However, according to this report in the New York Times, incandescent bulbs with improved energy efficiency are making a comeback. History has it that right before its death, an old technology makes a burst of improvement to stay relevant although only for a short while. So, is this one last hurrah for the incandescent bulb technology before its imminent death or is this new technology going to give us the best of both worlds — high energy efficiency for a better environment and the favorite quality of light for comfort and familiarity with no hazardous disposal problems?

Source: http://www.flickr.com/photos/spacepleb/2060630239/

Lighting and the Energy Independence and Security Act of 2007

It is estimated that there are 4 billion incandescent bulbs lighting up the United States. According to Department Of Energy lighting accounts for about 10% of the residential electricity bill in the U.S. US homes and businesses consume about 300 billion kWh of electricity annually for lighting. It takes about hundred large power plants (with 500 MW rated capacity) to produce that much electricity per year.

There has been increasing concern about the environmental impact of greenhouse gas emissions associated with power production from burning fossil fuels. Congress passed the 2007 Act in an attempt to reduce power consumption associated with light bulbs by requiring them to be more energy-efficient. It is projected that the new efficiency standards may reduce carbon emissions by approximately 750 million metric tons and save more than $40 billion on electricity costs by the year 2030.

President Obama said recently that

The first step we’re taking sets new efficiency standards on fluorescent and incandescent lighting. Now I know light bulbs may not seem sexy, but this simple action holds enormous promise because 7 percent of all the energy consumed in America is used to light our homes and our businesses. Between 2012 and 2042, these new standards will save consumers up to $4 billion a year, conserve enough electricity to power every home in America for 10 months, reduce emissions equal to the amount produced by 166 million cars each year, and eliminate the need for as many as 14 coal-fired power plants.

The Act does not prescribe or proscribe any lighting technology. It merely sets energy efficiency standards for common household bulbs. Tier 1 standards effective from 2012 to 2014 require light bulbs to be 25% to 30% more efficient than the prevailing technology. Tier 2 standards to be defined by DOE later may require light bulbs produced in 2020 to be 60% more efficient than today’s technology. The table below shows the current light output range for 40 W to 100 W bulbs, and the required lower wattage bulbs to produce the same light output range under Tier 1 requirements.

Summary of Performance Standards for Certain Light Bulbs in the Energy Independence and Security Act of 2007

The good news is that incandescent bulb manufacturers are making efforts to produce more efficient incandescent bulbs to meet new efficiency requirements.

Phillips has already come out with the Energy Saver line of incandescent bulbs which are 30% more efficient than older technology. They last three times as long, but are much more expensive at five dollars a piece. Other manufacturers including General Electric, Osram Sylvania, Auer Lighting of Germany, and Toshiba of Japan are also working on bringing out more efficient incandescent bulbs to meet Tier 1 and Tier 2 requirements mandated under the Act.

One of the main efforts at improving the efficiency of incandescent bulbs revolves around applying special reflective coatings to gas-filled capsules that surround the bulb’s filament. The reflective coatings act as heat mirrors bouncing the heat back onto the filament to be converted into light again, thus improving the efficiency. Other researchers are working on modifying the filament directly to improve the energy conversion efficiency. There are no cost estimates available for the finished products right now.

Cost Savings

Let us do a rough cost comparison between a basic 100 W incandescent bulb and the Phillips Energy Saver 100 W bulb. The basic bulb costs $0.60 and lasts for 750 hours. The equivalent 70 W Phillips Energy Saver bulbs costs $5 and lasts for 3,000 hours. As such, it is basically going to take four basic bulbs to last as long as one Energy Saver bulb. Assuming the bulbs get used four hours a day, they get used or lit about 1,460 hours a year.

The basic bulb rated at 100 W would consume 146 kWh or $20.44 annually at $0.14 per kWh. The Energy Saver bulb rated at 70 W would consume 102.2 kWh or $14.31 annually at $0.14 per kWh. Over two years, the approximate life of the Energy Saver bulb, the total cost of the basic incandescent bulb would be $2.40 plus $40.88, or about $43.28. However, the total cost of the Energy Saver bulb would be $5 plus $28.62, or about $33.62. In effect, the Energy Saver bulb would be saving the buyer $9.66. That is roughly $4.83 per year per light point.

This website has a nice calculator where you can compare cost savings of different alternative bulbs based on hours of use per day and energy costs for the general location.

It is important to know that the Energy Saver bulbs, although more efficient than the current incandescent bulbs, do not come anywhere close to energy efficiency exhibited by existing CFL or LED. However, many CFL’s suffer from poor color or quality of light, and do not work with continuous dimmers. They also contain mercury, requiring careful disposal after use or in case of breakage while in use. LED’s are currently prohibitively expensive, have reliable performance problems, and produce directional light.

Conclusion

Will incandescent bulbs survive in the future? That will depend on what the 2020 energy efficiency requirements will be, whether cost effective technology will be found to further improve incandescent bulbs to meet those acquirements, and what the competition will do. In other words, will competing technologies like CFL and LED overcome their current limitations? The Act applies to bulbs from 40 W to 150 W and has exemptions for many specialized uses, making it unlikely that the current incandescent bulb technology will completely disappear.

IMHO it is more likely that there will be improved versions of many of the current technologies finding appropriate use in the broad range of home and public lighting needs.

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The CARS Act provides consumers incentives to replace an old gas guzzler with a new fuel-efficient vehicle.  If you have a less than 25 years old car, and it was rated for less than 18 mpg when new, you can get a government voucher for $3,500 or $4,500 from the dealer towards the purchase of a new more fuel-efficient vehicle.  The $3,500 voucher applies when the mileage improvement is between 4 and 10 mpg.  The $4,500 voucher applies when the mileage improvement is more than 10 mpg.

Source: http://www.flickr.com/photos/mccaffry/3020832485/

The trade-in vehicle must be drivable, and be continuously insured and registered to the same owner for the full year preceding the trade-in to qualify for the payment.  So a working clunker is okay, but a dead clunker salvaged from the junkyard to claim the voucher will not work.  The dealer will be required to certify that the trade-in vehicle has been scrapped effectively taking it out of circulation.  The program is only available from July 1 through November 1.  However, National Highway Traffic Safety Administration (NHTSA) responsible for administering the program recommends waiting until July 23 when it will come out with the final rules and regulations for the program it calls the Car Allowance Rebate System (CARS).  The Act appropriates $1 billion for the program, which translates into approximately 250,000 vouchers or new car sales.

The details of the program are available here on this webpage.  The fuel economy ratings for the trade-in vehicle brands is available on this website.  There is a nice table showing the eligibility requirements for different vehicles here on this website.  Please note however that this table does not explicitly show the maximum allowable fuel efficiency for the trade-in vehicle to qualify.  For example, purchasing a new passenger car with 31 mpg with a trade-in passenger car with 20 mpg would not qualify for the program even though the mileage improvement is more than 10 mpg because the maximum allowable mpg for the trade-in vehicle is 18 mpg.

Source: http://www.cashforclunkers.org/edmunds-dealix-webinar-recap.html

Is the Program a Blockbuster in Waiting?

The program has its obvious flaws.  Those who keep and drive clunkers generally do not do it out of choice.  A new car costs anywhere from $15,000 to $20,000 at the least.  It also has higher insurance and registration costs.  Many clunker owners would not have the cash to pay for all the costs of a new car or the financial wherewithal to qualify for a new car loan, especially in this economy.  Those who could afford to pay for a new car with cash or financing, generally would not be the clunker owner/driver.  It is, therefore, unlikely that we are looking at a blockbuster program ahead of us.

Is it Worth It?

Just assume, hypothetically, that you are in good financial standing and you have a gas guzzler that you have been wanting to get rid of for a long time.  And, lo and behold, the government has just come out with the cash for clunkers program with its potential benefits to the consumer, the environment, and the auto manufacturer.  Who is it good for?

Assuming that you drive 15,000 miles per year and you go from a 18 mpg clunker to a 28 mpg shiny new fuel-efficient car, you will go from burning about 833 gallons of fuel per year to about 536 gallons of fuel per year.  That is a saving of about 297 gallons of fuel per year.  Assuming the average price of gas to be $3 per gallon, the cost savings are about $891 per year.  These savings continue for the life of the new vehicle.  However, for a realistic comparison, you should only count the savings for the period your clunker would have continued to operate without dying.

You also have to weigh in the registration, insurance, and repair and maintenance costs.  The registration and insurance costs for the new vehicle would definitely be much higher than those for the clunker.  The repair and maintenance costs for the new vehicle could be low in the initial years compared with those for the clunker car.  The financing costs could also be significantly higher for the new car assuming you finance your purchase, and the clunker was paid for.  The sales tax on the purchase of the new car would also be substantially higher.  However, fortunately the sales tax on the car is going to be tax-deductible this year.

In effect, you have to compare the total costs of ownership including registration, insurance, operating, and repair and maintenance costs for the clunker and the new car including the voucher benefit, for the period you were going to keep the clunker.  It is unlikely that purely financially you will come out ahead with the new car option.  However, if your clunker is only worth a couple of thousand dollars in trade-in value, and is ready to die any day now, it may be advantageous to use the cash for clunkers program to offset your total costs by the voucher amount minus the original trade-in value.

Because the trade-in car is going to be scrapped, you cannot get any additional trade-in value for it other than the voucher.  If the car’s trade-in value is more than $4,500, it doesn’t make sense to use the CARS program to get just $4,500.  This website here lists all the cars with a trade-in value of less than $4,500 that could qualify for the CARS program.  If your car is one of those in the list, you could use it as a trade-in for the CARS program.  Of course, you should ascertain the real trade-in value of your car at your local dealer. If the trade-in value of the car is just about $4,500, it makes sense to use the program and take the clunker out of circulation for the sake of the environment.  However, the lower the value of your trade-in is, the more there is financial benefit in addition to the environmental benefit in using the program.

There is a benefit to the environment in reduced greenhouse gas emissions from tailpipes when a fuel-efficient car replaces a gas guzzling clunker.  However, to really make it good for the environment, the CARS program should not have required the replacement vehicle to be a brand-new vehicle.  Clunker owners would be more likely to use the program if the costs were not so onerous.

As far as the auto manufacturers go, any boost to new car sales from the cash for clunkers program would be highly welcomed by them given the ongoing decline in sales experienced by auto manufacturers across the board.  It is unlikely in my opinion that the program will provide a significant and substantial relief to the auto manufacturers.

Total Cost of Automobile Ownership

If you are in the market for a new car to take advantage of the cash for clunkers program or otherwise, it is a good idea to compare the total cost of ownership between the different car options to chose the best option over all.  A car that costs cheapest out the dealer door, may not be the cheapest car when you add up all the costs to own and operate the car.

Edmunds.com has a good explanation of cost of ownership here at this webpage.  You can specify the details of your car including make, model, and year etc. on this webpage to get an estimate of the cost of ownership.  You can even compare similar models for total cost of ownership.  For example, even though the 2009 Nissan Ultima costs more at $22,755 than the 2009 Toyota Camry at $21,915, the total cost of ownership for the Ultima is $0.54 a mile compared to $0.58 a mile for the Camry.  Over the five-year, 75,000 mile period, the Ultima is estimated to be cheaper than Camry by almost $2,500.

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One of the measures state of California has adopted is to raise the sales tax by 1% starting April 1, 2009.  The total statewide base sales tax is now 8.25% up from 7.25%.  A breakdown of the base tax is shown here on this web page.  Special taxing districts formed by cities, counties, towns and communities levy additional local sales tax of up to 1%, adding to the base statewide sales tax.

In fact, the highest sales tax rate in California is 10.250% in Pico Rivera and South Gate in Los Angeles County from multiple taxing districts levying taxes in the same location.  In case you wonder why the tax rate is represented to three decimal places in California, it is because in some places the third decimal place is not zero.  Sanger in Fresno County, for example, has a sales tax rate of 9.725%.  Here is a California Board of Equalization web page providing current sales tax rates for all cities and counties in California.

How do these sales tax rates compare with the rest of the nation?  For an individual location, 10.25% seems to be the highest sales tax rate in the nation, which is also matched by Chicago.

This web page here provides basic statewide sales tax rate and the total average combined state and local sales tax rate data for all 50 states.  The total average combined sales tax in California is one of the highest in the nation.  Louisiana, Tennessee, and Washington are other states topping the list with highest average combined sales tax rates.  Delaware, Montana, New Hampshire, and Oregon have no state or local sales tax.  The total average combined sales tax rates are as low as 5% in Maine, Massachusetts, and Virginia in the 48 contiguous states.

Sales Tax Holidays

I also came across this excellent blog post by Bargaineering about state sales tax holidays which have been in place in many states starting this decade.  Thirteen states besides District of Columbia have declared sales tax holidays for 2009.  Of course, California has never been one of them.  The table below shows the sales tax holiday days and the restrictions applicable to the purchase.

2009 State Sales Tax Holidays

Source: Federation of Tax Administrators

(updated May 4, 2009)

* dates are for calendar year 2009, as of March 19, 2009. Some state have not published 2009 information on their website; old information may be provided in the links for these states.
** Holiday will only be allowed in years where the South Carolina Board of Economic Advisors certifies sufficient revenue growth.

Are the Sales Tax Holidays Worth It?

Sales tax holidays certainly appear to be a good time to wait to shop where possible.  In effect, shopping then is like shopping during sale, except every item of the kind, say clothing, would be on sale.

Talking of sales, there are sales galore all through the year.  I wonder if stores also have a sale during these holidays, so it becomes a real not-to-be-missed opportunity.  The sales tax holidays may not be such a good deal if you could only save on up to 10% of sales tax, but pay regular prices.  Clothing sales routinely include discounts from 25% to 50%.

Of course, when talking about discounts, some percent off a jacked up full price may be no bargain at all.  The only way to shop smart is to have a general idea about good price for an item before hand, and then compare the final discounted prices at different merchants to decide if the price is really a good deal.

Buying an item from an e-tailer on Internet could also be a good idea.  Depending upon your and the merchant’s location, buying items on Internet may not cost you any sales tax at all.

Related posts:

1. Home Buyer Tax Credits 2009 Act 2 I am back to the blog after spending months being extremely busy looking to buy a house.  We finally bought...

So, I looked at a number of different options.  Broadly, there are two options for cell phone service.  There is the monthly option where you purchase a subsidized phone and sign up for a calling plan with a set number of allowable minutes every month.  You may have to sign a year long or a two years long contract.  The cheapest monthly plans start at about $15 a month.  The unused minutes in a month can sometimes be rolled into the next month depending on the specific plan.

source: http://www.flickr.com/photos/shadowmancer76/

The other option is to go with a prepaid cell phone service.  In this case, the phones themselves are not subsidized by the carriers as much as in the monthly plans.  But you are not locked into a monthly plan.  You can purchase as little or as much you expect to need.  The catch here is that the purchased minutes are generally valid only for a fixed period.  But the call rates can be as cheap as 10 cents per minute.

In our case, the phone was needed basically for infrequent emergency use.  I didn’t want to get locked into a plan where we end up paying too much for very little use.  It made more sense for our needs to look at a prepaid cell phone service rather than a recurring monthly cell phone plan.  I looked at a number of prepaid cell phone service options to select one.

TracFone

TracFone is one of the large prepaid cell phone service providers.  It uses the AT&T network.  Consequently, it has a vast national coverage area.

TracFone has many cell phone choices available ranging from $10-$60 for a basic phone to stylish flip phones with Bluetooth and VGA cameras.  The cell phone manufacturers include Motorola, LG, and Kyocera.  You can also buy some of these track phones at your neighborhood brick-and-mortar department stores like Sears.  The phones usually come with 20 minutes of initial prepaid airtime.

After activating the phone, you have to purchase additional minutes and add them to your account.  The TracFone web page here shows the airtime cards you can purchase.  The minutes are valid for 90 days to a year.  You can also buy a Double Minutes for Life Card with which you can get double minutes on all future cards except the one card that comes already with double minutes.

However, the best deal is to get a phone which includes double minutes for life.  Because I did that with the $30 Motorola W376g phone, I could get a total of 1,050 minutes from the $100 card with 400 minutes and 250 bonus minutes.  That comes to about 9.5 cents a minute for calls during any time of the day.  Also, because the minutes are valid for a year, we could spend less or more in a month as needed.  $100 a year is about $8.33 a month for about 87 any time minutes which is a better deal than any monthly plan.  Best of all, if we purchase additional minutes before expiry of the card, any unused minutes can be rolled over to the expiry of the new card, which is fantastic.

If you want to see detailed reviews of TracFone and various other prepaid cell phone service providers, check out Prepaid Reviews.

Cell Phones for Children

During the course of my research, I found some companies marketing cell phones geared specifically to children.  Firefly Mobile bills itself as the mobile phone for mobile kids.

The Firefly phones come with three different plans, all without a contract and activation fees.  But that is about all there is good about it.  As far as the call rates are concerned, they are not a good value.  The prepaid minutes cost 15 cents per minute on top of a daily access fee of 35 cents per day.  The monthly plan minutes cost 10 cents per minute but with the same daily access fee of 35 cents per day.  The access fee alone costs about $10.50 per month.

The third plan called the Buzzme plan has no daily access fees but the monthly costs are $10 a month for 25 minutes or 40 cents a minute, and $20 a month for 150 minutes or about 13 cents a minute.  These minutes expire every month, that is to say, use it or lose it.  The other two plans’ unused purchased minutes keep rolling over as long as the access fees are paid.

Their phones called the flyPhone and glowPhone are for really little kids, and of course, our teenager would not be caught “with that thing” in a million years.  It is clear that if our teenager could get past the looks of these phones, they still would not make good money choice.

TracFone versus iPhone

I came across this YouTube clip comparing TracFone with iPhone.  It is a funny spoof on what you have to shell out for an iPhone compared to a TracFone.  The clip doesn’t even compare the per minute call charges, which I am sure are probably a better deal on the TracFone.

Click here to view the embedded video.

I have nothing against the iPhone.  It is a cool gadget and could be a great functional choice under some other circumstances.  But for now, for his emergency use in high school, the TracFone seemed like a better choice especially if good old Dad is footing the bill.

What is your experience with search for an inexpensive cell phone service?  What have you found to be a good value?

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It is practically impossible to physically hoard oil at today’s prices for use tomorrow. However, there are a couple of ways to hedge against a rise in price of gas.

Oil-tracking Funds

One way is to buy a domestic oil-tracking fund like USO. USO or United States Oil Fund, LP, an Exchange Traded Fund, seeks to reflect the performance, less expenses, of the spot price of West Texas Intermediate (WTI) light, sweet crude oil delivered to Cushing, Oklahoma. So in theory, you buy USO today for a dollar amount equal to the cost of gallons of gas you would use for the entire year at today’s cheap prices. Later when the gas prices are high, you sell USO. The profit from the sale should offset the higher prices you have paid for at the pump.

But wait, there is a problem with the details. It is very difficult to know when exactly to sell the USO stock. If you settle upon a date, say one year later, the price on that day may not be the same as the average of higher prices you have been paying during the year. Worse, both the gas and USO prices could stay higher all through the year but drop down to your initial price or an even lower price at the time of the sale date. If you decide not to go with a fixed date, it is almost impossible to decide precisely when to sell. The peak price only gets identified after the prices have fallen back down.

Even if, fortuitously, the timing was perfect and the price at sale time was the same as the average between the purchase and sale, you still have to pay taxes on capital gains from the sale besides the commissions on the purchase and sale of USO. You have to invest money up front and incur the opportunity cost of giving up interest or other returns from that money.

Another strategy is to use prepaid gas cards or a fuel cost protection program like Petrofix.

Prepaid Gas Card Services

I found two potential prepaid gas card services – MyGallons.com and GasBankUSA. As the name suggests, the idea is you prepay today at today’s price for gas you would use in future. Sounds good, but they are not operational yet. Both the services say they are working on going live in the near future.

Petrofix

Petrofix is a fuel cost protection program. It is operational right now. You can purchase a plan from them for your geographic area. A plan extends for a certain duration ranging from three months to two years and allows you to lock in the current price for a fixed number of gallons per month for the duration of the plan. The prices are based on weekly statistics for the geographic area published by the Department of Energy’s Information Administration (EIA). You can purchase gas at any pump. You can actually use a web site like gasbuddy.com to search for the cheapest gas station in your neighborhood to fill your tank. If the published gas price rises above your locked in price, Petrofix pays you the difference between gas price and the locked in price.

Their current price for the 12 Month Plan for West Coast is $0.31 per gallon. The current price of gas is $2.02 for the West Coast. If the gas prices go above $2.02, Petrofix pays you the difference. Of course, if the gas price falls below $2.02, you do not get any payback from Petrofix although you are able to fill your tank at the cheaper price.

Including the price of the Plan, you are actually effectively locking the price at $2.33. You will not pay a price higher than that for gas for the duration of the Plan, no matter how high the price of gas goes. On the flipside, you will pay less than $2.33 if the price of gas falls below $2.02 but it will always be $0.31 more than the price at the pump.

Consider the hypothetical scenarios in the table below. You never pay an effective price more than $2.33. You can pay less though when the gas prices are below $2.02. The table reflects net savings or loss per gallon and per month for different gas prices at the pump assuming signing up for hundred gallons of gas per month. In the real world, the actual annual savings/loss will depend upon actual gas price movement during the duration of the Plan.

One good thing about Petrofix hedging is that you only pay the plan cost up front, not the entire cost of gas you will consume for the next year like you do with gas cards or if you buy an oil-tracking fund. That way, you don’t have to pay upfront what you would have paid incrementally over the year for gas.

In the Plan above, you are essentially paying extra $0.31 or about 15% over the current price of $2.02 to hedge against price rise for the next year. Looking at the historic gas prices in the chart above, gas prices seem to go up at least 50% from a trough to a peak in a year. Given that, the Petrofix Plan above appears to be a good bargain assuming of course that the prices are near a trough. What do you think?

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