Archive for the 'business' Category

Changes?

We drove less last year than in 2006- it was the first time in 20 years that we drove less. Granted, we only drove .4% less, and we still drove 3 trillion miles. 3 trillion! But hey, the budget deficit is still 9 trillion dollars, so at least it’s not the biggest Crazy Staggeringly Huge Statistic That Worries Me.

So it looks like fuel prices are changing the ways America behaves, right? Slowly, but it’s happening. BusinessWeek reported a couple weeks ago that consumers are buying more efficent cars (especially the cheaper ones), SUV and big truck sales are dropping, and we’re taking more public transportation. But they ask a pretty good question- if prices for fuel go down, will we stop being efficient and go back to our old ways? That’s exactly what happened after the last energy crisis in the 70s. For those of us who do the energy efficiency thing for reasons other than cost, no. But how many of the people economizing are doing it because they have to, and are just waiting for $2.50 gas to come back so they can buy that Escalade? (Are Escalades still cool?) Or is this a national shift- will the green wave make it past the breakers of the economic crisis and drift lazily onto the sunny shores of a new consumer paradigm?

Also, if consumers are buying more efficient cars and not buying trucks and SUVs so much, why are car companies still saying they have “no idea” if consumers even want more efficient cars? And more importantly, why does BusinessWeek publish articles wherein car company executives whine about the CAFE standards and this supposed lack of consumer interest, with no attempt at investigation of consumer interests (or even perusal of their own archives)? That article has some interesting analysis of how the car companies are dealing with CAFE, actually, but man, it irks me that auto executives use that tired “nobody wants efficient cars” refrain.

Sheesh, Russia

Relations between Russia and Britain have been strained for over a year now, what with all the radioactive poisonings and art shows and cultural office tussles, but now the Russian government is upping the ante. The ministry for Natural Resources, Rosprirodnadzor (in the long tradition of awesome Russian names) announced an environmental inquiry into the practices of British Petroleum’s operation at Samotlor oil field late last week. Production at that field alone accounts for about 1/4th of BPs oil production.

Soviet oil production was never know for its responsible environmental practices, and a conglomerate was formed in 2003 with BP to improve the widespread leaks and groundwater contamination already at the Siberian site. But Russia has been trying to consolidate oil production under their nationally-controlled Gazprom, and things aren’t looking good for BPs investment. In 2006, the same environmental inquiries were made into another foreign-run oil field in Russia:

In 2006, the same Russian environmental agency threatened Royal Dutch Shell with multibillion-dollar fines in a months-long campaign that led to Shell’s selling a controlling stake of its Sakhalin Island oil and gas development to Gazprom.

After Gazprom bought the stake, the agency dropped its environmental complaints and work continued.

The same inspector in the Shell situation, Oleg L. Mitvol, the agency’s deputy director, was appointed to lead the investigation at TNK-BP’s Samotlor field, according to the statement.

So.  Hurrah for the concept of environmental enforcement, I guess.  But Russia is just using “concern for the environment” as a shield in their quest to do whatever they feel like.  I admire them for their skill in doing whatever they, like, actually- it makes keeping up with international events that much more scary, entertaining, and bizarre.  But it’s discouraging to open an article on the environmental failings of Big Oil and sympathize with Big Oil after you read the details.  Sure, their site might be a mess, but I bet it’s not much worse than any other oil field in the former USSR.  Russia makes a mockery of environmental protections.  I guess it’s what’s left to do, after they’ve made such a mockery of open democracy and the rule of law.

They’re Asking For It

One of the most popular arguments against government “intervention” in alternative energies and the green economy is that government regulations are always inefficient, they slow the natural progress of the economy, markets work best when they’re totally unfettered, etc. Stuff like that. The jatropha-in-Myanmar post a couple of days ago might even lend that argument some support.

But the capitalism-loving, -touching, and -squeezing heads of huge companies like BP, GE, and Dow Chemical disagree- they’re urging the government to come up with a coherent energy policy that favors energy efficiency, clean fuels, and even carbon taxes. They contend that the piecemeal regulations the Bush administration half-heartedly doles out are costing America jobs, and US companies the chance to compete internationally. Apparently, since European countries tend to take alternative energies like nuclear and wind seriously, their governments have created favorable investment climates around those technologies- and the clean tech money is settling abroad.

GE’s Chief Executive Jeff Immelt makes a case for government subsidies, carbon trading, and investments in clean technology from a purely business standpoint- and to the free-market crowd, he has a response. From the WSJ’s “Environmental Capitol” blog:

And government largess helps drive progress—like in GE’s aircraft engine division half a century ago. That admission riled free-market types in the audience (and on stage) who took him to task for subsidy-hunting and accused him of—gasp—betraying his capitalist credentials.

“Don’t worship false idols,” he countered. “The government has its hand in every industry. If we have to have them, I’d prefer they were productive rather than destructive.”

Defending the “free” market is quixotic in the most literary sense, as the pure market is the pure Dulcinea: entirely a product of fevered imaginations. I’ve ranted about it here before, but observe that very successful capitalists realize this, and gamely play the market (and government) by the existing rules. There’s money to be made in clean technology (even capitalists who think global warming is a fraud know this and invest accordingly), and there would be even more of it if the US government stopped noodling around.

Last month, BusinessWeek reported on how the Bush Administration’s failure to lead on clean energy policies has left it to the states to invent their own. The magazine pointed out that a sustained federal push was essential for bringing the US up to speed in a clean tech economy already dominated by foreign companies- but not to hope for that push from Mr. Bush.

Maybe next year your dreams will come true, practical capitalists.

Tata for Now

A thought-exercise: An Indian company, Tata, has developed a super-cheap small car. Are we pleased?

Pro: The car costs less than $3000.

Con: That’s still more than 3 years pay at average Indian wages.

Pro: It’s safer than a motorcycle.

Con: It’s not much safer.

Pro: It’s got relatively low emissions- a byproduct of tiny.

Con: It’s not got the technology to keep emissions low after actual road use.

Pro: It will take up less space in a traffic jam.

Con: More people able to afford small car-> more small cars on the roads-> more traffic jams.

With dreams of being Model-T revolutionary, the Tata’s people car could do much for the new middle class in developing countries. Like, it could give them access to a car. A car engineered to the least expensive possible standard of functionality- the steering shaft is hollow, and at speeds over 45 mph, the wheel bearings wear quickly (great, so it’s a disposable car?). No worries about it being unleashed on American roads- it wouldn’t meet our safety or environmental regulations. And in a couple years, when India has environmental and car safety regulations of it’s very own, it probably won’t meet them, either. In the US, safety requirements cost generally add $2500 to the cost of making a car- about double the People’s car price.

Sure, it sounds hypocritical to wish that developing countries not develop into the same gas-quaffing, road warrioring, driving maniacs that the US already has become. Without widespread usable public transportation, most of the US isn’t left a choice. Owning a car has becomes a basic need, to work and get groceries and go anywhere. In most of the developing world, though, it remains a status symbol. I’m not bemoaning the role of efficient transportation in development- a car certainly goes faster than a donkey or a bike- I’m just saying, personal cars aren’t the most efficient method of transport, and if countries develop in a manner dependent upon them, they’ll only trap themselves in the same nasty emissions and oil-dependency cycle we’ve gotten ourselves into.

The US should try and set an example by, say, developing a viable train system, or encouraging investment in mass transit in cities- make a metro pass a status symbol. Or maybe we could go with the Cadillac flow, and make clean cars the new status symbol. Pardon me, while I covet the Provoq.

Really, though: Hey, India, we’re not a great example. Try something else.

Behind the Label

Disclaimer: I know this is long, but there’s a lot of organic ground to cover. Consider it a Sunday special, and read it at your leisure, or in chunks.

The USDA develops standards for labeling organic food, and products that contain at least 95% Organic Peanut Butter Labelorganic materials qualify for their organic seal. 70% organic ingredients allows manufacturers to say “made with organic products” on the label, and anything less occasions only an organic tag on the proper ingredients in the information panel. Tags like “all-natural” aren’t regulated. Sounds straightforward, and if you like shopping for organics with confidence in a label, stop reading right here. For an exercise in making tough decisions in the grocery, ask what the USDA means by the term “organic”. Now the fun will begin! They mean:

Organic meat, poultry, eggs, and dairy products come from animals that are given no antibiotics or growth hormones. Organic food is produced without using most conventional pesticides; fertilizers made with synthetic ingredients or sewage sludge; bioengineering; or ionizing radiation. Before a product can be labeled “organic,” a Government-approved certifier inspects the farm where the food is grown to make sure the farmer is following all the rules necessary to meet USDA organic standards. Companies that handle or process organic food before it gets to your local supermarket or restaurant must be certified, too.

Also, they

must consist of at least 95 percent organically produced ingredients (excluding water and salt). Any remaining product ingredients must consist of nonagricultural substances approved on the National List or non-organically produced agricultural products that are not commercially available in organic form.

More info on their organics regulations can be found here. So. “Not commercially available in organic form”, hunh? “Approved on the National List?”

It’s heartening that when the label says 100% Organic, it has to mean that (except for added water and salt). One-ingredient foods like vegetables are thus simple to buy “organic”. But the “Organic” USDA label doesn’t mean that the food doesn’t contain non-organic foods. According to the Seattle Times, the USDA has proposed a list of 38 approved non-organic foodstuffs allowed in foods labeled organic. Consumer advocates and organic food advocates are mad about this, of course. The USDA shouldn’t allow non-organic food into foods labeled organic. Truth-in-advertising laws seem to make that pretty clear: why not just let these foods be labeled the same way foods with 70-94% organic ingredients are? Why do they get 5% non-organic content “free”? Part of the reason these new “standards” are being pushed is because of the rise of large-scale organic farming: so many agribusinesses want a piece of the significant and growing organic action that they want to earn the organic label. Just, not always by actually farming completely organically, which would require transition costs and can offer a smaller yield (when compared to produce and animals hyped up on steroids and chemicals). For the sake of fairness, I’m going to try and imagine the valid reasons these agribusinessmen have for pushing weakened organic standards. 95% organic is better than 0% organic, and a favorable label allows their partially good efforts to reach a broader market place, which is nice for them. But they still don’t need to mislead consumers about what’s in their food. Farming, and the food produced by it, is either organic or it is not. Mostly organic stuff should be labeled as such.

The USDA group regulating these labels- the National Organics Program- has 9 staff members and a1.5 million dollar budget. An article from the NY Times explores the difficulty of an understaffed and under-budgeted program that controls standards for the 14 billion dollars of organic foods that consumers buy yearly.

One last wrinkle for today: What’s better, buying local, or buying organic? An article from culinate, a sustainable foodie magazine, discusses the growth of Big Organics, their impact on the the USDA labels and standards, and contends that foods should be judged not only by organic standards, but also by how far they come to you (ridding you of shipping guilt, and ensuring freshness). Maybe local is better all-around than organic, if you have to choose- supports small businesses, wastes less in shipping, and it can taste good (fresher, bumped around less). The British Organic industry is dealing with the import of organically farmed foods by air freight from other continents. African farmers who grow organic foods for international markets get paid better than they could otherwise, but the environmental cost of shipping would seem to negate the good qualities of the food in Britain. Africans are being encouraged to build up their own organic businesses for their home markets, but for now they can still ship their food to Britain.

Ok, now that organic labels are thoroughly confusing and the decision calculus of buying organic has been altered, how do we buy food? Is the paradigm of all-local, all-organic food- which would limit our access to things like pineapples and durians, and all fruits out of local season- the desirable outcome? Will the environmental cost of shipping food come down so that we may comfortably eat organics from exotic places? My head is spinning, but until I have better choices, the farmer’s market and local produce stores will have precedent over shipped organics, and shipped organics will take precedent over shipped non-organics. Thoughts on all this are welcome- does knowledge of the organic labeling change your organic decisions? Where do you find local and organic produce? Do the more lax 95% organic/5% non-organic- labeled as organic standards have any benefits for the consumer, or non-sneaky, non-lazy advantages for agribusinesses?

Take It All With You

Marketplace (of NPR) is preparing for a series on sustainable consumerism (oxymoron) by having one of the hosts haul her family’s trash around with her all week. All. Of. It. The project blog is here and contains a link to some other sites for the series “Consumed”. (Hint: The game is just a quiz, and all you win is guilt. And my score was 4 earths. Beat that! No, seriously, please beat that.) I’ll be listening to the series when it airs, and hoping it, being an economy-centerd show, ponders how in the world our consumer driven economy is going to work when people stop buying so much stuff. Now I will ask vaguely theoretical questions, so stay with me. I’m betting there are better questions to ask- I’ll let you know if I come up with any, let me know if you do too- but here’s a start.

Is sustainable consumerism an oxymoron? Is it our social responsibility to support our local/national/global economy by getting stuff? What would the economy look like if people didn’t buy things they didn’t need or at least seriously desire for more than an hour, or even repaired stuff they already had instead of scrapping it for new stuff? We’re mostly a service/consumer economy, so if we don’t buy enough things, who will employ salesmen/cashiers/other retail types? New market sectors will grow of course (maybe we could pay displaced workers to ride bikes to generate power or something, and also solve the obesity problem (I am kidding but just a little) ) but it’ll take time and people could get laid off, and businesses will either evolve or whine, and it is always cheaper to whine. Probably any answer lies in some balance of sensible consumption, or consuming only sustainable things, or a return to a barter system. Or not. This is all speculation until people actually do start changing their purchasing patterns, but it’s nice to have some concept of where we might want to change to.

Meanwhile, back in doing-stuff-about-it-world, (goal for the month) I’ll be reducing the amount of stuff I throw away and the amount of stuff I buy by packing my lunch (in reusable containers) instead of taking frozen boxes. I suspect this will mean a lot of PB&J, but I know that’s made with love and raspberry jelly, whereas I really have no idea what’s in that block of icy “lasagna”, so it should be cool.

Measuring PC Greenity

BusinessWeek’s special report on green tech (investing in, new trends, etc.) includes an article on a new rating system for measuring the greenness of PCs. The Electronic Product Environmental Assesment Tool (EPEAT) was

“designed by manufacturers and environmental groups to help institutions such as governments, schools, and businesses pick eco-friendly PCs. Computers submitted for EPEAT ratings have to first meet 23 required criteria covering hazardous materials, recycling, and power consumption. That scores them a bronze rating. To nab a silver or gold, they have to meet at least half or 75%, respectively, of a second list of 28 more rigorous criteria.”

BW points out that while businesses buying in bulk will pay attention to the EPEAT guidelines, most individual consumers care more about upfront cost and nerd cred than the environmental impact rating of a product. They conclude that since this is true, there’s not a reason to give consumers the additional information contained in this new rating.

Since this is a business mag, the lack of faith in the informed consumer must be forgiven. Though we shortsighted masses probably make our purchasing decisions based on cost, styling, or ability to frag n00bs, it’d still be lovely to have a chance to make an environmentally conscious decision (while fragging n00bs in style, cheaply). Not included in the article is a link to the EPEAT rating systems. 617 products have been reviewed and are searchable by product rating in the gold, silver, and bronze categories. Only 14 products got the gold- one of them is the $100 laptop design for the One Laptop Per Child program. Would tech people care to comment on whether or not the Gold medal winners are sweet systems and thus good choices for reasons beyond tree-hugging hippyness?