Category Archives: Energy

Clash of Principles in Wind Farm Debate

Maui wind farm -- you should see it from the water. Spectacular!

by James A. Bacon

The Floyd County board of supervisors is considering a ban on structures taller than 40 feet on mountain ridges, an action that would kill any chance of building a wind farm in the Southwest Virginia county. The proposal is bound to be controversial in the sparsely populated jurisdiction — and it raises prickly questions on how to reconcile multiple environmental and property-rights goals.

Two companies have discussed building wind farms on Willis Ridge. Wayne Booth, a cattle farmer whose land provides breathtaking views of the mountain line, has collected more than 600 signatures from local residents opposing the placement of turbines on the ridge, reports the Roanoke Times.

Floyd County is a solid part of “red state” America, voting 59% for John McCain and 39% for Barack Obama in the 2008 presidential election. Conservative political values rule — yet those values provide no clear guidance regarding the ban. Red State America believes in economic development, and building the wind farm would represent a potential economic boon. Moreover, many farmers, timber owners and small property owners also tend to think that what a man does with his property is his own business. On the other hand, one could advance the argument that wind farms are driven by tax breaks and other federal subsidies, making them illegitimate in the minds of small-government fiscal conservatives.

Conventional blue state values offer little guidance either. The justification for subsidizing wind power is to decrease the use of fossil fuels in electrical generation that create pollution and contribute to global warming. But conservationists tend to favor preserving the natural beauty of mountain ridge lines from real estate development on the grounds of aesthetics — and windmills are as visually intrusive than vacation houses. Even more worrisome, windmills, dubbed the “cuisinarts of the air,” kill hundreds of thousands of bats and birds each year, including many threatened species.  A U.S. Fish and Wildlife Service field report stated that nearly 500 bird carcasses were discovered in a mere two-week span at the Laurel Mountain wind farm in West Virginia, writes Kenneth Artz for the Heartland Institute.

How do you trade off potential gains for global warming versus unsightly aesthetics and the slaughter of birds? Which is more compelling — job creation or opposition to the government picking winners and losers through subsidies and tax breaks?

Personally, I don’t find the “aesthetics” argument very persuasive. I remember a seeing a view of wind turbines on a mountain crest of the island of Maui that was simply breathtaking. Windmills are no more intrinsically ugly than any other man-made structure. Moreover, my “right” to a pleasant view is hardly a bedrock constitutional one. Where does that right stop? If I have a right not to view wind turbines on a ridge line, do I have a right not to see a subdivision built upon farmland in my view shed? Do I have a right to veto, on aesthetic grounds, your decision to paint your house in Hokie blue and orange? Can I compel you to take down the hideous pink flamingos in your yard? No! If you want to protect your “view shed,” I suggest that you persuade the land owner to put the land into a property easement or, failing that, raise the money to buy the property yourself.

That’s an argument in favor of allowing the wind turbines. Now let me provide an argument against them. Our national energy policy is a disaster. We are spending tens of billions of dollars trying to promote wind, solar and other alternate energy sources, most of which are grotesquely uneconomical. It is foolhardy to subsidize the current generation of alternate energy sources, which will lock in expensive electric rates that both harm energy-intensive industries, thus costing jobs, and punish lower-income families whose incomes aren’t keeping up with rising costs as it is. Instead of subsidizing projects with inadequate technology, the U.S. government should invest in research on the next generation of energy technology. Subsidizing projects destroys wealth. Underwriting research creates wealth.

Taking all factors into consideration, I would oppose the wind turbines at the present time. Given the evolution of technology, it could take a decade or more before wind turbines can compete on a level playing field. Then I would tell the people of Floyd County, if you want to protect your views, raise money to buy the view-shed rights to your neighbor’s property. You’d be wise to start fund raising right away.

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Good Bye and Good Riddance to 2011

Glimmer of hope

by James A. Bacon

Good riddance to 2011, 365 days of misery that brought us the Gulf Oil Spill, Quantitative Easing 2 and the bulge in Anthony Weiner’s briefs. Most distressing of all, the year marked another failure by the country’s political leadership to address the nation’s fiscal free fall and avert the hard, hard landing that awaits us all.

Readers are well acquainted with my reasons for believing that Boomergeddon is at most a decade away, so I will not belabor them here. Instead, I go against type by listing three positive trends. To be sure, they won’t come close to staving off federal government default, but they do offer a glimmer of hope.

Violent crime is down. Violent crime in the United States has declined to the lowest rate in four decades. The odds of being robbed or murdered are less than half of what they were 20 years ago, and the downward trend shows no sign of abating. Society is so much safer that crime has vanished from the list of Americans’ top worries. As a bonus, coinciding as it does with the highest unemployment rate in 60 years, the downturn discredits the notion that “poverty” and “lack of opportunity” are driving forces behind crime. The experts and other social engineers took it on the chin. They still are at a loss the explain the cultural phenomenon.

Fossil fuel production is up. I’ve long been a proponent of the “peak oil” theory that says oil production has peaked, demand for petroleum products is soaring as China, India and other developing nations become more prosperous, and the price of oil will hit a permanently higher plateau that will cause considerable economic hardship in America’s auto-centric economy. I still believe that. What I did not anticipate was the Marcellus shale revolution. (I’ll withhold any judgment on the environmental impact of the new natural gas-drilling technologies until more authoritative data comes in.) Clean-burning gas will supplant dirty coal as the preferred fossil fuel for electric power generation and, in an added benefit for those who worry about Global Warming, will significantly reduce greenhouse gas emissions.

In a parallel trend, U.S. oil production is rebounding and is expected to reverse much of its 40-year decline. If you include Canada in the mix, the U.S.-Canadian economy could be producing record volumes of oil within five years. North America may never achieve “energy independence,” but we’ll ship a lot fewer dollars to hostile petro-states.

While the greens advocated reorganizing the energy economy around solar, wind, electric cars and other alternate energy technologies that squander billions of dollars in economically inefficient investments — think Solyndra on a trillion-dollar scale — they were blindsided by disruptive innovation coming from the private energy sector. Once again the “experts” are looking pretty ignorant.

Technology innovation continues apace. The advance of technology continues to amaze. Moore’s Law is old hat — we take it for granted that each new generation of computer will be faster, smaller and more powerful. What will really change things is the ability to embed computing devices with voice recognition, artificial intelligence and GPS sensors so (a) we can talk to the devices and (b) the devices “know” where they are.  “Smart” phones are just the beginning. Soon, everything from your car to your refrigerator will be smart as well. If there’s one thing that can bail this country out of its budgetary morass it’s the potential for extraordinary gains in productivity and economic efficiency made possible by technology. Let’s just hope that human-designed institutions can keep up.

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Virginia’s Energy Fantasies

By Peter Galuszka

Plans to mine uranium in Southside Virginia did not get the boost some had been hoping for now that a 22-month-long review by the National Academy of Sciences and the National Academy of Engineering has been released.

Far from rubber-stamping the plan, the independent analysis reported that there are “significant” health and environmental obstacles with the plan, which would allow mining 119 million pounds of uranium from the properties of several politically connected families near Chatham.

Among those challenges are that Virginia, which must protect the environment and the lives of mining workers, has no experience doing so and lacks any regulations covering mining uranium. The study did not give a go or no-go recommendation but said that mining could occur if proper safeguards were put in place. Getting them will take much time and effort.

In other words, the juggernaut towards the uranium mining idea, which has included all-expenses-paid trips to France for legislatures considering ending a two-decades-long ban on such mining, just got a big, bright yellow caution light, not exactly what proponents  had hoped for.

Even supporters started backing away from the idea. Gov. Robert F. McDonnell, who wants to make Virginia “the Energy Capital of the East Coast” seemed to mumble that uranium mining should be done safely. Virginia Energy Resources Inc., which owns 29 percent of the mining project, put the happiest face it could on the report, stating that we now have a “roadmap” to employ the “best practices” in safety that have been in practice in the U.S. and Canada. Mining opponents hailed the report as vindication of their fears.

What’s going to be interesting is the next step. How Virginia’s business elite handles the report and the moratorium will be the determining factor about whether the ban is ended and the mining goes through.

The sad truth is that many of these people see only one side of the energy equation and are loath to consider environmental issues or even get a deeper understanding of energy itself. Instead, legitimate concerns are painted as over-regulation madness by the likes of Barack Obama and his band of socialists. What is sad is that these very critics really have no real idea of what the global energy mix and what the markets really are.

For proof, read a piece of a couple of weeks ago by Barry E. DuVal, the new president of the Virginia Chamber of Commerce who was once mayor of Newport News and a cabinet secretary under Republican Gov. Jim Gilmore. DuVal’s piece was a diatribe against the Obama Administration for not including areas offshore Virginia for exploration and drilling. He also attacked Obama’s concerns about the controversial Keystone XL pipeline that would take fossil fuel energy from an oil sands project in Canada to Gulf Coast refineries. Without a major change in direction from the White House,” DuVal wrote, Virginia won’t be able to drill offshore, expand renewable electricity sources and build nuclear power plants.

A few little problems here. First, there are no known, large deposits of oil off the Virginia coast. There may be natural gas, but nothing certain. If you want to discuss natural gas,  one thing DuVal fails to mention, is that hydraulic fracking of Marcellus shale in Pennsylvania and New York, has resulted in an unexpected flood of new gas. The quantity is so great that electric utilities are shifting to gas from coal. As far as nuclear, DuVal seems to have forgotten the August earthquake that pushed the North Anna nuclear plant to its design limits and caused a national review of just how susceptible the country’s nuclear stations are to earthquakes. As for wind, Google plans a huge wind farm just off Virginia’s coast. No mention there. As for the Keystone pipeline, the petroleum is exceptionally dirty. The pipeline will result in zero jobs in Virginia, if you bother to look at a map.

And lastly, for the first time in decades, the U.S. has become a net exporter of energy. This is all happening without Bob McDonnell’s fantasy of the state becoming the “Energy Capital of the East Coast.” The Old Dominion is a huge shipping port for coal exports, but it involves coking coal for steel for skyscrapers in Shanghai and Mumbai and has nothing to do with energy.

So, given the level of understanding of the energy outlook, it should come as no surprise that this crowd will be pushing for an end to uranium mining and pressing on without substantive regulations. We hate regulations. We’re Virginians. In any event, it’s all Barack Obama’s fault.

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What’s McDonnell Up To With Transportation?

By Peter Galuszka

The McDonnell Administration is  taking a chain saw to policies that promote smarter, more efficient growth by axing  reforms to make neighborhoods connected and pushing design contracts that fast-track road construction and discourage public input.

Such are the conclusions drawn from two blog postings by David Alpert of Greater Greater Washington and Jim Bacon, publisher of this blog.

They detail how Gov. Robert F. McDonnell and Transportation Secretary Sean Connaughton are throttling reform-minded policies that recently put Virginia at the forefront of good planning. They are using the Commonwealth Transportation Board (CTB),  a 17-member panel appointed by the governor, as the spearhead to push their ideas on how subdivisions and roads should be built.

According to the Alpert blog, the CTB recently got rid of policies enacted in 2009 that would encourage to build new subdivisions that connect easily to secondary and primary roads. Up until then, planning in Virginia was of the usual 1950s model that erected countless cul de sacs without only a few roads outside the development.

The result forced people into a lifestyle dominated by automobiles that wasted time and gasoline as residents traveled to shop or work and caused more trouble for emergency workers such as police, fire or ambulance drivers trying to respond to a crisis.

Under former Gov. Tim Kaine, the CTB changed the rules in a way that put Virginia ahead of other states in planning concepts by adopting the connectivity policy. The CTB under McDonnell and Connaughton recently dumped the 2009 reforms. Why? My guess is to boost the interests of developers since McDonnell wants to be identified as “pro-business.”

The Bacon post is an investigative look at the controversial bypass of U.S. 29 in Charlottesville. His work was funded in part by the Piedmont Environmental Council but they did not edit the article. Bypass proposals have been contentious because they would tend to exacerbate traffic congestion on what is already the most crowded road in the university city. Business interests, notably manufacturers in cities such as Lynchburg and Danville, want the bypass to improve truck deliveries.

Connaughton’s goal is hastening development of the bypass. So, he pushed a “design-build” contract that is opposed to the way the state usually does construction project. In “design-build,” the contractor is also the designer and designs parts of the project as works goes along. The practice was once considered unethical by professional associations but it is has become widely adopted throughout the country. It can save money and quicken a project’s completion, but it can also lead to overruns and tends to limit public say about how a project looks.

The CTB bought the “design build” idea for the bypass, but according to the Bacon report, Connaughton did not mention that engineers at his own Department of Transportation had serious doubts about the $244 million cost estimates, believing they would run much higher. Their concerns were not reflected in information given to the board which approved the project.

The two excellent blog postings raise serious questions about exactly what McDonnell and Connaughton are doing. The state has just raised billions on the bond market for highway construction and is floating ideas for public-private roads such as a replacement for U.S. 460 in southeastern Virginia.

Connaughton is steamrolling the U.S. 460 highway just as he is on the U.S. 29 bypass. His concept took a hit recently when The Virginian-Pilot reported that a group of Tidewater politicians and business executives lobbied Connaughton to slow down on the road from Suffolk to Petersburg in favor of a third crossing in Hampton Roads, which they believe will do more to alleviate the water-locked region’s notorious congestion. Conaughton responded that the third crossing will cost twice as much as his pet road. There are problems with either plan. A third crossing would only dump traffic on clogged Interstate 64. Replacing U.S. 460 would create more exurban sprawl west of Suffolk, which has been the state’s fastest-growing city.

Playing it both ways as free-spenders and cost cutters, McDonnell and Connaughton are refusing to provide funding for the D.C. Metro Silver Line Phase II project which would help alleviate traffic congestion. And, Connaughton has shown his bare-knuckles management style by firing nearly the entire board of the Virginia Ports Authority in one quick putsch.

McDonnell, however, doesn’t have that much time in office left. What’s behind all of this?

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McDonnell’s Energy Pep Rally

By Peter Galuszka

One conceit of Gov. Robert F. McDonnell is that he magically wants to transform Virginia into “The Energy Capital of the East Coast.” The idea smacks of Alice in Wonderland.

An example is “The Governor’s Conference on Energy,” that began in Richmond on  Monday. I dropped by today and noted that the conference logo has a map with the state colored red as the aforementioned energy capital. There were the usual fossil fuels — coal, petroleum and natural gas — represented in exhibits along with a fair showing of nuclear power. Scattered here and there were cogeneration and wind turbine possibilities.

A keynote speaker was by Christine Todd Whitman, a former New Jersey governor and head of the U.S. Environmental Protection Agency under George W. Bush from 2001 to 2003. During her tenure, she helped emasculate the agency. She now advocates nuclear power. Despite the Fukushima disaster and the fact that Dominion’s North Anna nuclear plant remains shut down after a 5.8-scale earthquake on Aug. 23, Whitman beat the drum for more nuclear plants.

Coal companies also had a big role, likely because Dominion and American Electric Power, the state’s two largest utilities, have a large coal-fired capacity. And McDonnell is still pushing for oil drilling off the state’s coast despite the Deepwater Horizon disaster and the lack of evidence of any significant deposits.

The favored mix did not sit well with the few environmentalists at the conference. “It’s nuclear, nuclear, coal, coal, gas,” Glen Besa, an official with the Sierra Club told me. In fact, the Sierra Club intends to give a counter
speech favoring non fossil and alternative energy as McDonnell gives his
keynote address Tuesday evening.

There’s more odd about the conference. The “Energy Capital” moniker is a bit of a stretch for one thing. Take coa. The coalfields in far Southwestern
Virginia produce between 30 to 40 million tons a year. Next door, West Virginia produces 144 million tons and Kentucky 96 million tons a year. Total U.S. production is about 1 billion tons, so Virginia’s 40 million tons is rather puny.

Ditto oil. There’s isn’t much in Virginia although there are natural gas wells. Nuclear? In the state are four reactors, two of which are shut down due to the earthquake.

Yet there’s lots of interest in wind, especially offshore where Google plans a big farm and on the Eastern Shore where a turbine test facility is planned. Plenty of wind blows in the mountains near the West Virginia border. McDonnell ought to emphasize wind a lot more than he does.

Another curiosity is that the conference entrance fee was $245 ($50 for students). In  other words, the conference was not intended as an informational session for the general public. Rather, it was a pep rally for well-heeled energy executives who might enjoy the governor’s nonsense about Virginia being the “Energy Capital of the East Coast.”

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Can Japan Keep Pitching?

By Peter Galuszka

(Last of a series)

TOKYO, Japan — “Technology is like water, it runs down hill.”

My old Japanese friend and I are chowing down on delicious fried oysters and sashimi in a downtown Tokyo restaurant. We had just had drinks at the Foreign Correspondents Club Of Japan which offers a spectacular, 20th floor view of  the city, including parts of the Ginza shopping district.

My journalist friend’s comment is at once wistful and annoyed. He’s sick and tired of hearing about the Chinese “miracle” when much of the technology that the Chinese have used is  from Japan, the U.S., Germany or other more advanced nations.

I agree with him. I have been skeptical hearing about the wonders of the Middle Kingdom since it became fashionable when I was a middle-ranking editor on the international desk of a business magazine in New York back in the late 1980s and early 1990s. Although I am not a China hand and know little about the country, I keep noting that for every high speed train, there’s a high speed train crash that the government wants to cover up. Many Chinese products have the taint of intellectual property or brand theft. The miracle of millions of skillful, hard-working laborers churning out products for export doesn’t shed light on one-sided currency exchange rates or the labor conditions in which those products were made.

Not that long ago, Japan seemed to be where it was happening. Back in the 1980s, the buzz was that the Nipponese onslaught was moving from cars and consumer electronics to snapping up choice Manhattan real estate and buying big movie houses, controlling our media.

Alas, the real estate bubble in Japan hit and a “lost decade” of deflation followed. Japan is still staggering from it. Economists faulted the country for not taking enough steps to reconfigure the old “keiretsu” structure of big banks, government organizations and trading agencies all working towards common industrial policy and trade goals. Too slow to change, Japan was trapped and paid the price.

China faces the same pressures. It is, after all, a communist dictatorship that has ultimate say on all political, economic or civil rights issues. The plus is that it can make decisions quickly at least big decisions. It has the finances to build quickly and invest heavily in the U.S. This is an irony for conservative Americans who tout China because they  want to make money from it, but somehow forget that it stands for all of the things they loathe, such as big regulation, government oversight and spending.

My friend and I would like to see a return to the old days when Japan led Asia with close cooperation from Washington. Despite the horrors of World War II, it seemed a natural fit.

That idea, however, unravels the minute I step into a taxi. The drivers are invariably grandfatherly men in black suits and white shirts. They will take credit cards for the ridiculously expensive rides to the hotel. They must bow and hand you scrap after scrap of paper. Ditto trying to find an ATM that will issue a foreigner cash. Most ATMs work only with Japanese banks. And while the subway and train systems are fast and efficient with extremely courteous staff, they seem unnecessarily complex and old. At my mostly-Japanese hotel, when they serve a tasty breakfast buffet, they actually play elevator music from the 1960s, including (believe it or not), Mantovani. I sip my soup listening to “Born Free.”

Indeed, Japan’s biggest problem is not spirit or smarts. It is age. Demographics are against it. Japan has the largest percentage of elderly of any advanced country. About 21 percent of the population is older than 65 years old. It has always been hard for foreign firms to crack the Japanese market, but some now shun it because the population is getting too old. Meanwhile, national champions such as Sony or Toyota seem as ancient as a Madonna CD. In the latter case, a shameful breakdown in quality tarred the once-popular car maker.

Can Japan keep pitching? Can the U.S.? Both long-time allies face similar challenges. My guess is yes, but not until the current Asia set-up
changes once more.

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And the Band Played On

By Peter Galuszka

(Fourth of a series)

FUKUSHIMA, Japan — About an hour and a half north of Tokyo by bullet train,  the city of Fukushima is enjoying a fall festival. A brass band (see photo) belts out tunes while two young policewomen in sky blue uniforms have their pictures taken with children sitting atop their white Honda motorcycles. Jack-o-lanterns, Japanese-style, dot posters. Doting grandparents shoot pictures of their grandchildren riding a miniature steam train.

There’s little evidence that one of the worst nuclear disasters ever occurred last March 11 not 36 miles away on a rocky stretch of Pacific coastline. The meltdown of three nuclear reactors at the Daiichi power plant was the worst accident since Chernobyl and caused the deaths of more than 45 people, the evacuations of 130,000 and may cause untold future cancer illnesses and fatalities.

The only new information, as a friendly Fukushima resident shows me, is a newspaper article showing the radiation zones in a newspaper article. The most intense zone runs about 20 kilometers from the power station, including parts out to sea.

It is the worst zone. Gamma rays, that can penetrate anything except lead, are prevalent. The zone includes all or part of eight local jurisdictions. Extending another 10 kilometers out in another zone, land and buildings are somewhat less irradiated but still cannot be occupied. There are roadblocks on all roads leading into these zones.

The newspaper articles purports to outline just how many houses and other properties there are in these restricted zones and how  much people can expect to be compensated for them. I haven’t done an exact count but they appear to be between 5,000 and 10,000. People from the houses are living in temporary shelters with with families or friends elsewhere.

One would never know it from the pleasantries in the downtown of Fukushima city, but the nuclear disaster has serious implications on a global, as well as local, basis. Concerns about global warming had been pushing sentiment in favor of nuclear power as opposed to coal, but that’s shifted back again. The United Bank of Switzerland says that the Japanese mess may result in the closing of 30 other nuclear reactors around the world. In Germany, Chancellor Angela Markel said her country would shut down its reactors. German engineering conglomerate Siemens announced it was getting out of the nuclear business. China, on the other hand, intends to expand its nuclear generation capacity to offset its 70 perent reliance on coal.

Back in Virginia,  the region got a taste of Fukushima on Aug. 23 when a 5.8 Richter scale earthquake, much smaller than  the tsunami that touched off Fukushima’s nuke disaster but still unexpectedly strong, jarred the North Anna nuclear plant operated by Dominion Virginia Power. It forced a shutdown of two reactors while heavy casks of spent nuclear where shaken loose. A review by the Nuclear Regulatory Commission shows that perhaps 25 other nuclear reactors may need new earthquake safety upgrades.

If you get a map of Virginia and plot the same evacuations zones as at Fukushima, you likely would see the evacuations for weeks, months or years of all or parts of Fredericksburg, Culpeper, Charlottesville and the far western Virginia suburbs of Richmond near Manakin Sabot. These would be roughly a 30 kilometer zone — not the very worst, but still requiring evacuation.

Fukushima and North Anna also raise serious questions about another Old Dominion project realted to nuclear power. A small group of investors and Canadians called Virginia Uranium plans on mining reserves near Chatham. But if the mood is so against nuclear power, one wonders just how demanding the market for yellowcake is.

It is anyone’s guess who would pay for the irradiated property in Japan although Munich Re, the reinsurer in the case of Fukushima, says that covering the disaster can be done successfully.

Costs such as these, whoever, must be kept in mind should nuclear power still proceed. Financial discipline, naturally is the flavor of the times given the current  backlash against government spending. Yet that also dooms nukes. Dominion, for instance, requires federal loan guarantees if it wants to proceed with a third unit at North Anna which is likely to cost more than $10 billion. Fat chance of getting it, at least now.

Meanwhile, on Oct. 15, the New York Times reported that about 20 “hot spots” of radioactivity, some with Chernobyl-level amounts, had been found in Tokyo, 160 miles to the south of Fukushima. Government officials had stubbornly claimed that the contamination was limited to the zone near the stricken plant, but now it seems that the situation is much worse than thought.

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Yet Another Mongolian Crossroads

By Peter Galuszka

(Third in a series)

ULAN BAATOUR, Mongolia — Flying into this capital city nestled among treeless, light brown mountains brought back memories of a grimy, industrial Soviet city from 30 years ago. Along the tarmac are rows of cannibalized Antonov 2 biplanes used as crop dusters after World War II along with ubiquitous MI-8 helicopter workhorses.

The airport parking lot is also a blast from the past. As we struggle with our bags, Mongolian cab drivers scream at us for our business. My Russian-born wife springs into action. By turns playing one cabbie against the other and tough bargaining, besides touching off at least one fist-fight, she gets our fare down from 50,000 tegreg ($30)  to 15,000 tegreg (about $12)  in exactly 14 minutes — a masterful performance.

Downtown is a mix of Soviet and new destiny. The sidewalks are cracked lumps of ankle-twisting concrete. Local pedestrians will shove you out of the way. Mongolian drivers are hyper-aggressive, challenging other drivers to showdowns that can be measured in millimeters. Yet against the gels, yurts and Stalinesque buildings are scores of construction gantries providing testimony to Mongolia’s newest crossroads.

Freed abruptly from its decades’ long role as the Soviet Union’s 16th republica, Mongolia is struggling to position itself between a still-ambitious Russia and a fast-growing China’s with a ravenous appetite for raw materials. Mongolia needs foreign investment badly but has to shake off its bad reputation for lawlessness, corruption and a poor to non-existent infrastructure. As an attraction it has huge reserves of copper, gold and coal.

The best-known Mongolian, of course, is Genghis Khan, who conquered most of the Eurasian landmass in the 12th century. On the bright side, he brought a sense of law and order to his new empire, introducing such inventions as the diplomatic passport. But G.K. & Sons were among history’s most vicious killers. Their 12th century body county, taken together and adjusted for world population, would be about double that of all the people Hitler, Stalin and Mao slaughtered in the mid 20th century.

Mongolia has long been feared and abused by both China and Russia. It became a country in 1924 after the Manchus fell apart, but the Soviets were quick to force their influence. To make the point with his typical subtlety, Josef Stalin included Mongolia in his 1937  purges by accusing Mongolian Communist leader Gendel of collaborating with  Chinese nationalists and the Japanese.

The result was the arrest of 56,000 and the execution of 20,000 to 30,000 Mongolians, about 40 percent of the population. The horrible event is marked at the Victims of Political Persecution Memorial Museum tucked away in a hard-to-find part of downtown that is being torn up for new skyscrapers to house foreign consulting, banking, mining and construction firms.

The museum is not for the squeamish. One exhibit shows the skulls (see
photo)  of some of those executed. They were lined up precisely so one bullet would shatter the skulls of three or four victims. This particular batch of skulls shown in the photo was found in a mass grave in a remote part of Mongolian discovered in 2003.

Not everything in Ulan Baatour is horrible.  Nearby is a museum of Buddhism with wildly creative art and there are plenty of monks around. Historically, Ulan Baatour (or “U.B.” in local parlance) rivals Tibet as a Buddhist religious hot spot.

Meanwhile, Mongolians are trying to take corrective steps for a better future. At a conference on foreign investment that I attended, Bayaratsetsev Jigmiddash, a legal advisor to the Mongolian government, says that progressives are working on as many as seven separate laws to upgrade the country’s courts and judiciary systems. Key reforms include creating a conflict of interest code for judges to follow and to require them to list their assets and bank statements, she says.

There’s more to be done on the infrastructure front. Despite its strategic location between two rich countries, Mongolia is stuck with ancient Soviet-style railroads and equipment. General Electric is said to be interested in building new locomotives capable of withstanding minus 50 degree temperatures and sandstorms. Likewise, the highway system is primitive or just doesn’t exist where needed. Many major highways have no repair shops or gas stations. About 40 percent of the truck fleet is obsolete.

It’s a classic chicken-or-egg problem. Foreigners won’t invest without rule of law. Without investment, there won’t be rule of law. As one wag suggested, one place to start educating Mongolians about what being modern means is on the highways where no one seems to understand what a rule or a law is or how to brake for pedestrians.

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The Old Boy’s Still Around

By Peter Galuszka

(first of a series)

BEIJING, China — Red and gold emblems flap around Tiananmen Square in celebration of 62 years of the People’s Republic of China. This holiday, the sprawling square area is thronged with Chinese families of all ages on this warm and sunny fall afternoon.

I am here on a book research trip that will take me into three Asian nations. Of the three, China holds the spotlight as the coming thing. It’s been the coming thing since the 1980s when Deng Xiaoping turned more than three decades of Maoist central planning on its head and started market reforms. A combination of  pent-up entrepreneurial zeal that’s part of the Chinese DNA and a huge, young population soon sparked double-digit GDP growth rates that started to slow from 11.9 percent in 2010 to 9.7 percent only this year.

The results are stunning. The capital boasts of new buildings, clean streets, an efficient subway system, and luxury stores and restaurants. Growth is concentrated in coastal areas, such as Guangzhou and Shanghai where I stopped first to pick up my wife who is spending the year teaching there. Conventional wisdom has it that with its wealth and growth levels, China is fast eclipsing the United States as the world’s leading power — a view that my otherwise pleasant French Canadian seat mate mentioned as many as five times on the flight over from the states.

Shanghai is likewise a shiny jewel of Chinese modernity, shinier even than Beijing. Its riverfront skyscrapers soar high. Everywhere, gigantic flat screen televisions and LED lights flash out new light architecture. One example of this almost obscene longing for western-style commercialism is Wu Jiao Chang, a square that just got a new subway stop last year. At least four huge, multi-level shopping malls surround the square. Its focal point is a passenger rail line running through the center that has cladding shaped like a giant dirigible covered by thousands of tiny, color-coordinated flashing LED lights.

“People in Shanghai don’t seem to want anything more than eat, shop and have their hair done,” my wife says. Her words echo those of French philosopher Jean Paul-Sartre who once said: “Hell is all the people at a Shanghai department store at the same time.”

The mass-overconsumption so complained about on this blog is in full throttle in China’s big cities. Does it mean true modernity and western values? Not at all.

For an example, let’s go back to Beijing. We stayed at a no-star Chinese hotel near the massive airport because we had an earlier morning flight and couldn’t handle morning traffic. It wasn’t anything we couldn’t handle after years in the former Soviet Union, but it was tucked away in what you might think of as the real China. Garbage lay on the steps of the little eateries and hair dressers in a little strip mall that seemed destined soon for bulldozers. I needed the Internet to get in touch with Expedia.

I ended up in an “Internet cafe” up the dirty stairs of a building. The room was filled with 60 or more terminals with young Chinese playing Net games at some. But you don’t just sit down and boot up. You have to go to the bar where a man examines your passport and writes down all pertinent information for the police. The Net is tightly restricted since the Communist government fears the kind of Twitter-based backlash that this year brought down regimes in Egypt and Tunisia and probably Libya.

I sat down at an ancient Acer desktop with a keyboard that has been through several iterations of rebuilding. The keys are alternately black and red. It’s slow and pokey. A scary thought goes through my head: Do I want to put my Expedia personal data on this? Hell no.

I remember a Wall Street Journal story from earlier this year reporting that Chinese governments officials allegedly hacked hundreds of Google email accounts. The hacking was tracked to the People Liberation Army’s technical reconnaissance bureaus in the city of Jinan. This Big Brother approach is reminder of just how much China hasn’t changed, despite the glittering lights.

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Should Dominion Virginia Power Spin Off its Nukes?

Over the past two years, Dominion Virginia Power has experienced 14 unplanned shutdowns of its four nuclear reactors, by the Times-Dispatch’s counting. Is it time for the power company to consider spinning off its nukes or selling them to someone who can do a better job of running them?

I ask that question after encountering a new study by Lucas W. Davis and Catherine Wolfram, “Deregulation, Consolidation and Efficiency: Evidence from U.S. Nuclear Power,” published by the National Bureau of Economic Research. Here’s the argument they make:

For four decades all nuclear power reactors in the United States were owned by regulated utilities. Few utilities owned more than one or two reactors and utilities received a rate of return on their capital investments that was largely disconnected from operating efficiency. Beginning in the late 1990s electricity markets in many states were deregulated and 48 of the nation’s 103 nuclear power reactors were sold to independent power producers selling power in competitive wholesale markets. These divestitures have led to substantial market consolidation and today the three largest companies control more than one‐third of all U.S. nuclear capacity.

… We find that deregulation and consolidation are associated with a 10 percent increase in operating efficiency, achieved primarily by reducing the frequency and duration of reactor outages. Efficiency gains were experienced broadly across reactors of different types, manufacturers, and vintages, with the largest increases in the spring and fall during the peak months for refueling.

The resulting increase in electricity production exceeds 40 billion kilowatt hours annually, valued at $2.5 billion annually at current prices. “This increase is almost pure efficiency gain, achieved without building a single new plant or constructing a single additional mile of transmission capacity,” the authors note. The increased electricity output, they add, displaces mostly coal‐ and natural‐gas‐ fired power, implying an annual decrease of 38 million metric tons of carbon dioxide emissions.

I was always under the impression that Dominion ran its nukes pretty well, so that 10% efficiency gain may not apply here. But we won’t know for sure if we don’t ask. Such a gain, if possible, would delay the need to add more power-generating capacity, thus keeping a lid on electric rates. Lower CO2 emissions are a bonus that environmentalists should love. Perhaps the State Corporation Commission should look into it.

– JAB

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