m against legal immigration.” He later said, “nations that function under the rule of law do well.” Brat also said he wants to “secure” the U.S. border with Mexico. Trammell said he supports the DREAM Act that could provide a path to U.S. citizenship for some of the 11 million undocumented aliens in this country.

Brat’s immigrant-baiting and his “rule of law” smacks of a lot of ugliness in American history. “Know–Nothings” of white Anglo Saxons beat and harassed Catholic immigrants, primarily from Ireland. Chinese were harassed on the West Coast and Japanese-Americans were locked up in concentration camps during World War II. Jewish newcomers were met with restrictive covenants and college quotas.

In Richmond during the 1920s, efforts by Catholic Italian-Americans to build a monument to Christopher Columbus were fought by the Ku Klux Klan, which insisted that any such statue not dirty-up Monument Avenue and its parade of Confederate generals. Columbus had to go elsewhere in the city.

There’s a new twist and judging from Brat’s behavior on Tuesday. He seems uneasy by getting so out front on immigrant-bashing. He’s not the only Republican to take such strident stands. Look at New Hampshire, where Scott P. Brown, a Republican, faces Jeanne Shaheen, a Democrat, in a closely-watched race for the U.S. Senate.

Groups backing Brown, such as John Bolton, the surly former U.S. Ambassador to the United Nations, have run anti-Shaheen ads showing throngs of people clambering over a border just before showing Islamic militants beheading James Foley, a journalist and New Hampshire native, according to the New York Times. The ad was pulled after the Foley family complained, the Times says.

A major coincidence is that the Times‘ description of New Hampshire almost matches that of Virginia’s 7th Congressional District. Neither seems a hot bed of immigrant strife and threats.

The Granite State has one of the smallest populations of illegal immigrants in the country, the Times says. Of the state’s 1.3 million residents, only 5 percent are foreign-born and 3 percent are Hispanic.

The Virginia district has a population of 757,917 of whom 12.7 percent are foreign born and 4.9 percent are Hispanic. Most of the residents, 74.3 percent are white.

The district runs from the largely white and well-off western Richmond suburbs in Henrico and Chesterfield Counties and scoots northwest across mostly rural farmland to east of Charlottesville and up to Madison. With only 7.6 percent of the people living below the poverty level, it isn’t exactly a barrio of Los Angeles.

It is hard to imagine hordes of brown-skinned people swarming from up Mexico or Central America displacing the managerial executives, small business people and farmers in the Seventh. People that Brat seems to be worried about are employed in other nearby areas, such as the poultry plants of the Shenandoah Valley. But those workers are there because of local labor shortages. One wonders where Brat gets his ideas that illegal immigrants are going to steal true-blue American jobs in his district.

Last June during the primary, there was plenty of news about thousands of young Hispanic children coming across the southern border from Central America. At the time, there were estimates that up to 90,000 such children might come illegally into the U.S. this year. Many are fleeing gang violence in their homelands.

This is apparently what Brat is running against – a bunch of poor, 12-year-old Nicaraguans out to steal jobs and provide cover for Islamic terrorists. Their plight is a serious issue, but it is a humanitarian one. Brat chose to make it an odd classroom lesson in economics. He says the U.S. should not put up “green lights” and “incentivizing children from other countries to come here illegally and at their own peril.”

The news from the border seems to have calmed down since June. Brat may have found that now it is likely he’s going to Washington, playing the Hispanic-baiting card may not work as well on the national scene as it apparently did in his mostly-white district. It could be why he was hemming and hawing so much before the Virginia Hispanic Chamber of Commerce.

Illegal immigrant Ayn Rand

Illegal immigrant Ayn Rand

Perhaps other Republican politicians are having the same epiphany. As the New York Times writes: “Republicans have long relied on illegal immigration to rally the conservative base, even if the threat seemed more theoretical than tangible in most of the country. But in several of this year’s midterm Senate campaigns — including Arkansas and Kansas, as well as New Hampshire — Republicans’ stance on immigration is posing difficult questions about what the party wants to be in the longer term.”

There’s another strange contradiction with Brat. He’s a former divinity student interested in probing how unfettered free market capitalism can magically make the right choices for the betterment of mankind.

He draws a lot of his thinking from Ayn Rand, the famous thinker, refugee from the Bolsheviks and backer of her own brand of anti-government capitalism.

It may interest Brat that by today’s standards, Rand would have been an illegal immigrant.

EPA Carbon Rules: Ask the SCC

The SCC: An Emerald Palace?

The Emerald Palace or the SCC?

By Peter Galuszka

Last week, State Corporation Commission drew attention when its staff wrote to the U.S. Environmental Protection Agency, at the EPA’s request, to respond to one of the biggest proposed steps the nation has seen in cutting carbon dioxide emissions.

The report sparked considerable interest and confusion over what the SCC staff actually meant when it predicted that proposed EPA rules to cut carbon emissions 30 percent below 2005 levels by 2030.

The staff report, written by William H. Chambliss, SCC general counsel, said that EPA’s proposed limits would cost Virginia ratepayers from $5.5 billion to $6 billion extra. It claims that the state would have to shut down fossil-fuel, predominately coal-fired, plants producing 2,851 megawatts and replace it with only 351 megawatts of land-based wind power. This would badly impact the reliability of the state’s power supply, the staff said.

My immediate question was why so much and where, exactly? Precisely what power stations would have to be shut down? Where did the ratepayer increase numbers come from? Is there is a list of all the coal-fired plants affected? Dominion Virginia Power, the state’s largest utility, has long-standing plans to shut down two aging power stations at Yorktown and Chesapeake with about 920 megawatts of power? How does that factor in?

So, I contacted Ken Schrad, the spokesman for the SCC, by phone and email and asked some questions. He kindly provided the following answers (in italics):

Where are the affected plants precisely?

The numbers come directly from the EPA’s own spread sheets and the EPA does not identify the specific units.” 

How many plants are coal-fired?

Of the 2,851 MW, EPA predicts 2,803 MW of coal units and 48 MW of combustion turbines which could be natural gas or oil-fired CTs. Assuming Yorktown and Chesapeake are included in the EPA estimate, SCC staff knows that those planned retirements total approximately 920 MW.  The output of those units varies depending on when operating (summer or winter).”

Where does the 351 megawatt of land-based wind power, the only available replacement source for the lost fossil-fuel power, come from?

“The 351 MW figure is also direct from the EPA’s analysis which does not identify where EPA believes these undeveloped projects would ultimately materialize.  As staff noted in its comments, the SCC has approved the only request the Commission has received for a certificate for a wind project (Highland New Wind).  Approved in December 2007, the project envisioned up to 20 turbines with each turbine capable of producing up to 2MWs.  That project has not been built.   DEQ now has regulatory responsibility for permitting most solar and wind projects in Virginia. “

How do you answer criticism from environmental groups that Virginia has already attained 80 percent of the EPA’s carbon reduction already?

“Staff has no information regarding this assertion, the costs incurred to reach such a figure, how that attainment level was achieved, or the starting point from which such has materialized.”

The SCC staff recommends that the EPA adopt “an alternative carbon emission rate of 1,216 pounds of carbon dioxide per Megawatt hour of power. The EPA is proposing tighter limits of 843 of CO2/MWh for plants to attain by 2020 and levels of 810 pounds of CO2/MWh for plants to comply by 2030 because it would be more affordable. How much more affordable would the SCC’s suggested rate be? Continue reading

Could Surry Be an 80-Year Nuke?

Surry1By Peter Galuszka

Here’s a new twist on the carbon emission debate: Dominion Virginia Power is considering seeking federal approval run its 40-plus year-old Surry nuclear power station for another 40 or so years.

The arguments in favor are that keeping the two-units at Surry (1,600 megawatts) going would be a lot cheaper than building a brand new plant. Nukes do not contribute much at all to greenhouse gases and climate change compared to coal or natural gas plants.

The huge issue, however, is safety. Can you really expect a nuke whose design dates back to the 1960s to run until 2054? Surry’s plants near Jamestown were once the most heavily fined in the nation because of their repeated safety problems. Constant use can affect any number of crucial components such as making reactor metal brittle, pulverizing concrete and becoming more susceptible to earthquakes and storms.

According to the New York Times, Dominion hasn’t decided whether to apply to extend Surry’s life span. Other possible extended life reactors are Duke’s three Oconee units near Seneca, S.C. and Exelon’s Peach Bottom not that far from Three Mile Island in Pennsylvania.

Dominion is also pushing ahead with a third new unit at North Anna, but the price tag for that apparently would be many times what extending Surry would be. But there are no hard figures about the cost of the new nuke ($10 billion to $14 billion, maybe) or how much Surry would cost.

The news is curious coming just as the staff of the State Corporation Commission came out with a curious report slamming proposal EPA rules on cutting carbon emissions. Although the SCC’s opinions are murky and badly-documented, it raises fears that a bunch of coal-fired generation in Virginia will be shut down due to EPA regs. Hot flash: a bunch was going to be shut down anyway because it dates back to the 1940s and 1950s.

I don’t know enough about the current Surry operation to know what and how extending its life would proceed and whether it would be safe.

That said, I refer to my own reporting past – the 1979 when I was a reporter at The Virginian-Pilot. Another reporter and I spent weeks at the Nuclear Regulatory Commission’s archives in Bethesda, Md. poring over safety documents. This was back when newspapers had the money to do that kind of reporting.

Our result was a big investigative piece that made banner headlines on the front page one Sunday with two full pages inside. I’d include the cite since it is too old to have one. We found a multitude of issues at Surry ranging from faulty radiation monitoring for workers to faulty snubbers which are rod-like shock absorbers to mitigate earthquake-like movements.

Dominion, then Vepco, hated the story and tried to tear it down. But Vepco was undergoing a corporate sea-change away from its institutional arrogance related to some extent by the former Navy submarine officers were not used to being questioned by outsiders. Vepco was getting hit by Wall Street because its sloppy nuclear program resulted in extended outages. They ended up hiring a ringer engineer who cleaned up their act and later the company transformed into something more modern.

Even so, a decade after we did our story, there were still plenty of concerns about safety at Surry.

The big question is how can you keep a car designed in the 1960s going strong nearly 100 years later? Maybe they have the answers in Havana.

More Coal Industry Propaganda

coal woman By Peter Galuszka

If you read a blog posting just below this (the one with the coal miner with an intense look on his grit-covered face), you will see how hyperbole, confusion, misunderstanding, ignorance and one-sided arguments twist something very important to all Virginians – how to deal with carbon dioxide and climate change – into a swamp of disinformation..

The news is that the State Corporation Commission has responded to the federal government’s proposed rules that carbon emissions be cut 30 percent below 2005 levels by 2030 by complaining that it would cost ratepayers up to $6 billion.

This is because Virginia utilities may have to shut down 2,851 megawatts worth of electrical generation with only 351 megawatts (at present) of “unreliable” wind power to replace it.

The image one gets from the presentation of the blog post is that it is “The EPA’s War on Virginia” with the haggard-looking miner thrown in, we are given the impression that it is more of the “War on Coal” that the coal industry has been promoting in recent years to blunt much-needed mine safety laws and moves to police highly destructive mountaintop removal practices.

The author does not address any of this. But since he’s handing us the “War on Coal” propaganda line, let’s take his arguments apart. This won’t take too long.

  • The author fails to note part of the Richmond Times Dispatch story upon which he bases his opinions. There is a very important comment: “It appears the staff has misread the rule,” said Cale Jaffe, director of the Southern Environmental Law Center’s Virginia office. “Analyses that we have reviewed show that Virginia is already 80 percent of the way to meeting Virginia’s carbon pollution target under the Clean Power Plan. “Almost all of those reductions are coming from coal plant retirements and natural gas conversions that the utilities put in place long before the Clean Power Plan was even released,” Jaffe said.
  • That said, let’s take a look at coal-fired plants in the state which are the biggest carbon offenders. For starters let’s look at Dominion Virginia Power, the state’s largest utility. It has already converted three coal-fired plants – Altavista, Southampton and Bremo Bluff – to biomass. The 50-plus-year-old Yorktown plant (335 megawatts) is due to retire in 2015. Another aging plant – Chesapeake (609) megawatts — is also due to retire by 2015. The point here is that these plants are being closed because Dominion realizes that it is just too hard to keep 50 or 60 year plants operating efficiently and cheaply. It would be like keeping that 1960 Corvair because you don’t want to put oil workers out of work.
  • Dominion’s biggest problem and the biggest single air polluter in the state is the Chesterfield station with 1380 megawatts. Yes, it does need more controls. Then there’s Clover (882 megawatts) and Mecklenburg (138 megawatts). That brings us up to 2400 megawatts that might need upgrades. Let’s see. The two nuclear units at North Anna put out a little more than 1,700 megawatts just so we get some scale here. Dominon also has Virginia City (585 megawatts) which just opened, uses coal and biomass and has advanced fluidized bed burning methods.
  • Out west, Appalachian Power has 705 megawatts at Clinch River and 430 megawatts at Glen Lyn. Two of those three units there were built in (my God!) 1944 so I guess the blog author wants to keep those great granddaddies running to save miners’ jobs. Actually they are so unneeded that they have been on extended startups.Besides these Cogentrix has a couple small, modern plants in Portsmouth and Hopewell.
  • One reason there so little renewable generation (6 percent) is that the utilities do not have mandatory renewable portfolio standards to force them into wind and solar, etc. Virginia’s neighbors do.

All of this gets back to Jaffe’s point that the blog author so easily ignores. A lot of the carbon cuts are going to come from plants that are aging and are going to be closed anyway.

The SCC may complain about the $6 billion but guess what, you beleaguered electricity users? If Dominion puts a third nuke at North Anna, that’s easily $10 billion. Is that going to raise rates sky high? Where’s the outcry? It’s almost double what helping save the planet from carbon dioxide will cost.

The blog author’s hyperbole about the poor coal industry shows his ignorance of the topic. Virginia’s rather small coal industry (No. 12 in production) reached its peak in 1991. Natural gas has displaced a lot of expensive coal. Gas prices would have to triple to make Central Appalachian coal competitive again. There’s lots of metallurgical coal for steel, but the Asian economic slump has dropped prices maybe 60 percent.

I won’t comment on the author’s lame and misunderstood point about climate change not happening.

The blog author may want to blame that on Obama and the EPA but that would be almost as ridiculous as his blog post. I decline to name him because I don’t want to embarrass him.

The EPA’s War on Virginia

How to have it both ways: Destroy coal mining jobs with environmental  regulations.... and then blame "capitalism" for growing income inequality.

How to have it both ways: Destroy coal mining jobs with environmental regulations…. and then blame “capitalism” for growing income inequality.

James A. Bacon

Complying with proposed Environmental Protection Agency rules on carbon emissions would cost Dominion Virginia Power customers an extra $5.5 billion to $6 billion, according to the State Corporation Commission staff — and that doesn’t include the cost to Virginia’s smaller utilities, which are even more reliant than Dominion upon coal.

The EPA plan calls for cutting carbon emissions from existing power plants 30% below 2005 levels by 2030 in an effort to fight climate change, improve public health and provide “affordable energy,” reports the Richmond Times-Dispatch. Writes Peter Bacque:

The EPA’s own model predicts that Virginia utilities will have to shut down fossil-fuel power plants reliably producing 2,851 megawatts of electricity, and replace that generation with just 351 megawatts of unreliable land-based wind power. This raises alarming regional reliability concerns, the staff said.

The power plants involved today ensure reliable service to Virginia customers, have years of useful life remaining, and cannot be replaced overnight or without regard for impacts on the electric systems. …

Even if the operational concerns of replacing dependable fossil-fuel generation with variable, intermittent and “nondispatchable” — unreliable — wind and solar energy could be managed, the staff said, “there is still zero probability that wind and solar resources can be developed in the time and on the scale necessary to accommodate the zero-carbon generation levels needed” to meet the EPA’s mandatory carbon-reduction goal for 2020.

This massive and expensive transformation of Virginia’s electrical generation system is a huge, huge issue. Once upon a time, Virginians could reconcile themselves to tighter environmental regulations on the grounds that they got cleaner air in return. There was a tangible payoff to air cleansed of particulates, sulfur dioxide and mercury. There is no tangible payoff (except to the alternate fuels industry) from the EPA rules. The whole purpose is to reduce CO2 emissions in order to save the globe from the catastrophic consequences of global warming.

The administration seeks to transform America’s energy economy despite the fact that, even as CO2 levels in the atmosphere have increased dramatically, global temperatures have remained stable for 18 years now — contradicting the forecasts of virtually every major climate model ever cited by the Intergovernmental Panel on Climate Change. While the Global Warming hysterics maintain their prattle that the “science is settled” and “97% of all climate scientists agree,” the science is most assuredly unsettled. Warmist scientists who pay attention to the reality that temperatures are not rising are desperately concocting ex-post-facto explanations of why their predictions went wrong and why, despite all appearances to the contrary, the world is still doomed unless we abandon fossil fuels now.

That’s not to say that alternate fuels are a bad thing. At some point, the technologies will improve to the point where they will be competitive with fossil fuels and it will be prudent to add them to the fuel mix. Energy conservation is always a good idea. Building automation offers a high economic return on investment. More compact, walkable human settlement patterns can save energy and offer tangible health and lifestyle benefits in the bargain. There are lots of ways to reduce CO2 emissions (if that’s a goal you really care about) without saddling Virginia’s economy with an unnecessary burden of $6 billion or more.

This is bad, bad policy, and Virginians need to fight back. Voters need to ask Virginia’s congressional candidates — most prominently Senatorial candidates Mark Warmer and Ed Gillespie — what they think of the EPA mandates and what they, as congressmen, can do to mitigate the impact on Virginia ratepayers.

Why We’re Being Railroaded On “STEM”

 csx engineBy Peter Galuszka

When it comes to education, a constant mantra chanted by the Virginia chattering class is “STEM.”

How many times have you heard that our students are far behind in “STEM” (Science Technology Engineering and Mathematics)? We have to drain funding from more traditional areas of study (that actually might make them better human beings like literature, art or history) and give it to STEM. The two types of popular STEM are, of course, computer science (we’re all “illiterate” claims one journalist-turned computer science advocate) and biotechnology.

But how important is STEM, really? And if Virginia joins the STEM parade and puts all of its eggs in that basket, will the jobs actually be there?

The fact of the matter is that we don’t know what jobs will be around in the future and like the famous generals planning for the last war, we may be stuck planning for the digital explosion of Bill Gates and Steve Jobs that is like, so, 25 years ago.

To get an idea where markets may be, look at today’s news. Canadian Pacific is making a play for CSX railroad (headquartered in Richmond not that long ago) because of the unexpected explosion in fracked oil.

CP handles a lot of freight in the western part of Canada and U.S. where some of the most impressive new fracked shale oil are, namely the Bakken fields of North Dakota and Alberta. CP wants access to eastern U.S. refineries and transshipping points, such as a transloading spot at the mouth of the York River. CSX is stuck with dirty old coal where production and exports are down, although it has an extensive rail network in the Old Dominion.

The combined market value of the two firms is $62 billion — a far bigger potential deal than the $26 billion Warren Buffett paid for Burlington Northern Sante Fe in 2010. There are problems, to be sure. CSX isn’t interested and the Surface Transportation Board, a federal entity, nixed a matchup of Canadian National and Burlington a little while back.

But this isn’t really the point. The point is that the Old Steel Rail pushed by new sources of oil and to some extent natural gas has surprisingly turned domestic economics upside down. Many of the new oil fields are in places where there are not pipelines, so rail is the only answer. In 2008, according to the Wall Street Journal, six or so American railroads generated $25.8 million in hauling crude oil. Last year that shot up to $2.15 billion.

So, what does that mean for students? A lot actually, especially when we blather on about old-style STEM that might have them inventing yet another cell-phone app that has a half-life of maybe a few months. Doesn’t matter, every Virginia legislator, economic development official and education advocate seems to be hypnotized by the STEM genie.

A piece I just did for the up-and-coming Chesterfield Observer on vocation education in that county:

“The recent push to educate students in so-called STEM (Science, Technology, Engineering and Mathematics) may be case in point. The goal is to churn out bright, highly trained young people able to compete in the global economy with their counterparts from foreign lands.

“A subset of this area of concentration is computer science, which goes beyond knowing the basics and gets into the nitty-gritty of learning code and writing computer languages. By some accounts, such skills will be necessary to fill more than 2 million jobs expected to become open in the state by 2020.

“Critics question, however, if overspecialization in technology at earlier ages prevents students from exploring studies such as art and literature that might make them better rounded adults. And, specialization often assumes that jobs will be waiting after high school and college when they might not be.

“Peter Cappelli, a professor of management at the Wharton School of the University of Pennsylvania, has written about such problems of academic overspecialization in national publications such as The Wall Street Journal. He recently responded to questions from the Chesterfield Observer via email.”

“Not many science grads are getting jobs in their field,” Cappelli says. “The evidence suggests that about two thirds of the IT (information technology) grads got jobs in their fields, about the same for engineering. There is no guarantee in those fields. It’s all about hitting the appropriate subspecialty that happens to be hot. There are still lots of unemployed engineers and IT people.”

So there you have it. In my opinion, the over-emphasis on STEM training has the unfortunate effect of producing young adults who have one goal in mind – getting a job and making money, not helping humankind. And, if you insist on STEM, why not branch into something where there are actually jobs namely petroleum engineering, geology and transportation engineering.

I’ll leave the dangers of added petroleum cargoes in trains to another post.

Petersburg’s Renaissance

PetersburgBy Peter Galuszka

Petersburg has been a special place for me.

Years ago, when I’d pass through, I always felt I were driving onto the set of a 1950s or 1960s movie set in the South such as “Cape Fear” starring Gregory Peck and Robert Mitchum. A somnambulant ease pervades the place as does the down-home friendliness you don’t get in pretentious Richmond 30 miles to the north up Interstate 95.

I got to know Petersburg a lot better when my two daughters went going to high school there at the Appomattox Regional Governors School for the Arts and Technology. Drawing from localities from Richmond to Isle of Wight and Franklin, the school body was bright, diverse and creative.

Driving my children if they missed the bus from Chesterfield was a pain but the effort was worth it since they had some fine teachers and avoided the White Toast trap of entitlement one gets into in more affluent suburban schools.

That’s when I was introduced to Petersburg’s nascent arts community. I went to plenty of “Fridays for the Arts” celebration and hung out at Sycamore Street with the kids.

Returning again recently, I found that the arts scene is really taking off. They  seem to be at a sustainable critical mass.

It is due primarily to the city’s policy of remaking itself by setting up an arts district that is nationally recognized as historic and offering tax credits and abatements for newcomers to renovate properties they buy from the city. The big expansion at the Fort Lee military base in 2005 really helped (although it’s due for a cut).

I wrote about it in a cover story in Style Weekly. The heroes and heroines are far-sighted city officials, arts willing to risk a lot remaking some truly historic buildings and the next wave, restaurants that aren’t owned by franchises, coming in.

Not everything is wonderful. Petersburg still has a weak public school system and a poverty rate of 28 percent, a point higher than Richmond’s. But it also doesn’t have the in-fighting among powerful interest groups that far bigger Richmond does. There’s no endless debate over building a baseball stadium in Shockoe Bottom (to line pockets of developers) or keeping it at the Boulevard.

There’s no high level brinksmanship about where to put a Children’s Hospital.

In Richmond, you see, ball fans and sick children are the last ones to be worried about. What matters is Mayor Dwight Jones, Bill Goodwin, Michael Rao, the Timmons Group and the editors of the Richmond Times Dispatch. They are important and you are not.

You don’t get that in Petersburg. The little city (population 32,000) that has a historical richness than rivals Richmond’s doesn’t think it is better than anyone else.