It all began with Enron
Posted on December 28, 2008
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By Kennedy Maize
At a pleasant Christmas dinner with friends last week, a smart diner posed a question: when should the government or the market have known that the U.S. (and the world’s, as it turns out) financial system was in life-threatening peril?
After pausing to scratch my head, I proffered an idea: it all began with Enron. Just a thought, a top-of-the-head proposition fueled by a glass of good wine, but worth contemplation.
My notion was not obvious, even to me, and I thought about it before I tossed it up for conversation. After further consideration, it’s an interesting proposition. I’m not sure of its explanatory efficacy, but I offer it for your consideration. It’s about market psychology.
Before Enron, many of us thought we understood financial markets, including trading in derivatives. It was all about the fundamentals: risk versus reward. Welcome to Vegas (where the bookies always have better market information than the punters). Package the risks and sell them to hedgers. Let the market sort out the winners and losers.
That approach to markets seemed to work well until 2001, when Enron’s market plays went south in a major way, just about the time terrorists struck New York and Washington. I described it at the time, borrowing from one of my favorite authors, Baltimore’s Edgar Allen Poe, as the “Fall of the House of Enron.” The analogy between Poe’s House of Usher and Enron was chilling. The houses fell beyond the comprehension of the observers of the day.
It turns out that Enron was engaged in multiple, complex derivative-based trades, meshed with deals for physical assets, so convoluted that even the geniuses at the Houston-based energy company couldn’t parse or value them. Enron, once a straight-forward gas pipeline company, became an energy and bandwidth trading conglomerate – much of it existing in the virtual world – too strange to comprehend.
The Enron folks were masters of the financial universe; they told us so repeatedly. The company had a greater percentage of employees with advanced degrees than any other major firm in the U.S. PhD’s and MBA’s abounded. Clerks had honors degrees in economics. Lawyers carried CEO Ken Lay’s briefcase. Lay had a doctorate in economics, as well as a pious self-image as a devout, practicing Christian. What a company!
The argument I posited last week over roast goose and gravy was that Enron opened our minds – the simplistic minds of some regulators, some investors, some reporters – to the notion that perhaps our financial institutions weren’t as transparent and straightforward as we believed. Maybe they were so complex that neither we, nor the Enron folks playing the markets, could really understand them. Maybe there was a need for real regulation?
After Enron crashed, investor faith in markets began to erode. Good thing, too. When the housing bubble burst in 2007 and 2008 and investigators started probing the derivatives game (as well as the role of short-selling in conventional markets), the resulting picture was frightening. Who knew that Wall Street brokers (and some significant streets in Washington) were packaging lousy mortgages (the term of art is “sub-prime”) with sound investments, slicing and dicing them (“securitizing” is the buzzword, which those who lived through electricity restructuring understand), and selling them to investors with no immediate interest in whether the debtors performed?
Sound mortgages and bad loans went into the same financial meat grinder, producing a sausage of debt-based derivatives that tasted just fine but were tainted with bad ingredients. No financial regulator – the equivalent of the now-discredited Food and Drug Administration – was able or willing to take the toxic products off the shelf. The market invented its own regulatory mechanism – credit default swaps – that quickly turned into another way to gamble on the markets.
Following my riff on how Enron started it all, I came across a fine column by Joseph Stiglitz, a Nobel laureate in economics and former Clinton administration advisor, writing in the January 2009 edition of Vanity Fair. Stiglitz noted that in the aftermath of the Enron and WorldCom failures, Congress passed the Sarbanes-Oxley Act, designed to pour more light into the convoluted financial transactions that led the telecom and energy companies to financial ashes.
Congress, Stiglitz observed, ducked a “fundamental, underlying problem” in the markets: stock options. Sarbanes-Oxley, as a result of heavy lobbying from the financial folk, didn’t regulate the use of options to price companies and reward executives. Options, Stiglitz argued, are a lousy way to value a company’s performance. They create perverse incentives for bad accounting: the need to pump up the companies’ performance overcomes the necessity to provide accurate information about the actual results of the firms. That means lies distorting the ability of investors and regulators (if such exist) to suss out the real profits and losses of the high-flying firms.
In the words of the late, great songwriter E.Y. “Yip” Harberg, “Say it’s only a paper moon, sailing over a cardboard sea. But it wouldn’t be make-believe if you believed in me.” In short, the market depended on belief, or a suspension of disbelief, on the part of investors that these investments could never go sour. That belief held for many years. Along came Enron.
Enron’s collapse made belief in financial markets far tougher. As the sub-prime mortgages surfaced and defaults accumulated in 2007, the market kicked into cascading disbelief and cynicism. Credit cramped up across the board. The result of Sarbanes-Oxley in the real world was less transparency and more financial constipation, the exact opposite of the law’s intentions.
Enron’s destruction in 2001 didn’t trigger the financial collapse of 2007-2008. But Enron lifted a veil on the malignant machinations of the market-makers that came to light last year, creating a climate of distrust of all markets and all market dynamics. We will see how this plays out in the next four years of the Obama administration.
I’d love to hear from readers with their thoughts on this very crucial and difficult subject.
Obama, Cabinet government, and John Holdren
Posted on December 21, 2008
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By Kennedy Maize
Some of my friends on the left have been lamenting the Cabinet choices of president-elect Barack Obama. One of them wrote in an email recently, “As the new government was put together, brick by brick, a disturbing pattern emerged. Time and again, those who had braved the perils of the Clinton… threat were passed over for those who came quite late to the party. Only Obama’s Illinois base prospered among his early supporters. The result: with the exception of Clinton, a bland and generally faceless cabinet.”
I don’t buy it. I don’t put much stock in Cabinet government. The Cabinet hasn’t been a major force in policymaking going back to the Johnson administration. Maybe it was in Kennedy and Ike, although the record isn’t very clear.
Cabinet secretaries and agency heads are mostly figureheads, unless they have some special relationship with the president. I suspect the same will be the case with Obama. “Bland and faceless” is par for the course. Probably desirable. Robert Reich, neither bland nor faceless, was not a successful Secretary of Labor.
I’d focus on who plays pickup hoops with Obama, more than who sits at the Cabinet table. A solid 15-foot jumper will count for a lot with this White House. And that’s fine, as the president should rely on his own crowd, while taking seriously what his agencies tell him. Ultimately, the choices are Obama’s, not those of the agencies.
Take the Department of Energy (please). Steve Chu, with a Nobel in physics, has scientific cred (although DOE’s credibility as a science agency is vastly suspect). Bush’s final DOE appointment, Sam Bodman, also had some scientific credibility; look what it got him.
I’m not aware of any personal connection of Chu to Obama. The appointment is a look-good, feel-good choice (unless Chu has a really good cross-over dribble). Energy policy gets cooked in the White House political oven, not the DOE microwave.
Look at Colorado Sen. Ken Salazar for the Department of Interior, a good choice. Has Obama ever demonstrated any significant interest in what Interior does? I’m not aware of it.
EPA? Ditto.
When it comes to the formal White House staff, the situation is similar. White House Council on Environmental Quality? Nancy Sutley is a friend and an exceptionally-competent individual. She won’t be calling policy shots, but supporting them. She will be a technician, not a policymaker.
The same pertains with White House environmental and energy advisor Carol Browner (mistakenly labeled, shudder, “energy czar”), and White House science advisor John Holdren of Harvard’s Kennedy School of government.
Holdren, to my mind, is a classic science policy fraud, who has mind-melded the Obama folks by his learned, bearded credentials. I wholly share — after some 30 years of interactions with Holdren — the judgment of John Tierney of the New York Times [http://tierneylab.blogs.nytimes.com/2008/12/19/flawed-science-advice-for-obama/].
Tierney, the best science columnist now writing, said of Holdren on Dec. 19: “Does being spectacularly wrong about a major issue in your field of expertise hurt your chances of becoming the presidential science advisor? Apparently not, judging by reports from DotEarth <http://dotearth.blogs.nytimes.com/2008/12/18/a-strong-voice-on-co2-as-science-adviser/> and ScienceInsider <http://blogs.sciencemag.org/scienceinsider/2008/12/sources-john-ho.html> that Barack Obama will name John P. Holdren as his science advisor on Saturday. [UPDATE: Mr. Obama did indeed pick Dr. Holdren. <http://www.nytimes.com/2008/12/21/us/politics/21science.html?ref=science>]“
I doubt that Holdren will be more than a nod by the administration to the current notion that that Bush administration censored “sound science” in favor of “political science.”’ I suspect Holdren will recommend a retreat from the Bush administration’s anti-scientific views on subjects such as stem cell research. That’s good.
On energy issues, Holdren represents “scientific correctness,” a totally repulsive notion when it comes to energy policy and climate science. But I suspect the science from the White House will clash head-on with the science from coal interests in Congress. The result: a fundamental stalemate, papered-over with unworkable schemes involving cap-and-trade prestigitation.
In Washington, everything is political, including science, law, accounting, history, medicine, and auto mechanics. I once told a coal industry group in a speech at a convention, when they were lamenting about the junk science involved with acid rain, “In Washington, you can have all the science you can buy.”
Enough of my rambling about the odious Holdren. Back to my major point. Appointments generally don’t matter. Obama will pay attention to folks he knows and trusts, and draw on his staff (including his cabinet) to cover his back. Most of Obama’s closest advisors won’t be Senate-confirmed officials, but White House insiders — David Axelrod, Rahm Emanuel, Valerie Jarrett, and the like.
Call me cynical. But that’s the Washington I know.
Another downside to wind power
Posted on December 18, 2008
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By Kennedy Maize
Here’s an interesting new wrinkle on wind power, from a researcher at the University of Illinois. According to Somnath Baidya Roy, turbulence from large wind farms can harm growth of crops in the local countryside.
Baidya Roy notes that in recent years, wind power has moved from small, isolated turbines to large farms containing a large array of turbines connected to the electric grid. In northwest Iowa, he observes, a wind farm has more than 600 wind machines, sending some power to more than 140,000 homes.
If wind is going to make a greater contribution to national generating capacity, the wind farms must be far larger, he says. “If wind is to be a major player in global electrical production,” says Baidya Roy, “we have to think in terms of even larger scales – of say, thousands of turbines per wind farm. Such a wind farm could replace 10 coal-fired power plants, but with so many turbines, turbulence could generate huge problems.”
Turbulence creates two environmental externalities for wind generation, says Baidya Roy. First, turbulence can interfere with the windmills, reducing their efficiency. On top of that, turbulence from the turbine rotors can also mess up local ground temperature and moisture levels. “Turbulence creates stronger mixing of heat and moisture,” he says, “which causes the land surface to become warmer and drier. This change in local hydrometeorological conditions can affect growth of crops within the wind farm.”
What to do? Baidya Roy suggests greater understanding of land use planning, looking for places to site wind farms where wind flows freely, without obstructions such as trees and mountains. That means wind developers should avoid tops of mountain ranges, where the wind resources are plentiful, but the surface friction is high. Baidya Roy says “frictional dissipation” is the enemy of efficient wind projects. He is using a 25-year collection of data from surface weather stations, radiosonds and satellites to map wind’s frictional dissipation around the world.
Where are the wind wonderlands? According to Baidya Roy’s mapping project, eastern and central Africa, western Australia, eastern China, south Argentina and Chile, northern Amazonia, the northeastern U.S., and Greenland are the best hosts for low-impact wind farms.
Obama to make energy and environment picks
Posted on December 11, 2008
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By Kennedy Maize
The Obama administration has picked Steven Chu, currently the director of the Department of Energy’s Lawrence Berkeley National Laboratory, to be secretary of energy. The selection was quite a surprise, as Chu’s name had not surfaced in any of the rumors circulating in Washington. Indeed, he’s not well know in Washington political circles.
Chu is a respected scientist, having won the Nobel Prize in physics in 1997 for work on laser trapping of atoms. He’s also on record as concerned about global warming and how to combat climate change. He told the Washington Post in a 2007 interview, “I was following it just as a citizen and getting increasingly alarmed. Many of our best basic scientists realize that this is getting down to a crisis situation.” Chu would be the first scientist to head DOE, one of the two largest science agencies in the federal government (the other is the National Institutes of Health).
Chu comes from a well-educated Chinese family. His father emigrated to the U.S. In 1943 to pursue advanced studies in chemical engineering at MIT. His mother followed two years later to study advanced economics, according to his Nobel biography. He was born in 1948.
Chu’s undergraduate degrees were in physics and mathematics from the University of Rochester. His Ph.D. is in physics from the University of California at Berkeley. He became head of LBL in 2004, and also holds a faculty position at Stanford University.
His nomination would be a tacit acknowledgment that energy policy will not be set at the Department of Energy (it never really has been), but at the White House. Further support for that analysis: President-elect Obama is said to be naming former Clinton administration Environmental Protection Agency administrator Carol Browner as White House energy “czar.” What that means in specific terms is unclear, but it clearly signals that the White House will be calling policy shots on energy and environment. Browner was a key aide to Vice President Al Gore, who wore the White House policy hat on energy and environment in the Clinton years.
A former Browner aide, Lisa Jackson, is set to be the EPA nominee. Most recently, she’s been chief of staff to New Jersey Democratic Gov. John Corzine, and was Garden State environmental chief under Corzine before that. In keeping with Obama’s diversity agenda, Jackson is black and grew up in the Ninth Ward of New Orleans. Jackson, 46, is a chemical engineer from Princeton. She was a key Browner aide during the Clinton administration. Again, the White House, not the EPA, will be calling environmental policy choices. Cabinet officers don’t make decisions in Washington; they implement them.
At the White House Council on Environmental Quality, Obama appears ready to name Nancy Sutley to head the group. Sutley, a white woman and lesbian activist, has been deputy mayor for energy and environment to Los Angeles Mayor Antonio Villaraigosa. Sutley has an undergradute degree from Cornell University and a masters from Harvard’s Kennedy School.
Sutley worked as a policy analyst in Washington for a lobbying group representing non-utility electric generators in the early 1990s. In 1993, she joined the EPA as an advisor to Browner. From there, she moved to an EPA slot in California, to the administration of former Democratic Gov. Gray Davis, and then into the state Water Resources Board and the Los Angeles city government. She has a reputation as being very smart and quite pragmatic. She originally was a Hillary Clinton supporter for the Democratic presidential nomination.
It’s the name game at DOE
Posted on December 8, 2008
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By Kennedy Maize
It’s time for the latest round of the name game, this time focusing on who President Elect Obama will pick to head the Department of Energy. Clearly, the the DOE pick is a second-level decision, after economics and national security.
In fact, DOE really doesn’t have much to do with energy. Around 20% of DOE’s $20+ billion budget goes for “energy,” and much of that is basic science that used to be part of NSF. DOE has almost nothing to do with electricity.
The Federal Energy Regulatory Commission and the Department of Agriculture’s Rural Utilities Service have far more to say about electric energy in the US than DOE. Interior has far more to say about coal, oil, and gas. What they all have to say isn’t always to my taste, but they are players. Bodmanland is not.
Let’s start a contest. Who is going to to be the next energy secretary? Here are my top-three entries. Feel free to add your own, and we will see who got it right when the announcements are made.
These picks are not based on my wishes, but my sussing out of the scene. If I could name the choice, it would be Al Franken. A comedian would fit in nicely at Forrestal.
Maize’s No. 1 pick: Phil Sharp, the absolutely correct choice from a political standpoint. PhD (this seems to be important in Obamastan). Former important House player from Indiana and House Energy and Commerce subcommittee chairman, former Kennedy School academic, currently major domo at a major think tank (Resources for the Future, in Washington). Phil’s a moderate pragmatist in the Obama mold, and has, to my knowledge, no important enemies.
No. 2: Ernie Moniz of the MIT physics department (a long-time ally of John Deutch of MIT’s chemistry department and Carter and Clinton-era principal). Moniz energy undersecretary in Clinton’s DOE, and in the White House science policy office for Clinton before that. He’s smart, knows the territory, and also has no significant enemies that I’m aware of. The fact that he actually knows something about energy is not necessarily disqualifying. Expertise has never been a prerequisite at DOE (Charles Duncan, James Edwards, John Herrington, Bill Richardson, Federico Pena, Spence Abraham, to name a few). Nor has it been a guarantor of success: Jim Schlesinger, Don Hodel, Hazel O’Leary, Sam Bodman.
No. 3: John Bryson, former CEO of Edison International (Southern California Edison), former member of the California Public Utilities Commission, and a founder of NRDC. He’s smart, wiley, and ingratiating. He’s got some of the attributes of the Cheshire Cat. I wouldn’t pick him for anything, but I’m not part of the Obama administration.
Dark horse longshot: Betsy Moler of Exelon (ComEd and PECO). Moler is a former deputy energy secretary who should have won the job when Bill Richardson stepped down. She’s also a former FERC chair, former Senate Energy Committee key aide, and put herself through law school while working as a Senate clerk. Her rabbi is John Rowe, who has solid Obama contacts in Chicago. The downside is that she’s making wheelbarrows of money after years of comfortable but limited income in government. Also, Moler’s a bit tarred with the ludicrous Clinton administration (Richardson) pursuit of the baseless Wen Ho Lee spying charges.
Feel free to weigh in with your choices or observations or critiques of my choices. Why not have fun when the new folks come to town?
Methane hydrates: Gold’s predictions vindicated
Posted on November 13, 2008
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By Kennedy Maize
Shades of Tommy Gold. The U.S. Geological Survey this week said it has concluded that there are vast “technically recoverable” methane hydrate reserves trapped in the Arctic coastal plain that could provide some 85.4 trillion cubic feet of natural gas, a significant addition to U.S. natural gas reserves.
Gas hydrates, also known as methane clathrates, are an unconventional source of gas, consisting of methane trapped in ice formations at high pressure and low temperatures. In the late 1980s and early 1990s, the late Thomas Gold (1920-2004), a Cornell University astrophysicist and well-known scientific maverick, argued that the earth had vast deposits of methane hydrates.
Gold argued that hydrocarbons were the result of forces of physics in the formation of the planet, not the conventional view that oil and gas and coal were the result of the decay of vegetable and animal sources buried by fossilization. His term for the origin of hydrocarbons was “abiogenic.”
Later, Gold argued in his 1998 book The Deep Hot Biosphere that petroleum and coal were the result of the abiogenic methane and deep-sea bacterial action to turn gas into liquids and solids.
Gold predicted – when I interviewed him twenty years ago for The Energy Daily – that vast, undiscovered natural gas resources were locked in ice in the Arctic and in deep sea beds. He said natural gas was essentially an inexhaustible resource, a product of the creation of the planet. Methane – one carbon atom and four hydrogen atoms (CH4) – he argued, is a simple molecule, easily formed from the forces that created the earth and likely one of the most common chemicals surviving the earth’s birth.
Gold, despite a reputation as an original thinker and possessing impeccable academic credentials, was greeted with scorn by conventional geologists. They said he was a crank. Methane hydrates, they said, were an interesting anomaly, but could never constitute a major source of natural gas. Astrophysical forces could never overcome the dominance of the doctrine of dead dinosaurs.
Since then, methane hydrates have proven to be ubiquitous in the places where Gold predicted they would occur. Both the U.S. Department of Energy and the U.S. Interior Department have looked on hydrates as a major potential supply of new natural gas.
The USGS press release last week said its assessment of North Slope Alaska methane hydrates “is the first ever resource estimate of technically recoverable natural gas hydrates, which are naturally occurring, ice-like solids in which water molecules trap natural gas in a cage-like structure known as a clathrate.” USGS said the estimated 85.4 TCF of gas trapped in the North Slope clathrates “accounts for 11.5% of the volume of gas within all other undiscovered, technically recoverable gas resources onshore and in the state waters of the United States.”
In geology-speak, said USGS, “‘technically recoverable’ means the resource can be discovered, developed, and produced using current technology and industry practices.” According to Energy Information Administration data, the U.S. uses about 23 TCF of natural gas annually.
To put the North Slope hydrates estimate in context, the USGS noted that the Wyoming Basin holds some 85 TCF of technically recoverable reserves, the National Petroleum Reserve Alaska (NPRA) holds 73 TCF (not including hydrates), the Western Gulf Basin in Texas holds 71 TCF, and the San Juan Basin in New Mexico and Colorado holds 50 TCF. Conventional resources in Alaska’s North Slope, says the USGS, total about 119 TCF.
According to the USGS, the area assessed for methane hydrate resources runs from the NRPA on the west to the Arctic National Wildlife Refuge on the east (bumping up against the Canadian border) and from the Brooks Range north to the federally-managed offshore boundary, three miles off the coast of Alaska.
According to an account in the Washington Post, some Alaska environmentalists are critical of the USGS report and the push for development of natural gas hydrates. The newspaper quoted Athan Manuel of the Sierra Club that the technology to capture methane from its ice-like structures “is a very destructive way to extract nature gas.”
This environmental objection, of course, is an assertion, not a statement of fact. USGS said it has not yet assessed the environmental impacts of extracting gas from clathrates, which, the agency told the Post, is “the next step” in its analysis.
The USGS report could boost long-delayed efforts to build a natural gas pipeline from Alaska’s North Slope to the lower 48 states. Congress has authorized a pipeline, and provided some generous subsidies, but squabbling among producers, and doubts about long-term gas prices, has slowed development.
Alaska Gov. Sarah Palin, the defeated Republican candidate for vice president, has tried to knock industry heads together in her state to come up with a plan for the pipeline. Despite her campaign claims that she got the pipeline on track, that is not yet the case. She exaggerated her accomplishments, although she did force a change in the stalemate created by her predecessor, former Alaska Gov. and Sen. Frank Murkowski. The pipeline, if it can be built, is at least a decade away from delivering gas, according to most accounts.
Power politics: Waxman v. Dingell in commerce committee
Posted on November 8, 2008
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By Kennedy Maize
Nothing fails like success. Already, Democrats in Congress are at each others’ throats about sharing the spoils from the Obama victory.
The most serious fight so far pits Hollywood liberal Henry Waxman against the long-time chairman of the House Energy and Commerce Committee, Democrat John Dingell of Michigan. Waxman has launched a high-profile attempt to oust the 82-year-old Dingell, who himself won the chairmanship in 1981 by overthrowing long-time Democratic chairman Harley Staggers of West Virginia.
This could be an epic battle, and emblematic of what happens when a party wins a large victory and exposes the schisms in its members. Waxman and Dingell have long been adversaries as they have served together on the House energy committee, going back at least 25 years to the battle over the reauthorization of the 1977 Clean Air Act. They famously brawled over most air act provisions, with Waxman pushing an environmental agenda and Dingell holding out for more modest, industry-backed approaches.
They fought to a standstill, and the issue didn’t get resolved until the 1990 (Bush I) push finally put a new version of the air act on the books.
Since then, Waxman (widely known as the “Wascally Wabbit of Westwood”) has been pushing Dingell on climate legislation. Waxman, representing a Hollywood district, is part of the more liberal, California contingent of Democrats, and an ally of House Speaker Nancy Pelosi.
Dingell’s roots are in the Rust Belt, where he has been a stalwart of the domestic auto industry. One source calls Dingell “the Jack Kavorkian of Detroit,” arguing that he has assisted in the auto industry’s suicide of bad car designs and poor management practices.
But Dingell, whose physical skills are showing his age, is one of the savviest legislators in history. He has consistently defended his committee’s enormous jurisdiction and fended off attempts to cut into his power.
On the other hand, Waxman has a history of usurping power. In 1979, at the beginning of his third term in Congress, Waxman mounted a successful campaign to take over the Commerce Committee’s health subcommittee from the widely-revered Democrat Richardson Preyer of North Carolina. Waxman made the case that the Democrats should reverse their bias for seniority, and prevailed. It was an early red flag that this Californian was a political force, which proved to be the case in the years ahead.
Insiders handicap the race in Waxman’s favor. Dingell is somewhat physically infirm, although his political skills are sharp. But Waxman has the implicit support of Pelosi, who has a long career of bumping into Dingell, the most senior Democrat in the House.
Dingell’s father was elected to represent his Michigan district in 1932. The elder Dingell died in 1955, and is said — perhaps this is an urban legend — to have told his son on his death bed, “Johnny, don’t let them take our guns away.”
Nevertheless, Johnny won the seat to succeed his father and his been in the House ever since. An avid hunter and fisherman, Dingell is perhaps the leading congressional opponent of gun control legislation, although a conventional liberal on many other issues, and a dedicated environmentalist on land use and wilderness topics.
Big John will pull out all of his political guns to defeat Waxman, a worthy opponent. Check Las Vegas for the odds on this contest.
The “Name Game” begins in Washington
Posted on November 6, 2008
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It’s entirely predictable. Once a new president is elected, the most popular topic in Washington becomes “the name game.” Who’s in, who’s out, who will get the political plum jobs.
Indeed, there is an official government publication, called The Plum Book, that lists the 7,000 or so political jobs that an incoming administration can appoint to ride herd on the hundreds of thousands of career civil servants who actually make the government tick (or not). The book, published alternately by the Senate Committee on Government Affairs and the House Committee on Government Relations, has the official title: United States Government Policy and Supporting Positions. It is available from the U.S. Government Printing Office.
Bill Clinton drew criticism in 1992 and early 1993 for dilly-dallying about his immediate White House staff and cabinet and subcabinet selections. His transition to driving the ship of state was quite rocky, in part because he didn’t manage the selection of his team well.
President-elect Obama appears to be aware of that, and is moving quickly to put his folks in place.
The first choice was Rahm Emanuel, 48, to be chief of staff. Emanuel is a Clinton White House veteran, as well as a three-term congressman from Obama’s Chicago, who moved rapidly up the House leadership ladder. Emanuel is known for having sharp elbows in political disputes, a sharp mind, and a foul-mouthed, in-your-face demeanor. He is said to run a very tight ship.
The first order of business for the incoming administration is to line up “transition teams” to take a close look at the functioning of the federal agencies, and make recommendations on how, or whether, to reorganize them, and who should be the new leaders. This was an innovation of the Reagan administration in 1980. It proved to be valuable to the incoming administration, as well as giving the public a close view of the guts of administrative management at the various governmental institutions.
The Washington Post on Thursday, Nov. 6, reported that David Hayes, a former top-level Interior Department official in the Clinton administration, and an attorney at the well-connected Washington law firm of Latham & Watkins, would be running Obama’s transition operation for the Interior Department, the Energy Department, and the Environmental Protection Agency.
Obama, the Post reported, has also named former Clinton-era EPA administrator Carol Browner (an Al Gore acolyte) to his transition team. The newspaper said other transition officials in energy and natural resources include former Interior solicitor John Leshy (well regarded by environmental groups), former fish, wildlife and parks chief Donald Barry, and former under secretary of state Frank Loy.
The overall leaders of the Obama transition, according to National Public Radio, are former Clinton chief of staff John Podesta, Valerie Jarrett, a long-time Obama advisor, and Pete Rouse, Obama’s Senate chief of staff. It is said they will organize “parachute teams” to drop into the agencies and engage in bureaucratic intelligence gathering. Although the transition teams have not yet hit the ground – they’ve been working on background for a couple of month, according to press reports – rumors are already circulating about high-level appointments. There is speculation that Jason Grumet, the Obama campaign’s energy policy advisor, is headed to either DOE or EPA.
On the regulatory front, several sources have said that Nuclear Regulatory Commissioner Greg Jaczko, a Democrat, is a certainty to be the new NRC chairman. Jaczko, a Ph.D. in physics, was Senate Majority Leader Harry Reid’s technical advisor on nuclear issues, including the Yucca Mountain, Nev., waste site. His elevation to the NRC chairmanship, and Reid’s expanded control of the Senate, say the sources, could effectively doom the Yucca Mountain project.
At the Federal Energy Regulatory Commission, according to the same sources, a skirmish is already underway about who will be the Democratic chairman. Sen. Jeff Bingaman (D-N.M.) is said to be pushing his candidate, Commissioner Suedeen Kelly, to replace Joe Kelliher as chairman. Her term expires June 30, 2009. Republican Kelliher, who by most accounts has been a fine FERC chairman, has a term that expires June 30, 2012.
Sources suggest that Reid isn’t willing to give Bingaman his choice, preferring Commissioner Jon Wellinghof, former Nevada consumer advocate, for the chairmanship. His term expires June 30, 2013. Reid is also said to insist that he will pick the next Democratic replacement on the commission. Republican Commissioner Philip Moeller’s term is up June 30, 2010. FERC, by law, must consist of three members from the party in power, with the chairmanship part of that cohort.
Does the partisan makeup of FERC matter? Probably not, according to many who follow the agency on a day-to-day basis. But FERC can become an important political symbol when energy policy goes awry. That was the case when Enron imploded, competitive retail markets failed, and the Bush administration was forced to fire it own pick for the FERC chairmanship, Curt Hebert, replacing him with Texas regulator Pat Wood III.
Watch this space.
More confounding hurricane science
Posted on November 2, 2008
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More science to stir the pot on the hurricane-global warming issue appears in last Thursday’s issue of Science magazine. Three researchers fundamentally question the conventional wisdom that there is “a causal connection between warming tropical sea surface temperatures and Atlantic hurricane activity.”
While many scientists – and even more environmentalists – believe global warming and Atlantic hurricanes are linked, the hot air is increasingly leaking from that balloon. Leading hurricane scientists, such as NOAA’s Chris Landsea, have long argued that the evidence for a link between CO2 emissions and hurricane activity is weak. Looking at recent hurricane activity and intensity, Landsea at the National Hurricane Center in Miami last week told USA Today, “These are likely due to a natural climate fluctuation in the Atlantic.”
Gabriel Vecci of NOAA’s Geophysical Fluid Dynamics Laboratory, Kyle Swanson of the University of Wisconsin-Milwaukee, and Brian Soden of the University of Miami in the Science “perspective” article question the concept that increased Atlantic hurricane activity since the early 1990s is a result of man-made global warming. Rather, they say that the increase in activity “could also be the result of the warming of the Atlantic relative to other ocean basins, which is not expected to continue in the long term.”
Current evidence, they write, is inconclusive, and the statistical approach – correlating warmer surface temperatures and more hurricanes – is simplistic. Their analysis, they say, establishes that “we are presently at an impasse. Additional empirical studies are unlikely to resolve this conflict in the near future….”
As an alternative to the conventional statistical approach, the team writes, scientists must also “offer alternative theories and models that can be used to test the physical arguments” underlying the current approach. Taking a “fuller, dynamically based understanding of the tropical atmosphere must be of the highest priority, including assessing and improving to quality of regional [sea surface temperature] projections in global climate models.”
Can termites chew their way to ethanol?
Posted on October 22, 2008
Filed Under General | 1 Comment
By Kennedy Maize
Can termites lead the way to energy independence? A new study from the University of Florida in Gainsville says the tiny wood chompers and the bacteria in their gut could help turn non-edible plant parts into energetic ethanol.
In a paper to be published in the journal Biofuels, Bioproducts & Biorefining, Florida entomologist (that’s a bug guy) Michael Scharf and colleague Aurelien Tartar describe how termites and the little guys in their gut, known as symbionts, could help turn nasty, hard-to-digest cellulose into drive-a-hol (or maybe drink-a-hol?). We’re talking straw, corn stover, wood, and President Bush’s favorite, switchgrass.
Says Scharf in a university press release, “Through millions and millions of years of evolution, termites and their symbionts have acquired highly specialized enzymes that work together to efficiently convert wood and other plant materials into simple sugars. These enzymes are of the most value to bioethanol production.”
Most ethanol production for fuel in the U.S. comes from converting the sugars in corn, beets, and sugarcane into ethyl alcohol. But that diverts these sugars from food production, a controversial proposition as food prices are rising.
The university notes that “non-edible parts of many plants also contain a large number of sugar molecules, which could potentially be used to produce ethanol. But the problem is that these sugar molecules are far less accessible.” They are, in fact, locked up in “lignocelluose,” the two-by-fours of physical structure in the plant cell walls.
Termites, destructive critters that they are, don’t have problems chowing down on lignocelluose. Many homeowners can attest to that fact.
The key, according to the Florida researchers, is the fine grinding of the cellulosic material provided by the termites’ jaws, and the enzymes from the critters themselves and the critters in their bellies.
Scharf and others have probed the enzymes, looking at what he calls the “termite digestome,” the group of genes that produce the enzymes that break down the cellulose. According to the university, “The work has already provided strong preliminary evidence that the enzymes produced by the termites and their symbionts tend to work collaboratively, with the lignocellulosic material having to be partially digested by termite enzymes before it can be further digested by symbiont enzymes.”
Scharf says, “First, we now have the ability to produce and test individual enzymes for their competency and roles in lignocellulose degradation. Once we identify major players (from termites and symbionts), we can test combinations that may have applications in making bioethanol production more feasible from existing feedstocks, and maybe even other feedstocks that aren’t on our radar screens yet.”
Color me skeptical. I can recall writing stories in the early 1980s about bacteria that eat sulfur and could turn high-sulfur coal into low-sulfur “compliance” coal. Similarly, in the late 1980s and early 1990s, I recall writing about how scientists said white rot fungus, commonly seen in wood piles and downed timber, could make a major contribution to cleaning up chemicals at Superfund sites. None of that came to pass.
If it sounds too good to be true, my Pappy used to tell me, it probably is.