Massive Job Losses in the Energy Business - what does it mean?

Having drilled oil wells in the North Dakota in the 1980s and then becoming an energy analyst for several mutual funds and lecturing about the industry, I am sensitive to the current condition of the energy market.  So, let's start with the energy jobs loss recently published in the StarTribune of 120,00 people (exclusive of the 3 largest coal companies all in bankruptcy proceedings).  While there maybe people applauding the shrinking energy industry, the job losses are not minimum wage positions.  These jobs paid well because the work is hard, dangerous and long hours in remote places far away from families.  These jobs pay anywhere from $80,000 to $200,00 for offshore petroleum engineers and geophysicists.  Because the job market is dominated by the lower end - oil truckers, water haulers, rig hands, oil field services employees, let's use $100,000 as an average salary.  Multiplying the 120,000 job losses by the $100,000 in lost wages is roughly $12 billion in lost wages.  Every MBA or CFA student studies what a multiplier effect is.  Basically the multiplier effect is the injection of these wages which leads to more spending and creates more income, more spending, more income - a circular flow.  The multiple effect refers to the increase in final income arising from any new injection of spending.  Suffice to say, the multiplier has a savings component.  Assuming that a consumer saves 20% of each new dollar (definitely on the high side), the multiplier is 5 times.  That means that for every $1 increase in income, $5 new dollars of income are created.  This can go into reverse, if savings are increased by the individuals, increase in taxes, or job losses.  So the $12 billion in lost wages becomes $60 billion ($12 billion x multiplier of 5).  If the multiplier is 10 (a savings rate of 10%, still too high for US savings rate), then the negative impact is $120 billion.  That means that state governments lose $12 billion in tax revenues, assuming a 10% state income tax rate.  The Fed losses $30 billion in tax revenue, assuming a 25% federal income tax rate.  And we have not talked about the coal sector, which is in a death spiral.  The three largest coal companies in the US are in bankruptcy.  Add another several 10s of thousands of employees and their multiplier effect.  These are seriously large losses of incomes and tax revenues, not being made up from the gains in renewable energy job creation.

How does this bode for the future?  I am a Colorado School of Mines (CSM) graduate, a petroleum development geologist, and energy economist and analyst,  I keep an eye on the anecdotal stories of CSM graduates, friends in the industry, trends from my discussions with energy company executives, college students soliciting advice from me and economic statistics, I represent the last large supply of hydrocarbon energy specialists.  The over 50 year-old demographic represents about 60% of the total energy specialists (geologists, geophysicists, engineers, land people) in the industry.  The current trend of graduating seniors is moving away from the hydrocarbon sector.  What this means is that this cycle will result in a massive loss of a knowledge base that is not being replaced.  

What does this mean?  It means that the US had better move with lightning speed to replace this expertise with solar and wind expertise, or cold fusion or something else, faster than it is currently being added.  Because with coal consumption down from 50% to 39% (EIA) of fuel consumed to generate electricity, nuclear at 20% (also under continued pressure), hydropower at 10% (also under pressure to be dismantled), natural gas increasing from 20% to 30% (basically replacing coal's decrease, but also under pressure), we will need solar and wind to be deployed faster (I like tidal for the East, West and Gulf Coasts, solar for the Southwest and Front Range, wind and solar the Central and Midwest).  We are pushing for consumption of renewable energy at a faster rate than supplying of renewable energy.  This is a problem.

Another problem is that both solar and wind are intermittent and interruptible energy sources.  A big push is being made to develop batteries to store these energies in the off-peak to be deployed at peak power demand, but there is no talk about the source of the battery materials - lithium.  The building of Elon Musk's lithium-ion gigafactory to supply those Teslas and what he hopes to be micro grids of homes that are interconnected to one another, presupposes the securing of lithium.  Ironically, lithium must be either mined (always under environmental pressure) or evaporated from brine rich solutions (which takes time).  Where does this endlessly demanded supply come from?  So, we had better get after these renewable energy sources and new ones, because there will be a time in the very near future, that when you go to turn on the light, you will be in the dark.  

Skydrop Smart Water Controller - 5 Stars

This is a wonderful app that I would give a 5 star rating.  The controller was simple to install.  The website software was easy to follow and program my lawn information.  And the app shows more information than my website application, giving me override ability from home or away.  This is a fantastic app.  

After creating an account, your first screen in the Skydrop app is below.  This is a screenshot from my iPhone.  I have programmed this to follow City of Plymouth watering rules of even days (determined by the odd or even number of the last digit of your address).  This screen shows the next watering day, current temperature in Plymouth, MN, the project forecast with all 12 zones depicted by small circles under the forecast.  What is unique about this, is that the smart controller does not water every zone on every even day.  With the data that you have initially entered, it determines from empirical data, how much water and where it needs to be applied.  If you have shade covered grass, less water is required because of its lower evaporative rate than non-shaded areas.  The forecast for my zip code area indicates rain on Monday, May 23, then again on May 25, 27 and 28.  Therefore, the smart controller tentatively will not water on those days.  As weather is dynamic, the controller will update the weather constantly to refine the watering schedule.

Scrolling down the first page, all of the zones on your lawn are shown - below.  The number of minutes for watering per zone, the name of the zone (your input), when that zone was last watered and what type of zone it is - grass, shrubs, trees, flower beds, etc.  The circle with the arrow pointing to the right is an override.  You can activate any controller by pressing that arrow and beginning a watering cycle for that zone.  By touching the far right arrow, you open up the zone setting which includes the name, zone enabled, plant type, sprinkler type, shade type, slope type and soil type.

​SLXL 

The zone setting is shown in the next two screenshots.  The dynamic minutes are enabled.  What this means is, that if five minutes before the schedule watering for that zone, the controller accesses the web and the local forecast has been updated for rain, the controller will halt the watering schedule. Say that the 50% error rate of a weather forecast comes to fruition, and the updated rain forecast didn't occur, then the dynamic nature of the controller will look back and see that the zone watering was canceled and begin the watering.

The dynamic nature of the controller allows it to apply less water or more water as weather conditions change.  The below screen depicts the watering schedule that occurred last night.  Notice not all 12 zones received water, only zones 6,7,8 and 9 received water.  It cycle back and forth between the zones.  The controller that came with our irrigation system does not do this.  

​​SLXL

All of this is customizable.  If you dig up one zone to plant flowers, you can change the soil, shade, and slope profile directly on the iPhone or smart phone.  You can also experiment with the watering time length by tapping on the More Water or Less Water buttons shown in the third photo.  This could come in hand for areas with clay soil and little to no shading.  

All in all this controller and software is well laid out, easy to use and is saving me on water already. This system should pay itself back within 2 years here in Minnesota, faster if you live in water constrained California.  We will be installing telemetric water meters this year in the City of Plymouth. So, I suspect that people will all of a sudden take more interest in watering as a more accurate picture of water usage is determined and charged for by the City.

Skydrop Smart Water Controller Installation

I mentioned in my previous blog that I had purchased a Skydrop irrigation controller.  I am very handy and have done many household repairs and construction, but I am always sensitive to working around water and electricity.  Installing an irrigation controller means working with both.  I first reviewed Skydrop’s installation video, which was very informative and short.  I then reviewed another video, which was a bit longer and equally informative. 

I prepared by doing two things.  First, I took my laptop into the garage, where my irrigation controller was located.  I accessed the installation video so that I had it there to work from and to test the strength of WiFi signal.  I had full bars – this was good as it meant that I did not need to install a WiFi range extender.  Second, I found a pad of paper and a pen to write everything down.  If you are like me, then you will want to prepare a map (which the irrigation installer should have prepared for me along with all of the necessary information) and a spreadsheet outlining the number of sprinkler heads, the type of sprinkler heads, gallons of minute throughput and location.

With all of this ready, I started up the video again and began the step by step installation.  I first opened my existing controller and took pictures of the wires and connections with my iPhone.  I would use these photos if needed as a backup.  I disconnected the controller from the electrical outlet.  I then disconnected one wire at a time, labeling each with the number of the corresponding water zone.  I have 12 zones.  The Skydrop controller only has room for 8 zones (controller is approximately $250, which may sound expensive, but if you need to replace your existing one with an updated model, you will pay the same or more depending upon the features).  However, Skydrop offers an expansion panel for an additional 8 water zones for a total of 16 zones.  This extension costs about $50.  So, your all in cost is $300 plus your time and labor.  Check your local communities and utilities to see if they have any rebates.

The controller mounts to the wall with 4 screws (included).  It also includes a level to level the mounting panel.  Once leveled and secured to the wall, plug the power cord into the panel and then into the electrical outlet.  Connect the common wire (usually white) to the C on the panel.  Then, take your numbered wires and consecutively connect them one by one.  This control panel includes a Hot position marked H, which is used to test each zone.  This was perfect because I walked to each zone to see if the connection turned on the zone and if it did, I diagramed the number of sprinklers on my map and put the information on my spreadsheet.  After testing the zone, I inserted the wire into its corresponding numbered connection.  I did this for all 12 zones.  From watching the videos to finally connecting the LCD screen of the controller to the mounting panel and expansion panel, it took about 90 minutes.  I have lived in the house for 16 years and this was the first map and spreadsheet that I had of the irrigation system. 

The moment that I clicked the LCD screen to the mounting and expansion panels, the Skydrop logo light turned on and the jog dial turned on – yellow.  The jog dial turns a different color for a different action.  There are 5 different colors: 

Yellow – controller will need to be connected or reconnected to the WiFi for Smart Watering and remote access, or controller can be setup (as-is, no WiFi) using Custom Scheduling or Interval Watering.

Red – error with the valves or wiring.  Usually, the faulty zone is indicated within the user interface of the controller, web app or mobile app.  Once the zone is determined, a thorough investigation of the valve and wiring will help resolve the problem.

Green – controller is ready to receive and execute instructions.

Blue – controller is watering and edits cannot be made without ending the current water cycle.

White (no glow) – on controller, you can disable the green glow while idling, which turns off the jog dial.  On the web or mobile app, this indicates that watering is currently disabled.

The yellow glow was present as it was searching for a WiFi signal.  Once it lists the signals, you rotate the jog dial until your WiFi is highlighted and press the jog dial to accept.  The controller then guides you through several instructions to setup the controller to your protected WiFi.  It asks you to download the iPhone or Android app and type into the app – a code.  Once the controller recognizes the receipt of the code, it moves to the next set of instructions.  After inputting the zip code, I declined to set up a watering schedule and hit finished.  I could have stood there and entered all of the relevant information for each zone, but using the jog dial would have taken too long.  I took the laptop back inside, accessed the web and logged in.  Setting up the schedule was very straight forward.  It asks for the type of soil, sunlight exposure, type of watering sprinkler, number of water sprinklers per zone, etc.  I was able to give a name to each zone, which will be easier to trouble shoot any problem should one develop later.  There is also a provision for water restrictions that may be set at the community, city or state level. Once everything was saved on the web, I tapped the iPhone app and voila, all of the information that I had typed into the website populated to the app.  I tested both the app and the website app to remotely turn on one of the zones and everything worked. 

The total amount of time to connect to the internet and program the apps took about 30 minutes.  Add this to the above 90 minutes of actual installation of the controller and testing of the zones, you need 2 hours for 12 stations.  All of this was easier and quicker than I expected.  The software was far more robust and much easier to navigate than I expected.  So far, I would give this a 5-star rating.   The next blog will cover the actual operations.