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Articles by Donald E. L. Johnson

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Today is Thursday, April 17, 2014


Xcel Energy: Wind power subsidies benefit developers, not utilities nor consumers

Excel Energy, the biggest wind energy producer in America, says that it may not sign up for more wind energy because the subsidies extended as part of the bill that saved 99% of Americans from income tax increases inclluded some $40 billion in pork for developers of wind power farms and their suppliers like General Electric.

The wind production tax credit (PTC) disguises the cost of wind energy and exacerbates the costs of other types of enery sources, Excel's lobbyist said in a statement reported by The Foundry blog, which is part of the Heritage Network..

Excel has raised rates to pay for its "clean energy" investments in Colorado and Minnesota. Many of its wind farms are around our farm in SW Minnesota. That it isn't likely to buy more towers is another reason for us to not put towers on our farm. I've been agaisnt the towers because they're ugly, noisy and likely to be eyesores for decades after they wear out and cease to produce energy. Most important, we don't like being part of an uneconomic enterprise subsidized at the rate of $8.5 billion $10 billion a year by consumers and taxpayers for no good reasons. 


The Hidden Costs of Wind Energy; Why the full cost of wind generation is unlikely to match the cost of natural gas, coal or nuclear generation, By American Tradition Institute.

The hidden costs of wind power, by Institute for Energy Research.

Top wind utility: Wind subsidy benefits industry, not consumers, by Lachlan Markay, The Foundry blog.

Wind turbines 'Only lasting for half as long as previously thought,' by Energy Tribune.

The Democratic war on science, by Steven Hayward at Powerline blog.

Science must be seen to bridge the political divide; Scientists in the United States are often perceived as a Democratic interest grouip. For science's sake this has to change, by Daniel Sarewitz @

Posted by Donald E. L. Johnson on 01/07/13 at 02:31 PM
AgricultureFarmingCongress 112thStocksEnergy StocksTaxesPermalink

How farmers can get more folks up to date on agriculture

Sec. of Agriculture Tom Vilsack, a former governor of Iowa, warns that if rural America, or farmers, don't become more like other Moocher Nation Democrats, they'll lose even more influence in Washington, according to the left-leaning Associated Press story pubished on My comment on the story:

As the owner of a farm, I know that farmers are a big part of the Moocher Nation. We get our crop subsidies, government money to improve our land and nice tax credits for all kinds of things like having kids and getting home mortgages. 

At the same time, the mostly Red States that gave the GOP control of the House are more rural than most Blue states. So farm states still have some clout.

The problem is that folks like Sen. Grassley (R-IA), a corn and beans farmer, defends and advocates Moocher Nation ag subsidies like ethanol, which are a huge indirect tax on urban American and rural America alike. Ethanol and wind power scams and ag subsidy programs, which is a lot of members of Congress are responding to voters demands that ethanol and wind power programs be cut from the Federal budget.

Now, the federal money and ethanol money is nice to have and hard to give up.

That farmers work for every penny is described in a wonderful book, Farm, a year in the life of an American farmer, by Richard Rhodes. 

Agribusinesses should distribute Rhodes' book to every high school and college English teacher in the country and offer free copies to teachers who want to assign it to their students. And farmers should make sure that English and lit teachers in their high schools and community colleges assign the book to every student.

At the same time, the book should be distributed in lots of 10 to every Congressional office and all of the employees of the USDA, EPA and Commerce Dept. Those folks are readers. Give them a good read.

Econ books have used the grain markets to demonstrate the principles of supply and demand. The agribusiness world should encourage this and promote more ag econ teaching in community colleges and colleges.

Too see how high tech and complicated farming is, check out Iowa State University's curriculum for its ag majors. 

Meanwhile, the Sec. of Agriculture is just unhappy that his wife lost her run for Congress in Iowa and that farmers put aside their personal financial interests and voted for their country and Romney, not for Divider-in-Chief Obama.

Maybe the farm bill would have a better chance if it didn't include so much spending on food stamps, which help too many of the near poor as the truly poor buy more junk food and bankrupt the country.

Posted by Donald E. L. Johnson on 12/08/12 at 05:28 PM
AgricultureFarmingBooksEducationMarketing and SalesPromotionsPermalink

Bill Ritter wants to cut tax credits in an election year recession

Governor Bill Ritter is proposing to eliminate both useless and useful tax credits in an effort to balance Colorado’s state budget. These tax moves appear to be the least dangerous ones he can propose during a recessionary election year. Impact graphs from Joe Hanel:

Posted by Donald E. L. Johnson on 11/13/09 at 09:53 AM
AgricultureFarmingColoradoBudgetEconomicsTaxesRead More

House votes to crack down on institutional oil and agricultural commodities speculators

The U.S. House of Representatives last week passed the Commodity Markets Transparency and Accountability Act of 2008 (CMTAA), which will crack down on institutional speculators and sovereign wealth funds that have helped distort oil and agricultural commodities prices.  Whether the bill, H.R. 6604, will get through the Senate and a House-Senate conference committee before Congress adjourns next week for the elections remains to be seen.  The bill authorizes the Commodity Futures Trading Commission (CFTC), which regulates the futures markets, to require institutional speculators in energy and ag futures markets to produce monthy position reports. The CFTC also will set position limits on the number of contracts institutional speculators and swaps dealers on Wall Street may have in the market at any one time.  Thus, the House bought the recommendations in the Masters and White report on how institutional index fund speculators are distorting the futures markets, not the bureaucratic dodge produced by the CTFC a couple of weeks ago. I blogged about the two reports here and here. It is not clear why the act applies only to energy and agricultural commodities and not the metals and other markets not regulated by the Securities and Exchange Commission.  In addition to expanding the CTFC’s long-time mission of protecting speculators, producers and consumers with appropriate regulations of energy and ag futures markets, the House bill requires the CTFC to produce several reports on how speculators affect pricing in futures markets around the world. Those reports are due over the next two years.  H.R. 6604 looks like a sensible and clean bill. There are no earmarks and only the institutional speculators and their brokers are opposing it. They have been profiting from the chaos they’ve created in the futures markets and don’t want the party to end.

Posted by Donald E. L. Johnson on 09/20/08 at 05:03 PM
AgricultureFarmingFutures MarketsColoradoEnergySpeculationStocksEnergy StocksPermalink

How to invest in T. Boone Pickens’ wind power and natural gas schemes

Tom Konrad explains how investors can speculate on wind power here. On Monday and Tuesday, we drove I-90 across Wisconsin and Minnesota. We saw hundreds of wind mills in MN, many more than we saw in Colorado, Nebraska, Iowa, Illinois, Indiana and Michigan a couple of weeks ago. I don’t recall seeing windmills in Wyoming or South Dakota, be we sure saw a lot of coal trains in Wyoming.  Charts for stocks mentioned are here. Three more are here. Click on a chart for weekly and point and figure charts.  ITC Holding (ITC) has the best charts of the bunch. Most look pretty bearish to me.  Each windmill costs about $1 million per megawatt, and most windmills produce 2.5 megawatts and cost about $2.5 million, not including related infratructure costs. Most are owned by power companies around the country as well as by joint ventures between the power companies and the wind mill makers and by farm cooperatives formed to put up wind mills.  I don’t own any of these stocks For educational purposes only. Investigate before you speculate.

Posted by Donald E. L. Johnson on 08/21/08 at 08:35 PM
AgricultureFarmingColoradoEnergyStocksEnergy StocksPermalink

Speculators have convinced the NY Times that they shouldn’t be blamed for soaring oil prices

Columnists for both The New York Times and The Wall Street Journal believe speculators have nothing to do with soaring energy and commodities prices, but pension funds, endowments and other buy only institutional speculators are playing major roles in inflating futures prices and consumer prices.

What these columnists don’t understand and their friends in the speculators’ community won’t tell them is that the recently arrived institutional speculators distort the markets by taking long-term positions on the buy side only. Because they only buy huge positions, they put artificial floors under energy and other futures markets prices, as explained by farmers and others at a forum sponsored by the Commodity Futures Trading Commission on April 22. Transcripts of many of the remarks made at that forum by representatives of growers of corn, soybeans, wheat, cotton and rice are here.

A scholarly explanation of the problems created for corn and bean farmers and grain elevators was made by Prof. Eugene Kundra of the University Illinois. His statement is here.

Kundra said there are several reasons that futures and cash prices aren’t converging when futures contracts near expiration, causing major problems for farmers and commercial buyers of their corn and beans. While he didn’t specifically point to the long-term positions held by index funds and other institutional speculators, he clearly implicated them in one of his major proposed solutions. He proposed that the CFTC and the Chicago Board of Trade consider:

“Managing” the influence of passive longs and perhaps other groups by
limiting hedge exemptions, thereby forcing those groups to trade with spec
margins and spec limits. This solution follows from the assumption that these
traders have artificially and permanently forced futures prices above
fundamental value of the commodities in the cash market.

Garry Niemeyer, a corn grower, explained how institutional speculators are distorting the corn markets and making it impossible for grain elevators to buy corn or finance their hedges on the Chicago Board of Trade’s corn futures markets. His statement for the National Corn Growers Assn. is here.

After a detailed explanation of the problems institutional speculators are creating for farmers and the grain elevators that buy their crops, the corn growers recommended that speculating by institutions should be limited.

It is NCGA’s opinion that the large funds are having an overwhelming influence on the
futures markets and are “non-commercial” traders. Frequently, we see dramatic shifts in
the futures market that have no substantiated fundamental drivers. While we do not want
to drive the index and hedge funds from the market, they should be treated for what they
are, “speculators”. I realize this flies in the face of some CFTC decisions, but I believe to
truly be classified as a hedger, an entity must have a cash commodity position. NCGA
realizes that the large Index Funds are selling a commodity index and then going long in
each of their market basket commodities which could be construed as a hedge. But, they
are selling a market basket of futures prices, not a market basket of physical
NCGA proposes that the Index Funds no longer be afforded the same margin
requirements as traditional commercial hedgers. Specifically, to be classified as a hedger
the entity must have a cash position. We are not suggesting that they have an equal or
proportional cash position, but somewhere within that company they must be buying or
selling cash grain to retain the “hedger” classification.

Soybean, cotton and wheat growers agreed with this recommendation. They are in the markets every day. They have been in the markets during most of their careers and while they value the traditional roles of speculators in the futures markets, they also believe that index funds and other institutional speculators are distorting the markets, inflating prices and hurting both growers and consumers.

Having covered and studied the futures markets for years, I think the growers’ case that speculators are inflating prices and consumer prices is much stronger than the speculators’ argument that they are not. Institutional speculators say they are diversifying their portfolios and hedging against inflation for their beneficiaries.

But it is clear that institutional speculating in the energy and other commodities futures markets is causing much more inflation and is hurting their index fund and pension fund beneficiaries much more than it is helping them.

It’s time for institutional speculators to reassess their strategies and the impact of their speculating on their beneficiaries as well as on the American consumer.

The CFTC obviously was persuaded by the arguments that institutional speculators’ trading in the futures markets must be curbed.

On June 3, the CFTC announced that it was reversing previously announced intentions to expand position limits for institutional speculators, and it announced that it would work to make it easier for traders and the public to track trading activities by institutional speculators. The press release is here.

Joe Nocera’s Times column is here. As I previously reported here, Congress is investigating whether the sovereign wealth funds of net oil exporting countries are playing the futures markets and inflating prices. I advocated tighter position limits on commodity index funds and other institutional investors here. I explained one way institutional speculators influence individual speculators and trading by hedgers here.



Posted by Donald E. L. Johnson on 06/28/08 at 09:07 AM
AgricultureFarmingFutures MarketsStocksEnergy StocksFinancial MediaPermalink
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