AskDong

I’ve been a long term user of TurboTax.   I filed last year using it, and have done so for the last 9 years.  I’m a captive market.  Turbotax imports all my information from last year, and makes my filing a relatively quick matter.  I pay $60-$70 every year for this convenience.

I thought I would get a head start on my taxes this year by purchasing TurboTax right now.   I also figured that the best way for me to purchase it would be to download the software.  Intuit sells the product online as a download.  I brought the premiere version last year, and plan on doing so again. It’s $89.95, and includes 5 free federal filings.   Intuit still charges $19.95 for each state filing which I believe is increase from last year’s $14.95

As I said before the TurboTax is a cash cow for intuit even with the slightly lower total filing charges.   However what bothers me is that currently it costs me more to download the product than to buy a physical copy from Costco.  Costco sells the product for $62.95 online for the physical copy.  The best download price I can find is from the Amazon store which sells it for $66.49 versus $68.99.  Apparently according to the 1 review on Amazon, Amazon too was selling the physical copy for less money.  It’s not anymore.   I’m astounded that the download copy is not at a more significant discount.  What’s worse for me and many other users is the face that Amazon only sells Windows version for download.  I cannot download the Mac version anywhere but from the Intuit site.  At Intuit the download version sells for the same price as the physical version, $89.95.  This is substantially more expensive than the physical copy I can buy at either Costco or Amazon.

Companies should be incentivizing consumers toward choices that are better for their bottom line, and the environment.  Downloaded software is winner on both these counts.  Maintaining inventory, and shipping a physical product is more expensive than allocating hard drive space towards serving copies of software.  Right now, I’m confronted with a decision of spending $20 extra for a product I prefer (less trash and packaging) or putting my wallet ahead of my green credentials (which aren’t too great as is).  I don’t mind paying extra for products that I believe are more environmentally friendly.  What I mind is paying more for environmentally friendly and costs less for the manufacturer.

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.

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.

I’ve been following the rise of oil, personally and professionally.  Oil prices affect me a lot more professionally than they do me personally. I don’t drive enough that the price of gas makes a substantial impact on my budget.  The fact is that rising oil prices have been good for me professionally.  Yes, I’m in the “evil” energy business.  I’m one those “speculators” driving up oil prices.

That’s not quite true. I don’t trade oil, but oil does have a substantial but indirect impact on the electricity market that I’m in. I also don’t believe that rising oil prices can be squarely blamed on financial speculators.  This is not to say that traders do not affect or profit from rising oil prices. However, it’s simplistic to think traders can make oil go from $60 to $120 and keep it there all on their own.

When an oil trader bids up oil by buying oil futures in the “shadow” financial economy, there is still a day of reckoning in the real economy. There’s no question that a speculator can raise the price of futures by merely buying.  Futures are contracts to buy or sell at a future date.  If I sold a one year future contract for $100/barrel, I’m obligated in one year to deliver oil for $100/barrel.  For instance let’s say I wanted to raise oil prices, I could buy future contracts settling a year out for $200 when oil is only trading $100 today in the spot market.  The spot market is the real world actual time economy.  The spot market and the futures market however do move together.  If someone is willing to buy oil for $200 in year, but oil is only $100 today, there’s a clear profit opportunity. I can buy oil today, store it for something less than $100/barrel, and sell the future contract.  Instant profit of a $100.  As a result spot markets and futures markets tend to track.

However for the same reason that speculators can affect the real world spot market, the real world spot market has impact of the shadow economy.  If speculators are willing to buy $200 oil in on year’s time, but inherent supply and demand implies oil should be $100 today and tomorrow, then there should be other traders who would gladly take the other side of that trade.  That trader knows he or she should be able to procure oil for less than $200/barrel.  Ultimately what really prevents speculators from affecting actual prices in the long term is that for every deal there is someone just as canny on the other side.

I’m not naive enough to believer that speculators have not had an impact on oil prices. They have, and were the movement in oil prices short lived, I would put more blame on speculators. However, high oil prices have been sustained and for that I believe there have been actual supply and demand changes. Speculators can only keep prices high only for so long as it takes ever more capital to keep prices high.  For example let’s say I’ve brought $200 oil last year, I’m out $200 already, and if I were want to keep prices high I need to come up with more capital to buy more without raising capital by selling.  It certainly wouldn’t be the first time that speculators have tried to corner the market.

Sadly enough, rising oil prices if they persist are being caused by long term change.  Rising demand in developing nations such as China and diminishing supplies have fueled the rise in oil.  I don’t believe necessarily that we will run out of oil in the next decade, but it is a matter of time.  Oil and other fossil fuels are a limited resources.  It’s not a question if we’ll run out, but when.  In this regard, high prices are the answer to the long term problem. Higher prices will force us to rethink where we get our energy and how we use it.

I’m a great lover of food. There are few foods I dislike, mushrooms probably being the most notable. Recently I’ve been trying to be more conscience of my grazing habits. I want to eat well, but I also want to eat in a sustainable manner. One of the things I’m trying to cut back on is certain types of seafood.  Much of the most popular seafood; tuna, shrimp, chilean sea bass, etc are either endangered in the case of bluefin tuna or raised in an environmentally destructive manor as with shrimp.

I’m probably going to pick up a copy of Bottomfeeder: How to Eat Ethically in a World of Vanishing Seafood. Taras Grescoe the author was recently interviewed on Salon.  I like food books even when they’re an attack on the things I love.

I’m never going to be utmost environmentally conscience consumer.  Vegetarianism is probably the way to go, but I like I meat more than quite a bit. Seafood, however, represents a unique ethical problem.  Seafood as the name implies is harvested from the seas. But who sows and tends these crop? Hardly anyone.  The oceans as they rightly should be, belong to everyone and as result nobody actually takes any ownership. The Oceans are the ultimate commons.  Fishing boats from around the world fish the same seafood thousands of miles from home shores.

As with most commonly shared resource, an ethical crisis tends to arise - Tradgedy of Commons.  Simply stated Tragedy of the Commons is that individuals in this particular case the fishing industry from a multitude of nations act logically in their own self  interest to overuse the common resource of the oceans.  All food production has an environmental impact, but oceanic fishing is one of the few that takes place free from national borders.  It’s a difficult industry to regulate, and as result it’s even more critical how we as consumers behave. The burden is upon all of us to collectively demand environmentally sustainable fishing by adjusting what we eat. The Salon interview highlighted a fantastic tool from the Monterey Aquarium on what to buy and eat.  As a result I had mussels instead of the Atlantic Halibut last night.  It was cheaper to boot.