Author Archives: petervburrows

Illegal Drugs and Illegal Immigrants, Part Two

By Peter Burrows 7/13/18

In 2012, the U.S. White House Office of Drug Control Policy asked The RAND Corporation to estimate the market size of four drugs: cocaine (including crack), heroin, marijuana, and methamphetamine (meth). Their report, released in 2014, estimated that, “drug users in the United States spend on the order of $100 billion annually on all four drugs (in 2010 dollars),” a figure they estimated to have been constant for a decade, with big shifts in the drugs purchased, e.g. meth up, cocaine down.

The report did not add the expense of police, judges, prisons and street crime associated with illegal drugs. Of course, there is no way to put a price on the hundreds of deaths associated with drugs, from cops to gang-bangers to innocent bystanders.

Neither did the report add the cost of the chaos and carnage our appetite for drugs causes in Central and South America. This is a national disgrace. Those of us who want absolute control of our borders must realize we have a moral obligation to people escaping the violence that we are responsible for. These people should be granted asylum, at least temporarily.

The problem is that then EVERYBODY trying to enter America will claim drug cartel hit-men are chasing them. The solution is to legalize the sale of marijuana, heroin and cocaine.

This is NOT a new idea. Nobel economist Milton Friedman made the case for legalization decades ago. Here are excerpts from an interview he gave in 1991 on “America’s Drug Forum,” a PBS talk show. (Available on You Tube. You will understand why Friedman didn’t like being called “conservative.” Questions and answers paraphrased for brevity.)

Question: How would America be changed for the better if drugs were legalized? Friedman: I see America with half the number of prisons, half the number of prisoners, ten thousand fewer homicides a year, inner cities in which there’s a chance for these poor people to live without being afraid for their lives, citizens who might be respectable who are now addicts not being subject to becoming criminals in order to get their drug, being able to get drugs for which they’re sure of the quality.

Question: What is the proper role of the government in this? 
Friedman: The proper role of government is exactly what John Stuart Mill said in the middle of the 19th Century. The proper role of government is to prevent other people from harming an individual. Government, he said, never has the right to interfere with an individual for that individual’s own good. The case for prohibiting drugs is exactly the case for prohibiting people from overeating. We all know that overeating causes more deaths than drugs do. If it’s in principle OK for the government to say you must not consume drugs because they’ll do you harm, why not that you must not overeat? (Friedman then made a similar case against skydiving, skiing, i.e. where do you draw the line on personal behavior.) 

Question: Is the drug problem an economic problem? 
Friedman: No, it’s a moral problem. It’s a problem of the harm which the government is doing. The prohibition of drugs produces, on average, ten thousand homicides a year. It’s a moral problem that the government is going around killing ten thousand people. It’s a moral problem when the government turns people into criminals for doing something we may not approve of but which harms nobody else, e.g. being arrested for smoking marijuana, being thrown in jail, having their lives destroyed.

If you look at the drug war from a purely economic point of view, the role of the government is to protect the drug cartel. What do I mean by that? In an ordinary free market, potatoes or beef, anything you want, there are thousands of importers and exporters. Anybody can go into the business, but it’s very hard for a small person to import drugs because our interdiction efforts make it enormously costly. The cartels can afford fleets of airplanes, sophisticated methods and so on. By keeping goods out and arresting, for example, local marijuana growers, the government also keeps the prices high. What more could a monopolist want? He’s got a government who makes it very hard for his competition and who keeps the price of his product high.

Legalization is a way for us, as citizens, to stop our government from using its power to engage in the immoral behavior of killing people, taking lives away from people in the U.S., in Colombia and elsewhere, which we have no business doing. Right now, Uncle Sam is also taking property without due process of law. The drug enforcers are expropriating property, in many cases of innocent people. That’s a terrible way to run what’s supposed to be a free country. ——–

I urge interested readers to explore Dr. Friedman’s thinking on the many You Tube clips that are available. Sometimes he goes a little over the top, as when he said the government was “going around killing ten thousand people,” but if confronted, I’m sure he’d smile and say, “Does it make any difference to the victims who pulls the trigger?”

The question to ask is: Will we be worse off with legalized drugs than we are now? I want to emphasize that nobody who favors legalization thinks recreational use of these drugs is a good thing. There will be costs involved, and they will be very visible, but it’s a matter of choosing the lesser evil.

With legalization, we will need to spend a great deal more on rehabilitation and education, but that cost should be compared to what we now spend on incarcerating drug users and purveyors. Plus, rehab needs will probably expand as drug usage grows in response to both lower prices and the removal of legal penalties. How much? Beats me.

Marijuana legalization by different states gives us some insight on what happens to prices and demand after legalization. The website recently discussed pricing and they noted that an entrepreneur could buy a pound of marijuana in legal California and make about five times his cost by selling it in illegal New York. From this it would appear that, so far, legalizing marijuana results in about an 80% drop in price.

The price drop has led to an increase in demand in legal states, but nobody knows by how much since nobody knows how big the black market was. I wouldn’t be surprised to see a substantial increase in marijuana use, but I note that at one time almost 50% of the adults in America smoked cigarettes. Now, less than 15% do. Hopefully, marijuana use will eventually be lower than that.

The biggest obstacle to legalization in the past may have been that there were too many people benefiting from the status quo. I’ll cover that in Part Three, plus look at how synthetic opioids are disrupting the illegal drug business, both for good and for ill.




Illegal Drugs and Illegal Immigrants

Have you heard of political newcomer Alexandria Ocasio-Ortez? You will. The 28-year-old just won the Democratic primary in New York’s 14th Congressional District, beating an incumbent Democrat who had held the seat for 20 years — 20 years! — and who outspent her by a factor of eight. And it wasn’t even close: she beat him by 15 points.

How did she do it? It doesn’t hurt that she looks a little like Julia Roberts. She’s also an articulate campaigner who exudes warmth and self-confidence. She’s very likable, but the secret to her success may be that she’s a Hispanic who sounds like Bernie Sanders. She wants Medicare for all, tuition-free college, a guaranteed Federal job for everybody, and she’d abolish ICE and impeach Trump. Democrats around the country are enthralled.

However, before the lovely Ms. Ocasio-Ortiz becomes the Democratic nominee for President, they might want to consider the demographics of her district, as laid out by Star Parker in her July 4 column. The Census Bureau breaks down the demographics as 50% Hispanic, 9% black and 16% Asian; 45.8% are foreign born and 67.8% do not speak English at home.

This is not the demographic profile of America —-yet. Some of us horrid deplorables think that the Democratic party would like to see an America that looks like that. In fact, deplorable me thinks that if given the power, the Democrats would like to have open borders, instant citizenship, ballots in Spanish and a voting age of 10. (“If you’re old enough to go to the bathroom by yourself, you’re old enough to vote.”)

It wouldn’t be long before there would be a Constitutional Convention to do away with that pesky checks-and-balance BS that was imposed hundreds of years ago by a bunch of racist white men. No more First Amendment, no more Second Amendment and, Thank You God, no more Twenty Second Amendment. That’s the one that limited Presidents to two terms.

Barrack Obama would run again, and the vote would be so overwhelming that future elections would be considered a waste of time. Caudillo for li —-I mean, President for Life. Then we could fulfill the dream of New York Times columnist Thomas Friedman, who has said that it would be great if America could “be like China for a day, so we could do what’s right.” A day?? Don’t be such a piker, Tom. FOREVER!

Changing the demographics of America has been the long-range plan of the Democratic party for over 50 years, starting with the 1965 Immigration Reform Act. Here’s what Democratic consultant Patrick Reddy wrote in 1998:

“The 1965 Immigration Reform Act promoted by President Kennedy, drafted by Attorney General Robert Kenndy, and pushed through the Senate by Ted Kennedy has resulted in a wave of immigration from the Third World that should shift the nation in a more liberal direction within a generation. It will go down as the Kennedy family’s greatest gift to the Democratic Party.”

Hello, Alexandria Ocasio-Ortez. Note that Reddy did not say this would be the Kennedy family’s greatest gift to AMERICA. Finally, a few of the stupidrepublicans (one word) are starting to wake up to what’s going on. I’m hoping the near-hysterical reaction to the Trump Administration’s pathetic border control efforts will wake up a few more.

On July 1, open borders advocates held over 700 rallies and marches around the country, one right here in Silver City, to protest the Trump Administration’s treatment of illegal immigrant families apprehended at our border with Mexico. The protesters don’t want children separated from their parents at detention centers.

In the short run, this is to protect children from predators in the general population of detainees. In the long run, incarcerated criminals are of course not accompanied by their families. Regardless, Trump caved to the pressure and ordered the military to prepare detention facilities that would accommodate family units. That’s OK by me. Very expensive, but no one likes to see children separated from their parents if it can be avoided.

Unfortunately, the response to this will be more illegal immigrants posing as “families” and the problem will be worse than before.

What to do?

The first step I would take would be to eliminate the asylum option. Today, anybody can walk up to our border and request asylum. The reason for the request doesn’t have to be that you are escaping political or religious persecution, the intended purpose of our asylum laws. For example, women can claim they are escaping domestic abuse, or men that they are escaping gang violence.

Typically, after a brief detention, most are given a date for an asylum hearing and then released, free to go Anywhere, USA. Over half don’t show for the hearing. After all, mission accomplished. Of those who do show, very few are granted asylum, e.g. less than 12% of requests from Hondurans, Guatemalans and El Salvadorans are actually granted. Those lucky folks get cash, medical care and a housing allowance.

Better than a green card, baby.

Predictably, when Attorney General Jeff Sessions said that the law did not include domestic abuse as sufficient grounds for asylum to be granted, he was attacked by Democratic Congressional leader Nancy Pelosi for his “staggering cruelty.” But as Sessions said, the asylum law “is not a general hardship statute.” If it was, every poor person in the entire world would qualify, PRECISELY WHAT THE DEMOCRATS WANT.

Ironically, the poverty these people are escaping is for the most part due to the political/economic realities of socialism and other totalitarian governments that inhibit individual economic freedom, the very thing the left-wing, open-borders crowd wants for America.

However, there is one class of asylum seekers who deserve our help: people escaping the consequences of America’s War on Drugs. Again, the problem is that every asylum seeker will claim to be fleeing the violence attendant to illegal drugs – and there is a Hell of a lot of violence.

Please read an article by Daniel Davidson in The Federalist, June 26, 2018: “With Cartels In Control, There Are No Easy Answers To The Border Crisis.”

Davidson wrote: “Violence in Mexico is out of control – and getting worse. National elections in Mexico are set for July 1, and so far, 121 political candidates, most of them running for local office have been assassinated, along with dozens of their family members. …across Mexico drug cartels have infiltrated local and state police forces, political machines, and major industries. Candidates who speak out against corruption …are especially in danger.”

Because of the Gringoes’ insatiable appetite for drugs, Mexicans are being murdered by the hundreds, many of them the very best people in their society. I don’t know why every decent human being in Mexico doesn’t hate our guts.

In 2014, the Rand corporation estimated the size of the illegal drug business in America at $100 billion. That is a BIG business. The irony is that it wouldn’t BE a big business without the war on drugs. The basic materials are cheap. The drugs are expensive because they are illegal. Legalize the drugs and most of the profit goes away, and so does most of the drug violence.

Therefore, the second step I would take to alleviate the border/illegal immigrant problem would be to end the war on drugs by legalizing the drug cartels’ big money makers: heroin, cocaine, and marijuana. Some states have already legalized marijuana.

This is a discussion worth having, don’t you think? My next article will continue the topic.

Thoughts On The PRC Election

Thoughts on the PRC Election by Peter Burrows, – 5/18/18 

I attended the forum last week for the two Democrats running in the primary for Public Regulations Commission, District 5, Stephen Fischmann and incumbent Sandy Jones.  The Grant County Beat and the Daily Press covered the meeting with excellent articles. 


As would be expected at any forum of Democrats, both candidates made ritual genuflections at the alter of “the little guy” and then proceeded to defend a program, net metering, that favors wealthy electricity users at the expense of all other rate payers. (See my recent article, “What is ‘Net Metering’ and Why Should You care.”)


When asked if net metering was a good thing, my question, both said it was a good thing — wrong answer — but both also said it was something that needed to have a cost-benefit review.  We can hope such a review would look at Vermont, where the Public Utility Commission recently estimated that net metering costs rate payers $21 million a year, most of which subsidizes homeowners wealthy enough to afford solar panels. 


As an aside, earlier this month I asked two of the Republican candidates, Ben Hall and Chris Mathys, the same question: Is net metering a good idea.  Neither one knew what I was talking about. Hall tried to tell me it was some sort of Federal program, and he was a PRC commissioner from 2010 to 2014! 

While Fischmann showed an impressive familiarity with all of the issues discussed, several things he said made my BS Meter go off.  The first was something he said about electricity storage, which is the big bottleneck to using more solar and wind-generated electricity.    

Fischmann made the incredible statement, as reported in the Beat article, that such storage was “substantially cheaper” than natural gas-generated electricity, currently the cheapest fossil fuel-based electricity.  


Jones correctly said that there is no storage technology that can supply large scale electricity at reasonable prices. 


Fischmann doubled down, claiming there was a large-scale storage project underway in New Hampshire that subsidizes homeowners because it saves the utility moneyA quick Internet search revealed the “large-scale” project to be a pilot program that would install Tesla Powerwall batteries in about 300 homes initially and up to 1000 homes if the project proves economical. (Liberty Utilities Proposes Battery Program for Lebanon, Valley News 4/4/18.)


There are 7,500 homes just in little Grant County, so the above project is hardly large scale. Furthermore, the Tesla batteries are subsidized to the tune of about 80 percent, something that wouldn’t be needed if it made economic sense for homeowners to buy their own batteries. The project will test the assumption that distributed storage makes more sense, somehow, than centralized electric storage.   


Regardless, it’s a little premature to herald this as proof that electricity from storage is cheaper than electricity from natural gas plants. A recent article in Forbes favorably commented on two small storage projects in Arizona, but also noted that they benefited from the 30% Federal investment tax credit that all solar projects get. (“Energy Storage is Coming But Big Price Declines Still Needed,” Joshua Rhodes, Forbes, 2/18/18.) 


Fischmann also cited a recent Colorado case where bids to provide power from wind and solar plus storage were “substantially cheaper than the cheapest natural gas.” Once again, Fischmann hadn’t done his homework. 


The utility, Xcel Energy, received proposals to provide electricity from wind-plus-storage and solar-plus-storage that, to quote an article in Carbon Tracker, “highlight the incredible cost reductions in renewable energy with storage.” The article cited the median for wind-and-storage as 21 cents per kWh and that for solar-and-storage as 36 cents per kWhneither of which compares favorably with the 11-12 cents you and I pay here in New Mexico.


What is absolutely mind blowing is that the article then states: “Details on the bids are sparse. Crucially, the amount of storage is unknown. The combination of renewables plus storage bids are $3-$7/MWh higher than standalone wind and solar bids, suggesting a limited amount of storage.”


How can the bids show “incredible cost reductions in renewable energy with storage” if the amount of storage involved in the bids is unknown?  If Tesla dropped the price of an electric car from $35,000 to $10,000 but only had a 12-volt battery in the latter model that would get you to the corner before it died, would that be an incredible cost reduction in the cost of electric powered transportation? 


The Investment banking firm Lazard, a BIG backer of “alternative energy technologies,” mainly solar and wind, had this to say in their latest annual Levelized Cost of Energy Analysis, November 2017, emphasis mine: “Although alternative energy is increasingly cost-competitive AND STORAGE TECHNOLOGY HOLDS GREAT PROMISE, alternative energy systems WILL NOT BE CAPABLE OF MEETING THE BASE-LOAD GENERATION NEEDS OF A DEVELOPED ECONOMY FOR THE FORESEEABLE FUTURE.”


Fischmann also claimed that San Antonio, Texas, was getting cheap energy from Austin Energy, “which is 50 percent renewable.” That is wrong on two counts: San Antonio doesn’t buy electricity from Austin. Each city has its own municipally owned utility, and neither is 50 percent renewable, although San Antonio’s CPS Energy plans to be 50 percent by 2040. 


(The cost per kWh in Austin is 10.7 cents, in San Antonio, 10.8 cents, about what we pay here in Silver City.) 


To Fischmann’s credit, he did acknowledge that renewable energy is subsidized, but claims that renewables are cheaper even without subsidies. He also told me privately that Renewable Portfolio Standards are not needed if renewables are cheaper than fossil fuels, something I would agree with. 


The problem with Mr. Fischmann is his uncritical acceptance of renewable energy claims.  He wants a PRC that is “passionate about fact-based renewable energy” but wants his own facts. He also appears to have his lips firmly planted on the derriere of Mariel Nanasi, the director of New Mexico’s most intransigent environmental group, New Energy Economy, in Santa Fe.  


I think he would make decisions that favor environmentalists at the expense of the rest of us. He would say there is no conflict, but some of us would strongly disagree.  The only way I MIGHT vote for him is if he was running against Republican Ben Hall next November.  


At the moment, Sandy Jones has got my vote. He knows the issues, knows how to listen, works hard and is not a “true believer” environmentalist.  He is not a fan of Mariel Nanasi, either. That’s a big plus in my book.  


I’ve requested that the editor of the Grant County Beat give both Jones and Fischmann the opportunity to comment on this article should they care to.      


Correction to my article on the PRC election by Peter Burrows 5/19/18 

My subconscious has been grinding away for couple of days about something I wrote in my article on the PRC elections.  I rechecked, and sure enough, I had made a big mistake when I wrote that Xcel Energy had received bids for wind-plus-storage electricity and solar-plus-storage electricity at 21 cents and 36 cents per kWh respectively.   

The proper numbers should have been 2.1 cents and 3.6 cents per kWh, which explains the enthusiasm those numbers generated in the press, as they are far lower than what would be expected of bids that included storage, even after the 30% investment tax credit.   

Regardless, since the amount of storage included in those bids was not disclosed, and since the bids were only 15-20% higher than stand-alone solar and wind, one commentator wisely noted that there was probably only “a limited amount” of storage involved. 

I should have caught my decimal point error – too many zeros! –and used 2.1 cent and 3.6 cent per kWh to illustrate a larger point: Even if solar and wind electricity was free, the current cost of storage makes 100% reliance on wind and solar prohibitively expensive.  

Tesla has just completed a $50 million battery project in Australia that can provide electricity to 30,000 homes for one hour.  Since there are 7,500 homes in Grant County, one of these Tesla “batteries” would give us four hours, and we would need three to get through the night, nothing to spare.  That’s $150 million capital cost, and at 5% interest and 5% depreciation/debt reduction, we would have a bill of $15 million per year.   

That would add about $167 per month to the electricity bill for each of the 7,500 homes.  That’s just for storage, zero cost for the electricity.  

Someday storage costs may be low enough to lower our electricity bills, not increase them, but that is not the case today.    

Ethanol’s Lessons for New Mexico

Ethanol’s Lessons for New Mexico by Peter Burrows 5/10/18 –              

Last March, New Mexico’s Senator Tom Udall introduced a bill that would revise the Renewable Fuel Standards to virtually eliminate blending corn ethanol into gasoline.  It would drop the current 10 percent standard to 9.7 percent and begin a ten-year reduction of the required use of corn ethanol from 15 billion gallons in 2018 to 1 billion by 2029. The Sierra Club and the National Wildlife Federation strongly support the bill.    

This is very good news.  The evidence has been piling up for over 20 years that using corn as a biofuel source has been wasteful, unnecessary and counter-productive.  Here’s what Michael Bruce, Executive Director of the Sierra Club said about the proposed bill and its supporters:   

“The Sierra Club applauds Senator Udall, Congressman Welch, and all the members of Congress who are putting common sense first rather than continuing to permit a dirty and destructive policy to remain intact. Instead of continuing to play political games with our environment and public health, these legislators are moving policies that will help undo the damage caused by the ethanol mandate. We urge Congress to pass this legislation immediately rather than continuing to push false theories about ethanol.”  

As the saying goes, “Strong letter to follow.”  The above statement could have been made 10 years ago, but hey! Better late than never.     

One of the “false theories about ethanol” was that its use would reduce CO2 emissions. Study after study has shown just the opposite: producing and using corn ethanol actually increases CO2 emissions.  Furthermore, using corn has increased the world-wide cost of food by billions of dollars while increasing, not decreasing, the cost per gallon of gasoline.   

The conclusion that ethanol increases CO2 emissions is what has earned the environmentalists’ wrath. In the Church of Global Warming, to increase CO2 emissions is to sin. The fact that it is also very costly is of no concern. After all, they have a world to save.   

To that point, Udall’s bill maintains a cellulosic biofuel mandate.  Cellulosic biofuel uses waste organic plant material, from corn stalks to grass clippings. In theory, it’s a good idea, but the reality is that It is ridiculously expensive.  The Energy Independence and Security Act (EISA) of 2007 mandated a goal of 9 billion gallons of cellulosic ethanol by 2017. The actual production: 540,000 gallons.   

This lack of cellulosic ethanol didn’t deter the EPA from attempting to punish refiners of gasoline for not using the mandated cellulosic feed stocks that did not exist!!  Fortunately, that EPA effort was struck down by a federal court.     

To Udall’s credit, his bill eliminates the ridiculous cellulosic ethanol mandated by EISA, which rises to 21 billion gallons in 2022, and replaces that with a cap of “only” two billion gallons, which doesn’t have to be reached until 2037, at which time the mandate ceases to exist.  I think this is essentially a small concession to the ethanol “true believers” to get their support for the overall bill.   

Regardless, Udall’s bill is a big first step toward curbing an industry, ethanol, that would not exist in anything near its present size without government mandates and subsidies.  Will Udall’s bill get through Congress? It will face opposition from the owners of the over 200 distilleries that have been built to produce ethanol, and opposition from thousands of corn farmers.    

Even if Congress can overcome the millions that will be spent to stop Udall’s bill, President Trump, wearing his RINO hat, has said he will “protect” the corn farmers. “Corn farmers” of course means Iowa, and Iowa means “first primaries,” which in turn means, “Kiss those corn farmers’ tractors, cows and asses.” A wag once noted that if Florida had the first primaries, we’d be making ethanol out of orange juice.     

You’re probably thinking, “OK, Burro, what’s all this got to do with New Mexico.”  Here’s the answer: Every politician in New Mexico, regardless of party, top-to-bottom, thinks that New Mexico has a great future with renewable energy.  All the winners and losers in the upcoming primaries, all the winners and losers next November, all of them, will tout solar panels and windmills as great businesses for New Mexico’s future. If you know of one who doesn’t think that, please tell me who.  Please.  

You’re thinking, “Well, what’s wrong with that?”  What’s wrong is that, like the ethanol industry, windmills and solar panels are almost wholly dependent on government mandates and subsidies.  I would guess that solar is about 90% dependent on government, and wind 100%.    

The second or third largest owner of windmill farms in America is Berkshire Hathaway. The chairman of Berkshire Hathaway is life-long liberal and mega-billionaire Warren Buffett, who is famous for his blunt-spoken opinions. Without tax credits, he said, wind-generated electricity “doesn’t make sense.”    

Without those tax credits, New Mexico has no wind farms and no future as a big producer/exporter of windmill electricity.   

At this point, some of you are saying, “But Burro, New Mexico is so sunny! We should encourage people to put solar panels on their roofs, in fields, on buildings, along the road sides, everywhere! And then we could export all that solar electricity which would save the world from global warming and we’d get rich in the process!”  

The problem with that fantasy is the hard reality of costs.  Even if solar electricity was free, which it isn’t, the cost of storing solar electricity so it can light your house at night is very expensive.  Tesla, the electric car company, is a leader in battery technology and recently completed a project Tesla’s owner, Elon Musk, called the “world’s largest battery.”   

It is a $50 million electric storage facility in Australia that will power 30,000 homes for —-Drum roll please ––one hour.  There are about 7,500 homes in Grant County, so Musk’s “battery” would provide us four hours of electricity.   If we only occasionally had a cloudy day and never had two cloudy days in a row, we would need 36 hours of storage. (No sun from 6 PM through 6 PM the next day is 24 hours, and until 6 AM the next morning is an additional 12 hours.)  

That means we would need nine of Tesla’s batteries at a cost of $450 million.  Financed at 5% and depreciated over 20 years, or 5% per year, means this “battery” will cost Grant County $45 million per year. The cost per 7,500 households would be $6,000 per year, or $500 per month.  

How does $500 per month compare to your current electricity bill?  This is with only 36 hours of storage when at least triple that would be needed. This is with zero cost electricity, i.e. free solar panels that last forever, producing electricity with no transmission costs on free land that is not taxed.    

Last year, a couple of New Mexico’s legislators proposed that 80 percent of NM’s electricity be from renewables by 2040, a huge increase from the 20 percent mandated by 2020.  Some environmentalists want to be 100 percent by 2035. Either option would require massive amounts of storage and a massive increase in your electricity bill.      

Someday, I don’t know when, even in New Mexico it will be recognized that renewable energy is ridiculously expensive. When that day comes, and it will, wind and solar will face a “Udall bill” that will end mandates and subsidies.  Does New Mexico really want to invest its future in industries that depend on subsidies and mandates that will someday end?        

What is “Net Metering” and why should you care?

What is “Net Metering” and why should you care? By Peter Burrows 5/4/18 – 

 To encourage homeowners to install solar panels, most public utilities, including Public Service of New Mexico (PNM), are required by law to pay homeowners for any excess electricity the solar panels produce.  This doesn’t happen all the time, but when it does, the excess electricity is fed into the utility’s grid for sale to other customers. 

Imagine that homes with solar panels have two meters, one that measures the electricity coming into the home from the electric utility, and another that measures the excess solar electricity that goes into the utility grid on those occasions when the solar panels produce more electricity than is being used.  The net of the two is the “net metering” that determines the electric bill.  

In reality, when excess electricity is fed into the utility’s grid, the homeowner’s meter runs in reverse, lowering the electric bill in real time. 

A very important feature of net-metering is that the utility is required to pay the homeowner the same price it charges the homeowner, i.e. the retail price.  At first glance, this sounds fair.  If you’re paying the utility $.11 per kwh for the electricity they sell you, the utility should pay you $.11 per kwh for the electricity you sell them.  

There are two problems with that thinking. The first is that when the utility buys a kwh from you for $.11 and then resells that kwh at for $.11, the utility loses money.  Even a co-op run by pathological profit haters will realize that there must be a markup over the cost of something to cover heat, lights, taxes, accounting and so on.  

You may say, “Oh no, the utility doesn’t need to charge for all that because it’s only giving me back my own electricity when I need it.”  In essence, the utility has stored your excess electricity so you can use it at a later time. Conceptually, that is perfectly accurate.  In practice, that is hugely inaccurate. 

This is the second problem with net metering: It allows the homeowner to use the electric grid as though it was a huge COST-FREE storage battery when there is no such thing as cost-free electric storage, battery or otherwise.   

To illustrate the point, if you disconnect your home from the utility’s power, go “off the grid,” any excess electricity generated by your solar system will be wasted unless you can store it.  The most economical way to do that today is to buy a Powerwall battery from Tesla Motors. Tesla’s 7-kilowatt/13.5-kilowatt-hour storage system costs $5,900, plus “supporting hardware,” whatever that is, and installation.   

You’ll probably need several of these, depending on the size of your solar array, how much sunshine you get, and how much electricity you need.  Regardless, it’s hardly free.  

Bottom line: Net metering is a subsidy to homeowners who have solar installations. If you think this subsidy is paid by the electric utility, you are sadly mistaken.  Look at your electric bill. You will note that there is a “Renewable Energy Rider” which is an addition to your bill, not a reduction. On my bills, this adds about five percent to my electricity cost, before taxes.  

This is how WE, not Public Service of New Mexico (PNM) help to pay the monthly electric bills of people wealthy enough to install solar panels. This is in addition to the subsidy we paid, indirectly, through tax credits given to people as an incentive to buy the solar systems. Tax credits are a reduction in income taxes owed, which means somebody else must pay higher income taxes.   

A case can be made that such subsidies are necessary in order to get a new industry up and running.  I don’t agree but, regardless, it would be a great victory for transparency if candidates for public office would say: “I am in favor of raising your taxes so that rich people can install solar systems and have lower electric bills in order to save all of us from global warming.”   

Or something like that.  

Until recently, 41 states required net metering at retail prices. In Michigan, the Public Service Commission, the equivalent of our Public Regulatory Commission, just last month replaced retail pricing with something closer to wholesale pricing, a step in the right direction.  Montana is considering a similar change. 

In New Mexico the chances of anything so sensible are remote.  Politicians of both parties are enamored of renewable energy, and the Public Regulatory Commission (PRC) will do what is necessary to help PNM meet the renewable fuel standards mandated by New Mexico’s legislators, something the PRC should do, even if that means raising our electric bills. 

Considering its importance, one would hope that candidates running for election to the PRC would be familiar with net metering.  There are five candidates running to represent our district, District Five, two are Democrats, three are Republicans. 

I have met two of the Republicans and neither was familiar with net metering.  One, Ben Hall, was on the PRC from 2010 to 2014 when he was defeated for reelection, and I think he should have been knowledgeable about net metering. Instead, he tried to tell me that it was some kind of Federal mandate.  Ben Hall should withdraw from the race.  

The other candidate I have met, Chris Mathys, also didn’t know about net metering but at least he didn’t try to BS me. There’s hope for him.  I have not met the third Republican candidate, Joe Bizzell, but I did email him yesterday, “Is net metering a good idea?”  

No answer yet. I plan on asking the two Democratic candidates the same question, and I’ll let you know how all three respond.   


A Common Sense Proposal to Increase Safety at New Mexico’s Schools

A Common Sense Proposal to Increase Safety at New Mexico’s Schools, by Peter Burrows 3/14/18 – 

Last month’s horrific shooting at a high school in Parkland, Florida, elicited the usual storm of hysterical cries to “do something.”  Most of the “somethings” proposed would in fact do nothing.  

Not all, however.  The common sense notion that teachers should be armed is gaining ground.  There are many who think arming teachers is anything but “common sense,” and those people are wrong.  Let’s look at some facts. 

1)  Crazy people are crazy, not stupid.  I should rewrite that at least ten times, because it is an important, crucial fact that gun control advocates just don’t get: The killers are crazy, not stupid.  

2) 98 percent of all mass shootings in the United States happen in placers that are legally designated as “gun free zones.”    

3) Almost all schools are gun free zones.  

The linkage between the above three points should be obvious.  Try to imagine you are a twisted little psychopath who wants to go out in a blaze of infamy.  You approach Stout Elementary during school hours and you notice a sign, a BIG sign, above the door that reads:  ALL EMPLOYEES IN THIS BUILDING ARE PERMITTED TO CARRY CONCEALED FIREARMS.  

I believe the typical psychopath would read that and decide to wreak mayhem elsewhere.  Maybe he’ll go down to the Silco Theater, confident that he can shoot the place up and escape out the back, undeterred and still on the rampage.  

He gets to the Silco, however, and notices a sign, another big one, that reads: LAW ENFORCEMENT OFFICERS AND CONCEALED CARRY PERMIT HOLDERS –  HALF PRICE.  I’m betting he reads that and heads to Walmart, where the sign on the door says firearms are not permitted in the building.  

Yes, indeed. That’s the place to kill lots of folks, unless of course, there’s a lawbreaker on the premises who might shoot back.    

The bottom line is that it is not the psychopath who is stupid; it is the advocate of gun free zones.   

Thinking that an armed guard is going to solve the problem is also stupid.  Didn’t work in Lakeland, where the guard was either incompetent or cowardly. Doesn’t make any difference which, because any psychopath with an ounce of intelligence will know that the guard is the first and only person he has to take out to then have a risk-free killing zone.  

The beauty of having armed school personnel is that not every teacher has to be armed, maybe not any. But the psycho won’t know who’s armed.  Could be the janitor. Could be the little old lady helping to teach kindergarten. Could be the kindergarten teacher.   

You get my point, I hope.  

As a practical matter, this does not eliminate the mass-shooter problem, it merely changes the locale. True, but it does keep the kids safe, which is the objective.  

Implementing this plan would be simplicity itself: The New Mexico Legislature passes a law that requires every employee of our public schools pass the background check required to buy a handgun.  (Not a bad idea, guns or not.) If they pass, they get a concealed carry permit, good for as long as they are employed by the school, which allows the employee to carry a concealed weapon at the school, or anywhere.  

Any employee can carry a weapon, but no employee is required to.  Training should be available for those who want it, but not required, because we don’t want to identify those who may be armed in any way.  The schools could sell weapons wholesale, but on a strictly confidential basis, for the same reason. 

Even if nobody in the school was armed, something I hope would never happen, the psycho would see the sign, ALL EMPLOYEES IN THIS BUILDING ARE PERMITTED TO CARRY CONCEALED FIREARMS and go elsewhere.  

Any supervisor who objects to that sign should be fired. What that person is doing is maintaining the invisible sign, easily read by the psychopath, that reads: THIS IS A GUN FREE ZONE. NOBODY WILL STOP YOU FROM KILLING OUR CHILDREN. 

Stupid.  Really, really stupid. 


Straight up stupid

“Straight up stupid” by Peter Burrows 3/5/18 — 

Somebody once described the Republicans and the Democrats as “the stupid party and the evil party.”  That’s a little unfair to the Republicans, as there is plenty of nonpartisan stupidity to go around, but last week the Republicans owned the title. No contest. Two examples: 

First, Republican Lt. Governor John Sanchez visited Silver City to talk to local officials about the Air Force’s proposed Gila Wilderness flyovers.  He then spent an hour or so with local Republicans.  At that meeting, he lamented to some of us about what a money loser Governor Bill Richardson’s Rail Runner had proven to be.   

He also mentioned another money-losing Richardson folly, the Spaceport. (I note that quite a few Republicans put on their stupid hats and supported Richardson’s Spaceport idea.)  New Mexico has spent $250 million on a facility that was supposed to start sending rich people into sub-orbit starting in 2010. That’s right, 2010.  Flights to date: Zero. 

Surprisingly, the recent budget bill has $10 million for a new hangar at the spaceport, and when I asked Sanchez if that was going to get a line item veto, I got the strong impression that it would not. Sanchez told us the Spaceport has new management that is “really professional” and will sell the locale to aerospace companies around the world and the new hangar will facilitate that and blah, blah, blah.  

Besides, the Spaceport, like the Rail Runner, can’t be sold because nobody will buy it. Gee, I said, why not try to GIVE it to Jeff Bezos or Elon Musk, a couple guys who might know how to make a buck down there?  

(Bezos and Musk are billionaire entrepreneurs operating their own space cargo/travel companies. I doubt if either would want a facility located in the middle of nowhere, but it would be worth a try.)   

Sanchez looked at me as though I had lost my mind. He was probably thinking, “What a crazy Old Fart. The Spaceport cost a quarter of a billion dollars and he wants to give it away!”   

Does Sanchez really think the state can hire a bureaucrat who will do a better job than Amazon founder Jeff Bezos? Is he that stupid? More likely, Sanchez has been a member of the political class for so long that he can’t bring himself to admit that the State of New Mexico has made two of the most colossal, straight up stupid investments ever made by a state government.   

That we won’t shut them down or give them away illustrates the sunk-cost fallacy, in which previous investments, the sunk costs, compel people to add to those investments even though it doesn’t make economic sense to do so.  Here’s a great definition I found on the web: 

Sunk costs “are investments which can never be recovered. An android with fully functioning logic circuits would never make a decision which took sunk costs into account, but you would. As an emotional human being, your aversion to loss often leads you right into the sunk cost fallacy.”    

From another site: “The sunk cost fallacy is sometimes called the Concorde fallacy —- a reference to the construction of the first commercial supersonic airliner. The project was predicted to be a failure early on, but everyone involved kept goingTheir shared investment built a hefty psychological burden which outweighed their better judgements. After losing an incredible amount of money, effort and time, they didn’t want to just give up.” 

Sound familiar?   

Exercise of the fallacy is commonly called throwing good money after bad.  Those of us with an MBA in finance have a more technical term for sunk costs: Spilt Milk.  

The state should shut down both the Rail Runner and the Spaceport because doing so will save New Mexico money.   It won’t recover the investments made or the obligations incurred. Those are sunk costs.  

There is no hope under any realistic scenario for the Rail Runner, but there is a slim chance the Spaceport could become viable if it was given to private investors with the promise it would be a tax-free zone — forever.  Do not hold your breath waiting for that to happen.  

I can forgive New Mexico’s Republicans for succumbing to the sunk cost fallacy concerning Richardson’s boondoggles, but it is unforgivable not to make political hay out of them. These are two examples of Democratic stupidity that voters should be reminded of — constantly. Not to do so is even more stupid than continuing to pour money into them. Damn RINOS. Might as well be Democrats. 

The other great stupidity of last week belongs to President Trump.  He proved his Republican bona fides by imposing tariffs on steel and aluminum imports, following in the footsteps of president George W. Bush, who imposed steel import tariffs in 2002.  

The President of the Peterson Institute, economist Adam Posner, said on CNBC that Trump’s tariffs were “straight up stupid,” a wonderful phrase now a part of my lexicon. He also said Trump’s move was “fundamentally incompetent, corrupt or misguided.” Yes, indeed.  Dictatorial, too. Obama-like.   

I don’t know if there is such a thing as “trade deficit fallacy,” but there should be, right alongside sunk cost fallacy. Trump doubled down on his stupidity by saying “Trade wars are good, and easy to win.” I wonder if there is an example in history where a nation “won” a trade war?    

The effect of tariffs ripples through the economy in ways most people don’t see.  A good example, close to home, is Trump’s import tariffs on solar panels, a move opposed by our Senator Heinrich, a Democrat, who urged Trump to “look at the bigger picture,” that being that solar panel manufacturing is a miniscule portion of the solar industry, and the increased cost of panels would hurt demand, effecting installers, inverter manufacturers and so on.   

The senator is right. Of course, the REALLY big picture would include the subsidies the solar industry gets, the uneconomic realities of solar power and the stupidity of New Mexico trying to save the world from Global Warming. (Always capitalize a religion.) So, in this case, import tariffs might actually have a good effect, though not in the way intended.   

Stupid Republican thwarts evil Democrat.  Nothing to be happy about.