"Dear Santa,

"Please disregard any infractions regarding my behavior this year.

"From, John"

We had thought Scooter, at almost 11 years old, didn't really believe in Santa any more. When Christmas Eve came, however, it looks like he wasn't quite ready to deny Pascal his wager.

We had our first major snowstorm of the season last night, and as I was shoveling the driveway I was thinking about different ways to remove snow.

Okay, I'll be honest--I was trying to figure out how to justify installing a snow-melting system when we have to replace our driveway in a few years. I still shovel the drive by hand, but I can foresee a time when I won't want to do that any more or will be traveling enough so I can't.

There are four basic ways to remove snow and ice from a driveway: shovel it by hand, clear it with a snowblower, melt it with a heated driveway, or hire a snowplow service. (You could look at a fifth possibility, melt it with chemicals, but that would require so much chemicals as to have serious environmental consequences. Chemicals are best used for stubborn patches of ice which are hard to remove mechanically.)

The Physics Perspective

The most obvious way to look at the problem of How to Remove Snow is to compare the energy required to melt snow vs. move it.  I measured our driveway and found that it is about 1,200 square feet (I'm going to use English rather than metric units because they're probably more familiar to my readers).

If we get a heavy snowfall of a foot, which translates to an inch of equivalent rainfall (Minnesota's snow tends to have one inch of rainfall equivalent for every 8-15 inches of snow), that's about 6,000 pounds of ice on the driveway which needs to be melted (which will yield about 750 gallons of water, if you're keeping track).  It takes 144 BTU to melt a pound of ice, so it will take about 850,000 BTU to melt all the snow.

In addition to melting the snow, you also have to heat the driveway itself. If there's three inches of brick over the 1,200 square foot driveway, that's about 40,000 pounds of brick. In the worst-case scenario, that brick needs to be warmed by about 100 degrees F, which will take about another 900,000 BTU. Normally a snow-melting installation includes a layer of insulation underneath the driveway, so we don't need to heat the ground underneath the driveway. In total, then, we need about 1.75 million BTU to melt a foot of snow from the driveway on a very cold day.

Calculating the energy it takes to move the snow isn't quite as straightforward since it depends on whether you push the snow (with a plow), lift the snow (with a shovel), or launch the snow (with a snowblower). Hard-to-measure factors like friction and ice adhering to the surface can matter a lot. The simplest case is the snowblower, which essentially fires the snow out a chute. If we assume that the snowblower shoots the snow out fast enough to launch it about 30 feet straight up, then it will take about 300 BTU to clear all the snow.

This is a rather lopsided result: it takes about 5,800 times as much energy to melt the snow as to clear it with a snowblower. This is not a helpful result in my quest to justify a snow melting system. It's not the end of the story, though: a snowblower turns out to be much less efficient.

It turns out to be fairly easy to convert chemical energy from natural gas into heat. Our on-demand hot water heater (which would likely be pressed into service to drive any snow-melting system) claims to be 98% efficient, and the required plumbing would have only minimal loss, so over 90% of the energy of the natural gas would be available to heat the driveway. Delivering our 1.75 million BTU to the driveway will require just a little over 1.75 million BTU of natural gas.

Small gasoline engines, like the ones used to drive snowblowers, are not very efficient. Only about 10% of the energy content of the gasoline is actually converted into mechanical energy in the driveshaft of the engine. What's more, the snowblower has a lot of internal friction, idle time, and other losses. It's probably reasonable to assume that only 10% of the output of the engine actually gets converted into flying snow. Realistically, then, it probably takes about 30,000 BTU of gasoline (or about 1/8 of a gallon) to clear the driveway.

Even accounting for the relative efficiency of melting vs. moving snow, it still takes 58 times more energy to melt the snow. This is still not a helpful result, but there's one more wrinkle: a foot of snow on a very cold day is a worst-case scenario for the snow melting system, and melting less snow on a warmer day leads to a direct reduction in the energy required. The snowblower, on the other hand, is likely to use about the same two cups of gasoline no matter how little snow fell or how warm the weather, because most of the energy is going into friction and the important factor is how long it takes to walk the machine across the entire driveway. With only an inch of snow on a warmish sunny day, the snow-melt system might require only 2-3 times as much energy as the snowblower.

The Fuel Perspective

Another way to look at the problem is to estimate the amount of fuel consumed by the different ways to remove snow. For our foot of snow, the snow-melt system will consume about 18 therms of natural gas, or about $13 of gas at recent prices from our gas company. The two cups of gasoline the snowblower consumes is about $0.30 of fuel these days.

The amount of gasoline consumed by the snowplowing service is harder to estimate because they likely burn more gas getting to and from our driveway than they use in actually clearing the snow. Plow services tend to drive big four-wheel-drive trucks which get poor mileage (especially with a giant plow rig attached to the front), so it seems reasonable to assume they burn about 1/2 gallon (or $1.20) getting to and from each client on the route.

Finally, when I shovel the driveway by hand, it takes me about an hour and burns 720 calories according to government exercise tables. That's about three candy bars, which cost about a dollar each at the convenience store, so about $3 worth of "fuel" is required.

Here, too, there's a slight wrinkle. Our geothermal system uses waste heat to warm a storage tank for hot water, and this heat could be available for use in a snow-melt system. This could give us the first 25,000 BTU or so for free each time we run the heated driveway--not very helpful for the foot of snow on a subzero day, but a significant factor in the case where we're trying to remove a small amount of snow or ice on a warmer day. This low-use scenario could wind up costing $0.50 or less.

The Time and Money Perspective

Finally, we can look at the problem from the perspective of how much time and money it takes to clean the driveway. Right now I spend about an hour shoveling the driveway every time we have a significant snowfall, and for bigger storms this sometimes needs to be done twice or more. As already established, this costs about $3 worth of candy bars.

Clearing the driveway with a snowblower takes about a half-hour, and about $0.30 worth of fuel each time. This may seem like a no-brainer (replacing $3 of Snickers with $0.30 of unleaded and taking half the time), but the snowblower itself will cost about $500 and last perhaps five years. If I have to clear the driveway ten times a season, it's clear that buying the snowblower is the most important expense, adding about $10 to the cost of each snowfall.

Hiring a snowplow service is the most expensive option, but it takes me zero time to clear the driveway. We used to hire a service until about 10 years ago, and back then they charged a minimum of $30 every time it snowed with a surcharge for more than three inches of snow. Today it would probably cost $40-$50 for every snowfall, and our foot of snow could cost as much as $75 with surcharges.

The snow-melt system actually starts to look compelling from a time and money perspective. Like the snowplow service, it requires zero effort for snow removal, but the deep snow on a cold day will only cost about $13 in natural gas. I haven't priced the cost of installing the system, but my guess is that it would add between $2,000 and $5,000 to the cost of replacing the driveway (which will have to be done anyway in a few years). Considering that we already have a water heater capable of driving the system, we could well come in at the low end of the range.

The installation price of a snow-melt system is steep, but it should last for the life of the driveway or longer. Over 25 years, the $5,000 spent on the system will cost only $200/year, or $20 for each snowfall if we need it ten times per season. So (rounding off a little), a heavy snowfall will cost about $35 in fuel plus capital expense to melt the snow, as compared to $50-$75 for a plowing service. A light snowfall would cost only about $20 to melt (essentially just the amortized cost of installation), but $40-$50 for a service.

Concluding Thoughts

There's no question that moving snow takes much less energy than trying to melt it, and the cheapest, most efficient way to clean up after a snowstorm is to shovel by hand. I'm happy to keep doing this, but She Who Puts Up With Me has zero interest in hand-clearing our driveway.

At some point, I might not want to keep shoveling, or my business travel schedule may make it likely that I won't be in town when the snow flies. When that time comes, we can hire a service, buy a snowblower, or install a snow-melt system.

Buying a snowblower is the cheapest option, but also the least convenient--it will still require someone to spend a half-hour in the cold and blowing snow. I don't think She Who Puts Up With Me will be too excited about this, though it's still better than hand-shoveling.

That leaves hiring a service or going with the heated driveway.

If we have to choose between those options, the snow-melt system is substantially cheaper, as long as we anticipate using the service for a number of years. If we expect to need a service for only a few years (maybe we expect my travel schedule to change, or move to a different house), then the capital expense of the snow-melt system makes it more expensive.

All this is still dreaming at this point: the time to make a decision about a heated driveway is when we replace the driveway. Our current driveway is 25 years old and in poor shape, so it could be replaced at any time. On the other hand, after the geothermal system this year we're not eager to embark on another major home-improvement project for a couple years.

A Northwest flight was in the news recently when it overflew its destination by about 150 miles and the pilots didn't respond to air traffic control.  It turned out that the pilots were working on their laptop computers (against airline policy) and got so engrossed that they missed all the attempts to communicate with them.

I don't want to dive into all the hand-wringing over this incident (which ended without damage to anything other than the pilots' professional reputations and credentials). Others far more qualified than I have weighed in on what a terrible lapse of judgement this was.

But this does highlight what I see as potentially an increasing problem in modern aviation: complete and utter boredom.

Over the past 20 years, cockpits have become more and more automated, and modern airliners literally fly themselves with almost no intervention from the crew. Even 4-seat propeller planes of the kind I fly are becoming more automated--it's getting hard to buy a new airplane without a complete digital instrumentation system (aka "glass cockpit") and sophisticated autopilot.

For the most part, this is a good change. Computers are much less likely to make mistakes than people in the routine operations of the aircraft, and can navigate far more precisely. The job of the human pilots is no longer actually flying the airplane, but communicating with the ground and being ready to take over in case something goes wrong (which it almost never does).

The downside is that it leaves the flight crew with very little to do during the cruise phase. If you think it's boring sitting on a 4-hour flight, imagine what it's like for the pilot and co-pilot. They are required to sit in their seats and be alert for hours at a time, but not permitted to sleep, read books, play games, or do much of anything other than talk to each other and (very occasionally) ATC. Even standing up and going to the bathroom is actively discouraged for security reasons.

This sort of enforced inactivity plus alertness is simply not something human beings are good at. The amazing part of this incident is not that the pilots got sucked into some other activity, but that it doesn't happen more often.

In much the same way that JFK was the first TV Age President, it is increasingly clear that Obama is the first Internet Age President.

Kennedy was not the first president to have to deal with television during his presidency, but he was the first one to figure out how to use TV to his political advantage. He knew how to look good on TV, and recognized that this was important. The 1960 Kennedy-Nixon debates, where Kennedy looked presidential and Nixon did not, are considered pivotal in the outcome of the election.

Similarly, Obama is the first President to really know how to use the unique dynamics of politics in the Internet Age to his advantage. Consider this sequence of events, which has played out at least a half-dozen times since the beginning of the presidential campaign two years ago:

1. Obama's opponents raise an issue which they think makes Obama look bad.
2. Issue starts to be discussed more and more online, and starts to get distorted by the more rabid of Obama's opponents. Obama's spokespeople may downplay the issue, but Obama himself makes no direct statement.
3. Emboldened, Obama's critics push the issue. It gets distorted more and more, and begins to spill over into the traditional mass media. Looking for a good story, the media reports on the most absurd, extreme versions of the original story.
4. As the frenzy crescendos, Obama delivers a calm, rational, centrist speech about the issue.
5. Obama looks Presidential, and his opponents look like rabid morons.

I'm not the first one to notice this repeating pattern. Andrew Sullivan calls it the "Rope-a-Dope," and speculates that Obama manages to subtly bait his opponents into Step 1 above. I'm not so sure about the baiting part--not because I think Obama's above baiting his opponents, but because he doesn't seem to need to. For whatever reason, Obama seems to bring out the absolute worst in his critics.

This strategy is perfectly suited to the Internet Age, where any idea, no matter how kooky, can find a sympathetic audience. It plays perfectly into the 24-hour news cycle where the biggest challenge is finding fresh material to report on. It draws strength from partisan media like Fox News and talk radio where there's always a willingness to push negative stories about Obama, no matter how implausible.

Back when most people got their news from the three major networks and a big-city newspaper, many of these wacky stories never would have gotten off the ground because the mass media would have considered them too fringe. Indeed, back in the Kennedy administration, the media wouldn't even report on JFK's well-known affairs, judging it a personal matter between the President and the women in his life. Good luck with that today. Even if the mass media doesn't want to report a story, the Internet and smaller outlets now are big enough to give them the breathing room to grow to the point where the large outlets feel like they can't ignore the story.

So what does it take to be an Internet Age President? In the TV Age, the advice was simple: Look Good on Camera. Nixon failed to do this in 1960 and it cost him the election.

In the Internet Age, the key is to Stay Cool No Matter What. This applies both to the candidate and to his or her campaign and supporters. McCain made a whole series of rash decisions during the 2008 campaign, ranging from suspending his campaign during the financial crisis to choosing Sara Palin as his running mate.  It cost him the election.

There will always be kooks and crazies around the margins of politics, and now that they have a bigger voice it's easy to be baited into doing something dumb. Taking the bait achieves nothing but bringing yourself down to their level.

Instead, an Internet Age politician needs to remain visibly above the fray, while looking for opportunities to use the cacophony to his or her own advantage.

It's been three months since our geothermal system was installed.  We've made it through the hottest part of the summer, and proved that a heat pump sized for a Minnesota winter does a bang-up job with air conditioning in the summer.

So far we've discovered only one problem: the sinkhole.

When the contractors buried the plumbing for the loop field, they basically excavated a trench about ten feet wide, twenty feet long, and six feet deep.  That's about 45 cubic yards of material removed.  At the bottom of this pit, they connected the six deep wells to a manifold and a pair of pipes which run under the garage into the utility room.  These pipes circulate the antifreeze solution which transfers heat between the ground and the house.

After all the plumbing was done, the geothermal company just pushed the 45 yards of material back into the hole.  They made no attempt to level the ground, nor did we expect them to.  On the contrary, they made it very clear that they would leave the yard a complete mess and it was our responsibility to fix the landscaping.

A week or so after the geothermal guys left, the landscapers arrived.  They used a bobcat to level and grade the ground and plant grass seed on top.

Now, we had a dry spring and summer and for a while things looked pretty good.  If you've had experience with excavation, though, you can probably see where this is going.

A certain amount of settling is always expected when you dig a hole and refill it.  That's because the granules of dirt, sand, and clay don't just drop back into the same compacted configuration they had been before.  Instead, they're fluffed up a little, and it takes some time to unfluff.  A good soaking rain helps, since the water suspends and lubricates the particles.

This August, we got that rain.  When we got that rain, the ground above the excavation settled.  And collapsed into a big sinkhole.

My best guess is that when they pushed all that material back into the hole, they accidentally left a sizable void in one of the corners of the excavation.  This is easy to do when the dirt is dry and lumpy like it was this past spring.  The void sat there quite happily for a couple months, until we got enough rain to actually soak all the way down to the underground air pocket.

Once the water reached the void, it collapsed and created our sinkhole.

The sinkhole is about a cubic yard in volume, which is to say, big enough to look ugly and alarming, but not big enough to actually be dangerous.  Fortunately it's not in a place visible from outside our yard, so I don't feel like it has to be dealt with this instant to keep the neighborhood looking good.

Right now, I'm thinking that the time to deal with the sinkhole will be in the spring, after we've had a complete freeze-thaw cycle and I can be fairly confident that the excavation is mostly done settling.  I would hate to fill it all in, just to have it sink again.

If I had thought of it at the time, I should have taken the garden hose and run it into the rough-filled pit the geothermal guys left before the landscapers arrived. That would have at least uncovered the void and prevented the dramatic sinkhole, even if the ground would still have settled after being regraded.

Update: A few hours after I wrote this entry, I discovered that I was a little too sanguine about the need to immediately fill in the sinkholes. The sinkholes are trapping runoff which would normally flow downhill and away from the house, and with heavy enough rain some of the water is making it into our basement. Not much, but enough to make me want to go get a couple yards of sand and rough-grade the sinkholes before the next big storm.

High Speed Rail, which generally means trains running faster than 110 MPH, is hot again these days.  There's money in the economic stimulus package, the beginnings of a plan in California, and just this week, a five-part series on National Public Radio.

I am a big fan of the idea. Personally, I would love to be able to hop on a train in Minneapolis and be in Chicago three hours later without the hassle of airports.  Or, even better, an overnight sleeper to San Francisco (currently a two-day trip by rail). For me, this would be a service worth paying a premium over an airline ticket, given how miserable air travel is these days.

But....the cost of actually building and operating a single high speed rail line will be substantial; and the cost of building a national network of superfast trains will be astronomical--though no more astronomical than the cost of other national infrastructure like the interstate highway system, power grid, or airspace system.

Fans of fast trains hope that once one regional network is built, the benefits will be so obvious that other regions will demand their own networks, eventually creating a national system.  Opponents charge (probably correctly) that high speed passenger rail service will inevitably operate at a loss and require government subsidies (though the highway and airspace systems also require considerable government care and feeding).

Public Rails and Private Trains

Government is good at building gigantic infrastructure projects, but not at figuring out how to make the most efficient use of the infrastructure once built.  Competitive markets, on the other hand, are great at figuring out what customers want, but no private enterprise could possibly afford to build a high speed rail network--and forget about the idea of two competing sets of tracks.

My idea is to have government build and maintain the high speed rail lines, but private companies own and operate the trains.  Any company which could meet appropriate technical requirements would be allowed to operate high speed trains and pay a fee for the privilege.

This is similar to the way the highways and airspace systems work today, where government builds and maintains the infrastructure but private companies set schedules, pricing, and routes.  It's almost the exact opposite of how Amtrak currently works, since Amtrak has a quasi-governmental monopoly on interstate passenger rail, but has to negotiate with private companies to use most of the tracks its trains run on.

There would be technical issues to work out--for example, traffic control, and how to allocate the most desirable time slots on heavily-traveled routes.  But we have decades of experience solving similar problems in the national airspace system.

In exchange for solving these (minor) issues, a high-speed rail system would gain several advantages:

1. Taxpayers would not have to pay for the trains, just the tracks.  This might not sound like big savings, but over the lifetime of the system it's substantial.
2. The government would be out of the business of setting fares and routes, and the free market can figure out how to deliver service at the lowest price.
3. Riders would have the choice of several different services--for example, a cheap train with lots of stops and crowded cars, or a more expensive and comfortable train.
4. This would create space for innovative new services--for example, same-day freight service--which a government-run system would never attempt.
5. With competing services and innovation, the odds are much greater that the high speed line would be used at maximum capacity, increasing the economic benefit and the system's ability to pay for itself.

Personally, I've never understood why railroads have to own and maintain their own tracks.  The public-private hybrid we use for other transportation modes seems to work much better, and were it not for the historical accident of how the railroads were built in the first place 150 years ago, I don't see why anyone would follow that model today.

Scooter, my oldest son, is the kind of person who just has to know what will happen when he throws a rock at a wasps' nest.

Then, he needs to repeat the experiment to make sure the same thing happens each time.

August is the time of year when the wasps' nests get to be about football size and utterly irresistible as a target for small thrown objects.  Last summer, there was one in the crabapple tree in the front yard, about six feet off the ground.  Scooter got stung a couple of times, and his face swelled up for days after.  Nevertheless, the next day he was at it again, chucking rocks and sticks despite the painful lesson of the day before.

The wasps are generally beneficial since they eat all kinds of damaging bugs and caterpillars, so I prefer a "live and let live" strategy when dealing with them.  When they get too close to where the kids are playing, however, something has to give.  Once discovered, the kids can't be trusted to leave the nest alone, and I don't want to have them scared to play in our own yard.

Last summer, we were fortunate to have a run of cool weather, so I was able to cut down the nest on a 50-degree morning (they have trouble flying when it gets that cool).  Within hours, some other critter had discovered the tasty morsels inside and ripped the nest apart to eat the wasps and their larvae.

This year, the kids discovered a nest in a tree near their new tree-fort.  It's not clear whether Scooter intentionally threw stuff at it, or just happened to hit the nest when chucking things at his brother, but either way the wasps got good and angry.  Scooter go stung about a half-dozen times during his mad dash to the house, while one of his brothers was smart enough to retreat before being stung at all.

The other twin, however, was in the treehouse and got pinned down by angry wasps.  The poor kid was stuck for several minutes while the insects repeatedly stung him.  I tried to get to him to help, but inadvertently walked right under the nest and got chased away when I got stung 8-10 times in just a few seconds.  I also lost my glasses in the yard and have yet to find them.

My son did manage to climb safely down and run to the house, leaving his shoes behind. For several hours, wasps were seen harassing the abandoned shoes, apparently thinking that they represented a continued threat. Needless to say, this nest cannot remain.

This nest is much higher up than the one from last summer, and the weather looks unlikely to get down to 50 for several weeks.  So this evening I plan to empty a can of insecticide into the nest and once again remind all three kids that when you see a wasps' nest, leave it alone.

I've been riding my recumbent trike (aka The Dorkmobile) for a little over a year and 1,500 miles now, and even convinced my brother to buy one.

Lately I've noticed more and more recumbents, including trikes, on the roads and trails. So in case you're thinking of riding one, here are some of my experiences so far.

General Impressions

Riding a recumbent trike is surprisingly different from a traditional bike, and takes some getting used to. You are low to the ground, don't lean into turns the same way, and use different muscles to pedal.

I like to describe it as pedaling a lawn chair, though the sensation of motion is more like a go-cart than anything else. If you're transitioning from a traditional bike, expect it to feel weird for the first hundred miles or so. You will have to learn to brake evenly with both hands (to avoid brake steer), and going really fast (30+MPH) feels unstable at first even though it isn't.

Pros

The biggest advantage of the trike is comfort. I can ride all day with no ill effects other than a little muscle soreness; on a traditional bike, my shoulders, wrists, and butt would be killing me after just a few miles.

I also find the trike a lot more fun than a regular bike. The low-to-the-ground position gives a great impression of speed, and the machine is unusual enough to get regular comments (and compliments) on the trail.

Between the comfort and the fun, I find that I'm riding a lot more on the trike than I ever rode my bike. I never tracked my bike riding very closely, but the 1,500 trike miles in the past year is probably close to my entire lifetime bike miles.

Cons

I didn't appreciate this until after a thousand miles or so, but adding a third wheel at least doubles the mechanical complexity of a trike over a traditional bike. Two front wheels means that steering is accomplished through a bunch of mechanical linkages; and the very long chainline means extra gears and the opportunity for the chain to oscillate wildly if it isn't tensioned properly.

The trike also has a much bigger footprint than a bike, which makes it harder to store and transport.  There are few trike racks made for cars, so I've usually wound up strapping it to the roof (which works really well as long as you only need to carry one trike).  It takes up the space of two or three bicycles in the garage.

The third wheel also adds some drag, so the trike will not be quite as fast as a bicycle.  If you care about speed, this is probably not for you.

Safety

A trike has many of the same safety considerations as a bicycle, but also some differences. Just as with a bike, when riding on roads visibility to cars is a really big deal. Big flags and lots of flashing lights are a good idea.  I have a flashing light mounted on my flag pole, which puts it near eye level for drivers.  I've not had much difficult being seen.

Another issue is that with the low posture of a trike, sometimes seeing around cars is a problem--for example, when I'm stopped at an intersection and a car pulls up next to me a little too far.  On a traditional bike, I would be able to see over the car's hood, but on my trike my eye level is about at the top of the car's wheel.  This isn't normally a safety issue, since the car usually knows I'm there, but it is annoying because I can't go until the car stop blocking my view.

The trike does have a huge safety advantage when it comes to stability.  Three wheels and a low center of gravity means that a trike is very hard to flip, whereas a bike can wipeout on even a small patch of slippery or loose ground.  If you do flip, there isn't very far to fall.  I've flipped my trike twice, and both were essentially non-events: get up, brush myself off, and continue.

(In case you're wondering, the recipe for flipping a trike is to turn from a road onto a sidewalk carelessly.  If you take the turn too fast and cut the inside of the corner, the inside front wheel will bump up on the curb and your momentum will flip you right onto your side.)

Conclusion

A recumbent trike is not for everyone.  It is more expensive and someone more maintenance-prone, and also a little slower than a bike.

But for me, it has been worth it.  I ride a lot more often, and a lot further, than I ever did on a bike, just because it is so much fun.  If you're thinking about a trike, I suggest that you give it a good long test ride.  If you're grinning so much that you have to pick the bugs out of your teeth afterwards, then there's your answer.

I crossed 500 miles under pedal power in 2009 not long ago, as well as logging a week over 100 miles.  That's a nice milestone on the way to my goal for the year of 2,000 miles, but I'm starting to think that might be a bit out of reach.

Last year I logged about 900 miles but that was a partial season since I didn't get the trike until mid-June.  I figured that with diligence, I should be able to double that number for 2009 (hence the 2,000 mile goal), but I didn't consider the cumulative effects of vacations, wacky summer schedules, and some downtime for mechanical problems.

Sadly, the weather this week is supposed to be absolutely perfect for trike-riding, but the kids' summer schedules are probably going to limit the number of days I can actually ride to work.  We're in the crazy part of the summer now, when all three kids have one summer program or another and we have to drive them all over creation every day.

Our new geothermal heat pump system is installed and operational (you can read about our initial research, and the decision to go ahead). All that remains at this point is to clean up the mess.

We have replaced our traditional furnaces, air conditioners, and water heater with a new system consisting of two geothermal heat pumps, a backup gas-fired furnace, a hot water storage tank, and a gas-fired on-demand hot water heater. The geothermal heat pumps both heat and cool the house using the soil under our yard as a gigantic heat sink (which is several times as efficient as a traditional furnace or air conditioner), and use waste heat to heat the water in the hot water storage tank. The on-demand hot water heater kicks in if the water in the tank isn't hot enough, and the gas-fired backup furnace is used on really cold days or when the power company turns off the heat pumps to manage the power grid in the winter.

First, a Rude Surprise

Recall that there are three financial incentives for installing this system:

• A $150/ton rebate from our electric company, Xcel energy, for new geothermal systems
• A "dual-fuel" electric rate which gives us cheaper electricity for the geothermal system if we have a gas backup and let the power company shut off the geothermal to manage the power grid, and
• A 30% federal tax credit

Of these, the $150/ton geothermal rebate from Xcel is relatively small (heat pump capacity, like air conditioner capacity, is measured in "tons." Our system is six tons total).  The dual-fuel rate is the one which really makes the system work financially, since that makes the geothermal significantly cheaper to operate than natural gas, even in years when natural gas is cheap.

We calculated that, given the cost of replacing our old furnaces (which had to be done anyway) and taking advantage of all the financial incentives, the geothermal system would pay for itself in about nine years.  That's not bad, considering that the heat pumps have a ten-year warranty and the loop field (the underground heat exchange wells which account for about half the project cost) should last pretty much forever.

Shortly after we committed to the project and paid for 50% of the system up front, we heard from our tax advisors that we might not actually be able to take advantage of the full geothermal tax credit. The problem is that the tax credit is nonrefundable, meaning that if it reduces your tax liability below zero then you don't get the difference back.  At the time we were planning the system, it was still unclear if the credit would be refundable or not; and now that it's not, we don't know if we will have enough tax liability in 2009 to get the full value of the incentive.

We re-ran the numbers without the federal tax credit, and it turns out that without it the system will pay for itself in 18 years instead of nine.  That's not great, but it's not terrible either, especially considering the nonfinancial benefits (helping the environment, etc.).

The System

The system we had installed is one of the more complicated (and therefore more expensive) residential geothermal systems out there.  We had to work around two major limitations in our home: an addition with a completely separate furnace and air conditioner (and no practical way to tie the ductwork together into a single system), and a relatively cramped utility room. Our system consists of:

1. The geothermal loop field, which is six parallel wells drilled to a depth of 180 feet in the front yard, each with a loop of pipe filled with antifreeze solution.  A buried manifold connects the six loops to a pair of pipes which go underneath the garage into the utility room.
2. A 2-ton heat pump for the addition, which uses antifreeze pumped through the loop field as a heat source or sink and an air conditioning-style compressor to heat or cool air. Some waste heat is pumped into the hot water storage tank through a pair of water pipes.
3. A 4-ton heat pump for the main house, which pumps its refrigerant through a heat exchanger in the gas backup furnace to heat or cool the house. It also pumps waste heat into the hot water storage tank.
4. A gas backup furnace, which also serves as the forced air blower for the main part of the house.
5. A hot water storage tank, which is warmed up to about 110 degrees when the heat pumps are running (and stays cold when they're not).
6. An on-demand hot water heater, which runs when the hot water in the storage tank isn't hot enough.
7. A motley assortment of pipes, pumps, wires, fuseboxes, relays, etc.

Together, all this gear replaces everything which had been in our mechanical room except the water softener.  It looks like the inside of Captain Nemo's submarine.

The Installation

The project took about two weeks to complete, though 90% of the work was finished in the first week.  Drilling the loop field and replacing our old mechanical systems happened in parallel, with our new hot water heater and gas backup furnace operational after the first full day of work.  This meant that we wouldn't have to be without heat or hot water, though fortunately the weather has been nice enough that the heat hasn't been necessary.

In order to be fully operational, after the equipment was in place and the loop field completed, the loop field had to be connected to the heat pumps and filled (it took about 125 gallons of an antifreeze mixture.  I'm told this fluid should never have to be replaced, unless the system has to be drained for some reason).  Then we had to wait for Xcel Energy to install a second electric meter, since the "dual fuel" rate requires that the geothermal system be separately metered from the rest of the house.

Once all that was done, we ran into a series of minor problems: the wrong part for a control relay, a burned out switch, and finally, after everything was running properly, the technicians accidentally left one of the heat pumps in a test mode, requiring another visit to reset it for normal functioning.

All told, the installation went about as well as can be expected for a project of this magnitude.

Living with Geothermal

The weather has been very pleasant lately, and we haven't used our new system much yet. It was a little cool the first evening the geothermal was on, so we ran it for a few hours to take the chill off.

Some things take getting used to in transitioning from traditional heat and air conditioning to geothermal. The biggest change is that unlike a gas furnace, which normally cycles on and off, a geothermal system is most efficient when it operates continuously in its lowest stage.

That means that it no longer makes sense to turn the heat down at night and when we're not at home during the day.  We had saved a significant amount on our heating bill by turning the heat way down at night, but now that strategy will actually cost us money by forcing the geothermal system to run in a less efficient mode to catch up--or worse, the system might switch to the gas backup furnace, negating the efficiency of geothermal entirely.

Getting the most out of geothermal will mean making only very gradual changes to the temperature in the house.  The name of the game is to try to keep it running in the lowest stage possible, and avoid running the gas backup at all.  We'll have to experiment with it when we get into the next heating season to see what works, but I'm guessing that we can turn down the heat modestly during the work week, as long as we are careful to raise it only gradually on the weekend.  The wood stove will be helpful, since it will give us a way to add more heating capacity without losing the benefit of the geothermal.

Our trusty Braun coffee maker (a wedding present from almost 16 years ago) recently died. I wanted to replace it with something which wouldn't die on us after a year or two, so the cheap $20 Mr. Coffee from Target was out.

I've heard people rave about vacuum extraction coffee makers, so I decided to investigate....and bit. For $75 (including shipping from Amazon), I picked up a Bodum Santos 34-ounce vacuum extraction coffee maker.

This is an entirely different way of making coffee from the usual automatic drip.  There are two chambers, a lower one which you fill with water, and an upper one filled with coffee grounds.  You boil the water in the lower chamber, which forces it up through a tube into the upper chamber where the hot water and grounds mix.  Then you remove it from the heat, and as the steam in the lower chamber cools it sucks the coffee back into the lower chamber through a filter.

As soon as I got the box this afternoon, I brewed a pot of decaf (it being past my usual hour for stimulants).  Following the advice of many people online, I preheated the water in the microwave to save time on the stove (a good idea).  And by golly, even though I don't consider myself a coffee geek, I really can taste the difference from our old drip coffee maker.  It has a much stronger coffee flavor with less bitterness.

Plus, it's fun to watch.

So the scorecard for the vacuum extraction coffee maker is:

Advantages:

• Fun to watch
• Simple: nothing electrical and no moving parts
• No replaceable filters, and easy to clean
• Brews a fine cuppa joe

Disadvantages:

• Fussier than a drip coffee maker
• More expensive than Mr. Coffee (though not more expensive than a high-quality coffee maker).
• Makes a smaller pot than a large coffee maker

The cul-de-sac we live on has about a dozen homes, and it's an amazingly stable neighborhood. More that half the homes have been owned by the same people for ten years or longer.  Two or three of the houses are still in the hands of the original owners (most of the houses having been built about 25 years ago).

For the past two years, there has been at least one house for sale at all times, and for several months during 2008 there were three houses on the market at the same time. It used to be something of a rarity to have even one house on the market, and the last time there were two for sale at once was 12 years ago, when we bought ours.

This weekend, the last house on our block sold. For the first time in a couple years, there are no houses for sale on our block.

Today's Sunday paper was the thickest I can recall since Thanksgiving.  Since most of the heft of the Sunday paper is advertising supplements and circulars, this is a strong indication that advertisers are coming back.

Target took out a huge full-color spread in the middle of the A-section, at least four full pages and maybe more.

This is an especially good sign given how hard newspapers have been hit in this downturn.  If advertising dollars are truly up, it comes not a moment too soon for them.

I've noticed in the past few weeks that morning rush hour traffic has been getting worse.

Now, my commute is not very long (less than ten miles), and the traffic on the particular highways I drive has never been that bad to begin with.  If traffic jams really are getting worse generally (and not just for me), then this is a sign of an improving economy.  More traffic at rush hour means more people going to jobs, which means more people employed.

Today I reached 200 miles on my trike for 2009.  The goal is 2,000 miles for the year, so I'm 10% of the way there.

2,000 miles will be a push, so making this milestone by the end of April is a good start.

We've had a couple of months to investigate installing a geothermal heat pump system for our home, and now it's Decision Time.

This whole process started back in January when our old, conventional furnace went kaput on one of the coldest nights of the year.  It was past its expected life expectancy, so we started researching geothermal.  A geothermal heat pump uses the ground under the house as a gigantic heat sink, pumping heat underground in the summer (when the air conditioning runs), and pumping heat out in the winter (when it acts as a furnace).  This takes considerably less energy than conventional heating and cooling.

Financially speaking, a geothermal system costs more upfront, but less to operate.  The payback time is long enough that most people would be (understandably) reluctant to install one without some sort of financial incentive.  Fortunately, there are incentives aplenty:

• The Fiscal Stimulus Package offers a 30% rebate to new EnergyStar rated geothermal installations from the federal government.
• Xcel Energy, our power company, offers a special "dual fuel" electric rate: if we have a conventional backup and let them turn off the electric heat pump occasionally to manage demand, they cut the electric rate in half.
• Xcel also offers a rebate of $150/ton for installing a new geothermal heat pump system.

Doing the Research; Running the Numbers

Going into this process, we were helped by the fact that my parents installed a geothermal system a little over a year ago.  They've been generally happy with it, but had some issues (more on that later), and they were able to provide some hard numbers.  We figured it would cost about $25,000 to replace our furnace.

We identified several local geothermal contractors and invited them to our home to inspect the existing system and offer ideas and bids.  The contractors we did invite represented a cross-section of major heat pump brands, and all passed our initial screen of good histories on Angie's List.  We did not talk to the installer my parents hired, after hearing some of their negative comments and seeing other customers' complaints.

Our home presents a couple of unique problems for this installation.  First, we actually have two furnaces, separated by about 30 feet.  One is for the main part of the house, and the other is for an addition built before we moved in.  Ideally, we would want to replace both units with a single heat pump and tie the ductwork together, since a second heat pump adds considerable cost to the system.  There also isn't very much room around either of the existing furnaces for new equipment, making it difficult to find room for a conventional gas backup furnace (and without that special electric rate, the numbers don't make sense).

None of the contractors we spoke to thought it was feasible to put in only a single heat pump to replace the two furnaces: there just is not enough room to run the needed ductwork without cutting through bearing walls.

The space constraints also knocked out one of the manufacturers, which simply didn't have any way to give us both the heat pump and the gas backup in the space we have available.

We settled on a system from a local WaterFurnace contractor with many years of experience, and which could show us examples of how they'd handled similar problems for other customers.  The total cost will be about $40,000, and this will include two heat pumps, a natural gas backup furnace, a hot water holding tank, a desuperheater to use waste geothermal heat to preheat domestic hot water, and a whole-house on demand gas water heater.  The cost is split approximately one-third for equipment, one-third for drilling the geothermal wells, and one-third for installation and other components.

This will be a six ton system total (heat pumps, like air conditioners, are measured in "tons" of capacity), with four tons serving the main part of the house, and two tons serving the addition.  Only the main part of the house will get the backup gas furnace, but that will be sufficient to keep the addition warm (though not totally toasty).

Given that the total cost will be so much higher than we expected, we went back and did a more careful analysis of the payback.  Working in our favor is that we are also getting a new water heater in the bargain (which we would probably need in a few years anyway), so we can count the avoided cost of a new water heater towards the geothermal system.

After figuring out the various rebates and backing out the cost of two new furnaces, two air conditioners, and a new water heater, we estimate that the geothermal system will cost about $11,000 more than replacing everything with the conventional equivalents (after rebates).  It will save us about $900/year in heating costs, and $250/year in hot water (since the hot water will be essentially "free" when the geothermal system is running), and pay for itself in ten years.

I didn't figure in any air conditioning savings, since last summer we barely ran our A/C at all.  However, if we do have a hot summer, the savings will increase very quickly because the efficiency improvement for geothermal air conditioning is even more dramatic than for geothermal heat.  This could easily be hundreds of dollars more in savings.

So the numbers still make sense--the system will pay for itself before the warranty runs out.

That said, this will be a financial strain.  First, we have to pay for the whole system in one big lump, whereas if we were to replace our furnaces, hot water heater, etc., as they failed, we would be spreading the cost out over several years.  Second, we don't get the federal rebate (well over $10,000) until we get our 2009 tax refund sometime in 2010.  That means that it will be over a year between the time we spend the money and when we get that part of the money back.

Finally, the $40,000 number doesn't include relandscaping the front yard.  Drilling the wells will leave the yard a mess, and we're going to have to spend some money getting it repaired and cleaned up.  We had been planning to do a some significant landscaping within the next few years, so this will also get moved up to this spring.

Avoiding the Pitfalls

Part of making the numbers work is making sure we actually can claim all the rebates and incentives for this project.  My parents discovered this the hard way, when they went to do their 2008 taxes and learned that the model of heat pump they installed wasn't EnergyStar rated and therefore not eligible for the federal rebate.  The rebate in 2008 was limited to $3,000, so they weren't counting on it to the same extent that we are, but it was a rude surprise nevertheless and a warning for our project.

I've verified that both of the heat pumps we'll be installing qualify for the federal rebate, but we still need to contact Excel and make sure we have all our ducks in a row for both of their programs.

I also expect that there will be some as-yet-unknown gotchas.  We don't yet know where all our utility lines are, so we don't know where the wells can be drilled and where the connection to the house will have to go.  There's the chance that something will turn out to be unsuitable and put the kabosh on the whole project.

The Plan

If all goes well we'll probably have our new system installed by the end of May.  We need to get a permit for drilling the wells, and plan where everything will go.  Drilling will be in early May, with the mechanicals shortly thereafter.

Comment moderation has been turned on--it didn't take long for the spammers to flood one of my entries with a couple hundred spam comments advertising what appeared to be puppy spam.

At least the cleanup was quick, thanks to mass delete.

The moderation policy is that any reasonable and unspammy comment will be allowed through, but no promises on the time.  This blog is very much a part-time hobby, so I'll get to comments when I get to them.

Cornering the market is a (generally illegal) form of market manipulation where someone buys or controls enough of something--a stock, commodity, etc.--so as to effectively control the market price for that item. It can be very profitable, since the person who has cornered a market can force buyers (at least those buyers who have no alternative) to pay essentially any price.

For example, you might corner the market in frozen concentrated orange juice by going out and buying up all the OJ you can find, then entering into contracts with the OJ plants to buy their production. At some point, someone wanting to buy frozen concentrated orange juice would be forced to come to you, and pay whatever price you ask.

In practice, there may actually be more OJ futures available to buy in the market than actual OJ production, since a significant fraction of the market is not actual buyers or sellers of the physical commodity but speculators who trade futures contracts expecting to close their positions without ever touching any actual juice (except perhaps at breakfast). So when those futures contracts start to mature, the speculators discover that they are obligated to deliver actual frozen concentrated orange juice (which is unavailable) or buy back their contracts at some absurd price. You have, in effect, created an artificial shortage of OJ to your own benefit.

Cornering a market is very expensive, since you have to have enough capital to lock up most of the supply. It can also be very risky, since if you try and fail to corner a market, you can wind up paying too much for a huge amount of something you don't actually need. Nevertheless, every so often someone tries to corner a market; and occasionally someone succeeds.

The most profitable, and most difficult, market to corner would be the market for money itself. Money is in some respects a commodity like any other: it can be bought and sold, you can create derivatives, and you can write contracts which obligate the delivery of a certain amount of money under certain conditions. If you could corner the market for money, you would drive up the value of money (otherwise known as "deflation") by creating an artificial shortage (aka "liquidity crisis"). The people you traded with would be unable to deliver the money they were obligated to under their contracts, so you would be able to demand whatever other hard assets they might have instead.

Cornering the market in money would be hard, but maybe not impossible. The best way would be to buy up a whole lot of some financial contract which is normally relatively inexpensive, but under the right (very rare) circumstances obligates the seller to give you a hundred or a thousand times the capital you invested. Ideally, the seller would view the contract as safe (so the price would be low), but could be triggered by some crisis.

A Credit Default Swap (CDS) fits the bill pretty well: pre-2008, you could buy a contract for a few tens of thousands of dollars per year which would obligate the seller to give you $10 million upon the failure of some big investment bank or blue-chip corporation.

So you buy CDSs on a bunch of big low-risk corporations at 2006 prices (which is to say, dirt cheap). Since the CDS isn't directly tied to an actual bond issued by the company, you can actually buy more CDSs than the company has outstanding debt. Then, recognizing that there's a cascading effect, you also buy CDSs on all the companies who sold you the first set of CDSs--since if Lehman Brothers has to pay out on all those swaps, they'll have a good chance of defaulting as well. Since the CDS market is almost completely opaque, nobody will know how many contracts you've bought up or what the aggregate value is.

At 2006 prices, you could have invested a few billion to buy CDSs which would pay (in aggregate) a trillion dollars or more if the companies started failing. Lots of investors have a few billion to throw around. Almost nobody--other than the U.S. Treasury which prints its own money--has a trillion.

The corner happens when one of the companies you bought CDSs on starts getting into a little trouble. Every company has rough spots, so this is bound to happen sooner or later.  That will make the market value of the CDSs you own go up, and lets you demand more collateral from the companies you bought the CDSs from.

That, in turn, requires those companies to come up with cash quickly, and hurts their financial stability--which drives up the value of the CDSs on those companies, and lets you demand more collateral from a different set of counterparties.

If it all plays out right, in fairly short order every company which sold you CDSs is selling every asset they can get their hands on in order to meet their contractual obligations to you. Cash becomes the most valuable commodity because nobody can find enough of it. It's financial armageddon, but you win big.

The only flaw--and it's a big one--is that the government can create new cash any time they want.  Normally they don't like to do this, because it can lead to inflation.  But if the government discovers what's going on early enough, they can print more money, give it to the foolish companies who wrote those CDSs (like AIG) to make good on their promises, and break the cycle of collapse by making money less scarce.  This excess cash can (at least in theory) be taken out of the system at a later date once things have stabilized, in order to prevent hyperinflation.

So....do you bet on the Federal Reserve being on top of things and pumping the cash to the right place at the right time? Or do you bet that nobody will figure out what's going on until it's too late?

Jeff Matthews reports on his blog today that Williams-Sonoma thinks its business may be bottoming out, and that the November-December period may have been the worst for their high-end housewares.

Today's big economic news was that February's housing starts--the number of new homes which began construction during the month--jumped in a big way from January.  One month does not make a trend, but a lot of people smarter than I think that housing starts are a leading indicator for when we enter or exit a recession.

The pessimistic counter-argument would be that housing starts have fallen almost 80% from the peak, and since they can't go negative there has to be a bottom somewhere.

Which would also be my point: there has to be a bottom somewhere.  We may be at that bottom right now, though we won't know for sure for several months to come.

Sara Jane Olson, the middle-aged Minnesota housewife and convicted terrorist, is scheduled to be released on parole soon and she wants to return to Minnesota.

The local police want none of it.  They want her to have to serve her parole in California, where she was tried and convicted of her crimes.  (Apparently it is routine for parolees to be allowed to move to other states if they want.)

Not because she's dangerous.  Far from it: she may have been involved in a violent militant group back in 1975, but by all accounts her radical impulses faded with disco and polyester suits.  Since then the wildest thing she seems to have done is maybe put a drop or two of Tabasco in her hotdish for the lutheran potluck.

Rather, as the head of the local police union said, "She should serve her debt where she committed her crimes."  In other words, letting her return to Minnesota wouldn't be punishment enough.  Justice can only be served by forcing her to live in California.

Minnesotans like to make fun of California sometimes (and I suspect the reverse is also true), but this is the first time I can remember a member of Minnesota's law enforcement system actually seriously suggesting life in California as criminal punishment.

Retail Sales statistics for the month of February were released this morning, and they are down only 0.1%.  Just as important, the January number was revised up (1.8% growth from the original 1.0% growth).  Some sectors were better than others, and car sales were among the worst.

This relatively stable statistic--still subject to revision of course--suggests that some of the fear we saw in the last few months of 2008 may be starting to subside.

According to Calculated Risk, wholesale prices for used cars and trucks rebounded significantly in February, after a huge drop in January.  Indications are that buyers are making larger down payments and taking out shorter duration loans.  It appears that many people are switching from buying new cars to used.

I view this as optimistic for several reasons.  First, it shows that these durable assets (cars, that is) do have value and are not plummeting to zero.  That gives more confidence to both buyers and lenders that they're not just throwing their money down the toilet.  Second, it shows that there is still fundamental demand for vehicles despite the inventory overhang, and there is a price where people will buy.  Third, it indicates that the demand for used vehicles is matching the supply, and some of that demand will eventually spill into new vehicles as the supply of used cars diminishes.

Every month or so, I sit down with a small group of CEOs of other small technology-based businesses here in the Twin Cities.  It's an informal place to talk through our problems, share experiences, etc., in a confidential and safe environment.

This month we started the meeting by going around the room sharing our views of the economy; naturally I shared my determination to seek out optimistic indicators no matter how foolish it makes me seem.  Pretty much everyone was gloom-and-doom.

But at the end of the meeting, one of the other CEOs made an interesting observation: "Remember how we started the meeting talking about how bad the economy is?  Isn't it interesting that nearly every one of us said that our business right now is picking up, and some of us are doing better than ever."

This week, for the first time in about ten years, I had to buy a suit.  I only need to wear a suit a few times a year, and I had been living off the inventory I collected during my investment banking days.  That inventory finally ran out, so back to the menswear store I went.

(Incidentally, the new suit today, in 2009, cost less than a new suit of similar style and materials ten years ago even though it had to be special ordered.)

While at the store, I happened to chat with the owner and asked him how business was doing.  His response: January and February were brutal, but things seem to be picking up just a little now.  (They did have some deep discount items, but it was end-of-season stuff like sweaters.)

High end men's clothing is a very discretionary item, so when that starts to tick up, it means that some people are finding the money to update their wardrobe, or that they can't defer it any longer.

I've been optimistic that we're nearing the bottom of the recession since January 2008.  Long enough that I'm starting to feel foolish.

But you know what?  I've decided that I don't care.  My company is doing OK (never better, in fact), and the only way to deal with this murk we're in is to keep your head down and push forward.

So I decided a couple weeks ago that I would make a point of looking for signs that the economy is bottoming out, or even maybe starting to improve a little.  Maybe this is early, maybe we've got years to go before the recovery starts, but in the meanwhile I'm going to search for the signs of hope.

And someday the economy will recover, and when it does, you heard it here first.

On to my first Optimistic Sign: The Media Defaults to Pessimism

All through 2008, the media (and especially the financial media like the Wall Street Journal) wrote articles about looking for the bottom: how great the stock market prices were, the great deals you could get on a foreclosed house, etc.

Since January, however, I've noticed the tone of the articles change.  Now they say that things could get much worse, don't buy into a sucker rally, the recession will last much longer.

On NPR a couple weeks ago, there was an interview of a government official (I think it might have been Gordon Brown, Prime Minister of the UK) where the interviewee mentioned a forecast that the economy would bottom (that is, stop getting worse) sometime in the second half of 2009 and show some modest growth in 2010.

The striking thing was how hostile an skeptical the interviewer was to this pronouncement: "Really?  Do you honestly think we're going bottom out any time before the end of 2010?" (or words to that effect).

Remember, Gordon Brown does not know when we'll hit bottom.  Neither does the interviewer.  Nobody does.  We could be at the bottom right now, and we would not know it for months.

But the default position seems to have become that this recession will last at least until the end of 2010.  That's almost two more years of recession, and a recession lasting over three years total--exceptionally long in postwar history.  Is it possible?  Sure.  Plausible?  Maybe.  Certain?  No way.

I consider this irrational gloominess (the opposite of Alan Greenspan's famous irrational exuberance) an optimistic sign, if for no other reason than the pundits are always wrong.

But less cheekily, it means that we are emotionally accepting the fact of the recession which is an important step to moving on.  It's the moving on which produces a recovery.

I'm slowly getting the hang of this new blog software thing....This morning I finally discovered the comment moderation queue (so that's where all the comments went!).  I'm still fiddling with the site design, and plan to get a custom favicon up soon.

There was one complaint about the site design--I'm not sure if it's a browser issue, or someone complaining about my nonexistent graphic design skills.  I basically took the stock Drupal theme and added my "cosmic finger" banner and snow-covered font from the old site.  I tested it under Safari and Firefox, but I don't have easy access to a current version of IE (I have a ten-year-old copy, and this site sucks with that, but I'm not going to lose sleep over that).

The other thing I want to get working again is the live feed from my home weather station--which is only useful if you happen to live in my home, but cool nevertheless.  So expect to see some more tweaks of the site design: this is a work in progress, and I welcome all comments.  I'm even going to turn off moderation, at least for the time being.

I've been optimistic that we're near the bottom of the economic downturn since the beginning of 2008.  I'm starting to understand that I don't have a clue when this will end (but neither does anyone else).  To give myself some credit, however, I was also early in calling the start of the recession (back in February 2008, I wrote that I thought a recession started between November 2007 and January 2008, which was dead on and months before the Conventional Wisdom said we were in one).

In retrospect, what I wrote a year ago ("....the recession began sometime between November and January....we're probably close to the bottom right now....") seems hopelessly optimistic.

All of this is a way of saying, don't believe my opinions about the economy, I don't have a clue.

But I do have some observations:

1. This is already the worst economic downturn since the early 80's, and there's a good chance it will be the worst since the Great Depression.  But we're nowhere near as bad as the Great Depression and I see no reason to assume it will get that bad.
2. As bad as the recession of the early 80's was (and it was the only one on par to what we're going through now), it also ended surprisingly fast.  At least surprising for the people in the middle of it.
3. The Great Depression capped a whole series of Depressions in the 1800's and early 1900's, some of which were almost as bad as the Great one.  The economy really is different (more stable) now, as compared to the Gilded Age.
4. Therefore....we will come out of this recession, and maybe sooner than the Conventional Wisdom thinks.  Right now the Conventional Wisdom is that the recession won't end until the end of 2009, and some are pushing it into 2010 or further.  The CW will always see the end of the recession 6-12 months in the future, even when the recovery is already beginning.

Fred Wilson wrote yesterday that he sees a fundamental shift in the economy going on: the big old "blue chip" companies are often the ones who got themselves overleveraged and in trouble, and the younger, smaller companies are taking over.  I think there's a lot of insight there: over the past 20 years many mature companies (GE, GM, etc.) turned themselves into "growth" companies by developing financing arms, which essentially goosed their growth with leverage.  The real growth companies (ones whose core businesses were growing) saw no need.  The new "blue chip" companies are ones like Google, Microsoft and Cisco, with dominant market positions and cash-rich balance sheets.

In my own business, I've observed that the world is definitely not coming to an end, and in fact innovative companies are taking market share (a statement which--fortunately--describes our biggest client).  There is still consumer demand, especially if you have a product or service which people like at a good price.  There is still room to compete, especially on value and no-gotcha services.

So while I'm still optimistic that we may be nearing the bottom of the recession (and I'm going to stay optimistic no matter how long it takes!), in practical terms I'm keeping my head down and focusing on business.  If enough people do the same, this recession will be over, and sooner than we all think.

Following up on the article from last November about my recumbent trike, I did get the Velokit installed in the hopes I could keep riding in the winter.  But I made two mistakes.

First, I was too optimistic about the cold weather advantages of having a full fairing.  Keeping the wind off is nice, but I didn't think of the problem of the inside windshield frosting over.  When the trike is moving this isn't a problem, since there's enough air movement inside to keep the window clean.  When stopped, however, my heavy breathing causes instant fog, and if it's much below freezing the fog freezes almost as fast.  Once frozen, it won't easily come off, making for a hazardous situation.

Second, we had some early snowstorms this winter followed by an extended period of very cold weather.  This coated the side streets around my home with a very persistent layer of ice and made it impossible to get up the hills on the trike.  Had I planned ahead I would have gotten studded tires, but I didn't think of that in time.

So I pretty much stopped riding between Thanksgiving and mid-February.  Now that we're getting towards spring, we've had a higher sun and enough days of above freezing weather to clean the ice off the roads, and I've completed one and a half round trips to the office on my trike this year--a total of 25 miles so far in 2009.

I've set my goal for this year at 2,000 miles.  I think that's do-able, if I'm diligent about riding to work whenever possible and get in a few extended trips on the side.

A year ago my parents replaced their relatively new natural gas furnace with a geothermal system (or for the purists, a Ground Source Heat Pump, GSHP). They wanted to save energy and the environment, and saw this as a way to cut way back on their carbon footprint. They combined this with "windsource" electric service (which, at least in theory, supplies your electricity from wind farms at a slightly higher cost) in order to reduce their CO2 emissions from heating their home to effectively zero.

A geothermal (GSHP) system uses a heat pump (essentially a refrigerator which can be run in reverse) to extract heat from the ground in the winter, heating the house and cooling the ground. In the summer it runs the other way, extracting heat from the house to cool the house and warm the ground. A series of water-filled coils, the ground loop, act as a heat exchanger and turn the ground under the yard into a giant heat sink. The net result is heating and cooling 3-5 times as efficient as a traditional furnace.

My parents are happy with their system, but I had a hard time seeing how it made financial sense. Even with the higher efficiency, drilling a bunch of deep wells for the ground loop is a very expensive proposition, and natural gas is quite a bit cheaper than electricity.

Nevertheless, we decided that when the time came to replace our own furnace we would at least investigate geothermal.

That time came this winter, when the main furnace in our house (we have two) died on a cold night. It's 25 years old and past its expected lifetime, and when the technician looked at it his first question was whether we actually wanted to spend any money fixing it. We got it working again (at least for now) for a couple hundred dollars, and immediately started researching replacement options.

And so began the first chapter of Our Geothermal Adventure.

The Energy Equation

My first step was to call Dad and get some hard numbers from him about his geothermal system. Fortunately he keeps good records of utility bills, and was able to give me actual electricity and natural gas usage both pre- and post-geothermal. I could match those records against the records I kept of our bills from the same month to see how their heating costs compare to ours (answer: my parents' house uses about the same amount of heat as ours).

A little analysis showed that in my parents' home, the geothermal system heats their house for about a third as much energy as natural gas. This is as expected. However, at the rate we pay for electricity (about $0.11/kWh right now), electricity is two to three times as expensive as natural gas per BTU.

So in a year when gas is cheap (like this year), geothermal would cost about the same, and when gas is expensive we might save a third of our heating bill. That hardly seemed like enough of a difference to justify the huge upfront costs of the GSHP.

We decided to keep exploring anyway, since the environmental positives were appealing, even if the financial equation wasn't coming together.

Excelobama To The Rescue

About that time we learned that a geothermal tax credit was in the 2009 Stimulus Bill, as it was then going through congress. That would mean that the feds would pick up nearly a third of the cost of our installation if we decided to go down that route.

Then, at the first meeting with a geothermal salesperson, we learned that our local power company, Excel Energy, has a special "dual fuel" rate for people who heat with electricity (including geothermal) but have a fossil-fuel powered backup. The deal is that you let Excel turn off your electric heat as needed (an hour at a time, up to 24 hours over the course of the season) and they cut your electric rate in half for the power used for heating. This lets the power company better manage their load during the peak of heating season, and the backup furnace runs only a tiny fraction of the time.

The combination of these two factors--the Obama rebate and the Excel price cut--changed the math radically. Even compared to a year with cheap natural gas, our heating bill would be cut in half. If gas goes back to $1.50/therm (as it did after Katrina), we save 75% or more. And with the feds picking up 30% of the upfront cost, the payback for going geothermal got much faster.

In fact, when you look at the price difference between a geothermal system and a conventional furnace (remember, we have to replace the furnace anyway), we figure the geothermal will pay for itself within 7-10 years. That's actually before the warranty runs out from some manufacturers.

So it looks like we'll be getting a new geothermal system this summer. And this article can only end with....

To Be Continued....