What I Learned Today

DST today? Who knew?

This is the second year the US has moved daylight savings forward from the first Sunday in April, which was the norm for 20 years, to the first Sunday in March. In 2005 Congress passed an energy mandating this change – anticipating a decrease in energy consumption. But is it so?

Benjamin Franklin provided one of the earliest suggestions for daylight savings during his envoy in Paris. He proposed “to ring church bells at sunrise, and if that was not enough, let canon be fired in every street to wake the sluggards” to promote candle conservation. 64 million pounds of candle wax would be saved in six months’ time.

After the 1973 Arab oil embargo, Congress extended daylight savings time in hopes of saving energy. The U.S. Department of Transportation found that extending daylight time in March and April in 1974 and 1975 saved the equivalent of 100,000 barrels of oil each day, or approximately 1% of the nation’s energy consumption.

The American Council for an Energy-Efficient Economy estimates that starting DST in March rather than April through 2020 will save $4.4 billion and reduce emissions by 10.8M metric tons.

However, Professor Matthew J. Kotchen and Laura E. Grant of UCSB conducted a study in Indiana where before 2005 some counties responded DST and others did not. The study found that daylight savings does not necessarily equate to energy savings. Daylight savings “decreases consumption for artificial illumination but increases consumption for heating and cooling.”

The cost to Indiana residents was $3 per household per year. If equated to the entire population, that is $8.6M a year and up to $5.3M per year in pollution costs. However, the results may not apply to other areas in the country that have different sun schedules and climates from Indiana. “We’re currently working on further research to try to come up with estimates for the nation as a whole,” says Kotchen.

A Penny Saved..

So here’s a hot debate – do we obliterate the penny from our currency? The AP recently had an article about the potential elimination. Treasury Secretary Henry Paulson thinks the penny is “‘worth less than any other currency.’” He seems to think the dollar is also pretty worthless, since the only cash he carries on him is “a few dollar bills… to sign for people who ask for autographs.”

He does not plan to take on the challenge of eliminating pennies anytime soon. Instead, the Treasury is considering changing the metal content to lower production costs.

It’s a very debatable topic. Here are good arguments for and against eliminating the penny.

I’ve debated the topic in the past, and though pennies seem a nuisance and are economically inefficient, I always recount a story of my days as a consultant. During a cab ride from the IAH airport to my Midtown-Houston apartment, the rather eccentric cab driver (whose cab was lined with trinkets and dolls) struck up a conversation with me. We somehow arrived at the topic of Wal-Mart and he bemoaned the recent rise in “Always Low Prices.” He described how he saw his products increase by pennies each; he and his wife could not go out to the movies and had to restrict their dining out as a result.

Most of us don’t even stop to pick a penny off the ground anymore (I still do). I’d argue that the elimination of the penny, resulting in a “rounding tax,” will further impose upon people like my cabbie.