Welcome To Josh's Blog O' Thoughts: November 2007

Lately, there's been a lot of talk (especially in the political arena) about energy consumption and Global Warming. Most of this, however, has been aimed at making it less enticing for businesses to pollute or to produce inefficient products. What really needs to happen, is that the American people need to start thinking differently about energy use.

Most people think about the cost of gas because they can easily see the cost vs output, but people do not think as much about other energy uses such as home lighting. This is because you get a monthly electric bill that simply lumps together all the electric use of your house. With a car, you know all the gas is used by your car. On the electric bill, it's easy to look at it and think that a large part of the bill is due to things you "need" like a refrigerator or air conditioning.

While an air conditioner can constitute a large part of your electric bill in peak summer months, it's worth noting that people often overlook the effect of household lighting. Lighting can be a very large part of your monthly bill, especially in the dark winter months.

As I drive around looking at new houses, I notice that some of the more popular trends these days include more outdoor lighting (soffit lights, accent lights, spot lights, etc). Most don't really serve any purpose other than to highlight the house. If people thought about how much it cost to actually run these lights, they may reconsider having them.

The old rule of turning a light off when you leave a room still applies. The fewer lights on in your house, the more electricity and money you will save.

A couple years ago, I decided it would be interesting to find out about how much it was costing me to run my Christmas lights during the holiday season. The calculation is quite simple so I'll walk you through it. Some information you need to find out ahead of time:

1. How many bulbs you put up.
2. How often you typically have them turned on.
3. The cost for a kilowatt-hour from your power company. (should be listed on your bill)

And now for a little background information. A typical mini-bulb Christmas light uses about 0.5 watts per bulb. If you have LED bulbs or the large, old-school bulbs, you'd have to find out how many watts per bulb you ware using.

Let's assume that you put up 3,000 lights (on your tree, house, bushes, etc), and that you typically have them on from 5:00PM till 11:00PM from Dec 1 to Jan 14. Let's also assume that your electric company charges you $0.10 per kilowatt-hour (kWh).

So, here we go.

3,000 lights * 0.5 watts = 1,500 watts when they are all on.

1,500 watts / 1000 = 1.5 kilowatts. So, if you have all of them on for 1 hours, you have 1.5 kilowatt-hours.

1.5 kilowatt-hours * 6 hours per day = 9 kilowatt-hours per day.

9 kilowatt-hours per day * 45 days = 405 kilowatt-hours total usage by Christmas lights during the holiday season.

405 kilowatt-hours * $0.10 per kilowatt-hour = $40.50 to run your lights for the entire season.

You can see that this is no small chunk of change. Might make you consider switching to LED Christmas lights which will use only a tenth of the electricity because they are so efficient (they're also nearly indestructible).



As a side note, this calculation can be used for anything that you know the energy use of. For example, four 60 watt bulbs left on for about 3 hours per day. Or an 1100 watt oven cooking for 2 hours. Some of it will make you sick to see how much you are spending to operate that device.

For the past couple years, complaints about rising gas prices have been met with responses such as "When you adjust for inflation, it's still much cheaper than it was in the late 70's early 80's". Well, we can now say that this is no longer true. Even when you adjust for inflation, we are currently hovering right around the all-time high prices. Take a look at the graph:


Source: http://www.inflationdata.com/inflation/Inflation_Rate/Gasoline_Inflation.asp

In the graph (yearly average price), you will see that the previous peak in 2007 dollars was around 1980 when the average price for the year was around $3.05/gallon. Obviously, since this graph is averaged out per year, some of the high peaks we have already seen this year will be smoothed out. But there may have been enough high days in this year to push our yearly average above the previous high.

So, we might end up having to say that 2007 was the most expensive gas year ever.

Lately, with crude oil hovering near $100 a barrel and setting record highs nearly daily, I have been wondering if all of these price increases are simply due to the economic principles of supply and demand or if a large part of it is driven by assumptions that demand is higher (or going to be higher) than it really is. Or for that matter an under estimation in supply could cause the same situation. At any rate, there could be a certain amount of panic being caused that is helping drive these prices higher.

Additionally, with crude being traded on the commodities market, it wouldn't surprise me if the demand is being created simply by traders and investors rather than actual consumers. Normally, with a supply and demand situation you would expect the price to rise if consumers were demanding more of the product. However, in this situation the product passes through a middle-man first. The middle-man wants to make a profit too. People have seen that oil is on the rise. When that happens, they think "Maybe I should buy into that and make some money for myself?" They think they can buy in at $90 and sell at $100 and make a profit. This causes extra demand, not by actual consumers but by people trying to make a profit by trading oil commodities.

So, does anyone else see how this might resemble another situation in the past decade. Let's think back to the late 1990's. Tech stocks were a huge boom. Any little startup company could get funded, go public, and have their stock skyrocketing. The reason is that people had seen the successes being made in the technology sector so they didn't bother to think about real consumer demand. So you had investors buying into a lot of companies that were losing money and had no customer base. What happened? The technology bubble burst around the year 2000. Stocks across the board fell.

Now if we apply the same thinking to oil trading, we could expect to see a peak point before a bubble burst. The bubble burst will be caused by some big holders selling off or some bad news about actual demand. Once some people sell off others will follow suit and prices will fall.

Again, this is one of my things that is totally up for debate. I'm no economic wizard so this seems feasible to me. Let me know if you have other opinions.

Did you know there was a massive section of sea floor in the Pacific Ocean that is literally covered with miles and miles of trash? Until today, I had never heard of the The Great Pacific Garbage Patch. Apparently, this accumulation of garbage is as large as a continent and contains garbage from all over the world.

Due to the currents in the oceans, trash is gathered in certain accumulation zones. One of the strongest areas of accumulation is this patch in the Pacific. Unfortunately, a lot of the garbage that accumulates here is made of plastic. And plastic, as we know, is very hard to break down. Actually, I believe I heard that it was chemically impossible to break it down via natural methods (erosion, etc). Since the chemical bonds don't break, all these processes can do is break the plastic item into smaller pieces of plastic. These pieces will often wash ashore on beaches, and in some cases, cover a beach with tiny, multi-colored pieces of plastic.

It's unfortunate that we have this amount of garbage in our oceans. And it's sad to think that a large portion of it was probably dumped in the ocean on purpose. Too bad we don't think ahead before doing things like this.