CHRIS KAHN | June 29, 2009 03:27 PM EST | AP

NEW YORK — The government will help companies build powerful solar farms in the desert Southwest by pre-qualifying huge swaths of federal land for development.

The Department of Interior said Monday it will designate 670,000 acres of federal land in Nevada, Arizona, California, Colorado, New Mexico and Utah as study areas for utility-scale solar projects.

The land will be divided into 24 tracts called Solar Energy Study areas.

Interior Secretary Ken Salazar said the department will work with states on environmental studies and permitting to speed solar development in those areas.

Our Perspective:

This is good news. Finally, the government is stepping forward and acknowledging the opportunities provided by alternative energy development.

I hope this is only the beginning!

Let us know your thoughts? You may leave a comment or email george@hbsadvantage.com

By JAD MOUAWAD
Published: July 5, 2009

The extreme volatility that has gripped oil markets for the last 18 months has shown no signs of slowing down, with oil prices more than doubling since the beginning of the year despite an exceptionally weak economy.

The instability of oil and gas prices is puzzling government officials and policy analysts, who fear it could jeopardize a global recovery. It is also hobbling businesses and consumers, who are already facing the effects of a stinging recession, as they try in vain to guess where prices will be a year from now — or even next month.

A wild run on the oil markets has occurred in the last 12 months. Last summer, prices surged to a record high above $145 a barrel, driving up gasoline prices to well over $4 a gallon. As the global economy faltered, oil tumbled to $33 a barrel in December. But oil has risen 55 percent since the beginning of the year, to $70 a barrel, pushing gas prices up again to $2.60 a gallon, according to AAA, the automobile club.

“To call this extreme volatility might be an understatement,” said Laura Wright, the chief financial officer at Southwest Airlines, a company that has sought to insure itself against volatile prices by buying long-term oil contracts. “Over the past 15 to 18 months, this has been unprecedented. I don’t think it can be easily rationalized.”

Volatility in the oil markets in the last year has reached levels not recorded since the energy shocks of the late 1970s and early 1980s, according to Costanza Jacazio, an energy analyst at Barclays Capital in New York.

At the close of last week’s trading, oil futures fell $2.58, to $66.73 a barrel, after rising above $72 a barrel last month.

These gyrations have rippled across the economy. The automakers General Motors and Chrysler have been forced into bankruptcy as customers shun their gas guzzlers. Airlines are on pace for another year of deep losses because of rising jet fuel costs.

And households, already crimped by falling home prices, mounting job losses and credit pressures, are once more forced to monitor their discretionary spending as energy prices rise.

While the movements in the oil markets have been similar to swings in most asset classes, including stocks and other commodities, the recent rise in oil prices is reprising the debate from last year over the role of investors — or speculators — in the commodity markets.

Government officials around the world have become concerned about a possible replay of last year’s surge. Energy officials from the European Union and OPEC, meeting in Vienna last month, said that “the speculation issue had not been resolved yet and that the 2008 bubble could be repeated” without more oversight.

Many factors that pushed oil prices up last year have returned. Supply fears are creeping back into the market, with a new round of violence in Nigeria’s oil-rich Niger Delta crimping production. And there are increasing fears that the political instability in Iran could spill over onto the oil market, potentially hampering the country’s exports.

The OPEC cartel has also been remarkably successful in reining in production in recent months to keep prices from falling. Even as prices recovered, members of the Organization of the Petroleum Exporting Countries have been unwilling to open their taps.

Top officials said that OPEC’s goal was to achieve $75 a barrel oil by the end of the year, a target that has been endorsed by Saudi Arabia, the group’s kingpin.

“Neither the organization, nor its key members, has any real interest in halting the rise in oil prices,” said a report by the Center for Global Energy Studies, a consulting group in

London founded by Sheik Ahmed Zaki Yamani, a former Saudi oil minister.

But unlike most of 2007, when the economy was still not in recession and demand for commodities was strong, the world today is mired in its worst slump in over half a century. The World Bank warned the recession would be deeper than previously thought and said any recovery next year would be subdued.

The International Energy Agency held out the prospect that energy demand was unlikely to recover before 2014. Yet the indicators that would traditionally signal lower prices — like high oil inventories or OPEC’s large spare production capacity — do not seem to hold much weight today, analysts said.

“Crude oil prices appear to have been divorced from the underlying fundamentals of weak demand, ample supply and high inventories,” Deutsche Bank analysts said in a recent report.

Investors are betting that the worst of the economic slump may be coming to an end, and are bidding up what they perceive will become scare resources once demand kicks back again, analysts said. This uncertainty is making it difficult for companies to plan ahead, they said.

“People do not like that kind of volatility, they want to know what their costs are going to be,” said Bernard Baumohl, the chief global economist at the Economic Outlook Group.

For the global airline industry, the latest price surge is certain to translate into more losses this year, according to the industry’s trade group, I.A.T.A. Airlines are expected to post losses of $9 billion this year, following last year’s losses of $10.4 billion. “Airlines have not yet felt the full impact of this oil price rise,” according to I.A.T.A.’s latest report.

At Southwest Airlines, for example, fuel accounts for about a third of the company’s costs, according to Ms. Wright, the chief financial officer. The experience of the past year, she said, “has convinced us we cannot afford to not be hedged.”

The company has currently hedged part of its fuel use for the second half of the year at $71 a barrel, and for 2010 at $77 a barrel. Hedging acts as an insurance policy if prices rise above these levels.

But last year, Southwest reported two consecutive quarters of losses, as prices spiked and collapsed — all within a few months. “Prices were falling faster than we could de-hedge,” Ms. Wright said.

To survive the slump, many airlines have cut routes and raised both fares and fees, like charging for luggage, while some of the industry’s top players have merged. For example, Delta Air Lines bought Northwest Airlines last year, and in Europe, Lufthansa of Germany bought Austrian Airlines and Air France-KLM acquired Alitalia of Italy.

Likewise, automobile showrooms emptied out as gasoline prices rose, forcing General Motors and Chrysler to cut production sharply as they wade through bankruptcy. Meanwhile, they are under pressure from Washington to improve their fuel ratings.

“Do not believe for an instant that sport utilities are making a comeback,” George Pipas, Ford’s chief sales analyst, told reporters last week.

But to Jeroen van der Veer, who retired as chief executive officer of Royal Dutch Shell last week, prices are increasingly dictated by long-term assessments of supply and demand, rather than current market fundamentals. He advised taking a long-term view of the market.

“Oil has never been very stable,” Mr. van der Veer said. “If you look at history, you have to expect more volatility.”

Let us know your thoughts? You may leave a comment or email george@hbsadvantage.com

Just Do It

July 2, 2009

By THOMAS L. FRIEDMAN
Published: June 30, 2009
There is much in the House cap-and-trade energy bill that just passed that I absolutely hate. It is too weak in key areas and way too complicated in others. A simple, straightforward carbon tax would have made much more sense than this Rube Goldberg contraption. It is pathetic that we couldn’t do better. It is appalling that so much had to be given away to polluters. It stinks. It’s a mess. I detest it.

Skip to next paragraph

Fred R. Conrad/The New York Times

Thomas L. Friedman

Now let’s get it passed in the Senate and make it law.

Why? Because, for all its flaws, this bill is the first comprehensive attempt by America to mitigate climate change by putting a price on carbon emissions. Rejecting this bill would have been read in the world as America voting against the reality and urgency of climate change and would have undermined clean energy initiatives everywhere.

More important, my gut tells me that if the U.S. government puts a price on carbon, even a weak one, it will usher in a new mind-set among consumers, investors, farmers, innovators and entrepreneurs that in time will make a big difference — much like the first warnings that cigarettes could cause cancer. The morning after that warning no one ever looked at smoking the same again.

Ditto if this bill passes. Henceforth, every investment decision made in America — about how homes are built, products manufactured or electricity generated — will look for the least-cost low-carbon option. And weaving carbon emissions into every business decision will drive innovation and deployment of clean technologies to a whole new level and make energy efficiency much more affordable. That ain’t beanbag.

Now that the bill is heading for the Senate, though, we must, ideally, try to improve it, but, at a minimum, guard against diluting it any further. To do that we need the help of the three parties most responsible for how weak the bill already is: the Republican Party, President Barack Obama and We the People.

This bill is not weak because its framers, Representatives Henry Waxman and Ed Markey, wanted it this way. “They had to make the compromises they did,” said Dan Becker, director of the Safe Climate Campaign, “because almost every House Republican voted against the bill and did nothing to try to improve it. So to get it passed, they needed every coal-state Democrat, and that meant they had to water it down to bring them on board.”

What are Republicans thinking? It is not as if they put forward a different strategy, like a carbon tax. Does the G.O.P. want to be the party of sex scandals and polluters or does it want to be a partner in helping America dominate the next great global industry: E.T. — energy technology? How could Republicans become so anti-environment, just when the country is going green?

Historically speaking, “Republicans can claim as much credit for America’s environmental leadership as Democrats,” noted Glenn Prickett, senior vice president at Conservation International. “The two greatest environmental presidents in American history were Teddy Roosevelt, who created our national park system, and Richard Nixon, whose administration gave us the Clean Air Act and the Environmental Protection Agency.” George Bush Sr. signed the 1993 Rio Treaty, to preserve biodiversity.

Yes, this bill’s goal of reducing U.S. carbon emissions to 17 percent below 2005 levels by 2020 is nowhere near what science tells us we need to mitigate climate change. But it also contains significant provisions to prevent new buildings from becoming energy hogs, to make our appliances the most energy efficient in the world and to help preserve forests in places like the Amazon.

We need Republicans who believe in fiscal conservatism and conservation joining this legislation in the Senate. We want a bill that transforms the whole country not one that just threads a political needle. I hope they start listening to green Republicans like Dick Lugar, George Shultz and Arnold Schwarzenegger.

I also hope we will hear more from President Obama. Something feels very calculating in how he has approached this bill, as if he doesn’t quite want to get his hands dirty, as if he is ready to twist arms in private, but not so much that if the bill goes down he will get tarnished. That is no way to fight this war. He is going to have to mobilize the whole country to pressure the Senate — by educating Americans, with speech after speech, about the opportunities and necessities of a serious climate/energy bill. If he is not ready to risk failure by going all out, failure will be the most likely result.

And then there is We the People. Attention all young Americans: your climate future is being decided right now in the cloakrooms of the Capitol, where the coal lobby holds huge sway. You want to make a difference? Then get out of Facebook and into somebody’s face. Get a million people on the Washington Mall calling for a price on carbon. That will get the Senate’s attention. Play hardball or don’t play at all.

Our Perspective:

Finally the Congress is recognizing there is an issue with emissions. For years, many have denied there is any correlation between emissions and climate change.

Leave it to the politicians to throw pork into an important issue.

Why would they recognize an issue, claim it and take responsibility for fixing it. They do not want to be held accountable for they have to run for reelection.

We can’t afford to push the rock any further.

Our ignorance has caused this problem.

But now that we acknowledge there is a problem, our arrogance can not let it continue.

We are only here for a short time. 

Everyday is a gift.

It is our responsibility to hand it over to the next generation, a world; that is in better condition than what we received.

This bill is flawed and we have to make our voices heard.

Have them pull the pork and make a real statement.

We can choose to lead by example! Just do it!

Let us know your thoughts? You may leave a comment or email george@hbsadvantage.com

Written By Arthur Delaney   reported on Huffingtonpost.com

The U.S. economy lost 467,000 jobs in June as the national unemployment rate rose to 9.5 percent, the government announced on Thursday morning. While that’s only one-tenth of a percentage point from May, the current rate is the highest rate in 26 years.

Heidi Shierholz, an economist with the Economic Policy Institute, said that the loss of 6.5 million jobs since the start of the recession combined with the growth of the workforce means that the gains of the previous business cycle have been completely blown away.

“This is the only recession since the Great Depression to wipe out all jobs growth from the previous business cycle, a devastating benchmark for the workers of this country and a testament to both the enormity of the current crisis and to the extreme weakness of jobs growth from 2000-2007,” said Shierholz in a statement.

The ranks of the long-term unemployed — people out of work for 27 weeks or more — grew by 433,000 in June to a total of 4.4 million. Three in 10 of the unemployed are now long-term unemployed. The collapse of the housing industry contributes to their plight.

“We know right now because of the housing crisis that people can’t move to find another job,” Shierholz said. “People that in previous recessions may have been able to relocate to find another job can’t now.”

The Huffington Post has been profiling people who’ve been out of work for long periods of time. Marvin Bohn of Ohio hasn’t worked for a year and has been paying for his meds out-of-pocket. Steve Dittmann of Kansas said of the unemployed life, “I feel like I’m on the other side of a Plexiglass wall looking in.”

A broader measure of labor underutilization that accounts for people who’ve stopped looking for work hit 16.5% in June, a 0.1 percentage point increase.

“In June, there were large decreases in manufacturing, construction, and professional and business services,” said Bureau of Labor Statistics Commissioner Keith Hall in a statement. “Together, these three sectors have accounted for nearly three-quarters of the jobs lost since the recession began.

Many economists have predicted that even when the recession is technically over with the economy beginning to expand, there will be a “jobless recovery” as unemployment hovers in the double-digits.