Tuesday, May 28, 2013

When Neymar Roots He Roots for the Oregon State Beavers!

As you know I am in Brasil and the story that has dominated the news over the past week or so is that saga of the soccer superstar Neymar and his transfer from local club Santos to super-club Barcelona.

Yesterday, however I started seeing pictures in the press with Neymar wearing what looked suspiciously like an Oregon State baseball hat:

But I figured I must be wrong.  But NO!, in today's Folha de São Paulo is this picture (I could not find the electronic version on-line so this is my iPhone photo of the page):

Sure enough it is an OSU baseball hat!

Obviously Neymar is hoping the Beavers wind the College World Series again...

Finally Someone Gets Serious About Fiscal Stability

Some movement on a permanent rainy-day mechanism from Salem.  Thank you Brent Barton!  Perhaps the most pressing issue for the long-term well-being of the state and as far as I could tell no one was really interested. This is perhaps less than Ideal from an ivory tower idealist's perspective, and I take the point about incrementalism, but I'll take anything that will pass at this point.

Salem has shown now real ability to do anything other than incremental reforms anyway, so let's start chipping away.  This is not a partisan issue at heart, it is a common sense issue and should not be derailed by partisanship.  It appears Brent has found an approach that is vanilla-enough for the legislature to potentially act on.  Let's hope so.

Friday, May 24, 2013

Picture of the Day: Falling Investment in Education

From the Wall Street Journal:

U.S. public-education spending per student fell in 2011 for the first time in more than three decades, according to new U.S. Census Bureau data issued Tuesday.

Thursday, May 23, 2013

Soccernomics: Principal-Agent Models and Options, MLS Style

Image credit: AFP/Getty Images

Forbes has a piece on-line that describes David Beckham's 'windfall' now that Manchester City FC and the New York Yankees have teamed up to purchase the franchise rights for an MLS team in New York City for $100 million:
As part of his deal with MLS when he played for the Los Angeles Galaxy, Beckham was given the right to buy an MLS expansion team for $25 million. The league has confirmed that Beckham has been having discussions with MLS recently about doing just that. Grabbing an MLS team for $25 million would be a huge windfall for the 38-year old Beckham.
This type of option contract is familiar in the corporate world where companies are eager to link executive pay to company performance to avoid moral hazard problems familiar in principal-agent situations. For example the CEO taking decisions that benefit themselves personally but harm the long-term profit of the company.  The problem with these in the corporate world is that they have created a myopia among some CEOs who are eager to drive the stock price up in the short-term and cash out disregarding the future profits of the company.  A classic example is the CEO who cuts costs and increases profitability by eliminating the R&D division.  Good for now, but what happens when the new products dry up?

But I digress.  My point is that MLS was not just sweetening the pot when it offered Beckham the option of buying into the league for $25 million, it was giving Beckham a big incentive to care about the long term health of the league which depended more than a little in how he behaved post contract.  It would be interesting to know who first proposed the option: the MLS or Beckham but it seems a reasonable way to align incentives and help ensure the visibility and reputation of the league.

All of this suggests why the MLS has survived and is starting to show some real life: there are some savvy folks running the league...

Wednesday, May 22, 2013

Obama Wants More Infrastructure Investment, Will Democrats Go Along?

NOTE: Once more into the breach from Fred Thompson.  The title refers to this piece by Kevin Drum. 

I should acknowledge up front both that I am an infrastructure enthusiast and that I think Keystone XL is a very smart infrastructure project. Montana, North Dakota, and probably Alberta crude would sell for $20 a barrel more than it does now if it could be cheaply transported to Houston, Texas. A rough, quick and dirty calculation suggests that XL, which will move 800,000 barrels a day at low cost, would generate about $6 billion in net benefit per year; that’s a present value of approximately $120 billion (i.e., the size of Oregon’s annual state product). But like all big infrastructure projects Keystone XL has an environmental downside, in this instance arguably a very big one. James Hansen, for example, asserts that its effects would be both catastrophic and irreversible.

Most of the principled disagreement over the Keystone XL pipeline appears to reflect different counterfactuals. By principled I mean arguments that do not involve the rejection of anthropogenic climate change or denial that prudence requires that we take the possibility of catastrophe very seriously and take action to avert or, if that is not possible, mitigate its dimensions.

The key counterfactual has to do with what will happen if Keystone XL is not built. Opponents claim that the crude oil it would carry will remain in the ground, resulting in a net reduction in the output of greenhouse gases. Proponents believe that Canada’s tar sands will be exploited at more or less the same rate whether XL is built or no.

Can we bring some simple economic thinking to bear on this issue? Perhaps, but before that some context. First, nearly all of the crude oil exported from Canada will be refined and consumed in the United States. Second, most of the Canadian crude now consumed in the US comes here via pipeline and is refined in Oklahoma, Missouri, and Illinois. Relatively small amounts are shipped by rail, some all the way to Texas and New Jersey, but not much. A handful of fairly small pipelines carry oil from Alberta through British Columbia and Washington. Some of the crude they carry is refined in Washington State but most of it is shipped on to California. Third, Keystone 3, which runs from Oklahoma to Texas, will be completed this year. Consequently, because the refineries there can process the Canadian stuff much more efficiently, a lot of the Canadian crude now refined in Illinois and Oklahoma will soon go on to Texas. Fourth, Canadian crude going to Texas will replace Venezuelan, Mexican, and Nigerian crude that now arrives by ship. Expansion of the pipelines from Alberta to British Columbia and Washington would replace oil from the Mideast (where California gets most of the oil it refines).

Building Keystone XL also means that the crude oil produced in North Dakota and Montana, the bulk of which is now moved by train to refiners, would instead be transported by pipeline. Consequently, building XL would have the immediate result of reducing the amount of crude transported by rail in the US. Whether it would also forestall an increase in rail shipments from Canada to the US is more iffy.

Initially, many of Keystone XL’s opponents implicitly took the ‘no effect’ position. They argued that XL is unneeded, that XL’s only effect would be to make the route traveled by crude from Alberta to Texas less circuitous, and that existing pipelines and railroads have more than enough capacity to move Canadian crude to the US: “Keystone XL’s capacity won’t be needed until sometime after 2020 at the earliest and maybe not until after 2030.” Consequently, most of the opposition focused on XL’s threat to the Ogallala Aquifer and the environmentally sensitive Sand Hills area of Nebraska. It was only after Keystone changed XL’s proposed route to avoid the Sand Hills that opposition coalesced around the argument made all along by XL opponent James Hansen that “If this project gains approval, it will become exceedingly difficult to control … exploitation of tar sands [which] would make it implausible to stabilize climate and avoid disastrous global climate impacts.”

The crux of this claim is that extraction and use of fossil fuels like oil and coal are directly related to the cost of transport. “If a pipeline provides cheaper transport, it’s going to suppress the cost of fossil fuels, prolonging their use. The cost of transport and the price of fossil fuels cannot be separated.” With respect to oil from Alberta’s tar sands, “the payoff from getting bitumen out of the sand is very low, it has to be heated to make the oil flow. The acidity of the oil is high and it’s full of stuff that no one wants to burn. Lacking the pipe line, there won’t be enough margin to support moving the product by rail.” Clearly, at least some opponents of the Keystone XL understand that the relevance of transportation costs to the extraction and use of crude oil depends on whether its producers are marginal suppliers or infra-marginal suppliers and by how much. If they are marginal suppliers, transportation costs are critical, if they are infra-marginal suppliers, not so much.

What is the weight of the evidence on this issue? My reading of the evidence is that, at $50 a barrel, the tar sands would be marginal suppliers. At $100 a barrel, exploiting this resource is a license to print money, even if the cost to get it to refiners is >$20 a barrel. Right now Alberta is an infra-marginal supplier. That is also the case with respect to North Dakota and Montana. Of course, one can imagine contingencies in which things would be otherwise. The price of oil could drop, for example, or, some time in the future, producers may choose to exploit harder to access or process tar sands. Clearly, there are circumstances in which transportation costs would affect the exploitation and use of these resources, although it is hard to imagine situations in which they would matter as much as the development of production technologies. The bottom line is that success in the fight against greenhouse gases does not depend in meaningful ways on this or any other infrastructure project. 

What does the fight against greenhouse gases depend upon? The enactment of measures such as carbon taxes, the payoff to investments in alternative technologies, and, to a lesser extent, trade policy. How would a carbon tax work? A carbon tax would drive a  Investing in technologies that provide substitutes for coal and petroleum: conservation, solar and wind power, nuclear power, algal biofuel, even natural gas and methane hydrates, will further reduce the demand for fossil coal and oil. That’s the next most important thing we can do. At best, fights about infrastructure are sideshows; at worst, distractions from issues that really matter in the fight against pollution and global warming.
wedge between the price paid by consumers and the price received by producers, reducing both supply of (production) and demand for fossil fuels (consumption) and encourage alternative, less carbon intense technologies. For example, a carbon tax of approximately $50 a barrel would render Alberta a marginal supplier (assuming fixed technology) and go a long way toward preempting more intensive exploitation of this resource. It doesn't matter whether the tax is levied at the pump or on the producer/importer and it most emphatically doesn't matter what you call it, the incidence of an excise tied to carbon content would be the same, as would the effects on consumption and production. Enacting something like a carbon tax is the most important thing we can do to fight greenhouse gases.

Monday, May 20, 2013

A Tale of Two Cities: Southern Hemisphere

A few weeks ago I took a trip from my temporary home of São Paulo to Buenos Aires.  This trip is a study in contrasts and a fascinating study for an economic naturalist.

Street market in San Telmo

São Paulo is a reflection of modern Brazil.  As a city it has sprung up like a weed - all rapid growth and no planning - and now the government is desperately trying to bring some order and their showcase weed-garden hampered by the fertilizer of robust growth that keeps the weeds springing up all over. As I have mentioned before, what is curious about SP is that the private investment in amenities (all safely within the confines of luxury apartment complexes) results in even less interest in creating lively and livable public spaces. The public good problem writ large.

La Bombonera - legendary home of Boca Juniors

Buenos Aires is a reflection of the past glory of Argentina.  As a city it evolved slowly and it was plotted, planned and designed to resemble the grand European capitals from whence the population largely came.  It is like a beautiful European garden that at one time was glorious but now has been left to decay a bit.  Despite the neglect and decay however, the city retains its charm.  Perhaps because of the repeated economic crises that have hit Argentina and perhaps because of the populism of the government there is still heavy investment in the public spaces of BA and because of that the city seems to revel in them and for that the city feels more human and humane.


I was surprised at how much English was spoken in BA by almost everyone you encounter from taxi drivers to waiters the clerks.  This is in stark contrast to SP where almost no one speaks English apart from wealthy business types.  I speculated that this is partly a reflection of the two economies: employment opportunities are abound in SP and labor is scarce so less educated workers find themselves working in restaurants, taxis, hotels and the like.  Since Argentina's economy has been so poor, highly educated young adults are resorting to restaurant work, taxi driving and so on.  Even the bell-boy of our rather modest hotel spoke almost fluent English.  I speculated as well that in Brazil English was not seen as a pathway to success, there is plenty of economic opportunity domestically so the incentive to learn English is less than in Argentina where domestic opportunity is scarce.

Porteños relaxing in the park on a perfect day in BA.  Other than the gated and heavily patrolled Iburapuera park, you will not find this in SP.  This is Parque Las Heras. 

I still think there could be a lot of truth to these theories but my Brazilian friends had another when I mentioned it to them: Argentina is a lot more educated than Brazil, full-stop.  And it is true.  Argentina has a high-school enrollment rate of over 70% while Brazil's is around 36%.  The average years of education for an Argentine is 9.3 while for a Brazilian it is 7.2.  Though I knew the stats for Brazil I was surprised at the stats for Argentina.

Modern BA: Old cars and new heros.

Still one cannot escape the difference in the energy of Brazil versus Argentina - Brazil's feels like a booming economy, no where more so than SP, while Argentina still feels like it is struggling and BA reflects this.  Black market money changers assault you all over tourist areas of BA thanks to the government trying to control the exchange rate at about 5 pesos to the US dollar when the black market is offering 10 (when the black market rate hit 10, they Argentine press said it had reached the Messi-Peso!).  The Kirchner government is trying to control prices by fiat and even tried to prosecute economists for publishing an non-government approved inflation rate.  Unemployment is high but there are a lot of public works going on which is nice in the Keynesian sense but worrying given Argentina's recent debt history.

Still despite all this I found Buenos Aires to be delightful.  I last visited BA in 2009 and I found it very grim.  The weather was cold but the mood seemed dark.  I was pleasantly surprised to find the mood considerably better (the absolutely perfect weather certainly helped) and surface signs that the economy was picking up abounded - full restaurants, few empty shops in the main commercial areas, etc.  And, by the way property in BA is incredibly cheap - large luxury apartments in Palermo, for example, go for around US $150,000, so if you want to be an international speculator in property, this is a good place to start.

Tuesday, May 14, 2013

Oregon April Unemployment Falls to 8% on 3,700 New Jobs

The Oregon labor situation continues to improve at a glacial pace, but string of positive jobs reports does show the state economy moving in the right direction.  The unemployment rate is down to 8% and the state added 3,700 jobs on a seasonally adjusted basis and 3,800 private sector jobs.

Given the still shaky state of the world's economies, it is welcome news.

Thursday, May 9, 2013


NOTE: Just in the nick of time Fred Thompson is back with a two-part long-form blog piece on coal ports in the Northwest.  Today (Thursday) is part two and part one posted yesterday (Wednesday)


At the beginning of this semester, one of the teams in my cost benefit class took on the assignment of looking at Oregon's coal terminal projects. I asked them to think about the following arguments reported in The Oregonian:


* The projects would create hundreds of Northwest jobs, boost tax revenues and preserve U.S. mining jobs.

*Exports would increase Asia's supply of "clean coal" and, thereby, improve their quality of life; Powder River Basin coal, like coal from Indonesia, is relatively low in sulfur and mercury and high in BTU content.

* China's newer fleet of coal-fired power plants is more efficient than America's, but its mining is far more hazardous, particularly at the marginal mines likely to be displaced by U.S. exports.


* Exports would increase Northwest diesel and coal dust pollution, especially near marine terminals, squeeze rail and barge routes, and split communities with long and loud coal trains.

* Powder River Basin coal from Montana and Wyoming would help Asia add electricity A reliable U.S. supply would encourage more Asian coal plants. That would reduce prospects for clean power, and boost pollution and global warming.

My students turned in their final report last Thursday, but we have talked about the topic for an hour or so each week throughout the term and shared sources. So my thinking has been influenced by theirs and vice versa.

To address the first PRO claim, we did quick and dirty analyses of the regional economic effects of the two Oregon projects using IMPLAN ProTM input-output data and software. Both indicted substantial gains, but it is our assessment that the net benefits deriving from those gains are largely contingent on the state of the economy overall. With Oregon unemployment rates still over 8 percent, it is reasonable to count the full simulative effect of these infrastructure projects, which is to say the local multipliers from building and operating these projects are currently >2. Hence, the boost to state product from the Morrow-Pacific project alone would be nearly .5 percent.

In the long run, as we approach full employment, multipliers will fall. Indeed, at full-employment, the net economic benefits from these projects will be approximately equal to their net increases in incomes and tax payments, both direct and indirect. In other words they will promote economic development only if they replace less productive jobs with more productive jobs. By regional standards the expected average wage associated with these projects, about $60,000 ($50-$80 thousand) per annum looks pretty good

We largely discounted the next two PRO claims. We subsumed the second under our discussion of the effect of the projects on pollution and global warming. The third was simply too distant to influence the decisions contemplated here.

On the first CON point, we concluded that these issues are not relevant. If the projects fail to mitigate these problems adequately, they will simply not be permitted to proceed. The Morrow Pacific project has done so. The Kinder Morgan project has not, but that is not to say that it cannot.

The second CON claim is the crux of the matter. The effect of the projects on pollution and global warming will depend on the quantity Powder River coal to the Far East shipped and the effect of those shipments on the total quantity of coal consumed. If all four plants were to be completed shipments would probably be about 100 million metric tons. As I have indicated, at this point, there is little chance that all four of the remaining terminal projects will be completed, so there is considerable uncertainty about the quantity of shipments.

The CON claim presumes that there would be no substitution of Powder River coal for local supplies whatsoever, so that Asian coal consumption would increase by the full amount of shipments and none of the potential benefits from substituting clean coal for dirtier coal would be realized. That is the most pessimistic scenario. In contrast, proponents of these projects imply that shipments would have no effect on Asian consumption (consumption would remain the same) and all of the potential benefits from substituting clean coal for dirtier coal would be realized. This is the rosy scenario. I think the most likely scenario would involve some increase in Asian coal consumption, primarily because the availability of cleaner coal might delay the transition to cleaner sources of energy. However, it is also likely that this increase would be largely offset by the benefits from substituting clean coal for dirtier coal. I also think that the rosy scenario is at least as likely as pessimistic one, although IMHO both are highly unlikely.

In any case, this issue should be put in context. The success or failure of efforts to fight greenhouse gases does not depend upon the success or failure of these projects. There are plenty of sources of low-cost coal available to Asia. South and East Asia consumes 6 billion metric tons of coal per annum. China alone, for example, used approximately 4.5 billion tons of coal last year, increasing at more than 10 percent per annum. The Morrow Pacific project proposes to ship 4.4 million tons a year, perhaps increasing to 8.8 million tons. Adding up all the proposed US projects, Kinder Morgan’s Port Westward project, the Millennium Bulk Terminal in Longview, Washington, and the Gateway Pacific Terminal project in Cherry Point, Washington, on Puget Sound near Bellingham, would add about 100 million tons to that total (1.7 percent), this is less than ¼ the annual increase in Chinese consumption alone. The fight against greenhouse gases depends up the enactment of measures such as carbon taxes, the payoff to investments in technology, and, to a lesser extent, trade policy. At best, this is a sideshow.

Nevertheless, it should be acknowledged that there is evidence that increased shipments of US coal to Europe (or, perhaps, more correctly the availability of reliable supplies of low cost thermal coal) have delayed its transition to cleaner sources of energy and may have, therefore, increased future ambient greenhouse gas stocks. Would selling Powder River Coal to Asia have a similar effect?

If US coal can penetrate Asian markets only by reducing prices, the answer is probably yes. But I am not persuaded that is the case. While it is true that increased reliance on natural gas in the US has led to substantial reductions in domestic coal prices, making US coal potentially more attractive to East Asian importers, once transportation costs are taken into account, the price of US coal, especially cleaner coal from the Great Basin, is often higher than the price of locally mined coal in East Asia. Evidently the reason that US coal is preferred in East Asia to local coal is that it is cleaner. Compared to the lignite mined in China, for example, burning western coal from the US generates less CO2, Carbon monoxide, and nitrogen oxides per unit of energy, 30-60 percent less sulfur dioxide and particulate matter, and one-tenth the oxides of mercury. Burning imported cleaner coal in Chinese coal-fired power plants could, therefore, reduce global greenhouse emissions, and will reduce most other kinds of air pollution.

Would that slow the transition to alternative, cleaner energy sources? Right now, East Asia wants Powder River Basin coal, because it is cleaner than its local coal. However, Asians are much less constrained than Europeans with respect to energy access and likely to be a lot less fussy about using alternatives to coal like nuclear power, methane hydrates, algal biofuel, or natural gas from fracking. Many of Asia’s newer coal-fired power plants could be converted to natural gas. China, for example, has more shale gas than the United States or so we are given to understand. It is not unlikely that Asians will increasingly pursue these options, to the extent that they can afford them. That is really the only hope we have that their greenhouse gas emissions will be abated, but it is not I think entirely a vain hope.

In the long run the greenhouse gases produced in the Far East will depend not on the availability of coal, but on the rate of transition to green technologies, which will depend on the willingness and ability of the East Asians to pay to make the transition. The richer they are, the more environmental quality they will want to buy. Environmental quality is a superior good. So we should do everything in our power to make them (and us) richer.

Wednesday, May 8, 2013


NOTE: Just in the nick of time Fred Thompson is back with a two-part long-form blog piece on coal ports in the Northwest.  Today (Wednesday) is part one and part two will post tomorrow (Thursday) 


Although proposals to build and operate coal-export terminals at Grey’s Harbor, Washington and Coos Bay, Oregon have been withdrawn, the Morrow Pacific project (Boardman – Port Westward) is well under way and projects on the lower Columbia River and Puget Sound remain under serious consideration.

Ambre Energy, an Australian company, has contracts to supply Powder River Basin coal to South Korea. Its Morrow Pacific project is designed to fulfill those contracts. It will haul coal from Montana and Wyoming by BNSF trains to Spokane, Washington and, then, by Union Pacific trains to a transfer and loading facility at the Port of Morrow, near Boardman, Oregon, about 200 miles east of Port St. Helens. Morrow Pacific will then move the coal by its own “energy-efficient, covered barges” down the Columbia River to Port St. Helens’ Port Westward Industrial Park, where it will transfer the coal directly from the barges to ships bound for Asia.

The Morrow Pacific project is smaller (5-10 million metric tons per annum), than are its potential rivals, but more capital and labor intensive (its planned investment in plant and equipment is 30 percent greater than Kinder Morgan’s and its output per employee approximately one-third Kinder Morgan’s). This is because it was explicitly designed to minimize infrastructural development and regulatory uncertainties, which put its Korean contracts at risk. Using barges, for example, meant building and operating two transfer and loading facilities instead of one, not to mention transporting coal from the Port of Morrow to Port Westward; eliminating coal piles and dust meant building storage barns with pollution scrubbers, sealed conveyer belts and enclosed loading equipment. But these choices also minimized train-related problems of all sorts and other environmental impacts.

Consequently, the Morrow Pacific project is tantalizingly close to realization. Construction at both ports has begun and the barges that will carry coal to the Port of St. Helens are being built at Gunderson Marine and Vigor Industrial in Portland. Nevertheless, completion of the project depends upon securing an operating permit from the US Army Corps of Engineers, an air-quality permit from Oregon's Department of Environmental Quality, and authorization from the Department of State Lands to dredge the riverbed, which is leased from the State of Oregon, from the approach channel to the dock. The Corps of Engineers must assess the effect of the project on river and lock congestion, recreation, fish populations and safety in the gorge. This process appears to be proceeding smoothly and it seems likely that the Corps will issue a permit in a timely fashion. That is not the case with respect to Oregon’s Department of Environmental Quality and the Department of State Lands. Both have been unaccountably delayed.

Ambre Energy is also keeping open the option of building a train-fed coal terminal nearby in Longview, Washington, the Millennium Bulk Terminal, at the former site of a Reynolds Aluminum smelter. Striking that option will depend largely upon the regulatory precedents set in deciding the other two main coal-terminal project proposals – Kinder Morgan and Gateway Pacific –, market prospects, and the likelihood of prerequisite public infrastructure investments.

Kinder-Morgan’s train-fed terminal project at Port Westward Industrial Park proposes to export up to four times as much coal as Morrow-Pacific (i.e., 15-30 million metric tons per annum), which will entail substantial increases in train traffic. If it goes forward, up to 12 round-trip coal trains a day will proceed down the Columbia Gorge to Vancouver, across the Columbia Bridge, through Portland to the Willamette River rail bridge and then up U.S. 30 on Portland & Western's one-track line, through Northwest Portland, Scappoose, and Columbia City, to Port St. Helens and back again. Substantial infrastructure investments will be required to relieve rail congestion in and around Vancouver, Washington and to bring the Portland & Western Railroad, owned by short-line operator Genesee & Wyoming, up to the standard needed to serve the Kinder Morgan Terminal adequately, both in terms of grade crossings and additional sidings to handle the coal trains. Ports on the lower Columbia from Portland to Astoria are eager to see these investments made, but they are by no means certain.

The Gateway Pacific Terminal project in Cherry Point, Washington, on Puget Sound near Bellingham, is even more massive. Starting in 2015, its developer, SSA Marine, plans to export approximately 24 million metric tons of coal per year through the Gateway Pacific Terminal and hopes to export even more. BNSF trains will bring Powder River coal to Cherry Point via Vancouver, Washington and Seattle.

Viewed purely as commercial propositions, the comparative advantages of the Kinder Morgan project vis-à-vis the Gateway Pacific Terminal project are relatively few. Port Westward is a lot closer to Vancouver, Washington than is Cherry Point. However, this advantage is largely offset by two considerations: first, empty coal trains from Cherry Point can save considerable distance on the return trip to the Powder River Basin by cutting straight back across the Cascades, avoiding entirely the rail congestion in and around Vancouver, Washington; second, Kinder Morgan does not control the infrastructure investments required to bring the Portland & Western Railroad up to the standard needed to serve its terminal adequately.

In contrast, Gateway Pacific Terminal features several strengths. Its site is large enough to allow efficient turnaround of trains and to handle more than one commodity at a time and still preserve a majority of the site as natural buffer. It is 1-2 days closer to East Asian destinations and its deep water (80 feet near-shore) can accommodate Capesize-class bulk carriers (in the range of 175,000 deadweight tons (DWT)). Port Westward’s 43 foot channel and 6,000-foot turning basin limits it to handling Panamax-class colliers (60,000 to 80,000 DWT). It is claimed that use of Capesize-class carriers reduces shipping costs 25-25 percent.

Both projects must make similar investments to ensure that air and water quality are protected:
       Coal must be stored away from the shoreline, either in enclosed barns or surrounded by natural buffers and protected by berms, sprayers and foggers.
       Rail cars must be unloaded in a closed buildings equipped with a negative air pressure ventilation system to filter the air. Special chutes must be used to transfer coal directly to the ships’ holds.
       Coal must be moved in covered conveyer systems over land and enclosed conveyer systems over water.
Both projects face arduous permitting processes and well-organized opponents, although it seems that the political climate is somewhat friendlier to coal exports in Oregon than in Washington. Overall opposition to these projects seems directed less at the terminals themselves than at the commodity they will handle and the rail traffic they will generate. Because the relevant regulatory agencies lack statutory authority to address these issues directly (indeed, coal trains have been traveling these same routes on their way to power plants in Washington and Oregon and export terminals in Canada for decades), their attention will likely focus on the effect of coal dust from incoming trains on air and water quality, issues that do fall under their supervision. For example in suit brought by Riverkeeper and other public interest groups against BNSF, it is alleged that: “…each rail car loses between 250-700 pounds of coal and coal dust on each trip for an average loss of 500 pounds of coal lost from each car per trip.” … “For trains with 120 cars – the typical length of a coal train – over 30 tons of coal is lost each trip. In other studies, again according to BNSF, as much as three percent of the coal in each car (around 3,600 pounds per car) can be lost in the form of dust.” In this instance, whether or not measures such as proper coal sizing, low profile loading procedures and coal sealants (water-based products that create a glue-like crust over the cargo) represent best-available control technologies or meet the standards to be issued permits under the Clean Air and Clean Water Acts are matters that could potentially be tied up in administrative procedure and/the courts for years, perhaps decades. (The US Administrative Procedures Act is heavily biased in favor of the status quo. It is nearly as hard to make someone stop doing something they are doing already, as it is to do something new). Moreover, the Corps of Engineers, which does have a broad regulatory portfolio, has opted to pursue the full Environmental Impact Statement review process for the Gateway Pacific Terminal and the Kinder Morgan projects and will probably do so with respect to the Millennium Terminal project as well.

Tuesday, May 7, 2013

Soccernomics: The Green and The Green

It is Friday, I haven't posted in a while and there is lots of serious economic realted stuff to discuss.  So, naturally I am going to talk about soccer!!  As a matter of fact I stayed up way too late watching a grainy pirated-feed of the Timbers (did you know they showed the match in the UAE?) so now it is Friday afternoon and I am over-tired and my post about São Paulo and Buenos Aires will have to wait.

So off we go to talk first about the Soccer

First, turf.  The MLS website (which has undergone a transformation to essentially a news and blog site covering MLS and is quite good) has a long-form piece on the growtrh of turf in US soccer.  Unfortuately for all that length it misses what I think is the most important aspect - it does not discuss at all the aesthetic impact of turf on soccer as a spectator sport.  It asks the question: since turf is becoming so ubiquitious at the youth level will it soon become normal for it to be used at the pro level.  The focus is on players who grow up playing on it be accustomed to it.  I think that matters not one whit.  The point is what it does to the spectator experience and there I am pretty convinced it provides a lesser product.  I prefer to play on turf (except old or worn out turf) becuase the community grass fields are so bad in Portland. And I think they are great for kids. But that does not mean I want to watch pros playing on it.

[NB: Oops, now it is Monday and my unfinished post is still sitting here, so keeping on the soccernomics theme, lets look at the Timbers salaries]

Second, MLS salaries.  Here is the Timbers list:

For all you parents investing thousands of dollars for club soccer for your kids in the hopes that they might one day play for the Timbers and earn millions $35K.  Remember these humble salaries when you are out there cheering - most of these guys are out there for the love of the sport not the riches.

Valeri's salary is not surprising, but I was surprised by Silvestre - didn't think his market value had slipped so far. Takes the sting out of his injury, I suppose.  Piquionne: $150,000 for a rarely used back-up striker...hmmm.  Will Johnson is worth every penny, but I was surprised to see he had raised his value so high.

Ok, there, now I am done.