Katrina Brought Fairness Back into Focus—Talking Points

Low-Wage Work: The Big Picture

· Although the United States still leads the world in overall prosperity and productivity, the American way of organizing work and rewarding workers no longer provides many hardworking families a piece of the American dream.

· Today, one out of four workers in the United States holds a job that pays less than $8.70 an hour (around $18,100 working full-time), which is the official poverty line for a family of four. (See Beth Shulman, The Betrayal of Work: How Low-Wage Jobs Fail 30 Million Americans, The New Press, New York, 2003)

· The core feature of the past quarter century has been the long-term shift from a manufacturing to a service economy. Wal-Mart is now the largest creator of jobs. Less than 40 years ago, one out of every three nonfarm jobs was in the manufacturing sector. As recently as the 1970s, it provided jobs to almost one-third of men between the ages of 25 and 54 who did not attend college. Entering the 21st century, however, manufacturing comprises only 16 percent of the total economy, or one out of every six jobs, making it smaller than the retail trade industry.

http://www.lowwagework.org/longnarrative.htm

· Low-wage jobs are not just quantitatively different than better paying jobs, but qualitatively different:

o Health and Sick Benefits: Most of these workers lack basic benefits such as health care, sick pay, disability pay, paid vacation. In 1995, less than half the workers making under $20,000 a year ($10.00 an hour working full-time) were offered health insurance by their employer in contrast to over 80 percent of workers making over $40,000 a year. And for those that are provided health insurance, many cannot afford the premiums, so many do without.

o Flexibility to Care for Children: Their jobs leave little flexibility to care for a sick child or deal with an emergency at school-let alone the normal appointments and needs everyday life. Only one in three low-wage workers receive paid sick leave for a child's illness. They have the most rigid schedules and little or no family or sick leave.

o Safety: While higher-wage jobs have become safer over the past 20 years, low-wage jobs became increasingly more dangerous. Nearly one in five poultry processing workers, for example, suffered a serious injury in 1995.

o Child Care: Quality child care is unaffordable for most and many nighttime shifts, forced overtime, and employer changes in schedules make it even harder to find and more expensive to obtain.

o Fear Factor: Low- wage workplaces are often emotionally degrading. Constant surveillance, time clocks, drug testing and rigid rules reinforce the pervasive sense that employers view them as untrustworthy. Fear is the chief motivator in these workplaces. Being five minutes late can mean the difference between having a job and not. A few minutes too long in the bathroom can mean a dock in pay or discipline.

o Lack of Training: Low-wage jobs provide the least amount of training for their workers.

o Security: Not surprisingly, workers in low-wage jobs suffer more frequent periods of unemployment, yet they are the least apt to qualify for unemployment insurance. For workers who earn between $10-15,000 a year, less than half were offered a retirement plan in contrast to 84% of those who make over $50,000 a year.

For more info, see The Betrayal of Work: How Low-Wage Jobs Fail 30 Million Americans

By Beth Shulman

· Earnings, wages and salaries now make up only 80 percent of census-reported income, compared to 90 percent in 1949. More than 10 percent of income comes from government payments alone: Social Security, Medicare and Medicaid, unemployment insurance and poverty-relief programs like welfare and food stamps.

· After a two-decade hiatus, productivity growth in the late 1990s returned to the rapid rates seen after World War II. The corresponding growth in incomes was less equally shared, however, in part because "skill bias" drove up earnings for the college-educated at the expense of dropouts and unskilled laborers.

· The service sector now accounts for more than 77 percent of all employment hours. Because of deregulation, globalization and technology change, power has shifted from workers to employers, generating growing competition for good jobs -- those that involve well-paid, clean, steady work in pleasant surroundings.

For more info, see The New Dollars and Dreams: American Incomes and Economic Change By Frank Levy

Minimum Wage in the US

· 6 states in the US have no State Minimum Wage Law. These states include: Arizona, Louisiana, Mississippi, Alabama, Tennessee, and South Carolina

· Ohio and Kansas have Minimum Wage rates below the Federal rate. In Ohio the State Law is $4.25 an hour unless the employer falls under one of the following two exemptions: employers with gross annual sales from $150,000 to $500,000 can pay $3.35 an hour and employers with gross annual sales under $150,000 can pay $2.80. In Kansas, The State law of $2.65 excludes from coverage any employment that is subject to the Federal Fair Labor Standards Act.

· 16 States including DC have minimum wage laws which exceed the federal law.

http://www.dol.gov/esa/minwage/america.htm

· In 2005, Washington has the highest state minimum wage. The next highest are Oregon ($7.25), Alaska ($7.15) and Connecticut ($7.10). In 2006, Washington is again expected to have the nation's highest minimum wage ($7.63), followed by Oregon at $7.50.

http://www.lni.wa.gov/WorkplaceRights/Wages/Minimum/default.asp

· Some 2 million people in the United States were paid the minimum wage of $5.15 or less in 2004. Working full time, such minimum wage earners make $10,700 a year, just above the threshold of $9,645 set by the federal government as its definition of poverty for individuals and barely half the $19,307 needed to keep a family of four above the poverty line.

· Public support for a pay raise appears strong. A survey of 2,000 Americans in December 2004 and March 2005 by the PEW Research Center found 82 percent supported an increase in the minimum wage to $6.45 an hour, while 12 percent were opposed.

For more info, see Activists hope Katrina hastens US minimum wage rise

By Andrea Hopkins washingtonpost.com

· The federal minimum wage for covered nonexempt employees is $5.15 an hour. The federal minimum wage provisions are contained in the Fair Labor Standards Act (FLSA). Many states also have minimum wage laws. Where an employee is subject to both the state and federal minimum wage laws, the employee is entitled to higher of the two minimum wages.

· Various minimum wage exceptions apply under specific circumstances to workers with disabilities, full-time students, youth under age 20 in their first 90 consecutive calendar days of employment, tipped employees and student-learners.

Characteristics of Minimum Wage Workers: 2002 (US Department of Labor)

· According to Current Population Survey estimates for 2002, some 72.7 million American workers were paid at hourly rates, representing 59.6 percent of all wage and salary workers. Of those paid by the hour, about 570,000 were reported earning exactly $5.15, the prevailing Federal minimum wage, and another 1.6 million were reported with wages below the minimum.

· Together, these 2.2 million workers with wages at or below the minimum made up 3.0 percent of all hourly-paid workers.

· Minimum wage workers tend to be young. About half of workers earning $5.15 or less were under age 25, and slightly more than one-fourth were age 16-19. Among teenagers, 10 percent earned $5.15 or less. About 2 percent of workers age 25 and over earned the minimum wage or less. However, among those age 65 and over, the proportion was about 5 percent. (See tables 1 and 7.)

· About 4 percent of women paid hourly rates reported wages at or below the prevailing Federal minimum, compared with about 2 percent of men.

· The proportion of hourly-paid workers receiving $5.15 or less was about 3 percent for whites, blacks, and Hispanics. For whites and Hispanics, women were more likely than men to be low-wage earners. (See table 1.)

· Roughly two-thirds of all low-wage workers in 2002 were in service-type occupations, mostly in food service jobs. (See table 4.)

· Among the four broad geographic regions, the West had the lowest proportion of hourly workers with earnings at or below $5.15 (about 2 percent), while the South had the highest (about 4 percent).

Source: U.S. Department of Labor, Bureau of Labor Statistics. Bureau of Labor Statistics'

How often does the federal minimum wage increase?

· The minimum wage does not increase automatically. Congress must pass a bill which the President signs into law in order for the minimum wage to go up.

For more info, go to Questions and Answers About the Minimum Wage

http://www.dol.gov/esa/minwage/q-a.htm

Latest efforts to raise the Federal Minimum Wage

· Senate proposals to raise the minimum wage were rejected …making it unlikely that the lowest allowable wage, $5.15 an hour since 1997, will rise in the foreseeable future.

· A labor-backed measure by Senator Edward Kennedy, Democrat of Massachusetts, would have raised the minimum to $6.25 over an 18-month period. A Republican counterproposal would have combined the same $1.10 increase with various breaks and exemptions for small businesses.

· The Kennedy amendment to a spending bill went down 51 to 47, and the GOP alternative 57 to 42. Under a Senate agreement, 60 votes were needed for approval.

· Kennedy said Hurricane Katrina demonstrated the depth of poverty in the country. Making minimum wage, a single parent with two children earns $10,700 a year, $4,500 below the poverty line.

· He said it was ''absolutely unconscionable" that in the same period that Congress has denied a minimum wage increase, lawmakers have voted themselves seven pay raises worth $28,000.

· The first minimum wage of 25 cents an hour was enacted under President Roosevelt in 1938. Congress has since voted eight times to increase it, including under Republican presidents Eisenhower, Ford and George H.W. Bush.

· Sixteen states and the District of Columbia have minimum wages higher than the national level.

For more info, see Senate declines to raise the minimum wage from $5.15

Proposals by Kennedy, GOP both rejected By Jim Abrams, Associated Press | October 20, 2005

‘Deep, Persistent Poverty’ After Katrina: More Budget Cuts and Tax Cuts

· The wretched images of the poor left to struggle on the Gulf Coast in the wake of Hurricane Katrina, with no means of escape, provoked widespread shock. But the conditions exposed by the hurricane are not confined to the south. After barely registering as an issue for a decade, poverty is back on the political agenda. We had all seen the evidence of ‘deep, persistent poverty’ on television, President Bush said in an address after the hurricane struck; poverty that ‘has roots in a history of racial discrimination, which cut off generations from the opportunity of America’.

· According to the US census bureau, poverty has been on the rise for the past four years, despite a robust economy. The number of people living in poverty increased last year to 12.7 per cent of the population, some 37m people, the highest percentage in the developed world.

· Items on the agenda in Washington include the extension of tax cuts on investment income and repealing the estate tax, both aimed at the wealthy. Also proposed are tens of billions of dollars of cuts to services like food stamps, federal student loans and Medicaid, the health insurance for the low- income Americans.

· The president’s vow to pay for reconstruction in New Orleans without raising taxes means further services are likely to be cut. Democrats have also attacked the Bush administration for suspending the minimum wage requirement for companies working in the hurricane- hit region. The minimum wage of $5.15 an hour has not in any case been increased since 1997: adjusted for inflation it is at its lowest level since 1956.

· Rarely has poverty continued to rise so long after the end of a recession. The median household income in the US has stagnated for the past five years at around $44,400, the longest period on record. Globalization is forcing US companies to keep prices low to compete and many manufacturers are closing factories and shifting production overseas: 2.7m industrial jobs have been lost since 2001. Many of those workers are moving into lower-paid service jobs.

· The numbers without any kind of health insurance grew last year to 45.8 million people.

For more info, see Poverty amid plenty BY DAVID TEATHER 19 October 2005

http://www.khaleejtimes.com/DisplayArticle.asp?xfile=data/opinion/2005/October/opinion_October42.xml§ion=opinion&col=

· a study by the Economic Policy Institute published in the wake of Hurricane Katrina found 491,000 of the lowest-paid workers in Mississippi, Alabama and Louisiana are parents of about 310,000 children -- suggesting families are also feeling the pinch of the stagnant wage.

For more info, see Activists hope Katrina hastens US minimum wage rise

By Andrea Hopkins washingtonpost.com

· The indefinite suspension of the Davis-Bacon Act in every county touched by Hurricane Katrina (including Miami, FL) has given contractors permission to cut the pay of construction workers below the prevailing levels prior to Katrina. This means that families will be paid less than their prior earnings.

For more info, see the report from Wider Opportunities for Women (WOW) titled, One Month After Katrina: Women and Families at Risk of Being Left Behind

Center for American Progress on the Budget Reconciliation process:
[budget reconciliation supposed to be completed by Oct 1 is proceeding now with serious implications]

· The conservative leadership in Congress was not so moved. As part of an esoteric process called "budget reconciliation," fiscally conservative Republican leadership is proposing $35 billion in cuts for programs that benefit the least fortunate. Programs likely to face the chopping block include cutting Medicaid by $225 billion, increasing Medicare premiums by $85 billion, cutting $4.5 billion from rural economic development as well as cutting student loans.

· This week the House rejected their proposal to cut food stamps. However, the Senate voted against raising the federal minimum wage.

· The program cuts are being sold as a painful but necessary step to reduce the federal deficit. But the $35 billion in program cuts are being paired with at least $70 billion in new tax cuts for the wealthy, resulting in a net increase in the deficit.

BIG TAX CUTS FOR THE ULTRA-RICH: The $70 billion in tax cuts "are likely to go overwhelmingly to high-income taxpayers." According to an analysis by Urban Institute-Brookings Institution Tax Policy Center, "53 percent of the benefits from these...provisions...are going to the 0.2 percent of households with incomes over $1 million a year." Three-quarters of these tax cuts "are going to the 3.3 percent of households with incomes exceeding $200,000 a year."

THE OFF-SET MYTH: The House of Representatives is pursuing even deeper spending cuts in critical government programs. One right-wing group is pushing about $50 billion in cuts, supposedly as a way to "off-set" the costs of reconstruction on the Gulf Coast. Actually, any spending cuts would only partially off-set tax cuts, and do nothing to off-set Katrina reconstruction. (American Progress has a real plan to eliminate unnecessary spending in the wake of Katrina.)

Women, Children and Minorities

· Almost all poor single mothers supplement their income with some combination of off-the-books employment and money from relatives, lovers and the fathers of their children. Few report any of this income to the welfare department or the IRS.

· This distorts reported income and spending, leaving the impression among politicians and the public that families can actually live on welfare or salaries of $5,000 a year (plus food stamps and Medicaid).

· Official poverty thresholds underestimate poor families' needs by about 25 percent, in part because they take no account of the new expenses of working or reductions in food stamp, housing and medical benefits that accompany higher income.

· Jobs for unskilled and semi-skilled women provide meager salaries, irregular hours, frequent layoffs and no promise of advancement.

For more info, see Making Ends Meet: How Single Mothers Survive Welfare and Low-Wage Work By Kathryn Edin and Laura Lein

· Using the federal government’s official poverty measure—which is about $16,000 annually for a family of three and $19,000 for a family of four—17 percent of the nation’s children are living in poor families. That’s 12 million children, and the number is increasing.

· Perhaps most stunning is that 7 percent of children—5 million—live in families with incomes of less than half the poverty level. That’s a paltry sum—less than $8,000 for a family of three and $9,600 for a family of four.

For more info, see A Poverty Of Understanding, Nancy Cauthen, September 30, 2005

· Income for the bottom 40 percent of African-American households fell by 5.9 and 5.7 percent from 2001 to 2003.

· Most recently, the U.S. Census Bureau reported that from 2002 to 2003 the number of Americans in poverty increased by 1.3 million people to 35.9 million. This caused the official poverty rate to rise from 12.1 to 12.5 percent. Although the poverty rates of African-Americans and Hispanics did not change from 2002 to 2003, they both exceed 20 percent. One of the most disturbing aspects of the Census Bureau’s release was the increase in child poverty from 16.7 percent in 2002 to 17.6 percent. About 800,000 more children now live in poverty.

· A recent analysis of a proposal to increase the federal minimum wage in steps to $7.00 per hour by 2006 by nine leading labor economists concluded that 76 percent of women who would benefit directly from the increase are over the age of 20. Minority women would disproportionately benefit from the increase: 33 percent of female beneficiaries would be African-American or Hispanic, even though these groups comprise only 24 percent of the female workforce.

· This study also identified the additional purchasing power that an increase would provide to families: 10 months of groceries, eight months of rent, an entire year of community college, and almost an entire year of healthcare expenses.

For more info, see Higher Minimum Wage Can Lift Minorities

by William Rodgers III September 22, 2004

· The annual income of an individual working full-time, with two children, at the $5.15 an hour minimum wage leaves them $4,500 below the poverty level. An increase in the minimum wage to $7.25 would benefit many of the 9.7 million children who live in households where at least one worker earns between the current minimum wage and $7.25 per hour. Furthermore, 1.2 million of these children live in households where two or more workers earned less than the proposed minimum wage.2

· Because the minimum wage is not indexed for inflation, its purchasing power has eroded over time. The eight years since the last increase represents the second longest period over which Congress has failed to increase the minimum wage. As a result of the stagnating minimum wage, a full-time minimum wage paycheck – which would have kept a family of three above the poverty threshold during most of the 1960s and 1970s – provides an annual income that is only 70 percent of the poverty line in 2004

· The current earnings of a single parent working full-time at minimum wage covers only 40 percent of the estimated cost of raising two children. This is down from 48 percent in 1997 when the minimum wage was last raised

· If the minimum wage were raised to $7.25 per hour, it would cover 56 percent of the costs of raising two children, a significant improvement for working families.

For more info, see Increasing the Minimum Wage: An Issue of Children’s Well-Being

Minimum Wage Facts at a Glance, Economic Policy institute, Last updated March 2005

A minimum wage increase would raise the wages of millions of workers.

· An estimated 7.3 million workers (5.8% of the workforce) would receive an increase in their hourly wage rate if the minimum wage were raised from $5.15 to $7.25 by June 2007.

Minimum wage increases benefit working families.

· An estimated 760,000 single mothers with children under 18 would benefit from a minimum wage increase to $7.25 by June 2007. Single mothers would benefit disproportionately from an increase — single mothers are 10.4% of workers affected by an increase, but they make up only 5.3% of the overall workforce. Approximately 1.8 million parents with children under 18 would benefit.

· Close to half (43.9%) of workers who would benefit from a minimum wage increase work full time and another third (34.5%) work between 20 and 34 hours per week.

Minimum wage increases benefit disadvantaged workers.

· Women are the largest group of beneficiaries from a minimum wage increase: 60.6% of workers who would benefit from an increase to $7.25 by 2007 are women. An estimated 7.3% of working women would benefit directly from that increase in the minimum wage.

· A disproportionate share of minorities would benefit from a minimum wage increase. African Americans represent 11.1% of the total workforce, but are 15.3% of workers affected by an increase. Similarly, 13.4% of the total workforce is Hispanic, but Hispanics are 19.7% of workers affected by an increase.

· The benefits of the increase disproportionately help those working households at the bottom of the income scale. Although households in the bottom 20% received only 5.1% of national income, 38.1% of the benefits of a minimum wage increase to $7.25 would go to these workers. The majority of the benefits (58.5%) of an increase would go to families with working, prime-aged adults in the bottom 40% of the income distribution.

· Among families with children and a low-wage worker affected by a minimum wage increase to $7.25, the affected worker contributes, on average, half of the family's earnings. Thirty-six percent of such workers actually contribute 100% of their family's earnings.

A minimum wage increase is part of a broad strategy to end poverty.

· As welfare reform forces more poor families to rely on their earnings from low-paying jobs, a minimum wage increase is likely to have a greater impact on reducing poverty.

· A recent study of a 1999 state minimum wage increase in Oregon found that as many as one-half of the welfare recipients entering the workforce in 1998 were likely to have received a raise due to the increase. After the increase, the real hourly starting wages for former welfare recipients rose to $7.23.

· The minimum wage raises the wages of low-income workers in general, not just those below the official poverty line. Many families move in and out of poverty, and near-poor families are also beneficiaries of minimum wage increases.

There is no evidence of job loss from the last minimum wage increase.

· A 1998 EPI study failed to find any systematic, significant job loss associated with the 1996-97 minimum wage increase. In fact, following the most recent increase in the minimum wage in 1996-97, the low-wage labor market performed better than it had in decades (e.g., lower unemployment rates, increased average hourly wages, increased family income, decreased poverty rates).

· Studies of the 1990-91 federal minimum wage increase, as well as studies by David Card and Alan Krueger of several state minimum wage increases, also found no measurable negative impact on employment.

· New economic models that look specifically at low-wage labor markets help explain why there is little evidence of job loss associated with minimum wage increases. These models recognize that employers may be able to absorb some of the costs of a wage increase through higher productivity, lower recruiting and training costs, decreased absenteeism, and increased worker morale.

· A recent Fiscal Policy Institute (FPI) study of state minimum wages found no evidence of negative employment effects on small businesses.

http://www.epinet.org/content.cfm/issueguides_minwage_minwagefacts

· Our basic finding is: advancement prospects depend not only on the individual worker's skills and earnings capacity, but also on the characteristics of their employers. In other words, a given worker with specific skills can be a good deal more or less successful in the labor market, depending on the employer for whom (s)he works and their pay/promotion policies.

· Some employers choose "higher-road" policies to being competitive and others choose a "lower road." The higher-road employers compete on the basis of higher worker productivity; they provide higher wages and benefits, as well as training and promotion ladders, in return for high performance and low turnover. In contrast, lower-road employers compete on the basis of low costs, and accept the high turnover/weaker performance that inevitably comes with that strategy.

· Unfortunately, many low earners have little access to these higher-wage employers. Not only do their own weak skills and poor labor market histories limit their access; but they are also impeded by a variety of other factors. These include lack of transportation to the local areas in which high-wage employers are often located; lack of information about these employers, and weak informal networks (based on friends and neighbors), that fail to link them to these jobs; as well as outright discrimination against some minority groups, especially native-born African-Americans.

For more info, see How Can We Help Low Earners Move Up in the Labor Market? by Harry J. Holzer, April 8, 2005

· The risk of job displacement and layoffs has risen, but high-performance strategies by employers can still increase both productivity and worker satisfaction.

· Pay and employment problems of the least-skilled could be addressed with strengthened basic K-12 education, school-to-work and apprenticeship programs, reliance on the Earned Income Tax Credit and improved job ladders.

For more info, see A Working Nation: Workers, Work, and Government in the New Economy By David T. Ellwood, Rebecca M. Blank, Joseph Blasi, Douglas Kruse, William A. Niskanen and Karen Lynn-Dyson

Costco v. Wal-mart: Wage and Benefit Satisfaction

· To workers and union leaders, it is a familiar refrain. These days, the story goes, consumers demand low prices, meaning goods must be produced and sold cheaply — and retail wages must be kept as low as possible. Companies like Wal-Mart insist they’re feeling the squeeze and must pay workers poverty wages — even while netting $10.5 billion in annual profits and awarding millions to top executives.

· But there’s another company that is breaking the Wal-Mart mold: Costco Wholesale Corp., now the fifth-largest retailer in the U.S. While Wal-Mart pays an average of $9.68 an hour, the average hourly wage of employees of the Issaquah, Wash.-based warehouse club operator is $16. After three years a typical full-time Costco worker makes about $42,000, and the company foots 92% of its workers’ health insurance tab.

· How does Costco pull it off? How can a discount retail chain pay middle-class wages and still bring in over $880 million in net revenues? And, a cynic may ask, with Wal-Mart wages becoming the norm, why does it bother?

· A number of factors explain Costco’s success at building a retail chain both profitable and fair to its workers. But the basic formula is one the labor movement has been advocating for decades: a loyal, well-compensated workforce means a more efficient and productive one.

Costco v. Wal-Mart: How They Stack Up

· Global Workforce
Wal-Mart: 1.6 million associates
Costco: 113,000 employees

· U.S. Workforce
Wal-Mart: 1.2 million
Costco: 83,600

· U.S. Union Members
Wal-Mart: 0
Costco: 15,000

· U.S. Stores
Wal-Mart: 3,600
Costco: 336

· Net Profits (2004)
Wal-Mart: $10.5 billion
Costco: $882 million

· CEO Salary + Bonus (2004)
Wal-Mart: $5.3 million
Costco: $350,000

· Average Pay
Wal-Mart: $9.68/hour
Costco: $16/hour

· Health Plan Costs
Wal-Mart: Associates pay 34% of premiums + deductible ($350-$1,000)
Costco: Comprehensive; employees pay 5-8% of premiums

· Employees Covered By Company Health Insurance
Wal-Mart: 48%
Costco: 82%

· Employee Turnover (estimate)
Wal-Mart: 50%
Costco: 24%

Sources: Wal-Mart, Costco, Business Week, Forbes.com

For more info, see http://laborresearch.org/print.php?id=391

Energy Costs

Energy Prices

According to the Energy Information Administration of the US Department of Energy, a rise in energy costs will look as follows:

· This winter, residential space‐heating expenditures are projected to increase for all fuel types compared to year‐ago levels. On average, households heating primarily with natural gas are expected to spend about $350 (48 percent) more this winter in fuel expenditures.

· Households heating primarily with electricity can expect, on average, to pay $38 (5 percent) more.

· Under the baseline weather case, Henry Hub natural gas prices are expected to average around $9.00 per thousand cubic feet (mcf) in 2005 and around $8.70 per mcf in 2006.

· Retail gasoline prices are expected to average close to $2.35 per gallon in 2005 and about $2.45 in 2006.

· Residential electricity prices are expected to average 9.3 cents per kilowatthour (kwh) in 2005 and about 9.5 cents per kwh in 2006, with significant regional differences depending on the fuel mix used to generate electricity in each region of the country.

· The price of West Texas Intermediate (WTI) crude oil is projected to average close to $58 per barrel in 2005 and $64‐$65 per barrel in 2006.

· Complete recovery of energy infrastructure from hurricane damage will take many months. However, considerable recovery should occur by the end of 2005.

For more information please see Short‐Term Energy Outlook and Winter Fuels

Outlook October 12, 2005 Release or visit www.eia.doe.gov

· At a hearing before the Senate Committee on Commerce, Science and Transportation, Tyson Slocum, research director, Public Citizen’s energy program, said that recent oil company mergers are partly responsible for gasoline price spikes.

· Despite Hurricane Katrina’s reported impact on gasoline prices, gasoline and oil prices have been creeping up for two years, in large part because of a wave of mergers in the oil industry.

· Last year, the top five U.S. oil refining companies controlled 56.3 percent of domestic oil refinery capacity. A decade ago, the 10 largest U.S. oil refining companies controlled 55.6 percent of refining capacity — which means that, due to mergers, the five largest oil refiners today control more capacity than the 10 largest did a decade ago.

· The five largest oil refiners — ConocoPhillips, Valero, ExxonMobil, Shell and BP — have seen profits of $228 billion since 2001.

· Despite government reports issued in 2001 and 2004 that directly link corporate mergers to high gasoline prices, no action has been taken to aid consumers who are suffering from a volatile market where prices spike day by day.

· oil industry profits are at record highs, largely due to record refinery profit margins. While in 1999, U.S. oil refiners earned 22.8 cents for every gallon of gasoline they refined, that profit margin increased 80 percent by 2004, to 40.8 cents per gallon.

For more information, see Rising Gasoline Prices Aren’t Wholly Caused by Hurricane Katrina, Public Citizen Tells Senate

Natural Gas

· Humans began tapping the Earth's deposits of oil and natural gas a little over a century ago. We've been exhausting the planet's oil reserves more quickly than gas reserves, because oil is easier to pump, transport and use. The planet's gas endowment will last longer, but the world is now using more each year than is being discovered -- an ominous sign.

· Accelerated consumption across the globe, says Darley, will continue to drive up natural gas prices, deplete reserves, and trigger chronic shortages. In a world where growing energy demand has begun to run up against environmental limits, gas is almost too good to be true, and, it seems, too good to leave in the ground. For instance:

• Countries trying to meet the greenhouse emissions limits set by the Kyoto Protocol are rapidly building natural gas-fired power plants, which emit much less carbon dioxide than do coal plants. Even in the United States, the world's number-one Kyoto deadbeat, most newly built power plants are gas-fueled, even as our domestic gas reserves dwindle.
• In response to criticism of its heavy coal burning, China intends to triple or quadruple its use of natural gas for power generation in the coming decade.
• The petroleum industry is pushing hard to build large numbers of liquefied natural gas (LNG) tankers, along with the requisite high-tech port facilities in the major producing and consuming nations. That will make it easier for a big energy-using nation like the U.S. to suck not only from gas pipelines on its own continent but from wells almost anywhere on the planet, as we currently do to feed our oil habit.
• Building and operating a global LNG system will require vast amounts of energy -- much of it supplied by gas, of course. To produce the power required to haul liquefied gas across oceans while keeping it cooled to about -260 degrees Fahrenheit, LNG tankers draw on their own cargo. And an explosion at a LNG terminal could produce a fireball a mile wide -- qualifying LNG as a potential WMD.
• The process of extracting oil from sands in the Canadian province of Alberta -- often looked to as a key new resource in a "safe" part of the world -- requires natural gas, and a lot of it. Darley predicts that if the oil sands are to satisfy even one-eighth of North America's demand, they will have to absorb a quarter to a half of Canada's natural gas production!
• Hydrogen is often hailed as a fuel of the future, but today, most hydrogen is manufactured from -- what else? -- natural gas. Hydrogen could be generated by, say, using solar energy to split water molecules, but don't count that happening on a large scale as long as gas is available. President Bush's well-hyped 2003 FreedomCar initiative relied mostly on gas-derived hydrogen.

· The timetable for peak gas or plateauing natural gas production and an eventual decline is much harder to forecast it is for oil. But a perfect storm of long-term forces appears to be blowing demand in only one direction -- up -- and the greatest access to such a hard-to-transport, hard-to-store resource will likely go to those players with the most money and the strongest armies.

For more information, see Hunger For Natural Gas By Stan Cox, AlterNet. Posted October 12, 2005

Energy policy

· The US House of Representatives passed the Energy and Commerce Committee's refining and pipeline bill Oct. 7 by a two-vote margin (OGJ Online, Oct. 4, 2005). But as members headed to their home districts for a week-long Columbus Day recess, it was still not clear how much effect the measure will have.

· Proponents said HR 3893, the Gasoline for America's Security Act, would reform cumbersome siting procedures by requiring the Department of Energy to coordinate refinery permitting—but only if a state's governor requests the process or if the US president designates the site as potentially suitable for a refinery.

· The bill did not include a provision addressing the New Source Review (NSR) permitting program under the 1977 Clean Air Act amendments. Electric utilities, as well as oil refiners, had sought reforms to clarify the process.

· Other parts of the bill would try to reform siting and construction procedures for pipelines and expansions and encourage prompt construction of a natural gas pipeline from Alaska to the Lower 48 states. The Alaskan pipeline provision includes a loan guarantee sunset provision if the state of Alaska and participants don't reach an agreement on constructing the system within 2 years of enactment.

· The bill also would require the US energy secretary to study whether essential crude oil and product pipelines have backup power to continue operating if their regular sources are cut off. It also would give the Federal Energy Regulatory Commission authority to regulate gas gathering lines on the Outer Continental Shelf.

· A provision that would have lifted offshore moratoriums and withdrawals for natural gas had been moved into the bill from a measure passed a week earlier by the Resources Committee (OGJ Online, Sept. 29, 2005). It was deleted during floor action.

For more information see US House narrowly passes bill on refining, pipelines

Nick Snow Washington Correspondent the Oil & Gas Journal http://ogj.pennnet.com/articles/article_display.cfm?Section=ONART&C=GenIn&ARTICLE_ID=238596&p=7

Renewable Energy and Conservation

Wind and Solar

· Customers of Xcel Energy's Windsource wind-energy program soon will have more to brag about than their environmental ethic. Namely, lower bills. The 29,000 Colorado Windsource participants who now pay as much as $6 more a month for "green power" soon will pay up to $10 less than their neighbors who use conventionally generated electricity.

· "People should be lining up now at Xcel to buy wind power because it will save them a lot of money," said Rick Gilliam, senior energy-policy adviser for Boulder-based Western Resource Advocates, an energy and environmental research group.

· Colorado voters in 2004 passed a law requiring the state's largest utilities to obtain 10 percent of their power through renewable resources - such as wind power - by 2015. Currently, Xcel gets about 2 percent of its power from wind farms.

For more information see Energy bargain blowing in wind By Steve Raabe

Denver Post Staff Writer DenverPost.com

· Whoever buys the house at 7387 Howell Mill Court will have a tough time keeping up with the Joneses. Like a jealous twin, it sits next to a replica dwelling that probably will receive far more attention.

· The neighboring house is a zero energy home, meaning that it should, over the course of a year, produce as much energy as it consumes. Ideally, it will tally up an annual energy bill of zero dollars.

· The University of Nevada, Las Vegas Center for Energy Research will monitor the two homes, which Pinnacle Homes constructed as part of a 146-home community called The Vinings in southwest Las Vegas.

· "There are two houses together that started life on the architect's drawing board as exactly the same house. One of them has been modified to be the better performance house, hopefully," said Bob Boehm, the UNLV center's director.

· The homes will be heated in the winter and air conditioned during the summer. The study will last 18 months before the model homes go on the market.

· The zero energy home is equipped with a photo voltaic electric system that receives energy from roof-integrated solar panels.

· The system is connected to the Nevada Power Co. grid, which will provide the home with energy when it's not producing enough.

· "If it generates more energy than what you need it turns the meter backward so you basically sell power to Nevada Power for the same cost they sell it to you," Boehm said. "When it's hot and sunny outside, that's when Nevada Power has the biggest drain on their grid and that's the time you're helping out with it the most."

For more information see Solar home uses zero energy By K.C. Howard, LAS VEGAS REVIEW-JOURNAL

· Wind power is the fastest-growing energy source in the world. (Worldwatch Institute)

· The wind in North Dakota alone could produce a third of America's electricity. (The Official Earth Day Guide to Planet Repair)

· Wind power has the potential to supply a large fraction--probably at least 20%--of U.S. electricity demand at an economical price.

· In 1990, California's wind power plants offset the emission of more than 2.5 billion pounds of carbon dioxide, and 15 million pounds of other pollutants that would have otherwise been produced.

· Providing power for villages in developing countries is a fast-growing market for photovoltaics. The United Nations estimates that more than 2 million villages worldwide are without electric power for water supply, refrigeration, lighting, and other basic needs, and the cost of extending the utility grids is prohibitive, $23,000 to $46,000 per kilometer in 1988.

· A one kilowatt Photovoltaic (PV) system each month:

• prevents 150 lbs. of coal from being mined
• prevents 300 lbs. of CO2 from entering the atmosphere
• keeps 105 gallons of water from being consumed
• keeps NO and SO2 from being released into the environment

For more on wind and solar power, see www.solarenergy.org

Energy Consumption

• Though accounting for only 5 percent of the world's population, Americans consume 26 percent of the world's energy. (American Almanac)
• Worldwide, some 2 billion people are currently without electricity. (U.S. Department of Energy)
• Total U.S. residential energy consumption is projected to increase 17 percent from 1995 - 2015. (U.S. Energy Information Administration)
• World energy consumption is expected to increase 40% to 50% by the year 2010, and the global mix of fuels--renewables (18%), nuclear (4%), and fossil (78%)--is projected to remain substantially the same as today; thus global carbon dioxide emissions would also increase 50% to 60%.
• Among industrialized and developing countries, Canada consumes per capita the most energy in the world, the United Sates ranks second, and Italy consumes the least among industrialized countries.
• Developing countries use 30% of global energy. Rapid population growth, combined with economic growth, will rapidly increase that percentage in the next 10 years.
• America uses about 15 times more energy per person than does the typical developing country.
• Residential appliances, including heating and cooling equipment and water heaters, consume 90% of all energy used in the U.S. residential sector.
• The United States spends about $440 billion annually for energy. Energy costs U.S.U.S. manufacturers $100 billion annually. consumers $200 billion and

For more stats on energy consumption see, www.solarenergy.org

What’s Next for Iraq –Talking Points

On the Road to Democracy: Iraq constitution and election process

CONSTITUTION SCHEDULE
· 15 August deadline extended twice
· National referendum on constitution by mid-October
· Full government elections by mid-December

Referendum vote
· The draft constitution will be put to the popular vote in a referendum in October (15th). Under the electoral mechanism to be used, it only needs voters in three of Iraq's 18 provinces to muster a two-thirds majority against the document for the constitution to fall by the wayside.
· The Sunnis are dominant in four provinces and so therefore effectively hold a power of veto.
· To ensure the constitution does not become law, the Sunnis will have to do something they did not do in the January elections - turn out and vote. That would mean that even in wrecking the draft document they would at least be engaging in the democratic process. And that could represent a significant development in Iraq's troubled path towards a brighter future.
For more information see, What next for Iraq's new charter? By Jon Brain BBC News, Baghdad http://news.bbc.co.uk/go/pr/fr/-/1/hi/world/middle_east/4193690.stm
· the constitution vote three weeks from now still carries the potential to further destabilize Iraq, no matter which way it goes. Approval may prove a pill too bitter for Sunni Arabs to swallow, but rejection could throw the political process back a year and complicate America's exit strategy.

· The referendum is a key step in a 22-month political process outlined in an interim charter agreed to in March 2004. If adopted, it will be the basis for a general election to be held by Dec. 15 to chose Iraq's first full-term democratic government.

· Sunni Arabs, the dominant sect under Saddam Hussein, say the draft does not assert Iraq's Arab identity in strong enough terms. And they worry that its federalist character could lead to the breakup of the country into a Shiite south and a Kurdish north, leaving them in central Iraq with little more than isolated farmlands surrounded by expansive deserts.

· If a simple nationwide majority or a two-thirds majority in three of Iraq's 18 provinces vote "no," the draft will be rejected, parliament will be dissolved and another parliament elected to start drawing up a new constitution.
· Sunni Arabs make up 15-20 percent of Iraq's estimated 26 million people and are believed to be the majority in four of Iraq's 18 provinces

For more information, see Iraq constitution fight not without hope HAMZA HENDAWI
Posted on Sun, Sep. 25, 2005 http://www.guardian.co.uk/worldlatest/story/0,1280,-5301790,00.html

· The draft constitution drawn up since June bears the imprint of the Shi'ite and Kurdish parties that dominate the parliament elected in January polls largely boycotted by Sunni Arabs.

· Fifteen Sunni Arab politicians were added to the drafting committee in an effort at inclusiveness, but the ICG says they felt increasingly marginalised after the Aug. 1 decision not to seek a six-month extension of the drafting deadline.

· Negotiations then took place informally among Shi'ite and Kurdish politicians. The Sunnis refused to sign their drafts.

· Sunni Arabs reject the draft mainly because they believe its provisions on federalism could lead to Iraq's break-up, leaving them in a landlocked heartland without oil resources.

· The proposed constitution is also vague and ambiguous on decentralisation and powers of taxation, the ICG says, with many other questions left for future legislation -- in parliaments where majority Shi'ites are likely to have the upper hand.

For more information, see Iraq constitution seen worsening insurgency-report
26 Sep 2005 12:11:24 GMT Source: Reuters By Alistair Lyon http://www.alertnet.org/thenews/newsdesk/L26557825.htm

· Unmaking Iraq: A Constitutional Process Gone Awry,* the latest briefing from the International Crisis Group, examines the growing divisions between the country's three principal communities -- Shiites, Kurds and Sunni Arabs -- and describes how a rushed constitutional process has deepened the rifts.

· On 15 October, Iraqis will be asked, in a referendum, to embrace a weak document that lacks consensus and is dangerously vague or ambiguous on key issues. It is likely to pass, despite Sunni Arab opposition: the Kurdish parties and Grand Ayatollah Ali al-Sistani have proven ability to bring out their followers, and the Sunni Arabs are unlikely to clear the threshold of two thirds in three provinces to defeat it. Passage may be the worst outcome, leaving Iraq divided along ethnic and sectarian lines, a situation the insurgents would exploit.

· The only hope left is for the U.S. to make a last-ditch effort to broker a true compromise that addresses core Sunni Arab concerns without crossing Shiite or Kurdish red lines. This requires the U.S. to sponsor negotiations to reach an agreement prior to 15 October that the constitution will subsequently be amended or appropriate legislation passed ensuring at a minimum that:

§ No more than four governorates can become a region through fusion, to assuage Sunni Arab fears of a Shiite super region in the South; and
§ Iraqis will not be excluded from public office or managerial positions on the basis of mere membership in the Baath party.

For more information see the report from the International Crisis Group (ICG), titled Unmaking Iraq: A Constitutional Process Gone Awry at www.crisisgroup.org

The Cost of War and Reconstruction

· The Senate would give President Bush $50 billion more for wars in Iraq and Afghanistan as part of a $440 billion defense spending measure a panel approved Monday.

· Reflecting a post-Hurricane Katrina debate about the role of the military in domestic affairs, the bill also will require that a report be provided on how National Guard units in neighboring states can be used to assist those affected by natural disasters.

· The House already has approved $45 billion more for the wars as part of its $409 billion version of the bill providing money for the Defense Department for the budget year that begins Oct. 1.

· Overall, Congress already has given the president about $350 billion for combat and reconstruction in Iraq and Afghanistan and fighting terrorism worldwide since the attacks of Sept. 11, 2001, according to the Congressional Research Service, which writes reports for lawmakers. That total includes $82 billion that lawmakers approved in May.

· Lawmakers are doling out dollars for the wars even as concerns arise about paying for reconstruction of the hurricane-ravaged Gulf Coast. At the same time, Congress and the president are facing public unease about the direction of the war in Iraq, according to public opinion polls that show dwindling support for it.

For more information, see Bill Would Give Bush $50B More for Wars By LIZ SIDOTI
The Associated Press Monday, September 26, 2005; 2:38 PM
http://www.washingtonpost.com/wp-dyn/content/article/2005/09/26/AR2005092600821.html

· A USA TODAY/CNN Poll last week showed that a majority of Americans give the war effort a low priority compared to domestic needs. Asked for the best way to pay for Hurricane Katrina damage, 54% recommend cutting spending for the Iraq war.
· The hurricanes come at a time when money for Iraq's reconstruction is running low. Congress approved $18.4 billion in 2003, but $5 billion was later set aside to rebuild Iraq's military and police.

· Congress may balk at additional Iraq funding requests if they're also facing large bills for rebuilding hurricane damage, including as much as $200 billion to rebuild from Katrina alone
· Amina Juma'a, a 35-year-old Baghdad homemaker and mother of four, says she watched Bush touring the areas damaged by Hurricane Katrina and was stunned by the "clean and beautiful areas" where evacuees were resettled. "Why can't he do that in Iraq?" she asks.
For more information, see Iraqis wonder what price they'll pay in Katrina's wake
By Steven Komarow, USA TODAY http://www.usatoday.com/news/world/iraq/2005-09-22-katrina-effect_x.htm

Public opinion regarding war and reconstruction

As you may know, the U.S. Congress has appropriated 260 billion dollars to fight the war and help rebuild Iraq. What best describes how you feel about federal spending on the rebuilding of Iraq?

We are spending too much............... 65
We are spending the right amount ... 27
We should spend more..................... 6
Not sure.......................................... 2

How confident are you that the money appropriated to rebuild Iraq is being spent wisely?

Very confident .................................. 7
Somewhat confident ......................... 28
Not too confident .............................. 31
Not at all confident............................ 33
Not sure.......................................... 1
Total Confident ............................... 35
Total Not Confident ........................ 64

For more information, see THE ASSOCIATED PRESS POLL CONDUCTED BY IPSOS PUBLIC AFFAIRS
http://www.ipsos-na.com/news/client/act_dsp_pdf.cfm?name=mr050920-1toprevised.pdf&id=2787

"Do you approve or disapprove of the way George W. Bush is handling the situation in Iraq?"






Approve
Disap-prove
Unsure


%
%
%

9/16-18/05
32
67
1


"In view of the developments since we first sent our troops to Iraq, do you think the United States made a mistake in sending troops to Iraq, or not?"






Made aMistake
Did NotMake aMistake
Unsure


%
%
%

9/16-18/05
59
39
2


"Which comes closest to your view about what the U.S. should now do about the number of U.S. troops in Iraq? The U.S. should send more troops to Iraq. The U.S. should keep the number of troops as it is now. The U.S. should withdraw some troops from Iraq. OR, The U.S. should withdraw all of its troops from Iraq." Options rotated





.


SendMore
Same asNow
WithdrawSome
WithdrawAll
Unsure


%
%
%
%
%

9/16-18/05
8
26
33
30
3



For more information, see CNN/USA Today/Gallup Poll. Sept. 16-18, 2005. N=818 adults nationwide. MoE ± 4.


· A new poll finds a majority of Americans reject the idea of using military force to promote democracy. Only 35 percent favored using military force to overthrow dictators. Less than one in five favored the US threatening to use military force if countries do not institute democratic reforms.

§ Public Not Convinced Democracy Makes World Safer or Counters Terrorism, But Favors Cooperative, Diplomatic Methods for Promoting Democracy and Speaking out on Human Rights

· The effort to promote democracy in Iraq is generating little enthusiasm. Seventy-four percent (including 60 percent of Republicans) said that the goal of overthrowing Iraq’s authoritarian government and establishing democracy was not a good enough reason to go to war.

· Seventy-two percent said that the experience has made them feel worse about the possibility of using military force to bring about democracy in the future.

· Sixty-four percent (65 percent of Republicans) are ready to accept an Iraqi constitution that does not fully meet democratic standards

· once the constitution is ratified 57 percent want to start withdrawing troops.

· 26 percent agreed that with more democracies the world is safer,

· 45 percent agreed that people in democracies are less likely to support terrorists. Even the view, popular among political scientists, that democracies are less likely to go to war with each other was only endorsed by 46 percent.

· 42 percent assumed that when countries become more democratic they will be more likely to agree with US policies

· 26 percent assumed that if Saudi Arabia were to hold free elections the government would be friendlier to the US.

· Americans do favor the US promoting democracy through diplomatic, cooperative methods. Seventy-four percent favored helping emerging democracies with assistance in conducting elections.

· Nearly six in ten favor bringing student, journalists and politicians to the US to educate them on how democracy works.

The poll, a joint project of the Chicago Council on Foreign Relations and the Program on International Policy Attitudes, was conducted by Knowledge Networks September 15-21 with a nationwide sample of 808 respondents (margin of error plus/minus 3.5-4 percent). A full report and questionnaire can be found at http://www.pipa.org and http://www.ccfr.org