The Ever-Changing Energy Story

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The Daily Reckoning | Saturday, July 2, 2011 ------------------------------------------------------- The reality of minimum wages, as seen through the eyes of a job creator, The world energy landscape twenty years from today...and beyond, Plus, all the rest of this week's reckonings, archived and ready for your energetic weekend reading... ------------------------------------------------------- Act Before Midnight Monday, July 4 See How a Small Grubstake Could Turn into HUGE Wealth New presentation reveals shocking wealth-building secret. See how just a tiny amount could explode into a vast sum for your retirement - all in just 30 days! Next play goes live Tues. July 5 - you must act on this presentation by midnight Monday. Details here... The Ever-Changing Energy Story Joel Bowman On a flight back to Buenos Aires, Argentina... In a recent interview, WYPR's "Power Ahead" host, Dan Rodricks asked Agora Financial's energy specialist, Byron King, to paint a picture of what the world energy landscape might look like twenty years from now. Responded Mr. King: "Well, it's a great question because twenty years is a long time. Twenty years ago, people didn't know what cell phones were. Now they're ubiquitous around the world. Twenty years from now, it's going to look a lot the same, and there's going to be some things that are different. Much of the world is powered by coal today. Much of the world will still be powered by coal in future years. We might burn it differently or what have you, but when people build coal plants, they're built for 50 years, and the Chinese have been building hundreds of them, so they're not going to go away. Natural gas is going to take a much bigger share. "We're starting to figure out how much more natural gas there is out there than people estimated. An absolute revolution in technology in the past few years has been in this shale gas development... Nuclear has taken it on the chin in the last month or two, but nuclear isn't going anywhere. "I think the long-term view is that we've had problems with the [nuclear] technology from the '50s, '60s, and '70s. There's different technology today, and I think it's going to be around. And don't count out oil. There is a lot of oil out there. There is a lot of oil yet to be found. And there's a lot of oil that's going to stay in the system for many decades to come. And when you look at it in the year 2031, I think that you'll see perhaps up to 10% of the world running on what we consider alternative energy, alternative fuels, things like that. But I think that the main base of energy and of power to run things is going to be what we have today, natural gas, oil, and coal, with nuclear. "And lots and lots and lots of different technology in how it's produced, how it's distributed, how people use it, efficiency, conservation, things like that." So what about fifty years then? What about investment angles for future technologies? Byron has those answers and more in the full interview which we present here as this week's feature Daily Reckoning column. The Future of Energy - An Interview with Byron King Forget QE3 - America's Going Bust, on the Road to Bankrupt Hell If America had a credit card, it would get mercilessly cut up and thrown back in her face. The country's basically broke and isn't paying its debts. Harsh, but true. All of that - and how it could affect your family and your retirement - is revealed in this urgent video report. Don't wait, watch now. ALSO THIS WEEK in The Daily Reckoning... Transforming Patience Into Gains By Ray Blanco Marco Island, Florida There's plenty of bad news out there lately. Nations such as Greece are in imminent danger of defaulting on public debts, and thousands of people are protesting in the streets in response to austerity measures. Here in the US, unemployment is rising, and a number of indicators are suggesting a return to economic contraction. On the stock market, weeks of declines in major indexes have wiped out all of this year's gains. The World, Right Side Up By Chris Mayer Gaithersburg, Maryland I was at the 49 North Resource Conference in Manhattan recently, meeting with mining companies and gathering intelligence. And I heard a guy give a talk with the title, "A Mining Supercycle?" I thought to myself: "Of course he'll say we're in a mining supercycle and how wonderful mining is. I'm at a mining conference, for crying out loud, surrounded by mining companies and geologists. To expect otherwise would be like expecting to find Victoria's Secret models at an Amish quilting bee." Governments are the Primary Creators of Systemic Risk By Charles Kadlec At the heart of that financial crisis were government policies including Federal Reserve efforts to manipulate the economy by keeping interest rates artificially low and a weak dollar policy that fueled the housing bubble, federal government rules and regulations that de facto required banks to make loans to high risk borrowers, and two government sponsored enterprises, Fannie Mae and Freddie Mac, who stood ready to purchase hundreds of billions of dollars of sub-prime mortgages if only Wall Street could figure out how to turn them into high grade bonds. The Immortalizing Enzyme By Patrick Cox Marco Island, Florida In the early 1500s, according to legend, the Spanish explorer, Ponce de Leon, traversed Florida looking for the Fountain of Youth. He never found it. 500 years later, scientists are still searching for it. They haven't found it either, but they might be getting close. The Future of Energy An Interview with Byron King Pittsburgh, Pennsylvania Twenty years ago, people didn't know what cell phones were. Now they're ubiquitous around the world. Twenty years from now, it's going to look a lot the same, and there's going to be some things that are different. Much of the world is powered by coal today. Much of the world will still be powered by coal in future years. We might burn it differently or what have you, but when people build coal plants, they're built for 50 years, and the Chinese have been building hundreds of them, so they're not going to go away. Natural gas is going to take a much bigger share. Israel Gives Money-Grubbing OPEC the Middle Finger Israel just discovered what could be the 2nd largest oil basin in the world today. This could spell the beginning of the end for OPEC - and huge gains for you. Details here. The Weekly Endnote... Usually in this space we give the floor over to a handful of reader mail - two or three, normally. This week, however, we received a thoughtful email on a particular topic of interest and, as such, thought we'd publish it in its entirety. And so... From Fellow Reckoner Howard B... Just a jot you might be interested in for a future article... My wife and I are a "mom and pop" here in New Mexico. We own a technology company providing computer and network services in eastern New Mexico and west Texas and a sign and T-Shirt printing business. We have several employees and would have several more but for the minimum wage increase that was forced upon us a while back. When min wage was 5.15, I hired employees and tested them for 90 days to see how they would fit into our family business. Those that proved to be "good metal" were kept and the dross was let go. Those that succeeded were given raises and kept on the job. Now that min wage is half again what it was at that time, we don't hire until we just absolutely have to hire because we can't afford it anymore. Our production has remained about the same, but our costs have risen dramatically, in employee direct wages and in employee taxes, plus our costs of materials has increased by a great amount. We no longer hire high school kids. We used to love to do that to give them a taste of what the working world was all about and to help them learn to be productive and make their own way in the world. We now have to hire fully trained, skilled individuals to remain competitive with our competition. Due to the hike in min wage we have to start our workers at a much higher level wage and we have to pay all of our "old hands" at a much higher rate to show them the respect we have for them over the new hires. We couldn't very well keep a journeyman at 0.25 higher than an apprentice - we had to raise his rates by the same amount as the min wage boost - half of what min wage was at $5.15! For example, the journeyman had been with us 4 years and was making (just an example) $8.50 an hour (that was a good wage for a t-shirt press operator at the time). After the min wage boost, his wages went to $10.50. We can't raise our prices much to make up for the increased cost - customers won't stand for it. This makes payroll a LOT harder to make and it really does make you think two or even THREE times before you hire a new employee! That's where the evilness of the higher min wage kicks in. Those of us paying employees won't keep ANYONE there that is worth their salt for long (at min wage). That's where we get to test them to see how they will fit into our "family". After their 90-day probationary time, wages are raised accordingly and that employee is placed on a track for periodic evaluations and pay increases. But when you are starting out at $7.55 per hour, that track has now been stretched out with raises at fewer intervals. Now employees have to do more because we can't afford to have as many employees on the payroll. It's a rough place to be as an employer - even rougher for a guy or gal out looking for work that can't get hired due to this. No winners anywhere due to some politicians trying to be popular. They just don't understand how business economics work. --- Got an opinion on minimum wage or, even better, a real world experience you'd like to share about it? Send your emails to the address below and, as always... ..enjoy your weekend. Cheers, Joel Bowman Managing Editor The Daily Reckoning ------------------------------------------------------- Here at The Daily Reckoning, we value your questions and comments. If you would like to send us a few thoughts of your own, please address them to your managing editor at joel@dailyreckoning.com When Lenders Stop Lending It's often said that the stock market is about the future. The bond market is about the here and now. But what if bond buyers suddenly recalled how they got mugged the last time they went around the corner? What if they remembered what happens when debtors borrow so much that they could never pay it back? Why Greece Should Default and Go Broke With Dignity Bear Traps in the Bond Market China: Where Money Is Treated Best I am sure that Mr. Pento is right because every country on the Face Of The Planet (FOTP) is desperately creating more and more money, and the money will eventually find its way to the place where it is treated best and/or has the best prospects, which is, in this case, Bob. Oops! I meant "China." Buying Gold on the Price Inflation Guarantee Awaiting the "Zero Hour" of Available Credit Greece Votes To "Implement" Austerity Measures When I clicked on the currency screens this morning, the euro (EUR) was doing well, trading around 1.4525, but then a cat was thrown among pigeons, when it was announced that the Eurogroup meeting scheduled for July 3, had been cancelled. That really threw the markets for a loop... Helicopter Money German Banks Warm to 30-Year Greek Debt The Daily Reckoning: Now in its 11th year, The Daily Reckoning is the flagship e-letter of Baltimore-based financial research firm and publishing group Agora Financial, a subsidiary of Agora Inc. The Daily Reckoning provides over half a million subscribers with literary economic perspective, global market analysis, and contrarian investment ideas. Published daily in six countries and three languages, each issue delivers a feature-length article by a senior member of our team and a guest essay from one of many leading thinkers and nationally acclaimed columnists. 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