Some Amazing North Dakota Oil Facts

1. North Dakota drillers produced almost 20 million barrels of oil in June from a record number of 7,352 wells, which is more than double the state's oil output in February 2011.

2. There are about 35,000 wells yet to be drilled in western North Dakota’s oil patch, almost five times the number of existing wells, so we can expect the current exponential increases in Bakken oil output to continue in the future. 

3. Oil companies are increasingly making inroads with advanced drilling technologies, and drillers are finishing new wells at a rate of eight per day, up from less than one a day five years ago.   

4. The time needed to drill a well has dropped by two-thirds since 2007 from 60 to 20 days, as the industry continues to fine-tune cutting through dense rock to the oil trapped nearly two miles beneath the surface.  This significant increase in efficiency is due in part to the increased use of diamond-tipped bits and the growing number of "walking drill rigs," which can be moved between well sites on hydraulic feet without having to be disassembled.

5. Besides the 161 increase in producing wells added during the month of June, there were an additional 350 wells that were completed and awaiting hydraulic fracturing services.

6. State and industry officials are reporting that 99 percent of rigs in the Bakken and Three Forks formations hit oil, while nine of 10 rigs are profitable.

7. A typical well drilled in North Dakota will produce about 540,000 barrels of oil during its 29-year lifespan, which would have a market of value of $40.5 million at $75 per barrel and $54 million at $100 per barrel.    

8. It will take at least 15 more years to complete drilling in the Bakken formation.

Bottom Line: North Dakota's future looks very, very bright and its status as the "economic miracle state" will continue for decades.

Sources: Jamestown Sun and the North Dakota Department of Mineral Resources.

Peak what?

Quotation of the Day: Should the Government Try to Reduce Income AND Life-Expectancy Inequality?

“When I talk to people, I find that they generally agree with, and rarely strongly oppose, forcible government transfers of income from the rich to the poor to reduce income inequality. But when I suggest that the government transfer medical expenditures from women to men to reduce life-expectancy inequality, I get a very different reaction. Often, the listener will simply give me a strange look and quickly depart. Those who do respond, however, typically say that I couldn’t possibly be serious because my idea is outrageously silly. I agree. It is silly. But I am completely serious in suggesting it.”

“When we seriously consider an attempt to use government power to reduce the gender inequality in life expectancy, the problems that we have always faced when government uses its power to reduce income inequality suddenly become crystal clear. Government transfers to reduce the gender gap in life expectancy would do little more than reduce improvements in both women’s and men’s life expectancies. For similar reasons, government transfers have done little more than reduce the income growth of both the rich and the poor. So government attempts to reduce life-expectancy inequality by transferring medical expenditures would be silly, but no sillier than its attempts to reduce income inequality by transferring money.”

~Economist Dwight Lee

Pessimism Illustrated

Person A: The weather is beautiful today, clear skies, low humidity and 80 degrees.

Pessimist A: Yes, but it rained ten days ago. 

Pessimist B: Yes, but it rained a year ago on this day.

Pessimist C: Yes, but it will rain sometime in the future, just wait. 

Pessimist D: Yes, but it's raining right now in Nebraska and Nepal right now, so it's not beautiful there at all.   

Pessimist E: Yes, but the government manipulates the temperature and humidity readings, so if the temperature and humidity were re-calculated according to Shadow Stats, it would really be ten degrees warmer (or colder), and more (or less humid), so you can't trust government data, and the weather is actually horrible now, not beautiful.

Pessimist F: Yes, but if we don't get rain soon, we might have a drought. (ht/arbitrage 789)

On the 40th Anniversary of the "Limits to Growth"

It's the 40th anniversary this year of the 1972 release of the book "The Limits to Growth" from the Club of Rome, which used computer models to predict that world population growth and economic expansion would cause the Earth to "overshoot" its carrying capacity of finite resources, and eventually lead to overpopulation, mass starvation, smog disasters, pesticide-induced cancers, oceans devoid of fish, massive species extinction, and significant reductions in life expectancy among other inevitable calamities, disasters, and catastrophes.   

As George Will explains in his latest column ("Why Doom Has Not Materialized"), "We were supposed to be pretty much extinct by now, or at least miserable. We are neither."  He then asks, "So, what went wrong?" And responds (in the tradition of resource economist Julian Simon), "The modelers missed something — human ingenuity in discovering, extracting and innovating. Which did not just appear after 1972."

George Will's column and rebuttal of the exaggerated claims of The Limits to Growth is largely based on a detailed 18-page article by Bjorn Lomborg, a Danish academic and skeptical environmentalist in the July/August issue of Foreign Affairs titled "Environmental Alarmism, Then and Now."  Here's an excerpt from that article on recycling:

Ask someone today whether he cares about the environment and what he is doing about it, and you are likely to hear something like, “Of course I care; I recycle.” The caring part is all to the good and a major positive change from a few decades ago. But the recycling part is often just a feel-good gesture that provides little environmental benefit at a significant cost.

When people think of recycling today, they often think of paper. This, too, is not a new idea; trash has been a resource for centuries, with the extent of its culling and reprocessing depending on the current market prices of the goods in question. Throughout the past century, about 30–50 percent of all paper was recycled, before the advent of public information campaigns or peer pressure.

But now, in the wake of jeremiads such as The Limits to Growth, recycling tends to be seen less as an economic question and more as a matter of personal and civic virtue. Children learn to “reduce, reuse, and recycle” as part of their official moral education. They are told that by doing so, they are “saving trees.” Yet in fact, well-managed forests for paper production in countries such as Finland and Sweden are continuously replanted, yielding not fewer trees but more. Artificially encouraging the recycling of paper lowers the payoff for such forests, making them more likely to be converted into agricultural or urban land. Nor does recycling paper save the rain forests, since it is not made with tropical timber. Nor does recycling paper address a problem of municipal waste: incineration can recapture much of the energy from used paper with virtually no waste problems, and even without incineration, all U.S. municipal waste from the entire twenty-first century could be contained in a single square dump that was 18 miles on each side and 100 feet high.

The effort to recycle substances such as paper and glass, however, consumes money and manpower, which are also scarce resources and could be expended on other socially valuable efforts, such as building roads or staffing hospitals. And so as the price of paper has declined and the value of human work has risen dramatically, today we pay tribute to the pagan god of token environmentalism by spending countless hours sorting, storing, and collecting used paper, which, when combined with government subsidies, yields slightly lower-quality paper in order to secure a resource that was never threatened in the first place.

In other words, Recycling is Garbage, as science columnist John Tierney explained in the New York Times back in 1996, and could also be described as a "fundamentally religious impulse" according to economist Steven Landsburg.

At the end of his article, Bjorn Lomborg concludes that:

Even though the Club of Rome’s general school of thought has mercifully gone the way of other 1970s-era relics, such as mood rings and pet rocks, the effects linger in popular and elite consciousness. People get more excited about the fate of the Kyoto Protocol (aimed at fighting global warming) than the fate of the Doha Round (aimed at lowering trade barriers) —even though an expansion of trade would do hundreds or thousands of times as much good as feeble limitations of emissions, and do so more cheaply, quickly, and efficiently for the very people who are most vulnerable. It is past time to acknowledge that economic growth, for lack of a better word, is good, and that what the world needs is more of it, not less.

Economic growth is good.  Amen.

VIX Index Falls to Lowest Level Since May 2007

According to Freakonomics blogger and Yale professor Ian Ayres:

"One of the most important but under-reported financial indicators is the CBOE’s Volatility Index (^VIX), which measures the market’s expectation of future volatility in stock prices (over the next 30 days). (The CBOE has written a nice technical white paper describing how it is calculated, here.) When it drops below 30 percent, it will be a strong indication that the market correction is complete and we’re back to business as usual." 

Often referred to as the "fear index," the VIX represents one measure of the stock market's expectation of volatility over the next 30-day period (Wikipedia). The VIX is a widely used measure of market risk and it is often referred to as the "investor fear gauge" (Investopedia).

The chart above shows that the VIX Index closed today at 13.45, the lowest level since May 2007, more than five years ago, and more than six months before the recession started in December 2007.  Investor fear in the stock market has been consistently subsiding, and market volatility is now back to normal, pre-recession levels.  

Ticketmaster Must Be Stopped

Ticketmaster is no stranger to controversy. Often criticized for its outrageous service fees, poor customer service and monopolistic control over the primary ticket industry, the ticketing giant — along with others in the ticket and live event industries — is now threatening to completely eliminate fan ownership of the tickets they buy.

How? By issuing “restrictive paperless tickets” that are non-transferable, and can only be used by the original ticket purchaser, similar to an airline ticket.  What if you get sick or end up having a conflict for a concert or game? Too bad, you would lose the ticket under Ticketmaster’s new policy for some events.

What is Ticketmaster’s motivation? The company already dominates the primary ticket market and is now attempting to elminate the secondary market with its new ticket restrictions.  In my commentary on MLive.com, I argue that when you purchase a ticket to a concert or a game, you should own it. Fortunately, there is legislation pending in both the Michigan House and Senate that would protect free-market competition in the secondary ticket market by banning practices that prohibit fans from transferring, reselling or giving away tickets to family and friends

Read the whole article here.

Rail Shipping: Coal is Down; Oil, Cars & Lumber Up

Here's some interesting data from this week's report on U.S. rail traffic from the American Association of Railroads:

1. On a year-to-date (YTD) basis through the week ending August 11, total rail volume of 9,005,952 carloads this year is down by 2.4% compared to last year's loadings of 9,231,927 carloads from January through mid-August.

2. Of the 20 different categories of carload shipments, coal totally dominates this type of rail shipping, and made up 44% of the shipping activity in 2011 from January to mid-August.  This year, coal shipments represented about 41% of total rail car loadings.  

3. Due in part to the switch from coal to natural gas for electric power generation, coal shipments by rail YTD in 2012 are down by 9.4%, from 4,075,000 carloads of coal last year to 3,693,000 this year from January-August.   

4. If we take out coal shipments, rail carload volume is actually up by 3% this year for the other 19 categories, close to the 3.6% YTD increase in the intermodal form of rail shipping for trailers and containers (Note: intermodal shipments are not broken down by category).  

Bottom Line: Coal shipments by rail exert a huge influence on overall rail carload volume because coal's share of total shipping by rail is so high (41-44%).  Therefore, it's only because of the decline in coal shipments this year that overall rail carload volume has fallen.  Take out coal shipments, and carload volume then shows a healthy 3% increase.  Along with the 3.6% increase in intermodal volume, the overall increase in non-coal shipments this year presents a much more positive picture of the amount of inputs, raw materials, commodities, chemicals, vehicles, parts, products, etc. moving around the country, destined for some factory, plant, construction project or car dealership.  And like I summarized yesterday, the three largest contributors to increased carload shipments so far this year are petroleum (+40.2% YTD), motor vehicles and equipment (+21.4%), and lumber (+12.2%).  

So the economy's doing better than we thought once we exclude coal from carload rail shipments, and the environment's getting better because coal shipments to electric utilities are declining. And the petroleum, housing and auto industries are showing strong gains over last year for shipments of key inputs and outputs for those sectors.

Thanks to Market Forces, Technology, and Private Sector Activity, C02 Emissions Drop to 20-Year Low

Market forces, not government action, made this happen:

From the Associated Press comes this story "CO2 Emissions In US Drop To 20-Year Low":

In a surprising turnaround, the amount of carbon dioxide being released into the atmosphere in the U.S. has fallen dramatically to its lowest level in 20 years, and government officials say the biggest reason is that cheap and plentiful natural gas has led many power plant operators to switch from dirtier-burning coal.

Many of the world's leading climate scientists didn't see the drop coming, in large part because it happened as a result of market forces rather than direct government action against carbon dioxide, a greenhouse gas that traps heat in the atmosphere.

Michael Mann, director of the Earth System Science Center at Penn State University, said the shift away from coal is reason for "cautious optimism" about potential ways to deal with climate change. He said it demonstrates that "ultimately people follow their wallets" on global warming.

"There's a very clear lesson here. What it shows is that if you make a cleaner energy source cheaper, you will displace dirtier sources," said Roger Pielke Jr., a climate expert at the University of Colorado.

In a little-noticed technical report, the U.S. Energy Information Agency, a part of the Energy Department, said this month that energy related U.S. CO2 emissions for the first four months of this year fell to about 1992 levels (see chart above). Energy emissions make up about 98 percent of the total. The Associated Press contacted environmental experts, scientists and utility companies and learned that virtually everyone believes the shift could have major long-term implications for U.S. energy policy.

 While conservation efforts, the lagging economy and greater use of renewable energy are factors in the CO2 decline, the drop-off is due mainly to low-priced natural gas, the agency said.

The International Energy Agency said the U.S. has cut carbon dioxide emissions more than any other country over the last six years. Total U.S. carbon emissions from energy consumption peaked at about 6 billion metric tons in 2007. Projections for this year are around 5.2 billion, and the 1990 figure was about 5 billion.

MP: Unlike renewable energies like solar and wind that reduce carbon emissions but are uneconomical even with billions of dollars of taxpayer dollars, the shale gas revolution has made a significant contribution to reducing CO2 emissions to a 20-year low without any taxpayer support and it wasn't even part of any intentional energy policy from Washington, or any regulatory directive from the EPA.  As the article points out, it was market forces and private sector activity, not government policies, that brought CO2 emissions down to 1992 levels.  Another great example of how society is "cleaned by capitalism." 

Welcome to the shale gas revolution. 

HT: John Childress

With New Technology Being Developed, Canada Could Soon Move to No. 1 in World Oil Reserves

Here's one more reason why Duke economist Mike Munger was correct when he wrote several years ago that "of all the idiotic things that people believe, the whole 'peak oil' thing has to be right up there."  Thanks to new, advanced oil recovery technologies currently being developed that would unlock Canada's vast oil sands deposits, our northern neighbor could soon surpass Venezuela and Saudi Arabia to become the No. 1 country in the world for oil reserves.  From a July 24 article in the WSJ:

"Ten years ago, new oil field technologies unlocked vast crude supplies from western Canada's oil-sands deposits, propelling America's northern neighbor to the top echelon of the world's petroleum repositories.

Now oil companies here are experimenting with technologies that could unlock even more reserves from what is some of the world's heaviest and stickiest petroleum. The new technologies could also drive down the cost of producing oil in Canada.

One consortium aims to get oil flowing to the surface by sending radio waves from huge antennae pushed through wells deep underground—adopting technology first developed for the U.S. government to eavesdrop on underground bunkers.

Another company is working on inserting electrical heating coils into wells to melt the oil, while other firms are tinkering with petroleum-based solvents they hope to pump into wells to get more oil out.

All the experimentation is aimed at improving a standard method of oil-sands extraction: so-called steam-assisted gravity drainage, or SAGD.

SAGD quintupled the amount of bitumen that may be possible to recover in Canada, and helped lift Canada's overall recoverable oil reserves to No. 3 in the world, behind Saudi Arabia and Venezuela.

But those reserves are only a 10th of the 1.7 trillion barrels of bitumen found in Canada. Alberta's Energy Resources Conservation Board estimates there are also more than 400 billion barrels of bitumen trapped in carbonate rock formations in Alberta, mostly in a large formation called the Grosmont that stretches across the center of the province.

"If we postulated that 25% of that can be recovered, Canada could move to No. 1" in world oil reserves, said Glen Schmidt, chief executive of privately owned Calgary energy-technology company Laricina Energy Ltd."

Related: Watch a WSJ video here that accompanies the article.  

Economic Data Points

1. From the American Association of Railroad's weekly report on rail traffic: Lumber shipments were up by 19.8% vs. the same week last year (+12.2% YTD), petroleum products by 44.4% (+40.2% YTD), and motor vehicles and equipment by 19.2% (+21.4%).  Conclusion: Housing, oil, and cars are booming. 

2. Mortgage rates are starting to head up, they increased for the third straight week to the highest levels since early July (3.62% for the 30-year fixed rate and 2.88% for the 15-year).  The 10-year treasury yield is the highest since May at 1.80%.      

3. From yesterday's CPI report: Natural gas prices have fallen by 12.7% over the last year, saving consumers millions, if not billions, of dollars.  

4. From today's Census report on construction: Building permits increased in July by 29.5% compared to a year ago, reaching the highest level since August 2008, almost four years ago.  

5. The Bloomberg U.S. Financial Conditions Index is at the highest level in more than a year.  

6. The S&P Volatility Index ("fear index") was at the lowest level this week since July 2007, more than five years ago. 

Hairbraider vs. Oregon's Cosmetology Cartel

Warning: This activity is illegal in the state of Oregon without a government license.

The Oregonian featured this article recently "Braiding African American hair at center of overregulation battle in Oregon," about occupational licensing in general, but with a special focus on hairbraiding in Oregon.  To perform hairbraiding in Oregon, even for free, currently requires a state cosmetology license, which involves 1,700 hours of training in a beauty school at a cost of $10,000-$20,000 for tuition.  The hairbraider featured in the story and video above, Portland-native Amber Starks, is currently performing hairbraiding across the Columbia River in Vancouver, Washington, where it's legal to perform hairbraiding without a cosmetology license.  Ms. Starks is awaiting a possible change in state law before she can legally perform hairbraiding in her home state. From the article:

Prompted by Starks' case, a group of Portland-area lawmakers have promised to file a "Natural Hair Act" for the 2013 legislative session. The goal is to braiders to work with some state oversight -- say, after passing classes in hair-care sanitation -- but without a full cosmetological education.

It's no surprise that Oregon's "cosmetology cartel" is fighting to keep its government-enforced barriers to entry in place that now require a full cosmetology license to braid hair:

In case after case nationwide, however, cosmetologists have opposed looser standards (see map above with hairbraiding licensing requirement by state). In several states, beauty schools canceled classes and bused students to the state capitol to lobby.

"We've worked so hard as an industry to get away from the dumb hairdresser stereotype, the 'beauty school dropout,' thing," said Katrina Soentpiet, who owns Face It Salon in Eugene. "We are professionals. If you work with hair, you should have to meet these standards."

The vice chairwoman of the state cosmetology board opposes any compromise. "As a practitioner for 40 years, it's offensive to me," said Sharon Wiser, an instructor at Bella Institute for Beauty in Portland. "Braiding is styling. It doesn't matter if it's Caucasian or ethnic hair. Ethnic hair is not different in that regard.

MP: The full article is worth reading; there is a good discussion of state occupational licensing in general.  In the 1950s only about 5% of Americans needed a state license to work, but now it's about one-third of the workforce can't work without a license from the state government. And the article points out that we can thank the recession for bringing excessive over-regulation of occupations into the public awareness, as workers run up against state occupational licensing as they face involuntary career changes.

I think the two most important questions to ask are: If hairbraiders are required to have a state cosmetology license to practice hairbraiding, 1) what would happen to the price they charge for their services, and 2) what would happen to the quality of their services.  If you answered, "Go up significantly" and "Nothing," you can go to the head of the class, as Walter E. Williams would say.

Like for so many issues, this a perfect time to invoke Bastiat's message: "Treat all economic questions from the viewpoint of the consumer, for the interests of the consumer are the interests of the human race."

HT: Wayne Sanman

Markets in Everything: Mobile DNA Testing

NEW YORK (CBSNewYork) — "It is a sign of the times — getting a quick DNA test is now as easy as walking up to a truck. The “Who’s Your Daddy” recreational vehicle is selling DNA tests for $300-600, mostly to fathers who suspect their children may not actually be theirs."

Cleaned by Capitalism, Polluted by Communism

Don Boudreaux at the Cafe Hayek blog regularly features posts titled "Cleaned by Capitalism," here's a recent example: 

"Modern, innovative, industrial competitive capitalism makes available to almost every denizen of the early 21st-century capitalist world a host of inexpensive and effective machines and substances to protect ourselves from what would otherwise be the daily, up-close-and-personal pollution of bacteria from rotting food particles. We have dinnerware – plates, drinking glasses, bowls, pots, pans, and utensils – made of ceramics, plastics, and metals that resist absorbing foods and that can be vigorously washed, daily. We wash these items using inexpensive detergents, hot potable water, and dish cloths and sponges (that more and more are disposable – thus making the cloths and sponges that we use cleaner than otherwise).

Increasingly, of course, we wash our dishes and utensils by using this incredible, electricity-powered anti-pollutant machine….

The hot water sprayed in powerful jets combines with special detergent to clean dishes more thoroughly – and with far less expenditure of human time and suffering of aggravation – than is achieved by washing dishes by hand.  Another instance in which our society is cleaned by capitalism."

I thought of Don's "Cleaned by Capitalism" series today when I read Cuban super-blogger Yoani Sanchez's post titled "Have We Become Accustomed to Dirt?" (I think the answer is YES), but which could have alternatively been titled "Polluted by Communism":

  
"A teenager writes — with his index finger — the words “Wash me” in the dust on the window of the bus. A mother asks her son what the school bathroom is like and he confirms that “it stinks so much you can’t go in there.” A dentist eats a french fry in front of her patient and with unwashed hands proceeds to extract a tooth. A passerby lets his pizza — just out of the oven — drip cheese over the sidewalk, where it accumulates in a pool of fat. A waitress cleans the tables at Coppelia Ice Cream with a smelly rag, and puts out glasses sticky with successive layers of badly scrubbed milk. A spellbound tourist drinks a mojito in which several ice cubes made from tap water are floating. A sewer overflows a few yards from the kitchen of a recreation center for kids and teens. A cockroach quickly darts along the clinic wall while the doctor listens to a patient’s chest.
 

All this and more I could enumerate, but I prefer to summarize what I’ve seen with my own eyes. The hygiene of this city shows an alarming decline and creates a scenario for the spread of disease. The cholera outbreak in the east of the country is a sad warning of what could also happen in the capital. The lack of health education from the earliest years of life lead us to accept filth as the natural environment in which we move. The material shortages also raise the epidemiological risk. Many mothers reuse disposable diapers several times, stuffing them with cotton or gauze. The plastic bottles collected in the trash serve as containers for homemade yogurt or for milk sold on the black market. The inadequate water supply in many neighborhoods reduces hand washing and even the number of baths per week. The high prices and shortages of cleaning products further complicate the situation. It is very difficult now to find stores selling mops to clean the floor and detergent is also scarce. Keeping clean is expensive and complicated."

MP: In a market-based economy, keeping clean is cheap and easy, as the "Cleaned by Capitalism" examples on Cafe Hayek clearly illustrate. It's only under market-repressing communism that "keeping clean is expensive and complicated." Perhaps Yoani Sanchez could have a series of posts on her blog titled "Polluted (or Fouled) by Communism."

The Higher Education Academic Conference Racket

The Marriott Los Suenos Ocean Resort and Casino in Costa Rica

At the risk of being accused of exposing one of higher education's "dirty little secrets," let's have a frank discussion about the market racket? for academic conferences.  This post was inspired by an email invitation I received today to attend an academic conference in Costa Rica next March at the Marriott Los Suenos Ocean Resort and Casino in Herradura, Costa Rica (pictured above).  It seems like I get one of these unsolicited invitations every week for an academic conference somewhere in the U.S. or overseas.  Here's how this "academic conference racket" works:

1. Promotion from assistant professor to associate professor with tenure at most universities is primarily based on publications in academic journals and presentations of research at academic conferences (which often then lead to publications).  Sure, teaching counts too, but marginal, below-average teaching can usually be offset by a strong publication record (but not vice-versa). 

2. Promotion from associate professor with tenure to full professor is also primarily based on academic publications and presentations at academic conferences.  Sure, teaching counts, but see above.  

Therefore, there is a HUGE demand from thousands of tenure- and promotion-seeking professors across the country (and around the world) to attend academic conferences, present their research, and then hopefully have that research subsequently published in an academic journal or in the conference proceedings, or sometimes both. Publications lead to tenure and promotion, and often large pay increases of $8,000 per year for promotion to associate professor, and $10,000 for promotion to full professor (those are the current increases at UM-Flint).  Another factor that increases the demand for academic conferences is that all travel expenses, conference fees, and meals are generally paid by the professor's academic institution.   

That explains the demand side of the market, which as I said is HUGE.  Now what about the supply side?  Of course, it's grown to meet the high demand and it's no surprise that there is a large and growing "academic conference industry," along with a large and growing industry for academic journals to publish academic research (which is typically ignored, except for a few other academics).  

The National Business and Economics Society (NBES) is sponsoring the conference in Costa Rica and is just one of hundreds of academic organizations on the supply side of the academic conference and publishing industry.  Previous NBES conferences have been held in Hawaii (every other year), the Lesser Antilles, the West Indies, Puerto Rico, Mexico, the Virgin Islands and Key West (and never in Duluth, MN, Sagniaw, MI, or Buffalo, NY).  See a noticeable pattern?  Hold an academic conference in early March in an exotic location like Costa Rica, and professors will flock to those events, with all expenses paid for by their university students and/or taxpayers.  Let's be realistic, don't professors deserve a "Spring Break" getaway around the time their students are heading down to Daytona Beach or Miami Beach?   

Now, to attract the greatest number of scholars to an academic conference in an exotic location in March, should the organization make the academic focus of the conference broad or narrow?  Obviously, it should be as academically diverse as possible, and the NBES isn't holding back, it invites scholars from Finance, Accounting, Marketing, Management, Information Systems, Operations Research, Economics, Public Health and Administration, Psychology and related areas.  Wow, that's every department in the entire business school plus some almost unrelated departments in the College of Arts and Sciences! 

While they're on their all-expenses-paid trip to the four-day conference in Costa Rica (often with a spouse, who pays airfare but usually not for the accommodations), the professors can take advantage of a host of activities in Costa Rica during their ample free time (their academic obligation may only involve one 30-minute research presentation, or maybe one other session where they serve as a discussant) that includes shopping, dining, deep sea fishing, water sports, hiking, golf, tennis, and an on-site casino.

For the last four years, the NBES has published electronic "conference proceedings" (password protected) of the papers presented, which could count as an academic publication for some universities.  In that case, the professor gets credit for presenting academic research at a conference in Costa Rica and possibly for an academic publication for his or her paper in the conference proceedings, and that research may eventually lead to an academic publication, which may eventually lead to promotion, tenure and a large increase in salary. 

In the end, students (or their parents or taxpayers) ultimately pay for their professors to attend academic conferences in places like Costa Rica in March, which contributes to rising tuition and the "higher education bubble."  And it's not clear that students reap any benefits from these academic conferences relative to the costs, especially if the trade-off is lower tuition and fewer academic conferences, or higher tuition and more academic conferences.  The fact that community colleges typically charge tuition that is about 50% of a four-year university might partially be explained by the fact that professors at community colleges aren't under pressure to publish, and don't attend expensive, four-day academic conferences in Costa Rica, Hawaii and the Virgin Islands with the same frequency as their counterparts at 4-year colleges.    

Academics: Am I being unfair or inaccurate? If so, please respond. 

Graphing The Huge, Exponential Bakken Boom

Click to enlarge.

The chart above shows just how important the Bakken region of North Dakota has been to the state's exponential growth in oil production over the last six years.  As a direct result of fracking unconventional shale oil in the Bakken, North Dakota went from the fifth-largest oil producing state in 2007 to the second-largest oil producing state this year, after surpassing Oklahoma in 2008, and then both California and Alaska this year.  It's amazing how just one oil field in western North Dakota and eastern Montana has transformed the energy landscape of North America.   

HT: The chart was inspired by a similar one at the EIA's website. 

Quotation of the Day

"Why are peak oil-ers like Jehovah’s Witnesses? Answer: When the definitive JW prediction of the ‘Day of Wrath’ failed in 1914, they did what false prophets have done in every generation: shifted the goalposts (to 1975 in the case of JW’s—and wrong again). It’s what false prophets do to save face, enabling them to keep fleecing the inherently gullible. Peak-oilers do likewise.

Having written their headline-grabbing, money-making blockbusters predicting the imminent collapse of an oil-driven industrial world, peak-oilers like to maintain a ‘fluid’ approach to their predictions. In the case of oil, however, that’s becoming a tougher proposition, as their ignorance of energy, economics and the sheer ingenuity of man is increasingly revealed in the looming global oil boom."

~Peter Glover in the Canada Free Press

Homebuilder Confidence Highest Since Feb. 2007, Homebuilder Stock Index Highest Since April 2008

1. From today's report on builder confidence from the NAHB: 

"Builder confidence in the market for newly built, single-family homes improved for a fourth consecutive month in August with a two-point gain to 37 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). This gain builds on a six-point increase in July and brings the index to its highest level since February of 2007 (see chart above)."

“From the builder’s perspective, current sales conditions, sales prospects for the next six months and traffic of prospective buyers are all better than they have been in more than five years,” said Barry Rutenberg, chairman of the National Association of Home Builders (NAHB) and a home builder from Gainesville, Fla. “While there is still much room for improvement, we have come a long way from the depths of the recession and the outlook appears to be brightening.”

2. The bottom chart above compares the performance of the S&P Homebuilders Index (based on stocks that reflect homebuilding activity including Pulte Group, Toll Brothers, Home Depot, Lumber Liquidators, Masco, Owens Corning, etc.) over the last year to the S&P 500 Index.  Since August of last year, the S&P Homebuilders Index has increased by 71%, almost three times the 25% increase in the S&P 500 Index over that period. The S&P Homebuilders Index has reached levels this week that have not been seen since April 2008, more than four years ago.

From DataQuick:

3. "Southern California home sales rose above the year-ago level for the seventh consecutive month in July despite continued declines in low-end distress sales.  Increased activity in move-up and high-end submarkets also contributed to a significant rise in the region’s median sale price, which neared a four-year high. The median price paid for a home in the six-county Southland rose to $306,000 last month, up 2.0 percent from $300,000 in June and up 8.1 percent from $283,000 in July 2011. 

July’s median was the highest since the median was $308,500 in September 2008. The median has risen month-to-month for six consecutive months and has increased year-over-year for the past four. July’s 8.1 percent annual gain was the highest for any month since July 2010, when the median rose 10.1 percent. 

Greater demand, partially triggered by historically low mortgage rates, and a thinner inventory of homes for sale help explain recent gains in the median price. But the increases also stem from a sharp drop in foreclosure resales, which often sell at a steep discount and are concentrated in lower-cost areas, as well as a substantial increase in the portion of sales in mid- to high-end neighborhoods." 

4.  "Home sales in the Bay Area rose on a year-over-year basis for the 13th month in a row in July, the result of increased mid- and up-market buying activity. The median price paid for a home was the highest in almost four years.

A total of 8,461 new and resale homes were sold in the nine-county Bay Area last month. That was down 1.4 percent from 8,577 the month before, and up 22.9 percent from 6,887 for July 2011. The median price paid for all new and resale houses and condos sold in the Bay Area last month was $421,000. That was up 1.0 percent from $417,000 in June, and up 12.6 percent from $374,000 in July 2011. Last month’s median was the highest since it was $447,000 in August 2008." 

MP: Evidence continues to accumulate that we've moved past the bottom of the real estate market this year, and have entered a new period of recovery characterized by ongoing increases in both home sales and median prices, rising builder confidence, and strong gains in the S&P Homebuilder Index.    

July Industrial Production Highlights; Factory Output Is Growing at 2X Rate of Overall Economy

The Federal Reserve released its report this morning on Industrial Production in July, here are some highlights:

1. Overall industrial output increased by 0.6% in July on a monthly basis, and by 4.4% on an annual basis, marking the 30th consecutive month of annual growth.

2. Annual increases were especially strong in July for business equipment (12.3%), motor vehicles and parts (26.5%) and overall manufacturing (5.0%), especially for durable manufactured goods (9.5%). 

3. The Federal Reserve reported motor vehicle assemblies of 11.01 million units in July (seasonally adjusted, annual rate), which was an increase of 29% over last year and the highest number of monthly assemblies in more than five years, going all the way back to June 2007 (see top chart above). Look for strong gains in vehicle sales to continue through the summer and fall, especially since banks are showing a new willingness to make car loans, see Monday's WSJ article "A Green Light for Car Loans" about the recent car-financing surge. 

4.  July's index for business equipment was just slightly below June's level, but was up by 12.3% compared to a year ago, and the index level for that market group of 104.5, is now slightly above the previous pre-recession peak in February 2008 of 104.4 (see chart above).  The transit component of the business equipment group registered the strongest annual gain in July at 28.1%.

MP: Overall, today's Fed report suggests that America's industrial sector continues to grow and remains at the forefront of the economic expansion - the June 2011-June 2012 growth rates in industrial production of 4.7% and 5.6% for factory output are more than twice the rate of growth in the overall economy of 2.2% for real GDP during the same period. Nothing in today's report on industrial output in July would suggest that the U.S. economy is on the front edge of a recession, especially with the strong performance for the production of auto assemblies (now at a five-year high) and business equipment (reached an all-time high in June), and the strong gains for durable goods manufacturing of 9.5%.

Update: From Scott Grannis, "The July industrial production numbers all but rule out the recession that many have been looking for. The economy went through a bit of a soft patch in the first half of this year, but now looks to be picking up. The folks at ECRI have a lot more 'splainin to do."

Oil Prosperity Delivers Economic Stimulus to TX

The oil boom in the North Dakota Bakken area has been getting a lot of attention lately due to the phenomenal increases in production there over the last few years, but there's also an oil boom going in Texas as well, thanks to the same advanced drilling technologies that are turbo-charging oil output in North Dakota.

The chart above shows daily oil production in Texas, which exceeded 1.8 million barrels per day in both April and May, reaching the highest level of production in more than 20 years going all the way to 1991.  Even though North Dakota oil production has increased six-fold over the last six years moving the state ahead of both California and Alaska in the last year to become the No. 2 oil-producing state, oil production there of 666,000 b.p.d. in June is only about one-third of the oil output in No. 1 Texas at 1.834 million b.p.d. in May.

Here's a recent account from the Houston Chronicle of the oil boom going on in West Texas in the Permian Basin, which is booming along with the Eagle Ford Shale area of South Texas, and has helped boost the state's oil production by 66% over the last two years (see chart above). 

MIDLAND, TX -- "As anyone who has tried to rent a house, navigate traffic or lease drilling equipment around here knows, the good times are rolling again. A strong demand for oil coupled with refined hydraulic fracturing and horizontal drilling techniques are tapping long untouchable, deep reserves.

What began a decade ago as a modest revival now is a full-fledged boom. The play extends across hundreds of miles of West Texas and into New Mexico, from Mentone east to El Dorado, and it is reviving long dormant backwaters. The best indicator, the Baker Hughes rig count, recently hit 442, after bottoming out in 1999 at 51. There are now more than 155,000 producing wells out here, generating revenue and requiring service for years to come.

"It's unbelievable. This has 50 years worth of life. They'll be redrilling the entire Permian Basin," exclaimed Jim Smitherman, chief executive officer of Security Bank in Midland.

Airport hangars in Midland now are jammed with private planes, there's a three- to four-month wait to join the Petroleum Club and many of the service companies lining Interstate 20 keep "Hiring" signs out front.  A freshly graduated petroleum engineer can make $80,000 a year, sometimes with a $10,000 to $20,000 signing bonus tacked on. Roughnecks and truck drivers willing to work killer hours can gross over $100,000 a year.

Arlen Edgar, 78, a longtime oil and gas investor said "There's a lot of money to be made. If you look at daily production in the Permian Basin, which is approximately a million barrels a day, that, along with the gas, represents $2.5 billion to $3 billion a month in production revenue."

Sales tax income for Midland went from $13.4 million in fiscal year 2001 to $29.4 million in fiscal year 2011. So much money is flowing in that the city's reserve fund is now equal to about half its general fund, double what it used to be. The wealth has triggered an ambitious capital improvements program. Midland will soon build a new firehouse while remodeling two others, and will also build a new municipal court building. Extensive new roadwork also is planned."

MP: Hydraulic fracturing and horizontal drilling is bringing new oil prosperity to Texas as well as North Dakota, and delivering an energy-based economic stimulus to both states, creating thousands of well-paying, shovel-ready jobs, bringing millions of dollars of new investment, and delivering millions of dollars in royalty payments to local landowners.

HT: Peter Parlapiano

America’s New No. 2 Oil State – North Dakota – Sets More Eye-Popping Oil Production Records in June

The “Economic Miracle State” of North Dakota pumped another record amount of oil during the month of June at a rate of more than 660,000 barrels per day, which was an increase of 3.2% compared to oil production in May (see chart above).  North Dakota’s record-setting oil output in June was noteworthy for several reasons:

1) The year-over-year increase in oil production of 71.1% in June followed annual increases of 75.5% in May and 73.5% in April, and those are the three largest increases in North Dakota history.

2) North Dakota produced almost 34% more oil than Alaska in June, marking the fourth consecutive month that North Dakota out-produced Alaska. The Peace Garden State surpassed Alaska’s oil production for the first time in March to become the country’s new No. 2 oil state, behind only Texas.

3) The number of producing oil wells in the state surpassed 7,000 for the first time ever, setting a new record high of 7,130 wells in June.  Over the last year, an average of 5 new oil wells have been put into production each day, and each new well is the equivalent of adding a new $8-10 million business to the state’s economy, see recent CD post for more details.

4) The amount of oil produced per oil well in the state increased to a new record high of 93 barrels per day, an increase of 29% compared to a year ago, and a sign that the efficiency of shale oil production is increasing significantly. Both the increasing number of wells and the increasing output per well is contributing to record high production levels.  Over just the last two years since June 2010, daily oil production in North Dakota has more than doubled.

As a result of the ongoing oil boom in the Bakken area, North Dakota continues to lead the nation with the lowest state unemployment rate at a four-year low of 2.9% in June, and more than five percentage points below the national average of 8.2%. There were nine North Dakota counties with jobless rates at or below 2.0% in June, and Williams County, which is at the center of the Bakken oil boom, continues to boast the lowest county jobless rate in the country at just 0.9%.  The exponential growth in North Dakota oil production has fueled exponential growth in the state’s “Natural Resources and Mining” employment, which has tripled in less than three years, and reached almost 22,000 in June.  Overall, North Dakota state employment has increased by 6.5%, almost five times the 1.3% increase in jobs nationally.

Bottom Line: The record-setting oil production in North Dakota continues to make it the most economically successful state in America, with record levels of employment and income growth, a labor shortage and the lowest state jobless rate in the country, increasing tax revenues, the lowest foreclosure rate in the country, strong housing and construction markets, and jobless rates in nine counties of the Bakken region at or below 2.0%.  Call it the “Dakota Model” of job creation and economic prosperity that is based on developing America’s vast energy resources, which is an economic model that could easily be replicated elsewhere if more domestic energy resources were opened up to exploration and drilling.  Under a Romney-Ryan administration, North Dakota’s job-creating, energy-based economic prosperity will likely spread to new parts of the country starting in 2013.

Ten Tuesday Afternoon Links

1. The "Van Indicator" Signals Economic Recovery  -  "How can we tell how small businesses are feeling? Find out how many vans they’re buying (90% of vans are purchased by businesses). Van sales were up 32% in July over last year, a greater increase than every other vehicle type except sports cars."

2.  Average sales at U.S. car dealerships are expected to rise to an all-time high of 805 vehicles this year, as the number of U.S. dealers remained flat the first half of 2012. The average sales are on pace to top the previous record set in 2005.

3. The number of U.S. craft breweries increased this year to the highest count in 125 years. It's the fastest growth rate since Prohibition ended, almost one new brewery every day.

4. Update on NYC's pizza wars in today's WSJ.  Cutthroat competition brings prices down to as low as 75 cents per slice.  Can't we get a similar pizza war in DC? 

5. The oil and gas boom brings scarcity of workers in small towns in Oklahoma, Texas, North Dakota as many businesses and government agencies now struggle to find enough workers. Reason? Most able-bodied people can double or triple their income in the oil patch.

6.  The Costco in Bellingham, Washington, has become exceedingly popular with Canadian shoppers to the dismay of locals who are claiming "gridlock" in the aisles. 

7.  419 Economists, including 5 Nobel laureates, Sign Statement in Support of Romney's Economic Plan to Create Jobs and Restore Economic Growth.   

8. Report: 46% Of U.S. Bank Account Holders Will Use Mobile Banking By 2017.

9. New York to London in an hour: Hypersonic WaveRider aircraft to be tested Tuesday.

10. Shale Gas to the Climate Rescue: Development of global shale gas could be the best way to achieve cuts in CO2 emissions. 

Markets in Everything: Research Validation Service

Science Exchange, in partnership with the open-access publisher PLOS and open data repository figshare, announced today the launch of the Reproducibility Initiative – a new program to help scientists, institutions and funding agencies validate their critical research findings.

“In the last year, problems in reproducing academic research have drawn a lot of public attention, particularly in the context of translating research into medical advances. Recent studies indicate that up to 70% of research from academic labs cannot be reproduced, representing an enormous waste of money and effort,” said Dr. Elizabeth Iorns, Science Exchange’s co-founder and CEO. “In my experience as a researcher, I found that the problem lay primarily in the lack of incentives and opportunities for validation—the Reproducibility Initiative directly tackles these missing pieces.”

The Reproducibility Initiative provides both a mechanism for scientists to independently replicate their findings and a reward for doing so.  Scientists who apply to have their studies replicated are matched with experimental service providers based on the expertise required.  The Initiative leverages Science Exchange’s existing marketplace for scientific services, which contains a network of over 1000 expert providers at core facilities and contract research organizations (CROs). “Core facilities and commercial scientific service providers are the solution to this problem,” said Dr. Iorns. “They are experts at specific experimental techniques, and operate outside the current academic incentive structure.”

See related Reuters article here, which highlights the issue of why there is a need for research validation:

"Last year, Bayer Healthcare reported that its scientists could not reproduce some 75 percent of published findings in cardiovascular disease, cancer and women's health.

In March, Lee Ellis of M.D. Anderson Cancer Center and C. Glenn Begley, the former head of global cancer research at Amgen, reported that when the company's scientists tried to replicate 53 prominent studies in basic cancer biology, hoping to build on them for drug discovery, they were able to confirm the results of only six."

Markets In Everything: Eyesight for the Blind

Bloomberg -- "Blind mice had their vision restored with a device that helped diseased retinas send signals to the brain, according to a study that may lead to new prosthetic technology for millions of sight-impaired people.  The technology moves prosthetics beyond bright light and high-contrast recognition and may be adopted for human use within a year or two, said Sheila Nirenberg, a neuroscientist at Weill Cornell Medical College in New York and the study’s lead author. 

“What this shows is that we have the essential ingredients to make a very effective prosthetic,” Nirenberg said. Researchers haven’t yet tested the approach on humans, though have assembled the code for monkeys. 

Nirenberg and co-author Chethan Pandarinath first monitored healthy eyes to determine the set of equations that translate light received by the retina into something the brain can understand. Then, they used special glasses to create a similar code and deliver it to the eye, which they had injected with a virus containing light-sensitive cells. The cells received the code and fired electric impulses, which the brain could interpret as images. 

Nirenberg’s research “is basically giving vision back to a system that doesn’t work,” said Aude Oliva, a principal investigator at the Massachusetts Institute of Technology’s Computer Science and Artificial Intelligence Laboratory, who wasn’t involved in the research. “I’ve never seen, and other people have never seen, this quality.”

No foreseeable barriers should stop the movement into humans now that the technology has been created, Oliva said. Nirenberg said that if researchers can come up with adequate cash to fund clinical trials, she hopes to soon adapt the technology." 

MP: In the midst of all of the gloom and doom we hear about daily, the pending fiscal cliff, talk of a double-dip recession, The Great Stagnation, etc. we still hear inspiring stories like this on a regular basis, a confirmation that technology, innovation and ingenuity march on, and deliver advances that make the future ever-brighter all the time.  It's a demonstration that our "ultimate resource" - America's human resources,  human capital and entrepreneurial talent - are still strong, and the vitality and dynamism of the U.S. economy will prevail.  The U.S. economy has experienced 33 recessions since around the time of the Civil War, and has successfully emerged after each one into a new cycle of growth and expansion, and there's no reason that this last recession and the current expansion will be any different.

As one example, when we look back on the period of U.S. history from 1870-1900, nobody describes that period as one of seven severe economic recessions, or a period when the U.S. economy was in recession 179 months out of 336 months, or more than half of that time period.  Instead, when we reflect on that period today, we think of the many amazing, game-changing inventions that emerged during that era despite the tough economic conditions, including the typewriter, air brakes, tungsten steel, barbed wire, telephone, internal combustion engine, phonograph, moving pictures, a longer-lasting light bulb, player piano, machine gun, gas-engine motorcycle, radar, gramaphone, contact lenses, escalator, zipper, bicycle frame, vacuum cleaner, zeppelin and the radio.  Likewise, a hundred years from now people will look back on this period of history more for its innovations (3D printing, iPhone, iPad, robotics, nanotechnology, advanced drilling technologies for oil and gas, and prosthetic technology for millions of sight-impaired people, etc.) than for the fact that we went through the Great Recession, which in comparison was relatively mild compared to the severe, recessionary conditions of the 1870-1900 period that included a five-year and a three-year recession.   

HT: John Sturges

The Best Movie I've Seen in Years

If you haven't yet seen the movie "Searching for Sugar Man," I highly recommend that you do so, it's excellent.  It's got a 96% Tomato-Meter Rating from movie critics on RottenTomatoes.com and a 96% audience rating, which is almost unprecedented for a movie to rank so highly on both measures at the same time.  Watch the trailer above, and here's a synopsis: 

Searching for Sugar Man tells the incredible true story of Rodriguez, the greatest 1970s rock icon who never was. Discovered in a Detroit bar in the late 1960s by two celebrated producers struck by his soulful melodies and prophetic lyrics, they recorded an album which they believed would secure his reputation as the greatest recording artist of his generation. In fact, the album bombed and the singer disappeared into obscurity amid rumors of a gruesome on-stage suicide. But a bootleg recording found its way into apartheid South Africa and, over the next two decades, he became a phenomenon. The film follows the story of two South African fans who set out to find out what really happened to their hero. Their investigation leads them to a story more extraordinary than any of the existing myths about the artist known as Rodriguez.

You can see Rodriguez on The Letterman Show tomorrow (Tuesday) night, and see him live, here's his touring schedule.

The Significant Medal Inequality of the Olympics

As predicted in a recent CD post, there was a significant amount of "medal inequality" in the 2012 Summer Olympics, see the country shares above of the total 962 medals that were awarded this year to athletes from 85 countries.   Note the amazing similarity between the shares of adjusted gross income earned in the U.S. in 2008 and the country shares of Olympic medals awarded this year, in both cases by the top 5, 10, 25 and 50% of "participants" or "earners."

The average person seems to understand how "medal taxes" and "medal redistribution" would undermine the competitive process that is essential to the success of the Olympics, but then that same person often seems to accept progressive "income taxes" and "income redistribution," without realizing that the "tax and redistribution" process can undermine incentives to work, produce and invest that are essential to the success of the market economy.  

Gibson Pays $350,000 Fine + $2.4M in Legal Fees

In the video above, Gibson Guitar CEO Henry Juszkiewicz discusses with Mike Huckabee the $350,000 fine his company paid to the federal government, in addition to Gibson's $2.4 million in legal fees, to avoid going to trial, which would have cost $5-6 million.  No charges have been filed. 

How About Minimum/Maximum Temperature Laws?

A version of the post below appeared on CD during the unusually cold winter of 2008-2009, and I present it again today, now that Rep. George Miller (D-Calif.) and more than 100 of his House Democratic colleagues have recently proposed legislation that would increase the minimum wage to almost $10 per hour:

Q: Couldn't the government intervene in the market for temperature-reading equipment to counteract "excessively low" winter temperatures or "excessively high" summer temperatures, just like the government does in the unskilled labor market to counteract "excessively low" wages for unskilled workers?  Let me explain.

In Defense of the Minimum Wage Law:

Unskilled workers are at the mercy of greedy, cold-hearted, ruthless, profit-seeking employers. Without some kind of government intervention in the unskilled labor market, employers will ruthlessly exploit unskilled workers, and pay them sub-standard wages (e.g. $5 per hour).

To counteract this injustice in the labor market for unskilled workers, our collective sense of fairness and justice demands legislation that currently forces employers to pay a minimum wage of $7.25 per hour. Wages below that minimum (e.g. $5 per hour or $6 per hour) are unconscionably low, and are outlawed by the minimum wage legislation, with violations subject to penalties, fines and possible jail time for employers paying less than the government-mandated minimum wage of $7.25 per hour.

In Defense of the Minimum Temperature Law:

The frigid, cold, and harsh winter of 2008-2009, and the hardships it has caused for millions of Americans (including an estimated 700 deaths), firmly establishes that we are at the mercy of a very cruel, ruthless, merciless, cold-hearted, and uncaring force: Mother Nature.

Something must be done about this unacceptable situation. Without some kind of government intervention in the market for low temperature readings being registered on existing thermometers and thermostats, Mother Nature will continually and ruthlessly expose Americans to harsh winter conditions of unconscionably low temperatures. Who among us wouldn’t agree that these excessively low winter temperatures are unfair, unreasonable and unjust?

To counteract this inherent cold weather injustice and Mother Nature’s ongoing lack of concern for cold Americans, our collective sense of fairness and justice requires legislation that will force all thermostats and thermometers sold in the United States to have a minimum, reasonable and fair temperature reading of let's say 0 degrees Fahrenheit. As part of the new Minimum Temperature Law, all existing thermometers and thermostats in homes, offices, and businesses should be immediately replaced with new temperature-reading equipment with a minimum reading of 0 degrees.

Any temperatures below that minimum (e.g. -10 degrees F. or -20 degrees F.) are considered to be unfair and unconscionably low, and will be illegal and outlawed by the Minimum Temperature Law, with violations subject to penalties, fines and possible jail time for thermostat manufacturers continuing to sell thermostats with temperature readings below the government-mandated minimum temperature. Further, all news and weather reports, all TV and radio stations, and all newspapers and websites are immediately prohibited from quoting any temperatures below the federally-mandated minimum of 0 degrees F.  

If successful, subsequent legislation for a Maximum Temperature Law should be considered for summer months, e.g. a maximum allowable temperature reading of 85 degrees Fahrenheit on all thermostats to control Mother Nature's unfair "temperature gouging" and "temperature scalping" this summer, with temperatures in the 90s and above in so many parts of the country this summer.    

Bottom Line: If Minimum/Maximum Temperature Laws seem ridiculous, that's because they are totally ridiculous. And so are Minimum Wage Laws.  Forcing employers to pay an unskilled worker $7.25 per hour doesn't change the reality that many of those workers are actually only worth $5 or $6 per hour. The artificially high minimum wage causes distortions and inefficiencies in the unskilled labor market because the minimum wage does not accurately and truthfully reflect many workers' true productivity, and it's like creating a government-mandated fantasy world.  A disconnect is created between the true measure (e.g. $5 per hour) and an artificial, government-mandated measure ($7.25 per hour), of a worker's value or productivity.

Likewise, imposing a minimum (or maximum) temperature law would create a government-mandated fantasy world about weather conditions, with a disconnect between the true temperature (e.g. -20 degrees or 100 degree F) and an artificial government-mandated minimum or maximum temperature (0 degrees or 85 degrees F). And just like the minimum wage law creates havoc in the labor market, so would the minimum temperature law create havoc for Americans, because thermostats would be conveying inaccurate measures of the true temperature.  

When it comes to the weather, what we want most is the most precise measure possible of temperatures, and we get those from accurate thermostats and thermometers, not from artificial, government-mandated minimum or maximum temperature laws. When it comes to maximizing the efficiency of the labor market, what we want are accurate, truthful and precise measures of worker productivity, and we get those from market wages, not from artificial, government-mandated minimum wage laws.