Friday, October 5, 2012

Why today's Job Number is Bullshit

Jack Welch was spot on regarding his skepticism of today's jobs report.
What the report didn't tell you was that 342,000 Americans dropped out of the workforce.
This article from UPI sums it up pretty well:
The Labor Department report said 12.1 million people were unemployed, a drop of 456,000 from the previous month.

That figure is critical because 342,000 more people dropped out of the workforce than gained employment in September. The September rate fell to 7.8 percent in part because it reflected an increase in the number of jobs initially reported in July and August. 
Although the number is officially described as representing people who elected to care for a relative at home or return to school, many did so because they were simply too discouraged to continue looking for work.
So what is the 'real" unemployment number for our country? It's a guesstimate at best as there's no way to measure all those who have run out of unemployment benefits and stopped looking for work all together. The Romney camp estimates the true number to be closer to 11%. They arrive at that figure by by applying the labor force participation rate from when Obama took office to today's population:
"The labor force participation rate in January 2009 was 65.7 percent," Williams said. Since then, the rate has fallen to 63.3 percent. "Had the rate remained the same, the labor force would be about 160,158,000. At that labor force level, the unemployment rate would be 10.7 percent."
As noted in this article, though, it's also impossible to guage the number of retirees during the recession. This was documented in this report by the Chicago branch of the Federal reserve.

What is clear is that this 7.8% number will be put out to the electorate as a sign of recovery. I'll expect to hear it in the upcoming debates. The headlines and pundits have filled the web with it today
To that I'll simply ask "then why didn't the markets explode today?"

I've been neutral about the Presidential race up until now, as neither candidate represents what I'm looking for in a leader. I've also resisted most of the tin foil hat conspiracy theories and muck slinging.

But when something this blatant is put forth as this- it compels me to choose the lesser of two evils.

Thursday, October 4, 2012

The Dallas Earthquakes - Good for HEK?

According to Cliff Frohlich, associate director and senior research scientist at the University of Texas at Austin's Institute for Geophysics, the earthquakes that occured this past weekend near Dallas appear to be connected to the past disposal of wastewater from local hydraulic fracturing operations.

During hydraulic fracturing, or "fracking," millions of gallons of high-pressure, chemical-laden water are pumped into an underground geologic formation (the Barnett Shale, in the case of northern Texas) to free up oil. But once fractures have been opened up in the rock and the water pressure is allowed to abate, internal pressure from the rock causes fracking fluids to rise back to the surface, becoming what the natural gas industry calls "flowback," according to the Environmental Protection Agency.

"That's dirty water you have to get rid of," said Frohlich. "One way people do that is to pump it back into the ground."

In a study he recently published in the journal Proceedings of the National Academy of Sciences, Frohlich analyzed 67 earthquakes recorded between November 2009 and September 2011 in a 43.5-mile (70 kilometers) grid covering northern Texas' Barnett Shale formation. He found that all 24 of the earthquakes with the most reliably located epicenters originated within 2 miles (3.2 km) of one or more injection wells for wastewater disposal.

The injection well just south of DFW airport has been out of use since September 2011, according to Frohlich, but he says that doesn't rule it out as a cause of the weekend's quakes. He explained that, though water is no longer being added, lingering pressure differences from wastewater injection could still be contributing to the lubrication of long-stuck faults.
"Faults are everywhere. A lot of them are stuck, but if you pump water in there, it reduces friction and the fault slips a little," Frohlich told Life's Little Mysteries. "I can't prove that that's what happened, but it's a plausible explanation."

Heckmann Corporation (HEK) operates as a services-based company focused on total water and wastewater solutions for shale or unconventional oil and gas exploration and production. The company offers water delivery and disposal, trucking, fluids handling, treatment, temporary and permanent pipeline facilities, and water infrastructure services for oil and gas exploration and production companies. It operates multi-modal water disposal, treatment, trucking, and pipeline transportation operations in select shale areas in the United States, including the Eagle Ford, Haynesville, Marcellus, Utica, Barnett, and Tuscaloosa Marine Shale areas

If a definitve link between the Dallas earthquakes and fracking is established I see two possible outcomes. The first is a moratorium on fracking. This doesn't seem likely given the strong push for energy independence and overall fragile state of the economy. The second scenario is regulation that the water used in the fracking process must be thoroughy cleaned and used at / or transported to ground level.

That's what Heckman does.