AskDong

McCain and Bush are both calling for the lifting of the ban on off shore drilling. While I’m fundamentally opposed because of my green conscience, I’m also opposed because it’s a short term solution to a long term problem. Even then, it’s unclear if this short term solution will yield results quick enough to fix the immediate problem, high fuel prices over the next few months. There’s a great deal of belief that the current extreme oil prices are product of a speculative bubble. Like all bubbles, it should pop at some point,

Fundamentally, however, lifting the ban will not all of sudden make the U.S. energy independent. There are not enough reserves off the U.S. coast or in Alaska for that matter to power America. It’s oil companies that stand to benefit the most by the lifting of the ban, not U.S. consumers. The only long term solution to the looming energy crisis is conservation and finding sources of energy that are either renewable or not likely to be depleted anytime soon.

There’s no question that high fuel prices are putting a crimp in everyone’s pockets, but short term solutions like tapping into the strategic energy reserves or lifting the the offshore ban at best postpones the inevitable and at worst exacerbates the problem. If anything the current high oil price regime is driving innovation in renewable energy, and inducing conservation amongst consumers. The country is moving slowly to long term solution. In the short run that journey might be painful. If we were to return to an era of low fuel prices, we would likely be back to driving gas guzzling SUVs and at the same time shunning research and development into alternative energy sources.

This past weekend I got back from 10th year college Reunion. I didn’t reconnect with many lost acquaintances. This was no great shock. I was not a social person in college. I ended up going to reunion and hanging out predominantly with friends I already see regularly in Boston. Despite not being the most social person in college, I was also a pretty mediocre student. Returning to college, I was reminded exactly how unacademic I truly was. I passed all my classes (excepting one early withdrawal), but my GPA was rather unspectacular, and my class attendance less than exemplary. I had no relationship with any professors. I never made use of office hours. All in all I wasted the academics of college. This not to say college was wasted. I made good friends, and laid a solid foundation for the rest of my life.

Reunion provided a opportunity for reflection. I didn’t set myself up for future success with my college academics. However, I was fortunate that my academics in high school allowed me to attend a prestigious school such as Dartmouth, and I had solid work experience during my off terms. I graduated into a good job market and was able to land myself a job in consulting. From there I’ve caught some breaks to be in the place I am today. Thankfully I’ve worked harder at my career than I ever did in college.

Traveling back to school and reveling in my mediocrity made me both appreciate where I am today, and affirmed my belief that everyone can have a second chance, and even a third. While the mistakes of the past certainly impact the reality of today, they do not spell doom for the future. The key is a willingness to reevaluate and do what it takes to make changes to either or both work and personal habits. You might be in dead end job but that doesn’t mean you need to be in a dead end career.

A Reader asks,
How can I find out what bank or lending institution holds a mortgage to a property that is not mine?

I got this question about 2 weeks ago and at the time I had no idea. However my own real estate travails have made me more knowledgeable. Apparently who holds title to mortgage is publicly available information. As a resident of Massachusetts, I’m fortunate to be access this information online. Massachusetts is on the cutting edge of the online deed information, I didn’t know this until I did some quick research and found that most states do not offer this information online. There are commercial sites such as landaccess.com which offer this information for some areas of the country like Michigan, Ohio, and Texas. Who holds a mortgage is part of the deed and title information and as result needs to be filed with the registry of deeds (or so it seems to me).

Given that this information is required to be accessible by the public, getting it is a matter of convenience. Individuals interested in properties in Massachusetts can easily find information online, but it seems like those in other areas of the country have to either pay to access it online or trudge down to the country registry of deeds. Given my own experience at the registry of deeds, it’s much better when you can do it online.

I went to pay my electricity bill the other day on the NStar website and noticed that they are offering customers the option of signing up for green power. While it’s been possible to sign up with a competitive electricity supplier for “Green” power, green power has not been an option for users who have chosen to stay with the incumbent utility. This includes me and the majority of residential electricity users. Retail electricity choice for individual consumers has not taken off as the supporters of electricity deregulation have hoped for. Why that is, is a story for another day.

According to NStar, most people would likely only pay $4 to $7 dollars more for green power than they would for conventional power. $4 to $7 doesn’t seem live very much at all. However, much of this is due to the fact I live in New England. New England is one the highest priced areas for electricity in the country. According to my last bill I pay .11172 per kWh. This translates to 111.72 per MWh in industry standard terms. To put that in perspective, coal generation costs about $30/MWh, and nuclear less than $5/MWh to run once constructed. New England on the margin does not run on coal. Coal and Nuclear plants are few and far between. New England is powered by Natural Gas which even with the newest and most efficient technology costs at least $90 a MWh to run given that natural gas is priced north of $10/mmbtu. Most new electricity generators are natural gas, conceived and developed when natural gas was cheap as cheap could be. People talk about oil all the time, but Natural Gas was once $1-2 per mmbtu at the turn of the century (and I mean 2000). They couldn’t give it away. It was often a byproduct of oil production. Oil may be 4 times more expensive, but natural gas is nearly 10 times more expensive.

If I were to sign up for the the Green Power Plan, I would like be paying 10% more on the cost generation which is about 1/2 of my bill. My electricity bill is about $80 on average a month. Under the Green Power plan, I would likely pay about $85. Five dollars a month does not seem like a lot to pay to increase the demand for green power. Unlike Field of Dreams, “Build it and they Will come.” does not apply to wind or solar generation. The demand needs to be there first either through the actions of environmentally conscience consumers who are willing to pay more, or through regulation. Regulation can take one of two methods. 1) Outright mandates 2) My Preference, Pigovian taxes that price in the true cost of pollution.

Electricity unlike some other products cannot be directly sourced. If that were the case I would have to a dedicated transmission line running directly to the generator I purchas power from. Electricity flows from generation to demand via the path of least resistance, regardless what financial commitment consumers might make. This is not to say that consumer choice does not affect the market, but only via aggregate demand. Signing up for the renewable energy option increases the aggregate demand for green energy and that is best I can hope for.

My investment update missed the big rally from yesterday, and big decline today. Given that yesterday and today are a wash, my results are actually quite current. May was an uneven month. The market neither rallied or tanked. Though the Nasdaq and the Dow diverged. The Nasdaq outperformed the Dow.

Below is my historical performance. I’ve added the the performance of my complete portfolio to the chart.

Brokerage Accounts: Accounts in which I pick individual stocks and some mutual funds. My IRA account(s) are amongst these accounts.
Asset Account: Accounts in which I managed on basic asset allocation principles. These accounts accounts consist of my 401k and Vanguard accounts.
All Classes: Total from all accounts