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More Awareness, not Ignorance, Will Lead to a More Rapid Solution

Wednesday, June 29, 2005

I try and read my local paper everyday. I'm aware of the slant of the Union Tribune and it doesn't bother me one bit. I'm intelligent enough to take that into account while absorbing facts. Anyway, a funny thing happens when you read the same paper over and over again each day. You notice trends both alarming and encouraging. And no, I'm not talking about Michael Jackson either. I'm talking about the news of the world. Events and occurrences that effect and shape our everyday existence, whether we are cognizant of them or not.

Take for example this article on our oil dependence, buried deep within the front section and easy to overlook.

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War game dramatizes huge dependence on oil -- U.S. could do little if supply is cut off

By John Mintz
THE WASHINGTON POST

June 24, 2005

WASHINGTON – The United States would be all but powerless to protect the American economy in the face of a catastrophic disruption of oil markets, high-level participants in a war game concluded yesterday.

The exercise, called "Oil Shockwave" and played out in a Washington hotel ballroom, had real-life former top U.S. officials taking on the role of members of the president's Cabinet convening to respond to escalating energy crises, culminating in $5.32-a-gallon gasoline and a world wobbling into recession.

"The American people are going to pay a terrible price for not having had an energy strategy," said former CIA Director Robert Gates, who took the role of national security adviser.
Stepping out of character, he added that the scenarios portrayed "were absolutely not alarmist; they're realistic."

The exercise began with ethnic unrest in Nigeria, leading to the collapse of the oil industry in that west African nation. Then al-Qaeda launched crippling attacks on key energy facilities in Valdez, Alaska, and Saudi Arabia.

But the war game's participants – including former CIA Director R. James Woolsey, former Marine Corps Commandant Gen. P.X. Kelley and former EPA Administrator Carol Browner – soon realized the U.S. government had few options in the short term to prevent an economic crash in this country and worldwide.

When the exercise's planners first met last year, oil was in the $40-a-barrel range.
As they fantasized where oil prices would be for the war game's start in an imagined late 2005, they said, they set them at $58 but worried they were being absurdly pessimistic. Yesterday, the closing price for a barrel of oil was $59.42.

The war game players also referred several times to other real-life events of today.
A major feature was how China's voracious appetite for oil is driving up world prices, and only Wednesday it was announced that the Beijing government, in a bold and unprecedented act, is bidding to buy the U.S. oil company Unocal.

The exercise was organized by two nonprofit groups that focus on the national security implications of U.S. dependence on foreign oil: the National Commission on Energy Policy, and Securing America's Future Energy, or SAFE.

The scenarios were dreamed up by a team of former oil industry executives and government officials, including Rand Beers, a White House counterterrorism official who quit in 2003 to protest the Iraq war.

The underlying situation dramatized in the exercise – and accepted by most energy analysts – is that tolerances are so tight between supply and demand that even small disruptions in the delivery of oil and natural gas can cause cascades of unpleasant developments.
The war game contemplated that when oil prices spiked and the Cabinet met to consider its options, it realized it had almost no clout to influence events.

The standard response, drawing on the Strategic Petroleum Reserve, was symbolic at best.
Within weeks, the game had conditions worsening – the Valdez oil terminal was on fire, as was a major Saudi oil port, and Western technicians were being killed there.

Foreign oil firms soon pulled tens of thousands of workers out of Saudi Arabia. Suddenly lacking technical expertise, Saudi facilities could no longer play their decades-long role of guaranteed "swing" provider of oil in response to disruptions elsewhere.

As the global recession deepened, there was no "central banker" of oil to smooth temporary dislocations.

The participants concluded that President Bush should invest quickly in promising technologies to reduce dependence on overseas oil, such as hybrid cars and vehicles that run on fuels derived from prairie grasses, animal waste and other products.

They agreed that these projects would take years to yield any benefit but should not wait for the kind of crisis they were dramatizing.
__________________________

A bit scary and not something people like to think about really. Gas at $5.50 a gallon and global unrest is a bit hard to swallow over morning coffee.

The next day however, there was this article on the front bottom page, below the fold, of the business section on a "little" local company, Kyocera, and their intelligent use of solar parking lot structures for multiple purposes (vehicle protection from the sun, utilization of it for energy, and preservation of it to light the area during the dark hours).

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Parking lot's 'solar trees' offer shade, provide power

By Craig D. Rose
June 25, 2005

Kyocera yesterday unveiled a demonstration project it hopes will help take parking lots to new places by including stylized solar arrays that shade cars while cleanly producing electricity.

Kyocera yesterday unveiled its so-called Solar Grove, a parking lot with stylized stanchions supporting photovoltaic panels that provide electricity and covered parking.The company's so-called Solar Grove is an array of modernistic stanchions – "solar trees" in Kyocera's lingo – supporting about 1,600 photovoltaic modules over an employee parking lot adjacent to its North American headquarters at Balboa Avenue and state Route 163.

Beyond providing 186 covered parking places and a small fraction of the energy the company uses at its headquarters, Kyocera is marketing Solar Groves as a part of an effort to double revenue this year from its solar energy products.

The diversified manufacturer of electronic components sought to enhance the appearance of the arrays by emphasizing a tree-like aspect, with each solar canopy supported by a single stanchion but shading six vehicles.

Kyocera declined to specify the cost of the new solar array, noting that the facility is a prototype. But the company said about 40 percent of the cost was covered by California rebates for solar projects and that it would benefit from federal and state tax credits.

All told, the company believes Solar Groves will prove attractive in the burgeoning solar market.
"The economic viability of PV systems like this represents a milestone for businesses throughout California," said Steve Hill, president of Kyocera Solar Inc.

By avoiding the need to burn natural gas or other fossil fuels for the power it produces, Kyocera said the array will avoid the annual release of nearly 340,000 pounds of carbon dioxide, a suspected contributor to global warming, as well as hundreds of pounds of pollutants.

The new photovoltaic arrays are tilted slightly to maximize solar exposure and have a capacity of about 235 kilowatts, enough to power about 68 typical local homes. The company last year began manufacturing solar panels at a facility in Tijuana and hopes to double production this year.

According to the San Diego Regional Energy Office, the Kyocera solar array is the largest privately owned such installation in the county and the third largest overall, behind solar arrays at the Del Mar Fairgrounds and one built for the Navy on North Island.

Irene Stillings, executive director of the energy office, said the $5 million in solar rebates the office had for San Diego this year has already been exhausted.

"Activity (in solar) is enormous," Stillings said. The rebate funding available, she said, "is not enough."

The City of San Diego has also set a goal of 50 megawatts of renewable energy capacity – from solar and other sources – by 2013. For context, peak summertime demand for SDG&E hovers around 4,000 megawatts. (A megawatt equals 1,000 kilowatts.)

The county overall has about 12 megawatts of solar capacity now – enough to power about 12,000 homes – and another 8 megawatts in the pipeline. But Stillings noted that solar construction could soon run into a key limit, namely a cap on electricity that San Diego Gas & Electric is required to buy back from owners of solar arrays.

The buybacks are a key component in making solar power viable because photovoltaics produce surplus power during the hottest periods when power is most in demand by the local utility.
State Sen. Chris Kehoe, who attended yesterday's ribbon cutting at the Kyocera facility, is sponsoring a bill to raise the cap on buybacks.

Kyocera's Kearny Mesa facility manufactures ceramic packages for computer chips and is among the larger electricity consumers in the region.

To protect its manufacturing process, the company made the headquarters energy self-sufficient in the late 1980s, with the bulk of its power provided by a natural gas-fired generator supplemented by solar power, which provides about 2 percent of its electricity.

The new Solar Grove has allowed Kyocera to retire a smaller rooftop photovoltaic system, which was donated to a hospital in Mexico, according to a company spokesman.

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My point is, you can get scared and think about the worst case scenario, or you can do something about it.

Bravo to Kyocera for doing the latter.

posted by Craig M Beck at 10:27 PM 0 comments  

In "Case" You Missed It...

Monday, June 27, 2005

Last Friday, the Supreme Court made a landmark case decision. If you're a homeowner, or prospective one, you should find the implications of this a little disconcerting.

Here's an excerpt of what Friday's California Association of Realtors (CAR) news wire noted.

SUPREME COURT RULINGS ERODE PRIVATE PROPERTY RIGHTS

The U.S. Supreme Court issued [a] surprise ruling recently that seriously undermines private property rights. In a 5-4 vote last week, the Justices ruled that government may invoke its power of "eminent domain" to seize private property from unwilling sellers. The case was brought by a small group of residents in New London, Connecticut who refused to sell their property to make way for a large-scale commercial development project. The Court went on to uphold the government's exercise of eminent domain in this case, reasoning that the taking of private property to promote the city's economic development, which includes creating new jobs and increasing tax revenues, is a public purpose that falls within the public use requirement of the Fifth Amendment. The court ruled that as long as the goal is to create new jobs or raise tax revenue, the city could seize the properties even if they are not "blighted".

This seriously lowers the bar a government body has to clear to seize land from an individual owner only to hand it off to rich developers in the name of higher tax revenue and property taxes. Granted, the former owners must still be compensated for the sale of their home, so it's not entirely robbery, but I'm not a fan of the government telling me when I have to move. Are you?

Fortunately, I have less to worry about because I live in California, a state with strong property rights...right? As long as you let your legislators know what's important to you, we can keep it that way. Currently, California governmental bodies can only exercise eminent domain if the area is first proven to be "blighted".

Just one more reason you can remind your neighbor to mow his lawn this summer.

posted by Craig M Beck at 8:15 AM 0 comments  

Free Trash Pickup: Pound Wise and Penny Foolish?

Tuesday, June 14, 2005

As many of you homeowners know, there was an ordinance passed in San Diego back in 1919 that ensured we would not be charged for trash pickup. Now everyone know's it is not really free, as the money from the general fund pays for this service, but San Diego is now looking for homeowners to start picking up part of the bill as costs mount.

I'm not much for new taxes, but when it comes to paying for trash, I'm all for it. I would gladly pay a prorated fee for how much I throw away. Maybe that's because I recycle as much as possible already and throw away very little. If residents were forced to think about how much money they spend throwing away easily recycleable materials, many more would likely choose to recycle. Some would not until it hit them in the pocketbook hard enough, but it would be a good start.

If there's no financial incentive for people to avoid throwing away anything and everything, why should they be bothered to recycle? A trip with a full truck load of just about anything non toxic can go into the Miramar landfill for a mere $12. In Spokane, WA, where they have more land than we certainly do down here to create landfills, taking a load to the county way station costs $98 per ton!

Do you think people in Spokane think a little bit more about what they throw away and what they recycle? Why then are we so short sighted in San Diego where raw land is at a premium?

Free garbage collection is not an entitlement. It's an express ticket to a less desirable future.

posted by Craig M Beck at 5:15 PM 0 comments  

The Media is Paying Attention. Is Joe Q. Public?

Monday, June 13, 2005

The media is funny in that they try and deliver what the public wants to hear about, but every now and again you find a journalist who is actually in the business to report news that needs to be heard. (Californians taking big risks to buy homes, report warns) There is very little alarmism in this article. The reporting is based on...wait for it...facts. These are facts that may just change the perception of some investors and speculators, the ones who need to hear it the most. For your average long term homeowner, there is nothing to fear. For those on a shorter leash or with less stability in their lives, there is pain in the future to be experienced without proper advance planning.

In my mind, these home investors and speculators are the same type of people who have been artificially screwing with the crude oil markets since we went to war in Iraq. Rampant speculation has caused price fluctuations that are unexplainable in historical context. The argument has long been that the price of oil is directly related to the price of gasoline, and gas and oil companies, along with the stations that provide the fuel to the public, have happily played along with the game.

Yet, over the last 5 weeks, oil prices have been increasing per barrel, yet the cost of gasoline has been going down, ever since the President took note of the public's outcry over the cost of fuel, which has less than half to do with the price of crude oil. One day down the road, our economy will feel the effect of hundreds of dollars of formerly disposible income not going into our consumer driven economy, but instead feeding our driving habits. Other options need to be considered.

For every dollar you put in the tank, close to 50 cents is directly lining the pockets of OPEC. If the trend continues, our economy is in for some real ugly potholes down the road.

DANGER! Bridge out ahead!

posted by Craig M Beck at 10:05 AM 0 comments  

TIME Magazine Chimes In on America's Home $$$weet Home

Wednesday, June 08, 2005

Not long after finishing a series on housing in MONEY magazine, the latest issue of TIME landed in my mailbox. Interestingly they ran a series of articles on the national housing craze as well, all worth the read, believe me.

Do I think we're hitting a national exposure level on the financial importance of housing to American's today? I sure do. Does it sounds alot like the go-go 90's stock market frenzy herd mentality? Sure does, but there are distinct differences you should be aware of. Do I think it's a bit scary? Most certainly.

Then again, I thought the stock market was going to crash in 1998 and I began to diversify into real estate that year.

What do I know?

posted by Craig M Beck at 2:15 AM 0 comments  

Do You See Your House as a Home, an Investment, or a Gambling Chip?

Sunday, June 05, 2005

I read an article in Money magazine this evening that concerns me. "Boomtown, USA" covers the insanity of the San Diego market from a purely skewed investment angle, practically offering those involved a standing ovation for their insight and brilliance. Give me a break.

The author, and most of those San Diegans interviewed, seem to be looking at homes for nothing more than a way to turn a quick buck. As a real estate agent and homeowner, I see my home as so much more. Fortunately, the rest of the articles were much more balanced. I recommend you browse the issue, or pick it up on the newstand.

I'm not saying homes aren't a good investment vehicle and that you shouldn't be thinking about your home as a giant piggy bank, but anytime people start looking at a product solely in terms of pure financial gain to be had, the outcome is rarely positive in the end. Think of all the people sitting on thousands of unwanted Beanie Babies.

By the time the general public is finally paying attention long enough to tear themselves away from American Idol and Survior, the smart investors have moved on and profited early, leaving the rest of us who are here for the long term, cleaning up their messes.

For those of you thinking about buying in now for a quick turn and burn property investment with 100% financing, I'm warning you now. Unless you plan on staying in the market long term, just like a day trader, the odds are against you winning by trying to time the market.

The only time people lose in real estate is when they are forced to sell. You may be relocated by your employer, suddenly find yourself upside down in a loan owing more than the home is worth if prices fall, or be unable to keep your payments up. When these things happen, foreclosures begin flooding the market and do nothing more than depress prices, fuel massive sell offs by scared homeowners, and bring back those same smart investors who already cleared out of the market, effectively allowing them to come back into the market to profit from it again.

Sadly, real estate often benefits from misery. Death, divorce and bankruptcy are windfalls for real estate investors. It also moves in cycles. Buy and hold is a good long term policy. Don't fall prey to buying in at the peak and selling at the bottom, painfully losing on both ends. That's not being a smart investor.

If you choose to ignore my warning, I have a feeling I might see you at the roulette tables in Vegas too. I wish you the best of luck there as well.

Just remember: They don't build those casinos for free...

posted by Craig M Beck at 8:45 PM 0 comments  

Why should I read my NHDS report carefully?

Friday, June 03, 2005

Ever heard of liquifaction?

Well, here's as good as reason as any to learn what it is.

I bet you each and every homeowner in Laguna Beach has discovered its meaning and right now are reading the NHDS (Natural Hazard Disclosure Statement) they got when they bought their homes VERY carefully...with their lawyers close at hand.

Never fear though. Californian's love their beachfront property. It will all be rebuilt eventually.

The question is: At what cost and how many lawsuits will determine who ends up paying for it?


Highlights from the article:

"Hundreds of residents displaced by a landslide that sent [17] multimillion-dollar houses tumbling down a canyon have been allowed to return, but some of them now face an agonizing question: rebuild, or move?

Officials said residents likely wouldn't be able to recoup their major losses. Insurers have been eliminating coverage for landslides in recent years, though some still offer it. Poulton Associates Inc. said a policy covering a $1 million home would cost about $3,500 a year.

'Right now we have a moratorium on Laguna Beach,' said Josh Feinauer, an administrator for the Salt Lake City-based insurer."

posted by Craig M Beck at 10:00 AM 0 comments  

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