Oil Bubble - ready to burst?

During the past 10 years we've experienced bubbles in the stock and housing markets. Whenever a bubble bursts money tends to flow into other markets. With prices over $107 per barrel recently it looks to me like oil is a bubble market. There is not technical reason for oil prices to be this high. People point to increased usages by China and India but I believe oil prices are primarily fear driven. Technology exists to get oil for much cheaper prices and I think that the oil price will drop soon. Maybe this discovery will be the catalyst to a sharp price drop.

If I had the money I would short oil futures right now

Installing a tankless water heater

When I purchased my current home in December I noted that the hot water heater was 13 years old and probably at the end of its useful life, though it was still working. I knew that the Federal tax credit of $300 for installing a tankless water heater was going to expire at the end of the year and the local gas company was offering a $350 credit as well.

When I looked into it further I found out that the local gas company would only pay if a "professional" company installed the water heater and the cost estimates for installation were ~$2000.00. With a little research I found out that the "professional" installer only had to have a Federal Tax ID to qualify as "professional". Well, I own an LLC with a Fed tax ID.....so I thought that I'd have my company (wink) install the heater. After all, I considered myself a jack of all trades!

I bought the 0.7 gpm model at Lowes for $999 with a 12 month no interest coupon. The instructions seemed easy enough. Removed the old tank and put up the new tank next to the same wall. Then I took my measurements for exhaust piping. My old tank had a powered vent with a side exhaust through a 4" PVC pipe. The tankless water heater requires inlet air from the outside (like a high efficiency furnace), so I figured I'd use the old exhaust PVC as the new inlet. When I went to buy the exhaust duct work I got a big surprise. Tankless water heaters put out a lot of moist air and require stainless steel exhaust ducting.

So I came home and relocated the heater to the exterior wall where I could still use the PVC piping from my old hot water tank. I then went out and bought lots of 3/4" copper piping and 1/2" black iron gas piping since I was about 20 feet from the old tank location. The instructions mentioned using 3/4" gas line but I figured that I must have enough gas pressure since the old heater used 1/2" and my huge furnace used only 1/2".

It took me about 6 hours to do all the soldering, installing the gas line, cutting a 5" hole through the wall for the new exhaust duct and then connecting it. I didn't have any leaks when I turned the water and gas on. I plugged the unit into the wall socket and turned the water on and it worked! Or so it seemed at first.

With our old 40 gallon hot water tank we hadn't been able to really use our jacuzzi tub yet, so we decided to try out the new tankless water heater that night. We turned the water on, got in the tub and about 10 minutes later the water turned cold!! So much for a hot bath that night. Over the next several days I tried to figure out what was wrong. Most of the time the heater worked OK but sometimes it would not light or go out. Also, when I turned the water on at high volume the whole tank would vibrate violently. The troubleshooting guide gave 4 possible solutions, none of which could be checked without specialized tools.

I sent an email to the manufacturer and they thought my problem was inadequate gas pressure. I had noticed that the problem seemed to occur when the furnace was running, so I decided to replace the 1/2" gas line with 3/4" line. Another $100 later I have a tankless water heater that works flawlessly.

Overall, I spent ~$1400 on the installation. Unfortunately, I lost so much money on my real estate last year that I paid no Federal taxes, so I didn't qualify for the Federal tax credit. Today I did receive the $350 rebate from the local gas company, so my net was ~$1050.

Hopefully, this unit will pay for itself. With 3 baths and 4 teenagers who think nothing of 1 hour showers I hope for some savings, although they may be tempted to take even longer showers now since cold water was the only reason they used to stop.

The only complaint I have is that the heater will not turn on until it senses water flow for 4 seconds. If someone takes a shower and shuts the water off, then you get in you will have hot water at first (lots of water in the pipes) but then the water will turn ice cold (our inlet water is only 35 degrees). The hot water comes back eventually, but it seems like a long time when you are caught in a cold shower.

Exxon and Carbon Based Fuels

There's an interesting article at CNNMoney on ExxonMobil. I was offered a job by Exxon when I got my BS but decided to go to grad school instead. I was quite impressed with the company but as the article indicates "it is not a fun place to work". Exxon is the epitome of capitalism in my mind - the most profitable company in the world. Some call their attitude ruthless or arrogant, but it is just no-nonsense business. I would trust their assessment of the future far more than anything I read from outside "experts".

• Exxon doesn't think we are running out of carbon based fuels. They expect that even by 2100 carbon based fuels will account for 80% of our energy consumption. I think this is right on. Since 1973 the scarcity crowd had been warning we were running out of oil or that "peak oil" was occurring, yet each year new discoveries are made and new technology allows us to utilize more carbon based fuels.
• Exxon doesn't invest in the "popular" alternatives because they are not cost effective. This is one that the environmentalist just don't get. Further, the hypocrisy of not supporting nuclear power plants (the only viable alternative to carbon fuels and cleanest) forestalls a switch away from carbon based fuels. And even though my company is putting its future into bio-based fuels these will remain non-competitive with carbon based fuels and inflate food prices.
• Exxon sees the bigger risk that the price of a barrel of oil will drop, not that the price will go high and make alternative fuels competitive. The price of oil right now has nothing to do with the amount in the ground. It's all based on the political situation in the Middle East and the environmentalists ability to restrict domestic supply sources. The NIMBY attitude towards building refineries also contributes to the high cost of gasoline.

I had one commenter state that I was a "shill" for big oil. I have always been impressed by people or companies that create wealth for society. Even though I don't like to shop at Walmart, I am impressed by what they have done to create billions in wealth for our society and make route to market more efficient. Improved productivity helps us all lead better lives. Likewise, Exxon is so efficient that they keep the price of gas at lowest levels possible given the political situation. I have never been impressed by the critics that spend their time yapping about successful people and companies and failing to create wealth for society.

Lock Bumping

Have you heard of lock bumping? I had not until just today. My company sent us a video of the process by which thieves can cut a key and using a simple tap, open 90% of the locks that secure our homes. You can even find a video of how to make a bump key at Wikepedia and a link to buy bump keys!

I guess we use locks only to fool ourselves into thinking we are secure. Determined thieves seem to be one step ahead of the naive public.

Fear Keeps you from Living a Longer and Happier Life

John Stossel wrote a piece titled The Media likes Scaring us and we like it. He discusses the network of people that benefit from scaring people - environmentalists, researchers,government bureaucrats and trial lawyers, labeling them the "Fear Industrial Complex"(FIC). The FIC does a good job of scaring us. I remember the wave of fear about overhead power lines that cost lots of people equity in their homes - only later did we find out that the researcher had falsified the data and there was no evidence power lines were related to increased cancer risks. Owens-Corning lost a billion dollars over silicone breast implants lawsuits but now the implants are deemed safe and women are have the same surgery again. All created trial lawyer greed that got people afraid of a myth. Of course, we continue to read the newspaper and believe nonsense about the poor economy, unwinnable wars and global warming.

So many people adopt a pessimist point of view. The irony of this, is that a pessimistic view point becomes a self-fulfilling prophecy for a lousy, shorter life. Here's some information from an Aetna website (can't link since it is behind a secure log-in):

"Americans are living longer than ever. Over the past century, the average American lifespan has increased a whopping 27 years. What’s the secret to a long and healthy life?

Good genes help. You get them from your parents. And since you can't pick your parents, this avenue to a longer life is out of your control. Besides, the value of good genes is in question. New research from Yale University found that genes contribute only 25% to the length of your life. This seems to mean that other factors, such as health behaviors and mental health, play a role in longevity, too.

Yale study claims that a good attitude helps keep your heart pumping and your feet tapping an additional 7.6 years on average. An optimistic outlook adds more years to your life than low blood pressure (4 years or less), low cholesterol (4 years or less), a healthy weight (1 to 3 years) and regular exercise (1 to 3 years).

"These Are the Good Old Days"The Yale study suggests that people who believe negative stereotypes about growing old may face a reduced life expectancy. If you think old people are frail and sickly, you'll probably see yourself as frail and
sickly when you get old."

So all that exercising you do and healthy eating are negated by reading and believing the garbage from the media.

Healthier, Weathier and Freer

I posted before on The Greatest Economy Ever because I believe that we are in a long period of economic prosperity that is fueled by technology. It seems that technology is not only creating this economic boom, but maybe providing other benefits as well. This article discusses the Good News for Mankind - not only are we wealthier, but also healthier and freer than ever in history.

Environmentalists scream that we are poisoning the planet yet:

"life expectancy increased from 47 years to 77 years. Onset of major disease such as cancer, heart, and respiratory disease has been postponed between eight and eleven years in the past century. Heart disease and cancer rates have been in rapid decline over the last two decades, and total cancer deaths have actually declined the last two years, despite increases in population. Among the very young, infant mortality has declined from 100 deaths per 1,000 births in 1913 to just seven per 1,000 today."

The article points out that this is a worldwide phenomena - not limited to the US or the West.

Also important is the broadening of freedoms:

"Equally important, the world is more literate and better educated than ever. People are freer politically, economically, and socially to pursue their well-being as they see fit. More people choose their own rulers, and have freedom of expression. They are more likely to live under rule of law, and less likely to be arbitrarily deprived of life, limb, and property. "

I wonder if freedom precedes the economic boom or the other way around - I would guess more freedom comes first. In China, people have been given freedom to start businesses and there is a huge growing middle class, while in Russia, there is much less freedom and no economic boom.

The article also makes an interesting point lost on environmentalists that want to limit economic growth - it is countries with the best economies that can afford to have the best environments. Globalization (another thing both extreme left and right fight against) seems to be responsible for a more rapid transfer of ideas and technology that not only benefits everyone economically but is important in developing countries adopting better environmental controls sooner then we did.

Yes, we still have problems and I don't see the world through rose colored glasses, but I remain an optimist about mankind's ability to solve problems as they arise. We are creative people and Straight Line thinking is counterproductive.

productivity tool

I found a product called EverNote yesterday that I have quickly adopted. I used to try to log my notes in Microsoft Journal, but my company doesn't support this app and I found it difficult to find old entries. I also had dozens of post it notes still on my desk with phone numbers or ideas or to do list.

EverNote seems to be able to capture just about everything I do and with the category feature it seems extremely easy to find information. My desk is now clear of post-its. Best of all it was free!

Must useful blog

I wanted to put in a plug for the blog that has been one of the most useful I have found to date - LifeHacker. It has helped me get into RSS feeds, optimized my computer, helped me discover wikis, the power of google, and provided tons of practical advice as well. They probably don't expect that 53 yo men are their target audience, but it has been for me.
Now if I can only get a commission for referring people...

Are wikis the next big thing?

One of the web tools that has me intrigued is the wiki. Now most of us are familiar with Wikipedia which was built using a wiki but few people I have spoken with have actually used one. I have been trying to figure out how they work and how to go about building one. I have been reading a blog IwillTeachYouToBeRich and stumbled across an interview by the author who started a wiki website PBwiki.com.

I took a few minutes to read the introduction and started a wiki. It was not too technically intimidating, but I'm not sure if the average person can easily use it (how would I get my family to plan the family vacation using a wiki when some have difficulty with email?).

On the other hand, I can see how it could be very useful to create collaborative books. For example, suppose you wanted to put all the information about investing in the stock market in one place. Right now people sell lots of books about investing. Could the collective genius of the Internet create a better book using wikis? In fact, a similar effort is underway to collectively write a book on Best Management Practices. Over a million people have been asked to collaborate on the book by the top two business schools.

I've been mulling this idea over since I read about that effort on Management and wondered if I could do something with some other topics. Do you really need to invite millions to be successful? Is anyone aware of other successful wiki projects? Can a wiki make money?