Tag Archives: economics

Rebuilding San Francisco?

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San Francisco is moving to alter certain requirements and political priorities in order to increase residential housing construction. San Francisco even has changed some actual rules so developers can build market-rate apartments with fewer requirements to provide affordable housing. One project coming out of these moves is this one:

In what would be the city’s most ambitious residential development in several years, local property developer Bayhill Ventures last month announced plans for a 71-story rental tower in San Francisco’s ailing financial district.

Cabrini Green come to San Fran, degentrifying the financial district? Only with the critical difference that this area will have even fewer police with which to enforce laws and keep folks safe than Chicago provided Cabrini Green.

It’s not certain that that outcome will be realized. However, the construction comes inside an established environment of a reduced police force; laws decriminalizing, among others, drugs and shoplifting; and prosecutors reluctant to prosecute. (Yes, I’m aware that San Francisco residents recalled an especially egregious non-prosecuting prosecutor, but his replacement is better only compared with that low bar.)

We’ll see.

Oil Buyback

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Progressive-Democrat President Joe Biden now plans to buy 2.7 million barrels of oil to put back into our oil strategic reserve.

Couple things about that.

We had 630 million barrels of oil in our strategic reserve before Biden took office and started selling it to the People’s Republic of China while claiming he was doing it to slow the gasoline price inflation his spending was causing. As recently as 24 November last, our reserve was down to 351 million barrels. According to my second grade arithmetic, that means Biden had reduced our reserve by 279 million barrels in just those two years and 10 months. My third grade arithmetic tells me that those 27 million barrels he’s buying for the reserve is just 1% of what he’s taken out of it. Which makes buying that oil an insulting effort to distract us with his pretense of refilling our reserve after his dangerous reduction.

The other thing is that he’s buying that oil at $79/barrel, which means he’s spending $213.3 million to buy that 1%. To replace all 279 million barrels, he’ll have to pay more than $22 billion at those $79 per. When the prior administration (the Trump administration for those following along at home) refilled the reserve after the Obama admin draw-down, Trump’s buyers paid $30-$55 per barrel. Call it, for this back of the envelope estimate, an average of $42.5 per barrel. At that price, Biden could replace the oil he removed for a total cost of $11.8 billion dollars. Bidenomics is going to cost us ordinary American taxpayers more than $10 billion at today’s actual price. That is, if Biden follows through on refilling our strategic oil reserve.

Update: third grade arithmetic tells me that those 27 million barrels should have been third grade arithmetic tells me that those 2.7 million barrels. Fershlugginer keyboard….

Heat Pump Efficacy

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I’ve mentioned earlier the level of energy efficacy of heat pumps. Here is an example of the level of fiscal efficacy of heat pumps. The fronted lede:

A two-year project to convert a public housing building to an electrically powered heat pump system is nearing completion on the Upper West Side. The 58-year-old 20-story tower at 830 Amsterdam Avenue (100th Street), part of the New York City Housing Authority (NYCHA) Frederick Douglass Houses development, is being retrofitted to provide heating, cooling, and hot water for residents—and to serve as a possible template for converting more of the 2,410 buildings NYCHA maintains citywide.

The strewn about and buried lede:

The $28 million project….
…
…to replace the aging boilers at 830 Amsterdam Avenue with a heat pump system, called variable flow refrigerant, that would deliver heat, hot water, and cooling to the building’s 159 units.

According to my third-grade arithmetic, and using up all my fingers and toes, that works out to $176,100 per unit.

Then there’s this:

If the 830 Amsterdam project is deemed successful, it could be repeated at other buildings operated by NYCHA or private landlords.

Successful by what measure? That’s certainly not a financial success.

Even accounting for the intrinsic fiscal inefficiency of government projects, this is an expensive template; more, it’s just foolish and negligently wasteful. And disastrous for the city’s taxpayers and for those private landlords. And that’s on top of the city’s taxpayers already seeing truly essential services, like policing and facilities for homeless residents (however inefficiently this one is done by a government), severely financially curtailed in favor of another virtue-signal, housing for illegal aliens in the sanctuary city.

I Have a Thought

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(Yeah, yeah)

The Energy Department’s Office of the Inspector General says that the Department

faces major management challenges ranging from hacking vulnerabilities to foreign espionage and could create “massive new risks to the taxpayer” as it spends tens of billions of dollars in new spending from President Joe Biden’s signature infrastructure initiative[.]

The OIG goes on to say that the fraud risk is similar to the realized fraud from the Federal government’s Wuhan Virus Situation (my term, not OIG’s) spending, where taxpayers now lost an estimated $200 billion government wide.

The OIG also noted that

Fast money must be balanced against the need for thoughtful and effective internal controls and independent audits[.]

In truth, this sort of thing isn’t limited to DoE’s current plan or to the government’s Wuhan Virus response. It’s all too typical of government spending programs.

Here’s my thought. Balancing fast money with thoughtful and effective internal controls and independent audits is necessary, but insufficient. There must be attention-getting sanctions applied, also, for failure to perform, both ante facto and especially post facto.

Congress should, under its dozen allocation bills, proceed with allocations to DoE—and to the other Departments and Agencies—but with these requirements: the funds allocated will be withheld from actual disbursement to the Departments and Agencies until they certify that they have instituted controls that will greatly mitigate the ability for fraud to occur.

Then, if after the allocated funds are disbursed, fraud is discovered greater than, say $5 million dollars in any Department or Agency, that facility will have its subsequent year’s operating budget reduced by the amount of the fraud. If fraud is again discovered in the second year, that facility will have its operating and its personnel budgets each reduced by the accumulated amount of fraud, less any that was recovered from the prior year. In each subsequent year, the facility will have its operating and personnel budgets—again each of them—reduced by the amount of accumulated net fraud.

The facility must either shape up or disappear. The only facilities that can’t actually disappear, though they can be substantially reduced, are the constitutionally implied Departments of State, Defense, and Treasury. The rest of the Departments and all of the Agencies in the Executive Branch are later creations of Congress in conjunction with the President, and they can be eliminated by Congress if they prove unable to control their own fraud.

That will be hard to effect politically, but it’s a Critical Item fiscally.

“Emergency Powers”

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Progressive-Democratic President Joe Biden has invoked the Defense Production Act of 1950 as an excuse to pour more of our tax dollars into his global warming foolishness. He’s using the Act to pump $169 million into nine projects across 15 sites nationwide in an effort to accelerate electric heat pump manufacturing. There are some serious problems with this. In no particular order:

Biden claims that heat pumps only use electricity; they don’t burn coal or oil or natural gas. That’s a disingenuously narrow view of the situation. Heat pumps do use only electricity at their point of use. However, that electricity comes from somewhere—primarily coal- and natural gas-fired electricity generating stations. At the times the heat pumps are needed the most—in the depths of heating and cooling seasons—”green” energy sources generally aren’t available: at night, when the sun doesn’t shine; when the sky is overcast, and sunlight is limited; when the wind isn’t blowing enough or is blowing too strongly. This is a shortfall that’s disastrously exacerbated by Biden’s open effort to destroy our hydrocarbon-sourced energy industry. Oil-, natural gas-, and coal-fired power plants are reliable, efficient, and don’t care about sun or wind.

Further, heat pumps get increasingly inefficient where temperatures are routinely cold and where temperatures are routinely hot. They work, after all, by trying to pump heat (hence the name of the devices) from inside the house to the hot outside for cooling, or by trying to pump heat from the cold outside into the house for heating.

Another problem is that the Defense Production Act was passed to support government-managed manufacturing (for good or ill) during times of conflict. We’re not at war with anybody now, and haven’t been for a few years—not since the fight against terrorists in Afghanistan, when Biden made his panic-ridden exit from that. Using the Act as an excuse for funding global warming-related matters is an abuse of the Act that warrants its heavy modification, if not outright rescission.

Yet another problem flows from Biden’s claim that his invocation is to boost domestic production of these heat pumps, especially by domestic manufacturers.

These awards will grow domestic manufacturing, create good-paying jobs, and boost American competitiveness in industries of the future.

Yet he’s pouring those millions into companies like Copeland, Honeywell International, Mitsubishi Electric, and York International Corporation.

Mitsubishi is a Japanese company, headquartered in Tokyo. York is wholly owned by Johnson Controls, and Johnson, while claiming to be an American company, is headquartered and domiciled in Cork, Ireland. That’s a lot of “domestic” manufacturing money—our tax dollars—going to foreign companies. Even if they do the actual manufacturing in the US, they’ll be taking off their (significant) cuts in Tokyo and Cork on the way by.