Environmental Economics

I have failed as a parent

Hostess Brands -- the maker of such iconic baked goods as Twinkies, Devil Dogs and Wonder Bread -- announced Friday that it is asking a federal bankruptcy court for permission to close its operations, blaming a strike by bakers protesting a new contract imposed on them.

The closing will result in Hostess' nearly 18,500 workers losing their jobs as the company shuts 33 bakeries and 565 distribution centers nationwide. The bakers' union represents around 5,000.

via money.cnn.com

At dinner last night, somehow the topic of Hostess closing came up. I asked my kids if they would miss Twinkies. All three kids (16,14 and 11) said "what's a Twinkie?" None of my kids have ever had a Twinkie? or a Ho Ho? or a Fruit Pie? or a DingDong?

Some may view that as good parenting. Me? I believe kids should learn to make their own choices. So if that means letting them have the occasional Twinkie or HoHo, then so be it.

And don't get too excited at my parenting skills. My kids know every flavor of Dorito and Cheez It around.

BP's settlement

Coincidentally, I plan to be in NOLA later thursday as well (emphasis added below):

BP, the British oil company, said Thursday it would pay $4.5 billion in fines and other payments to the United States government and plead guilty to 14 criminal charges in connection with the giant oil spill in the Gulf of Mexico two years ago.

The explosion on the Deepwater Horizon drilling rig in the Gulf of Mexico that was connected to a well owned by BP killed 11 workers and spilled millions of barrels of oil.

The payments include a $4 billion fine to be paid over five years, with much of it to go to government environmental agencies, BP said in a statement.

As part of the settlement, BP pleaded guilty to 11 felony misconduct or neglect charges related to the deaths of 11 people in the Deepwater Horizon accident in 2010, which unleashed millions of barrels of oil into the gulf.

A law enforcement official familiar with the case also said that two BP employees would be charged with manslaughter in the case. The United States attorney general, Eric H. Holder Jr., was scheduled to hold a news conference in New Orleans later Thursday. ...

Even with a settlement on the criminal claims, BP would still be subject to other claims, including federal civil claims and claims for damages to natural resources.

In particular, this settlement does not include what is potentially the largest penalty: fines under the Clean Water Act. The potential fine for the spill under the Clean Water Act is $1,100 to $4,300 per barrel spilled. That means the fine could be as much as $21 billion, according to Peter Hutton of RBC Capital Markets in London.

via www.nytimes.com

Carbon tax drama: act 3

The resolution:

House Energy and Commerce Committee Chairman Fred Upton (R-Mich.) threw cold water Tuesday on supporting a carbon tax, hours after a Treasury Department official said the administration could consider the idea if Republicans lead the effort.

A tax on greenhouse gas emissions has won increased attentoin in recent weeks as a way to combat climate change and simultaneously raise revenues.

But Upton (R-Mich.) said Tuesday he is “not a carbon tax guy.”

The administration said last week it would not propose a carbon tax. But Gilbert E. Metcalf, Treasury’s deputy assistant secretary for energy and environment, reiterated that position Tuesday, opened the door to discussing carbon taxes in fiscal talks if Republicans initiated the push.

Upton comments Tuesday underscore how unlikely that scenario is as talks about avoiding the "fiscal cliff" unfold. Asked if he would accept a carbon tax along with a tax cut elsewhere, Upton said, "I don’t like the idea."

via thehill.com

Carbon tax drama: act 2

The confrontation:

Conservatives including anti-tax activist Grover Norquist are trying to ensure that a carbon tax doesn’t gain any political momentum.

Norquist, the president of Americans for Tax Reform (ATR), said a carbon tax or a consumption tax would violate the ATR pledge against tax increases that a majority of Republicans have signed.

“There is no conceivable way to add an energy or [value-added tax] to the burdens American taxpayers face that would not violate the pledge over time,” he said in a statement Tuesday.

Norquist appeared to be backing off comments he made to National Journal in a story published Nov. 12. He told the publication that he opposes a carbon tax, but said that coupled with income tax cuts it could be structured in a way that didn’t violate the pledge.

But Norquist, who has a seen a drop in the number of lawmakers who have signed the ATR pledge, on Tuesday said that a carbon tax with offsetting reductions would, over time, inevitably lead to overall tax increases.

via thehill.com

Carbon tax drama: act 1

The setup:

A senior Treasury Department official said Tuesday that the Obama administration could back carbon taxes as part of a wider fiscal reform deal, but with a big caveat: Republicans would have to show that they want to play ball.

“If this is going to be an issue that is part of discussions, there will have to be some interest shown by Republicans if we are going to make any progress,” Gilbert E. Metcalf, the Treasury Department’s deputy assistant secretary for environment and energy, told reporters.

“The administration has not proposed a carbon tax nor is it planning to, but if there is, as part of fiscal reform discussions, there are a lot of pieces on the table, and if Republicans see this as a viable piece, then it could be part of the mix,” he said.

A White House official said last week that the administration is not going to propose a carbon tax.

Metcalf spoke to reporters after remarks at a forum on carbon taxes hosted by the conservative American Enterprise Institute and co-sponsored with the Brookings Institution, International Monetary Fund and Resources for the Future. He made similar remarks to the entire conference.

“The president believes that any legislative effort to address the risk posed by climate change must have bipartisan support,” he said, noting that Republicans must show “what it is they are willing to discuss.”

via thehill.com

Independence Day 2030

Thanks to a burst of new shale oil production in states like North Dakota and Texas—as well as conservation measures like increased auto fuel efficiency—U.S. oil imports have been falling, with the country now bringing in just 20% of its energy from beyond its borders. And if the International Energy Agency’s (IEA) new World Energy Outlook is to be believed, the U.S. may be on its way to becoming the single biggest player in the global oil market. By around 2020, the IEA projects, the U.S. will be the world’s largest global oil producer, overtaking both Russia and Saudi Arabia. U.S. oil imports will keep falling, and by around 2030 North America as a whole will become a net oil exporter. From being the world’s biggest customer for oil, the U.S. could become the world’s biggest salesman.

via science.time.com

Polling: phone vs internet

Nate Silver compares the accuracy of the presidential polls and finds there were some large errors related to methods. He concludes:

Perhaps it won’t be long before Google, not Gallup, is the most trusted name in polling.

Gallup used phone surveys and Google used internet.

A little something for your classroom ... just because I care!

From the WSJ's Micro Weekly email:

New York's Economics Blackout
by: Editorial Staff
Nov 05, 2012
Click here to view the full article on WSJ.com

TOPICS: Price Control, Supply and Demand

SUMMARY: Cuomo vs. Christie on gasoline shortages. "Public jobs would be so much easier if politicians could repeal the laws of economics, and some of the more obtuse keep trying. Today's lesson comes from New York and New Jersey, both of which are suffering from severe gasoline shortages a week after superstorm Sandy.... Republican Governor Chris Christie imposed gas rationing over the weekend via an emergency executive order.... Drivers with license numbers that end in odd numbers can buy on odd days, and vice versa for those with even plates.... That was in notable contrast to Governor Andrew Cuomo's New York, where 730,000 homes remain blacked out and the gas supply is also deficient. 'Fuel is on the way. Do not panic. We don't need anxiety. We don't need the lines,' the Democrat said Saturday, before disclosing a plan to distribute 'free' gasoline that came courtesy of the federal government.... Mr. Cuomo apparently didn't learn in freshman economics that when something is 'free,' you often get a surge of demand for it. He created the very panic he deplored."

CLASSROOM APPLICATION: The article fits well in an analysis of supply and demand. Begin with an equilibrium in a gasoline market. Set a price ceiling equal to this equilibrium price. Then, decrease supply. With the price ceiling in place, the market experiences a shortage.

QUESTIONS:
1. (Advanced) What properties about the prices charged by gasoline retailers caused the gasoline shortages following superstorm Sandy in New York City and the surrounding New Jersey counties?

2. (Introductory) Could gasoline price changes have been taken to reduce or eliminate these shortages?

3. (Advanced) Was Governor Christie's response to gasoline shortages better than Governor Cuomo's?

Reviewed By: James Dearden, Lehigh University

Hey, cool, I did exactly that (the "classroom application") on Tuesday.

Frankenstorm Sandy helps improve New Yorkers' math skills

New York City and Long Island are following in New Jersey’s footsteps in instituting an odd-even gas rationing system.

In an effort to ease long lines associated with the the fuel crunch taking place in New York City, Mayor Michael Bloomberg announced a rationing system will go into effect on Friday.

Beginning at 6 a.m., those with license plates ending in an odd number will be able to buy gas on odd numbered days.

via newyork.cbslocal.com

A sign of economic recovery?

McDonald's Corp. says a key sales figure fell in October, marking the first monthly drop in nearly a decade for the world's biggest hamburger chain.

The company, based in Oak Brook, Ill., says global sales at restaurants open at least a year fell 1.8 percent for the month. The last time the figure dropped was in 2003. The figure is a key metric because it strips out the impact of newly opened and closed locations.

The fast-food chain says the figure fell 2.2 percent in both the U.S. and Europe. In the region encompassing Asia, the Middle East and Africa, it dropped 2.4 percent.

After year of outperforming its rivals, McDonald's has seen sales slow recently as the company faces intensifying competition and a persistently weak economy.

via www.myfoxny.com

McDonald's blames increased competition and a weak economy, but what if McDonald's is actually an inferior good (in the strict economic sense)? Could decreasing demand for greasy, cheap food (but admittedly yummy) be a sign that incomes are increasing?

Just curious.