LOW OIL PRICES ARE A HUGE ENVIRONMENTAL OPPORTUNITY

The precipitous drop in oil prices creates a huge, once-in-a-lifetime opportunity for every person or group that is fighting the energy industry over environmental issues.  Before I reveal what that opportunity is, let me tell you that I followed and researched energy companies, primarily in North America, for almost two decades in my past job as a portfolio manager.  Thus I witnessed firsthand the growth of what some people call the shale ‘revolution’.  As a focused area of investment, my angle was to always be on the lookout for any disaster that could halt this growth, and the supposed profitability of shale. In doing so, I never encountered an environmental ‘smoking-gun’ that was so alarming that it could be used to sway public opinion, say in the manner of a nuclear meltdown.  Nevertheless, I was certainly aware of all the less-than-catastrophic destruction going on.

I was also amused watching the environmental and political fight over the XL pipeline last year.  Once again there really wasn’t a smoking-gun that could get anyone but those already in the environmental camp energized, plus a few farmers in a remote part of the country.  Several months ago I read how the real aim behind the fight to stop the pipeline was Tom Steyer’s desire to halt the importation and use of heavy oil from Canada, and the extraction and processing business in Western Canada as a whole. That sounds admirable, and he and others threw a lot of money and passion into it.  But in my mind what I really think killed it were the economics: between competing pipeline alternatives and logistical oil gluts, the companies pushing for it stopped pushing so hard once their profit motive turned worse.

I don’t mean to pooh-pooh in anyway the efforts of those fighting fracking and climate change, I just think it’s an uphill battle against those with greater resources and a profit motive, namely the energy companies, and the understandable unwillingness of citizens to care about the long-term consequences of that which they cannot see as they try to get on with their daily lives.  Throw in the argument that shale drilling keeps a lid on energy prices, true, and your job becomes almost insurmountable.

Fortunately, from the excesses of capitalism, comes the huge opportunity to which I alluded.  Because with gas prices way below $3 a gallon, now is the time for Continue reading

COLLEGE TUITION: NOBODY PAYS RETAIL, EXCEPT YOU

The increasing cost of college has been a headline topic for over twenty years.  It basically goes something like this: annual college costs have risen x% a year, while the rate of inflation is only y% a year.  For the sake of numbers let’s use 3% and 9%.  While that 6% differential may seem inconsequential, the power of compounding over the decades has yielded a number like this one cherry-picked from an article linked to below: Since 1985, the overall consumer price index has risen 115% while the college education inflation rate has risen nearly 500%.  

All of the above is pretty much undisputed: college costs have risen much faster than inflation.  What is in contention, is the reason “why?” Some articles take the angle that college presidents and senior staff are paid outlandishly, others about how big capital projects like luxury dorms, lounges, and athletic facilities have added to costs.  Of course these type of stories have been overshadowed since 2008 by the ramifications of the higher tuition costs: the huge increase in student debt and defaults.

Lost in the haze of this outrage and vitriol, is the real reason for college costs gapping inflation: few students pay the full sticker price.  All this talk about college costing 50, 60, or 80 thousand a year is applicable to very few.  Unfortunately, if you are reading this website, you are probably one of that few.  Furthermore, you are probably not a member of the uber-wealthy, for whom this is a trivial amount.

What you are though, is a subsidizer of all those who do not pay full price. Continue reading

THE CRUSHING OF THE UPPER MIDDLE CLASS

Hunters Point South is thirty acres of prime waterfront property directly across the East River from Manhattan in Queens, New York.  Until a year ago, it arguably could have been considered the most valuable piece of land in America1.  In addition to unparallelled views of all five boroughs, especially the iconic Manhattan skyline, it provides easier access to Midtown(New York’s largest central business district, the busiest single commercial district in the United States, and among the most intensely used pieces of real estate in the world)2 than most places within Manhattan, whether by car or subway.  When combined with the ability to create new construction containing all the features desired by Chinese tycoons, Russian oligarchs, private equity titans, and others of that uber-wealthy ilk; this extraordinary once in a lifetime property could demand top dollar.  Instead, it is owned by the City of New York, which has decided to use this choice parcel to develop something they have  termed “affordable housing.”

‘Hmm,’ you’re thinking, ‘that seems to be a very benevolent thing to do, maybe the politicians finally got it right?’  They did not.  They completely missed, or intentionally utilized, the sleight of hand that takes from one middle class strata and gives to another. Continue reading

  1. Here’s the math and thesis: http://bit.ly/1dilVay []
  2. http://en.wikipedia.org/wiki/Midtown_Manhattan []