Choose Solutions, Not Facts

19 04 2011

State and federal budgets are headed for the cliff to varying degrees with few exceptions.  Here in Wisconsin, we’ve had the Battle Royale fight to the death cage match with the repubs on one side and the unions on the other while the dems were hiding out in a witness protection plan.

Meanwhile at the federal level, we are on a dangerous trajectory unseen in my lifetime.  People have whined about the deficit and debt since my adolescence – the Miracle on Ice days against the Soviet Union.  I kept saying, “It’s not a problem.  It’s not a problem.”  Why?  Because the debt as a percentage of our economy was reasonable, and flat but very few people consider this metric – the one that matters most.  They just clobber each other over the head and call each other names and we have Jay Leno fodder like “pay-go”.

However, this all changed since the meltdown Lehman Brothers in the fall of 2008.  The debt as a percentage of our economy really IS becoming a major concern.  We are staring at $1.6 trillion deficits for as far as the eye can see.  Personally, I think the word trillion should be banned because it sounds inconsequential.  How about $1.6 million million, or $1,600 billion?

Do we cut spending, take away grandma’s pharmaceuticals, sell her home, and set her and her senile dog up in a tent under the bridge, or do we fleece “the rich”.  See, I’ve always believed when politicians talk about “the rich” they mean households with incomes of two freshly college-educated people, say an engineer and a nurse or a school teacher and pharmacist.

As a rational person, I did a little Saturday morning research and some pretty simple math to prove my point.  The chart below containing data from the IRS paints a pretty clear and grim picture for those expecting a free ride from “the rich”.  What it shows is total incomes and numbers of returns (households) by income bracket.  The average income of those in the top 1% is $1.2 million and the next 4% the average drops sharply to $220,000.  My analysis goes like this: suppose we just took everything these people made above $100k, $250k, and so on.  Taking everything in excess of $100k from the top 10% of earners is “only” $2.4 trillion – $800 billion more than the deficit.  I.e., if the government confiscated all household income above $100k, we would have an $800 billion surplus.  But almost no one in this country considers $100k to be wealthy.

So let’s move to $250k, which apparently according to the President is the line between the rich and not rich because he’s said ten thousand times he’s not touching the piggy bank of anyone making less than $250k.  Well guess what; if we take everything in excess of $250k, it doesn’t even balance the budget.  Everything!  Of course if we tried this, no one would make more than $250k.  If we took 90%, there would be very little income over $250k and so on.  Lastly, if we take everything in excess of $1 million, you know, stick it to the rich, it has practically a negligible impact on the deficit.  Hello Pesky!  And remember, this is EVERYTHING above $1 million.

I conclude with facts that raising taxes on “the rich” is akin to fixing the weather-stripping on a large commercial building that is hemorrhaging energy waste.

And so it goes for energy savings.  One has to ask themselves, what can I expect for savings to pay for a renovation I want?  Start by considering you can’t save more than the building or a piece of equipment is using.  Sound pretty ridiculously simple?  Some end users could learn from this.

If you are on a buildings and grounds committee, you should know a few basic rules of thumb.  I will use schools as an example here.  New construction costs around $150 per square foot.  The cost of lighting and HVAC for the building is probably 20-30% of that cost with HVAC costing $20-$35 per square foot.  People should consider their own energy costs per square foot, but it’s most likely going to be in the $1-$2 per square foot per year.

So put some numbers together to get a SWAG (scientific wild ass guess) of what your return on investment may be for an HVAC system replacement.  At Michaels we call such a limit of savings or return on investment a bracket or a bracket calculation.  For example, if you are paying $1.50 per square foot per year and a new HVAC system costs $30 per square foot, your best possible return is a 20 year payback – that is if you save ALL the energy being consumed now.  It is safe to say that actual payback is twice that long.  Ditto for adding a variable speed drive to a pump.  One of our engineers may consider a variable speed drive for a pump and I may pull out my calculator and within thirty seconds conclude it’s never going to fly.  The motor uses $750 electricity at most, and installing a drive is going to be at least $2,000.  After screwing around with more detailed data and analysis, it will be a 12 year payback and that’s going nowhere.

Imagine being hired to analyze options for an HVAC replacement, considering several alternative systems.  Wouldn’t you know it! The payback was infinite because the new system would cost more to operate in energy than the 90 year old steam system that provides no ventilation and no air conditioning.  The board is shocked at the price tag and doesn’t want to pay for the study!  They were “misled”.  Wha?  I would call it an introduction to the real world, circa 2011.

This is like going to the optometrist because the patient can’t see very well, thinking they need a $100 pair of glasses.  The doctor does his series of tests and he diagnoses cataracts.  The exam costs $150 and the cataract surgery costs $7,000.  Otherwise, the eyes are fine.  The patient is enraged and refuses to pay for the exam.  The patient still wants the eyeglasses – prescribed by said optometrist!  This is a perfect allegory to a real story.

You may be able to choose among solutions, but you cannot rewrite history, pick your own reality, or defy the arithmetic.

Tidbits

Checking in after my rant No Brazil Syndrome, how many radiation-related deaths have occurred as a result of Fukushima’s damage sustained in March 11’s massive earthquake?  Zero.  Meanwhile, in the same period, probably more than 3,000 Americans have died in car crashes and deaths from the tsunami in Japan alone exceed 13,000.

Like most other things, you (you) have infinitely more control over your well being than that thing poses.  Stay out of the sun or wear strong sunscreen, don’t smoke, keep your BMI within better than recommended limits, skip the red meat, wear your seatbelt/helmet, exercise, don’t break the speed limit, check your cholesterol and blood pressure, get your colonoscopies…

written by Jeffrey L. Ihnen, P.E., LEED AP

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