Shale Summary

We heard it yesterday in the context of President Obama’s speech on energy—so it will become a catch-phrase. Bet on it. “We are the Saudi Arabia of Shale.” If wishes were horses then beggars would ride—and if rock flowed like water we’d be the Saudis of shale. The happy claim turns out to be a numbers game. Saudi Arabia’s oil reserves are put at 267 billion barrels. Never mind that serious people doubt that. Over against that, the estimated crude oil potential of shale deposits in the United States would yield 800 billion barrels. I have this number from the Energy Information Administration, so it must be true.

Where is it? Our shale deposits are located in three states, Colorado, Utah, and Wyoming. The richest deposits are on Federal lands in Northern Colorado. If you drew a triangle with Casper Wyoming, Denver Colorado, and Salt Lake City, Utah at its points, you would more or less enclose the area. To see for yourself...

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That’s the superficial location—meant literally. The oil shale is deeper down. Deposits here start at 1,000 feet (three-football field lengths plus below). The best deposits are 2,000 below the surface (more than a third of a mile deep). For this reason two methods of getting the oil out are on offer: in situ and ex situ. The first means digging down and establishing a processing facility deep underground in a man-made cave. The other means conventional mining of ore, lifting it, moving it by trucks to a surface processing plant, and extracting oil on the surface.

As it happens, in situ is the better way. It yields more oil, requires no transport, and huge waste disposal operations are unnecessary. The downside is that that you have to preheat the mountain, as it were, for a period of 18 to 24 months before production can begin. Preheat how? It must be done by employing electrical resistance or radio waves.

What is it? Oil shale is rock, sedimentary rock to be precise. The inset shows that it looks like. (The source is Wikipedia here, and the object on the rock is a hammer.) The useful part of it is kerogen, the organic portion of such rock. When the kerogen portion is high in such rock, it is called oil shale. Another way to put it is that oil shale is future oil. Our crude oil was formed when these formations sank deep enough, to be heated high enough (140-320°F; water boils at 212°F) to yield their oil. The process must take place in an absence of oxygen. Not all but most of the kerogen turns into liquid oil or flammable gas.

The ratios of kerogen to mineral are an important aspect of shale. Share of kerogen per ton of shale ranges from 23 down to 13 percent, meaning that 77 to 87 percent is mineral waste. Another interesting fact about shale oil—never mentioned in political speech—is that its hydrogen to carbon ratio is lower than that of crude. Data from Estonia (here)—the world’s largest shale oil extractor— indicates that shale oil has 9.8 percent hydrogen versus Brent crude at 13.3 percent. Brent crude is a light, sweet variety. Crude has 1.4 times more hydrogen. Numbers from other sources tend to be in this range too. This means that shale oil must be hydrogenated—pure hydrogen must be obtained and added to it—before it is equivalent to, ah, Saudi oil. The best source for hydrogen is natural gas by steam reforming. This is another high-temperature process (1292-2012°F), thus adding to the energy needed to get energy out. Shale oil is also sulfurous (“sour,” in trade jargon), and its processing requires desulfurization.

What is its EROEI? Those letters stand for energy return on energy invested—tat for tit, you might say. Per Wikipedia’s summary here, a 1984 study put EROEI to between .7 and 13.3. Royal Dutch Shell’s research program, using electrical heating of the sort used in in situ operations, suggested 3 to 4. Conventional oil extraction yields 5 units for every unit expended. It isn’t clear whether these ratios include secondary refining processes like hydrogenation and desulfurization. Probably not.

Another source (here) cites recent studies of low EROEI for surface processing, less than 1.5 out for 1 unit of energy expended (2006, 2007) and 1.9 to 2.5 for in situ (2007). Canadian experience in tar sands processing is 2 to 4, but tar sands are easier to handle and less energy-intensive. The sand kernel is surrounded by water; the wet kernel is then surrounded by bituminous oil. Separating oil from water takes less energy than separating oil directly adhering to a mineral substrate.

Worth noting here is that, economics aside, a positive EROEI is all that is required. The return on crude is also dropping. It used to be 100 for 1. Now it is 5 or thereabouts—3 in the United States and 10 in Saudi Arabia. But, for these very reasons, some people doubt claims of 3 to 4 for shale—arguing that, in that case, shale would already be a booming business. But economics may not be put aside—and may explain the lack of a shale bubble now or in the near-term.

What are the Problems? Surface processing lowers yields and increases costs. Mining of large masses of rock from significant depth is required. The rock must be crushed. The heat process is pyrolysis, thus heating in the absence of oxygen, thus in tight containers. Waste containment (the residues are high in Arsenic) and disposal is a requirement. Water use is 2 to 10 gallons per ton of oil shale processed according to the Bureau of Land Management in surface extraction mining and retorting operations.

In situ processes required long lead times (that 2-year pre-heat period). Groundwater contamination is a serious problem.

Massive capital requirements are involved with, at present, not altogether predictable results. Publicly-owned, operated development is unimaginable in our political environment, and private money will stay away from this one until somebody else besides Estonia proves it to be big and very profitable. When that time comes our Lords of Industry will wrap themselves in white robes, bind their heads in white scarves, and head for the water spots in the Med. But I’m not holding my breath.

And now a footnote on problems. Here is the concluding paragraph of a brief EIA paper on the subject. Read this remembering that the very best deposits in the U.S. are on Colorado Federal lands:

In addition, current regulations of the U.S. Bureau of Land Management require that any mineral production activity on leased Federal lands also produce any secondary minerals found in the same deposit. On Federal oil shale lands, deposits of nahcolite (a naturally occurring form of sodium bicarbonate, or baking soda) are intermixed with the oil shales. Relative to oil and other petroleum products, nahcolite is a low-value commodity, and its price would fall even further if its production increased significantly. Thus, co-production of nahcolite could increase the cost of producing oil shale significantly, while providing little revenue in return.

Twenty Years of Electric Power

While on the subject of electrical energy, I thought I would update my understanding on the total picture—thus beyond nukes and hydro. A very nice data set is available here from the Department of Energy’s hard-working Energy Information Administration. Let’s first look at total electrical generation, in billions of kilowatt hours (kWh) from 1990 through 2009.

At the beginning of this period, we consumed 3 billion kWh. Our use of electricity peaked in 2007 at 4.157 billion. Usage had dropped to 3.95 billion kWh by 2009—indicating that even electrical generation responds to economic turndown by a matching dip in production.

The lower curves show the generation of electricity by selected types of fuels or methods like hydroelectric and wind. Note here that until 2006 the top two were coal and nuclear. After that time natural gas became more important than nuclear. Fourth is hydroelectric. Petroleum was fifth until, in 2008, wind power began to generate more electricity than oil. The categories shown do not exhaust the list— but since petroleum and wind barely show on this chart, a closer view of the others needs another graphic. Herewith the shares of fuels and methods in 2009 as a pie chart:

I am showing the percentage share of the leaders—coal, natural gas, nuclear, hydro, and wind. Together these accounted for just a hair under 97 percent of all electrical generation in 2009. Please note that solar and photovoltaic, while in the pie, is such a tiny sliver so as not to show at all (0.02%).

Finally, here is a chart that shows the growth rates of the various fuels/methods used to get that spark into the wire:

Now this is a most illuminating chart. It shows that wind-power wins, hands down, growing at 18.8 percent—and that’s every year in the 1990-2009 period! The big loser is petroleum. Some of the categories here need additional commentary—also revealing:

• The category “Other Gases” includes, to quote from my source, “blast furnace gas, propane gas, and other manufactured and waste gases derived from fossil fuels.”

• The “Other” category, growing at 6.5 percent a year, includes “non-biogenic municipal solid waste, batteries, chemicals, hydrogen, pitch, purchased steam, sulfur, tire-derived fuels, and miscellaneous technologies.” By non-biogenic I think they mean unlikely to rot, thus paper, cardboard, plastics, wood, etc.

• “Wood and Wood Derived” fuels include “paper pellets, railroad ties, utility poles, wood chips, bark, red liquor, sludge wood, spent sulfite liquor, and black liquor, with other wood waste solids and wood-based liquids.” Various liquids mentioned here are wastes in paper pulping mills.

• “Other Biomass” includes “biogenic municipal solid waste, landfill gas, sludge waste, agricultural byproducts, other biomass solids, other biomass liquids, and other biomass gases (including digester gases and methane).” Biogenic wastes are those that rot, ferment, and throw off gases.

Did you notice the interesting common feature of these categories? They all represent recovery of energy from wastes of some sort. The “Other” category ranks second in overall growth. We can come up with an Environmentally Friendly grouping: Wind, Solar, Wood, Biomass, and Other. In 2009 these accounted for 3.6 percent of total electric power generation. And in 1990? In 1990 they were 0.05 percent of the total—thus a 72-fold increase in the last twenty years. A tiny fraction of total megawattage, but the trend is there—and the growth rates are there as well.

Hydro Potential U.S.A.

Yesterday’s post made me aware that I’d never before mentioned hydro-electric power on this blog before, although it interests me a great deal. As mentioned, we obtain 6 percent of our electric power from hydro plants. I got to wondering how many such plants we have—and whether or not a nice map may be available. Thanks to the Department of Energy, I found this wondrous map here.

The map shows all existing hydro-power plants as little yellow squares. The legend, which shows areas (in purple) unsuitable for hydro power because of federal laws or policies prohibit such facilities, also shows areas which have a potential for future use (in brown). That category is labeled “high head/low power.” In trying to understand that, I gained some insight into how hydro-power is classified.

The word head refers to the height achievable for water to drop from one level to the other. A high head means greater than 500 feet, a low head less than 500 feet. The height we’re talking about here needs to be geological, thus due to the mountainous character of a region. That is why the brown areas correspond to such regions in the United States. Masses of water must be contained, and a man-made “head,” thus a reservoir resting on monstrous concrete pillars, would be too costly.

The word power refers to electrical capacity an area is capable of generating, measured in megawatts (MW). This measure is an indirect way of speaking about the amount of water available. The more water, the greater the power potential. A high power is 1 MW or greater; a low power is less than 1 MW.

MW refers to a capacity to generate power all at once, thus without reference to time. Turn it on, and its turbines put out that amount immediately. The flow of energy, the actual output, is designated by kilowatts per hour (kWh). In 2008 the U.S. generation was 4.156.7 billion kWh.

Based on the above, hydro plants are classified as High/High, High/Low, Low/High, and Low/Low. The brown area on the map (never mind DEA’s use of the word orange) represent areas where drop distances are 500 feet or greater but the water available is such that power potential is less than 1 MW. DEA’s selection of this midlevel potential is because the High/High situations have been mostly exhausted already. To look at the top category, here is a tabulation of the top five hydro-power sites in the United States sorted by capacity.

Some notes to this table:

• Coolee, Bath County, and Hoover would be classified as High Head/High Power whereas Niagara and John Day would be classified as Low Head/High Power.
• The actual height of Niagara Falls (the natural phenomenon) is 167 feet. The head in the power facility at Niagara Falls is achieved by diverting water from the river to another point.
• The Bath County, Virginia facility is pumped storage, meaning that water is held in two reservoirs, one high, one below the power station. In periods of high power demand, water is released to generate power. In periods of low demand (late at night), the water is pumped back to the high reservoir.
• The Hoover Dam is on the border between Arizona and Nevada.

What the DEA map tells me is that we do still have a lot of potential—but to exploit it we need to build many, many small plants—until the brown regions turn yellow. The Chinese have a saying: Yellow is the Middle Way—thus it is the route we must find to avoid both Scylla and Charybdis. (If that last phrase puzzles you, look here.)

Electric Leaders: Nukes and H2O

A table appearing in the 2011 United States Statistical Abstract (here) provides an interesting view of power generation across the globe in 2008. Some extracts from that table are graphed here. I am presenting one bar-graph on the top twenty countries in nuclear electric —and another on the top twenty in hydro-electric generation.

The United States produces 19.4 percent of its electric power using nuclear technology but ranks a distant thirteenth among the twenty leaders in the world. (I like that ranking. We’re contrarians in this family, and 13 is our lucky number.) Notice that Europe is very prominent on this list—and France leads the pack. At 78 percent of its total electricity, it generates 22.2 percent more than its nearest rival, Belgium, at 58.8 percent.

This bar graphs shows the top twenty in hydro-power generation—something of a misnomer. Hydro power relies on gravity. Water is its medium. And capturing tidal power is also due to the gravitational pull—of the moon. Here I show the United States as the twenty-first country. The U.S. doesn’t make the top twenty, but I thought I’d show us by way of comparison. Russia, another country with a large land area, produces 18.3 percent to our 6. China produces 14.1 percent. The leader is Paraguay. And speaking of Paraguay, notice the strong representation here by Latin American countries. Four of the top five are Latin American—and they’d sweep if Norway would not be butting in so powerfully. Aren’t they satisfied to have off-shore oil and gas. Ah, these northerners.

Five countries make both lists. These are, in order of their hydro-rankings, Sweden, Argentina, Romania, Russia, and Finland. And in their nuclear rankings, Sweden (again), Finland, Russia, Romania, and Argentina. Most balanced in this sub-list are Sweden and Russia. Both produce roughly the same percentage of electricity from both nukes and hydro-electric.

You might think that countries ranking high in hydro had it made. Nukes have the major problems of safety and waste disposal. Hydro-electric has the problem that dams eventually silt up and natural water flow is subject to climate change. Nobody is ever dealt the perfect hand that will take the pot forever and ever more.

Quick Abacus Tutorial

Take a look at this picture of the Chinese abacus, also known as the suanpan. This picture is from Wikipedia’s article on the abacus, which also treats of many others. The picture shown depicts the number 6,302,715,408. Thus the right-most column is units and the left-most column is billions. If all the beads were away from the center bar, the number represented would be zero. The second column from the right, as you can see, is 0. Now for an explanation.

The topmost and the bottom-most beads are never used in decimal calculations. I’ll return to their uses in a moment. First, what do the other beads represent? The bottom bead on top represents 5, the bottom beads represent 1, but the last one isn’t used. The number 8 in the first column is shown by pulling down 5 and pushing up 3: 5 + 3 = 8. The maximum number we can render in each column, therefore is 9—remembering that the top and bottom bead are Off Limits, as it were.

Now suppose we wanted to reduce this number by 3. Simple. We just move the three bottom beads of the first column away from the center. That leaves the top bead still in place: 5. But let’s instead add 3 to the original number. Here we must proceed one number at a time. We move one bead up from the bottom, making 9. Two more beads to go. But we can’t move any more beads in the first column; they’re all used up. Therefore we move one bead up in the bottom part of the next column over—and zero out the first column. One more to go. We add this one to the first column again. And we can do so because it has been zeroed out in the last step; it can hold a unit once again. The result is that the 8 has now turned into 11: 6,302,715,408 + 3 = 6,302,715,411. A nice do-it-yourself demonstration is available here.

Division and multiplication become more complicated, but in essence one does it on the abacus just as one does it on paper, keeping the intermediate results on another part of the abacus. No paper needed. When these devices came into use, paper was not as common as it is today. Abaci are big because they need extra space to record division and multiplication steps. The last post shows a Chinese abacus.

There are many kinds of abaci. The Japanese soroban, for instance, omits the topmost and the bottom-most beads; it is optimized for decimal calculation. But then the question arises, what possible use is the full Chinese suanpan? Oddly enough, long, long before computers came into use and hexadecimal math became the bane or blessing of computer-types like me, the Chinese evidently used that numerical system—and the suanpan can let you do math in hex. It was introduced in the fourteenth century of our era.

The hexadecimal system is base-16 as the decimal is base-10. In decimal the highest number is 9, in hexadecimal 15. Now if you use both of the top beads and all of the bottom beads, you get 16 values in each column, from 0 to 15. Here is a bit of information you didn’t know you needed: in hex the numbers run like this: 0, 1, 2, 3, 4, 5, 6, 7, 8, 9, A, B, C, D, E, F. F therefore is fifteen, shown on the Chinese abacus by moving all of the beads towards the center. And, not surprisingly, the number Hex 10 actually stands for decimal 16.
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This is a repeat of a popular post first presented on September 24, 2009 on the earlier version of this blog.

Employment by Young Firms

The Census Bureau’s Business Dynamics Statistics (BDS) program defines “young firms” as those less than three years old. I want to present some data on such firms today, specifically the total employment they represent. But first some context. One of the things you learn in looking at the world through the lens of statistics is that this lens tends to complete one’s view of economic reality—and frequently to correct misconceptions that arise in political debate. One of these is that small business (and young firms are predominantly small) is the engine of the economy, not least of employment growth. Small businesses do make a positive contribution. They also destroy more jobs than big business does. I made that case a while back here. Today a look at the employment that young firms actually account for, and this state by state.

This graphic appears in a BDS statistical brief accessible here. The highest percentage is achieved by Nevada, about 11 percent of total employment. The lowest percentage, a little over 5 percent, is by the District of Columbia. What surprises me in that case is that it is as high as that. The regional distribution of share here is fascinating in itself. A better look at regionality is provided by the following map:

The source of this map, also BDS, is here. What this map reveals is that political alignments across the nation echo the entrepreneurial activity as viewed through a lens that highlights the employment-growing powers of young firms, however fractional that contribution is to the total.

Technology-Driven, Money-Rich

I don’t know why, but when I hear the phrase no-fly zone and think about its meaning, what it means to me is this:

Airplanes will be used to deny Libya (in the current case) the ability to fly its airplanes and to bomb its own rebellious population.

The last thing the phrase implies for me is boots on the ground or what is actually happening: bombs on the ground. But, of course, that’s my fault. No-fly zone has always meant bombs. It meant that in Iraq a while back. And that in turn means that the world is treated to images of smoke and fire boiling up, from the ground, as our missiles land, with great precision, mind you, on the solid earth. They are destroying anti-aircraft installations. Because the deeper logic is something like the following:

No way will I permit our Air Force or Navy to fly in the sky if somebody on the ground can shoot at our craft.

The trouble here is that world opinion will be powerfully influenced by those pictures of fire and flame on the ground—and, count on it, plentiful accounts of civilian deaths despite all precision. In this process, needless to say, the superficially benign impulse to help an oppressed people win against a over-dressed oppressor will fade into the background immediately, and what will remain is America the Super-rich raining fire from the skies on miserable peoples carrying bleeding, soot-covered children from ruin to ruin. Time to stand proud? Lord! Lord Almighty.

According to this Wikipedia site (which also posts the image that I show), Tomahawk missiles cost $869,000 when built in Fiscal Year 1999. That number in 2011 dollars, per Wikipedia, is $3.756 million per missile.

We’re technology-driven, money-rich, and mad! Based on my view of things, learned from George Kennan in my youth, the diplomat scholar—and no reason since to change my mind—we have no business whatsoever mucking around in Libya—as we had no business in Iraq either. But if we must intervene, the way to do it would have been to land an armored division on the shores of Tripoli—Okay, maybe a good ways more to the east. This formation would have done the job almost instantly, efficiently, and with a great deal less cost in lives—although some of those lives would have been ours. We’d still suffer the outrage of the world as an invader. But a hundred Tomahawks and counting? Landing just as Hillary Clinton, in a speech, made it sound as if we would not be involved at all? I’d be equally upset if I were a Frenchman and saw blood-thirsty Sarkozy messing around in North Africa again. Algerians will be delighted! It’s a mad, mad, mad world.

Job Creation and Destruction

Although the phrase “creative destruction” was introduced by Joseph Schumpeter (1883-1950), describing capitalism, the idea goes back to Karl Marx. But, needless to say, this characterization of almost anything extends way beyond the economic. Put more neutrally, it describes the two polarities of all things living: birth and death. Let’s take a look at this pairing—but narrowly focused on jobs.

One of the Census Bureau’s least known programs is Business Dynamics Statistics (BDS)—perhaps because it was a joint venture between the Bureau and the Ewing Marion Kauffman Foundation. The program is accessible here. The program describes itself thus:

The Business Dynamics Statistics (BDS) includes measures of establishment openings and closings, firm startups, job creation and destruction by firm size, age, and industrial sector, and several other statistics on business dynamics.

Data from this program, available from 1977 through 2009 permit me to chart job creation and destruction over a thirty-plus year period.

The graphic shows total jobs created by commercial firms in every year by whatever means (blue line) and the jobs destroyed, also by whatever means (red line). The net result of these two processes is charted in solid green. Notice that in those years where destruction is greater than creation, the green line dips into the negative.

Now both job creation and destruction can take one of two forms. Creation may arise because (A) a new company forms and hires employees—or because (B) an existing firm hires additional employees. Conversely, job destruction may take place because (A) a company goes out of business, closes its doors, good-bye—or because (B) an existing firm lays off or releases employees.

A second set of curves gives us an indication of the numbers associated with Option A above: hires due to new company formation and job losses due to going out of business. The net of these two processes is shown as a dotted green line.

The data used in this graphic are available here by clicking on one of the Economy Wide label’s options.

What the graphic shows is the role of new businesses in the economy as a whole. Their share in job creation is significantly smaller than the total. Similarly, job destruction by closing the doors is also a relatively small part of total jobs lost. These two are related because most of the firms going out of business are also small. Death in early childhood is much more common among companies, these days, than among people. Of interest here is that start-up job creation has exceeded going-out-of-business job losses in every year except 1983 and 2009—and, the rather dramatic negative total for all firms in 2009—brought to you by The Speculators…and a Government Asleep at the Switch.

Soon I’ll present here a state-by-state graphic showing what percentage new firms represent of total employment.

Supermoon

At LaMarotte we echo Jack Horkheimer’s slogan and We Keep Looking Up! The object of great interest is the sun—but why not also, occasions arising, the moon, specifically the supermoon? Until the other day I’d never heard this word before. I assume that it must be a new coinage by NASA. The moon achieves this status when it comes closest to the earth. Its orbit around our planet isn’t a perfect circle. As it describes an oval around us, its closest point is its perigee (2 in the diagram), its farthest point is its apogee (1). Yesterday the moon came within an hour of its perigee, hence it appeared 14 percent bigger than at its most distant point from us. The following illustrations, courtesy of NASA, shows the differences. That image is part of a tutorial video available at this site.
              

We were out there, Brigitte and I, in the dark, overlooking Lake Saint Claire, at 8:08 p.m., moonrise time. Ages ago once, vacationing on the Atlantic in Virginia, we’d once risen before dawn to see the sun rise over the ocean—and had been disappointed. Ocean haze hid the sun until it was way, way above the water line. We were therefore patient when 8:08 came and went and the sky remained as dark as ever. Finally, about five minutes late, a tiny red semi-circle became visible. The supermoon then rose. NASA is right. We couldn’t detect, by naked eye, that we were looking at a supermoon. But the Muse of All Poets was indeed very lovely. A collage of what we saw, recorded by our little Kodak—but, alas, with a trembling hand—shows how the color changed as the moon ascended. But we didn’t linger long. It was bitter cold out and a wind blew at us, hard, from over Canada way.

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Jack Horkheimer is the Executive Director of the Miami Space Transit Planetarium, part of the Miami Science Museum. He is also known as the Star Hustler and, in his spare time, produces a television series known as Star Gazer.

From Silicon to Silicon

If our fate’s from dust to dust, a television set’s, presumably, is from silicon to silicon or, more colloquially, from sand to sand. Here is the intermediate stage: the corpse of a TV set. The trash haulers evidently felt a little squeamish about picking this one up. Oh obsolescence of obsolescences! All is obsolescence.

Eat the Core, Never Mind the Apple

A very bad habit began in early 2000. In February of that year the Federal Reserve Bank, then under Alan Greenspan, abandoned the Consumer Price Index (CPI), produced by the Bureau of Labor Statistics, as the basis for measuring inflation in the economy. Instead it substituted the Personal Consumption Expenditures index, produced by the Bureau of Economic Analysis. Now, mind you, the PCE is based on the CPI. It’s not a free-standing anything. No CPI, no PCE either. But the PCE modifies the results of the CPI by using a somewhat different formula. Underlying it is an assumption that when prices go up people will shift their purchasing to another product. Now the PCE comes in two varieties: the total PCE and then the so-called core PCE. The core excludes food and energy—these two being viewed as volatile and seasonal.

Let’s think about this. Food prices are rising. Now, based on PCE thinking, I’m going to substitute some other purchase for my purchases of food. Right? Obvious, isn’t it? I’ll go on vacation and not eat at all. Or, alternatively, gas prices are rising. Economic rationalist that I am, a true believer in the PCE, I will therefore stop driving. My thirty-mile commute can be accomplished on a bicycle, of course. And just imagine the health care benefits!

Or better yet! CPI is rising. But so, alas, is PCE. But I am a Federal Reserve Banker. When the economy goes south, I feel a lot of heat on my backside. So why don’t I give up both? I’ll give up both food and energy purchases. I’ll just live on the core of the apple. I didn’t like all that sweet moist stuff anyway—juices always dripping down and messing up my striped-blue suit. Thank the Lord there is the core PCE. I can not only use it in all of my measurements but above all in every one of my public statements.

Now here’s an added complication. The PCE is published quarterly, the CPI monthly. And since the PCE reflects the CPI (indeed can’t exist without it) everybody and his brother still uses the CPI to talk about inflation. They just exclude two categories from it. They exclude food and energy. That leaves the core, doesn’t it. And thus we get the phrase, “core inflation.” Now, best of all, CPI is rising, but the core of it isn’t, or only faintly. Thus those of us who feel the heat from the public can pronounce that all is well. The core’s in good shape—even if the apple’s rotting.

The graphic you see puts all this into a picture. I show monthly changes in CPI by three categories since July of 2010. Whatever prices were in July, that’s what they were. I call that 100. The bars show changes in price from that level. Lo and behold. Food prices are up 1.9 percent in this seven-month period, energy prices up a whopping 14.8 percent, and the rest—that’s the core, folks—is up less than 1 percent (0.7% actually). The data I am using may be found here.

Food and energy are the apple. The rest is what, in a real pinch, we can mostly do without. But our leaders are wise. They know that we will believe what they say, not what they do.

How Old Is the CPI?

Looking at the latest press release on the CPI numbers, issued by the Bureau of Labor Statistics (BLS), the idle thought occurred: I wonder how old the CPI actually is? My guess was that it arose, no doubt, either in connection with World War II or in the wake of the Great Depression. I expected the usual quick answer from either the BLS itself or from Wikipedia. No quick answer anywhere. But—finally!— I did find the answer—and it surprised me. I discovered it in The First Hundred Years of the Bureau of Labor Statistics, a 321 page history but issued as Bulletin 2235 by the BLS. It appeared in September 1985 and was written by Joseph P. Goldberg and William T. Moye. The book is available on the web here. I found the relevant event I was after recorded in this paragraph spanning pages 34 and 35:

Two reports prepared by the Bureau for the Aldrich Committee became landmark sources of data on prices and wages. Some wholesale price data were assembled for the preceding half century; for the 28-months preceding September 1891, prices were collected for 218 articles in 7 cities. Retail price collection was limited to the 28-month period, covering 215 commodities, including 67 food items, in 70 localities. Wage data were also assembled for the preceding half century in 22 industries; for the 28-month period, the data covered 20 general occupations in 70 localities and specialized occupations in 32 localities.

The Aldrich Committee was the Senate’s Committee on Finance, chaired by Nelson W. Aldrich on Rhode Island. The Tariff Act of 1890 had been passed. It’s known as the McKinley Act named after then Congressman (later President) William McKinley. (Full disclosure: Quite appropriately for a data maven like me, I live on McKinley Avenue). The McKinley Act was my kind of law. As Wikipedia summarizes it “The tariff raised the average duty on imports to almost fifty percent, an act designed to protect domestic industries from foreign competition.” Hear, hear! Anyway, Senator Aldrich asked the Bureau of Labor Statistics, at that time a mere six-year-old, to collect the right kind of data in order to measure the effectiveness of the McKinley Act.

The fundamental methodologies and ideas behind the Consumer Price Index now in force were already in place 120 years ago. The BLS defines a kind of “representative basket of goods and services”; it sends its agents out to visit actual stores and other institutions to collect current pricing data; and it does so across the country. Mind you. “Basket” here means more than just groceries and clothing. It includes all categories of consumer spending including fuels, rents, mortgage payments, premiums, tuitions, fees, childcare—and, yes, money spent on all kinds of products including groceries and clothing.

The idea of weighting each category within the price indexes—in order to derive a single representative number that stands for prices in general—was already present in 1891. The idea was introduced by Ronald P. Falkner, of the University of Pennsylvania, who had been hired to analyze the data the BLS had collected. Weighting was based on patterns of family expenditures. Thus categories were ranked by the amount of  money families actually spent on them. The greater the spending, the higher the weight. The name of the CPI was initially Cost-of-Living Index. The renaming took place in 1945 and was then called Consumer’s Price Index for Moderate Income Families in Large Cities. Today we call that series CPI for All Urban Consumers (CPI-U). Using the CPI as an official measure to adjust wages, pensions, and so on dates back to 1948.

Having now stared for a while into the well of the past, I will proceed to present the February 2011 numbers.

Pet Population Statistics

The closest thing to a Census Bureau in the world of pets is the American Pet Products Association, a trade group. APPA has been conducting a household survey since 1988. The survey itself, of greatest use to member companies, is expensive. It costs members of the association $795. That figure indirectly tells us data mavens what we ought to know: it costs real money to produce goods stats. With some effort, however, I was able to find some highlights free. APPA’s home page is here; a page showing household counts and animal numbers for 2008 is available here.

APPA tells me that 62 percent of all U.S. households keep a pet; with some 117.5 million households in 2010, that would be 72.9 million households. Among the four-legged variety, cats  outnumber dogs 93.6 million to 77.5 million. The pet with the biggest share of households, however, is freshwater fish—171.5 million. Physically the largest pet also has the lowest population count: 13.3 million horses. Birds are also in relatively low numbers: 15 million.

Looking around some more (trust but verify), I also found another gatekeeper, the American Veterinary Medical Association (link). They publish U.S. Pet Ownership & Demographics Sourcebook, available here for $279 for non-members. The AVMA data are for 2006.

The Census Bureau’s Statistical Abstract of the United States: 2011 reproduces data from this AVMA report in its own Table 1240, accessible here. The table, unfortunately, as it stands, doesn’t tell us what the numbers mean. I bothered to go to the source and therefore I am able to tell you that the first line of that table, showing animal populations, is in millions. Here they are: Dogs - 72.1, Cats - 81.7, Birds - 11.2, and Horses 7.3 million. Again, that’s for 2006. So we are in the ballpark, you might say.

You’ve often wondered, haven’t you? How many wonderful dogs like Katie the Beagle are there in the United States—statistically speaking, of course. There is only one Katie! And how many Mitzis are there? (Mitzi was my Mother’s generic name for every cat she kept. That seemed a bit cavalier to me. With a family of my own, I once offered the name Total Cheese for a new kitty that we’d acquired. The family did not agree—but the name stuck anyway.) Well, you’ve wondered. We all have. As usually, LaMarotte to the rescue!

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Silhouettes from Wikipedia Commons here.

Okay, So You Want a Portrait

The earlier version of LaMarotte featured Katie the Beagle prominently—hence all the more reason to show her here. Katie is famous in many ways, not least for Beagle Haikus (ht). Not our own pet—but in the family.

Power Plant Map of the U.S.

As earlier I showed a map of the fault zones (here), so now I'll follow that up with a map of the nuclear power plants located in the United States. It comes courtesy of the Nuclear Regulatory Commission (link):

Now it won't escape the invariably thoughtful readers of this blog that at least a third of these reactors rest within the “reach,” if I might phrase it like that, of the New Madrid Fault shown in the first link provided above. Earthquake maps tell us that we're living on a dangerous planet; our use of nuclear power plants adds to the danger. But, folks, it is a dilemma. We need power—and of the kinds we’d really suffer to do without, electric power is tops. At the same time we worry about carbon footprints. Nuclear plants have the smallest. One thinks of the rose garden that no one promised us…

Happy St. Patricks

It happens to be a coincidence, but it pleases me to launch a new edition, if I might call it that, of LaMarotte on the feast day of a famous figure like Saint Patrick. From this time forward, LaMarotte will appear on Google’s Blogger platform. The reason for this? I’ve discovered that WordPress, the host of LaMarotte since its beginning, thus since April of 2009, has begun to run ads on that site. WordPress has every right to do so. In effect I have been very pleased with that platform and its many attractive facilities. But the general thematic of LaMarotte, alas—which is a jaundiced-eye view of matters economic and secular—is incompatible with advertising. Therefore I have two choices. One is to pay for the hosting service and the other is to move to a platform where the service is free and running ads is a choice left to me. I'm retired. I have to be frugal. Hence this change. The silver lining here? WordPress evidently started running ads because LaMarotte had achieved a high enough level of traffic to make it attractive to advertisers.

It will take a little time before this second incarnation of the blog will have some content. Selectively I'll bring in from the old one some of the more popular posts. Importing the entire a blog from the WordPress platform is possible—but exceedingly tedious. Therefore I will provide a link to the old one on this site.