Articles by Sean Casten

How much would you pay for cheap gas?

Suppose you're a commodity trader. Someone offers you a future contract to buy gasoline at $2.99/gallon for the next three years. If you think that you can sell that gasoline for more than that, you might think this is a license to print money, and would therefore pay for that privilege. Which raises the following questions:

1. How much would you pay for that future "strip"?
2. Is the answer to Question 1 more or less than a Chrysler?

Lieberman-Warner criticism, Part 5

This is the fifth in a five-part series exploring the details of the Lieberman-Warner Climate Security Act. See also part 1, part 2, part 3, and part 4.

I close out this series with one small, specific thing that Lieberman-Warner gets wrong -- not necessarily because it's the biggest or most important thing it gets wrong; rather, because it illustrates the challenge faced by big and complicated legislation: it's really hard not to mess up the little stuff. Not out of malice, necessarily, but simply because it's hard to get that much right. And sometimes -- as in this case -- the little things you get wrong can have big consequences.

When all is said and done, good government policy isn't that much different from good human resources policy. If your employer makes it clear to you how your actions convert into your salary, you tend to work well together. On the other hand, if your employer gives you a 10-page incentive compensation plan with individual, department-wide, and corporate-level targets, bonus points for how many team-building sessions you go to, credit for attending various training seminars ... you get my point.

In a nutshell, that's the crux of the problem with Lieberman-Warner. Rather than starting simple and adding on complexity only as needed, it starts really complicated and virtually ensures that lots of those little details are wrong, misdirected, and/or in conflict with one another. In this final post, I'll look at just one of those details: utility decoupling.

Carbon costs and energy prices, NC edition

As the most ardent Gristophiles know, this site is hosting a lively debate over the degree to which prices imposed on carbon emissions will impact energy costs.

To recap, if prices do impact costs, then a carbon tax provides an investment incentive. If they don't, then we need some carrots to go with the stick of a tax.

Hot off the presses comes this bit of news from Greenwire ($ub req'd):

Duke Energy Ohio is asking federal regulators to approve the transfer of its Ohio power plants to companies owned by North Carolina-based Duke Energy Corp. whose rates are set in a competitive market instead of by state regulators.

Why, you ask?

Lieberman Warner criticism, Part 4

This is the fourth in a five-part series exploring the details of the Lieberman-Warner Climate Security Act. See also part 1, part 2, and part 3.

I grew up in New York and was a die-hard Knicks fan. I can still remember the lump in my throat when I was at a Mets game in 1985 and the Diamond Vision announced that the Knicks had won the draft lottery, ensuring that they'd get Patrick Ewing and build a franchise around him. And yeah, they never won a title with him (damn that Michael Jordan!), but you always got the sense that they could.

Suffice to say, things have changed. They have a massive budget, a high profile, the biggest media market ... and yet they built a team around guys with neither the talent nor will to make the playoffs, much less win.

Lieberman-Warner is essentially taking a New York Knicks approach to GHG policy. It's got a huge budget. It's got a huge profile. It appears to be too big to fail. And yet its success is, to a large degree, dependent upon the actions of individuals who have neither the ability nor motivation to lower GHG emissions. Right game, wrong team. This is perhaps the deepest flaw with the Lieberman-Warner approach as currently structured, but also the most subtle. Here's why: