US Oil Fracking: Friend or Foe?

At least two decades of market uncertainty have kept Americans worried about the future of production costs and world market dominance. Fracking in the American Plains and middle regions have influenced a huge transition from complete reliance on near-Asian production, to the re-emergence of US-based goods and services.

The boom in the Dakotas and other fracking regions has reduced the gap between costs of production between the US and countries like China to a paltry 5%. This means, from the popularity of new domestic oil production, that it is absolutely viable for companies to stay in America rather than export production elsewhere. Fracking has been good for technical- and labor-intensive jobs in the field, but it has been meeting significant resistance from state officials concerned about the health of their lands and their constituents—New York has banned fracking in the state because of its potential health risks.

US Oil Fracking Is Our Foe

Fracking has been the source of some controversy. Its supporters champion its financial benefits, while its critics emphasize its environmental and economic hazards. For example, in early June, roughly 3 million gallons of the potentially toxic saltwater produced in fracking pipelines leaked into a North Dakota creek that flows into the Missouri River. Also, Kansas, Ohio, and Texas have all reported that they are experiencing many small earthquakes that rated approximately three on the Richter scale. There is substantial evidence that these quakes are in fact related to fracking.

There are also economic costs to consider, in addition to the problem of the “bust” following the “boom,” which North Dakota is now learning. While North Dakota has experienced a population boom, the development of the infrastructure has not kept up and officials are looking into “surge funding” to help pay for the cost of the expanding infrastructure—in one case, up to $1 billion. That funding is already in jeopardy because the taxes paid by energy companies are declining.

US Oil Fracking Is Our Friend

There is however, tremendous hope for American fracking. A glut of capable and skilled workers is available and waiting to make new US oil fracking wells produce oil like no other wells in the world. According to many reputable sources, the US markets are inclined toward supporting companies that use domestic supplies rather than imported oil sources. It is a magical market relationship that could spark a revolution if the right economic conditions fall into place. Whether the naysayers want to believe it or not, American fracking is an economic giant that could wipe out many modern economic concerns.

Statistics show that thousands of people are flooding to regions with fracking companies and the jobs they promise. Though many of the jobs are being put on hold because of temporary adjustments to international oil–trading indicators, the jobs have not been eliminated. With the foresight of leaders in the domestic oil futures market, US oil fracking dominance could outpace the production in other countries, put tens of thousands of Americans to work, and entice a revolution in domestic manufacturing.

Opposing Foreign Forces in Domestic Oil

Unfortunately, there are a number of reasons the American oil boom is being countered by market forces. Worldwide oil prices are in free fall. Fracking enterprises are creating the perfect conditions for the US as a whole to pull back reliance on foreign oil sources and look to the wells in its own backyard.
The highest echelons of market expertise are indicating that oil-producing nations sense a slowing of economies all over the world. This is even true in the United States. No matter how much cheap, new oil is discovered and put on the market, the lack of an industry to buy it will mean that prices will sink.

Does Massachusetts Need a New Pipeline?

Last year, plans from a Houston energy company to introduce a new natural gas pipeline in New England sparked fierce debate, and the conversation is ongoing. Kinder Morgan, introduced The Northeast Energy Direct Project, which is a proposal to build a pipeline that would connect Massachusetts to abundant natural gas sources in Pennsylvania shale fields. However, the plan has met with significant resistance from local communities.

The initial proposal had the pipeline entering Massachusetts in Richmond at the border with New York. The pipeline would then skirt the upper western edge of MA and end in Dracut. Local residents of the towns that would be affected were quick to fight the idea of subjecting their communities to the construction and potential danger for explosions. In the face of such intense opposition, Kinder Morgan has since replotted the course of the pipeline. It now veers north into New Hampshire before coming to an end in Dracut.

Although the pipeline now bypasses many Massachusetts communities, it still faces avid disapproval from locals.

Massachusetts uses natural gas to heat about half the homes in the state, with two-thirds of the state’s electricity also being fed by natural gas. The share is only expected to increase as dilapidated coal plants shut down. Last year, two of MA’s coal plants ceased to function with a third expected to die out in 2017.

In a state where hard winters are a commonality, this is a disturbing trend. Gordon van Welie, head of ISO New England, the region’s power grid operator, said the region is already running out of available pipeline capacity to provide power during times of high demand. This has created issues such as shortages and spikes in wholesale prices of natural gas.

The volatile fluctuation in heating costs can cause havoc for residents and businesses, not to mention chilly living conditions. Without a steady estimate of fuel costs, business owners have a hard time budgeting and allocating funds to shipping and wholesale costs. According to the Beacon Hill Institute, the introduction of the new pipeline would save small businesses $1,238 annually. Industrial businesses would save an $25,415 annually.

Opponents of the pipeline believe that introducing another source of fossil fuels to the state is not the answer. Shanna Cleveland, an attorney with the Conservation Law Foundation, said the region should pursue energy efficient practices more aggressively and find ways to keep the demand for natural gas steady. A study conducted by Black & Veatch has shown that another pipeline would be unnecessary if renewable power and energy efficiency can keep natural gas demand flat.


How Will the “Internet of Things” Affect Business?

The continuing advancement of wireless technology has created a world where devices are connected in incredible ways. Cloud computing and the increasingly widespread network of data-gathering sensors have made it possible for devices to communicate with one another to accomplish goals—a trend people are calling “The Internet of Things,” or IoT.

With IoT, it may be possible to create useful structures such as  “smart bridges,” which would be constructed out of cement containing sensors that monitor stress, fissures, or warping. The monitoring system could provide ample warning before a serious collapse. IoT would make it possible for stores to track the spending habits of their customers via their unique cell phone signatures and also make purchase suggestions. It even makes it possible for you to control every appliance in your home with your cell phone.

But what effect will the “Internet of Things” have on businesses?

The infographic below, created by Leigh-Ann Carroll with Exigent Networks in the UK, illustrates some key factors where IoT will have a definite, positive influence on the global market.

Internet of things infographic

Internet of Things Infographic by Leigh-Ann Carrol

FLEXcon Gains Space-Age Flexibility in Spencer Business Market

FLEXcon, a family-owned business in Spencer, Massachusetts, has recently landed national attention with their new space-age business partnership. NASA’s Glenn Research Center has agreed to license the production of a special insulator to FLEXcon, a local business in Massachusetts. “We are delighted to secure a licensing agreement for Glenn’s technology,” said Glenn Research Center Director Jim Free, in a press release.

The special insulator is a significant improvement over other products. The material is a polyimide aerogel film that insulates against both heat and cold. The film, which is 500 times stronger than traditional silica aerogels, is currently patent-pending. FLEXcon’s license will allow the Massachusetts business to manufacture and market the film, as well as develop new applications for it.

FLEXcon won’t need to install any new equipment, as their existing  manufacturing equipment can be re-calibrated to create the new technology.

“We know how to take their invention and make it commercially feasible, … We’re excited about this. We’re proud of it. … This is a good win for FLEXcon.”

—Bill Sullivan, Vice President of Performance Products, FLEXcon

While the product was developed for use in space suits, it can also be used in a variety of every-day applications. The efficient, lightweight insulator can be used in household applications like refrigerators, dishwashers, and to insulate pipes. It can also be used in clothing.  Sullivan explained that, “You don’t want to put on a big parka when you’re climbing up Mt. Everest. You want to put on something that’s light but will give you good thermal energy.”

The polyimide aerogel also has applications in the medical industry as it can be used to insulate the containers used for organ transport and blood storage.

The ability to manufacture and distribute a brand-new bleeding-edge product can be a significant boon for the town of Spencer. The product will be a new sales item, which will increase corporate revenues for the local business. is There is potential for further deals with NASA. According to Free, “By licensing the polyimide aerogel technology to FLEXcon, Glenn will gain a commercialization partner.” This makes the implications of the business partnership exciting, because there may be future collaboration between the two companies.  Sullivan shared, “I think more good things are going to come through the relationship NASA has with FLEXcon.”

Massachusetts Gambles on Casinos for Economic Pay Day

Last week marked the opening of the Plainridge Park Casino, the first of potentially many new slot parlors in the state of Massachusetts. Doors officially opened on Wednesday to an eager herd of gamblers, including several special guests and state gambling regulators. The grand opening took place amongst a haze of doubt as many continue to wonder if the casino will provide the kind of economic benefits the area needs.

State leaders have great expectations for the new $250 million slots parlor. Projected revenue for the casino’s first year of operations is approximately $200 million, with $98 million to go back to the state. The town of Plainville has been promised at least $2.3 million annually plus $1.5 million in property taxes.

Vice President of Penn National Gaming, Eric Schippers, is particularly supportive of the new casino’s potential, saying that past investments have “created growth in businesses like restaurants and hotels.” He continues, “Wherever we’ve gone, it’s been a real shot in the arm for the local economy.”

While some industry experts argue that opening more casinos in a market that may be reaching its saturation point does not make much sense; gambling consultant, Steven Norton, asserts that the industry will grow in Massachusetts as casinos become more local and thereby more convenient. Most Massachusetts residents are accustomed to driving out of state to establishments like Twin Rivers.

The hope is that local residents will no longer feel the need to drive out of state and gamble, thereby giving their money to outside municipalities. It is predicted the influx of gamblers to the area should help stimulate the local economy. In addition, Schippers commented that Penn National has also spread the benefits of gambling operations to local businesses via cross-promotional agreements.

Others are not so certain the effect the casino will have warrants so much optimism. Clyde Barrow, former UMass professor who has studied gambling extensively, notes that most gambling patrons will spend their money on gas and fast food—and not much else. Most of the economic stimulus will come from the 500 or so employees the casino will employ, Barrow predicted.

Undoubtedly there will be an influx of new money to the Plainville area as the casino gets up and running. The casino is expected to attract upwards of 6,000 patrons a day and, if business is good, it could cause a ripple effect of new businesses migrating to the area.

Relaxed Regulations on Food Trucks Could Be Driving Up Business in Worcester

Massachusetts, and Worcester in particular, is a place known for embracing the American Dream in all its many forms. Now, the Worcester city administrators are looking at changing the rules governing one particular form of the big dream.

Food trucks are a novel interpretation of American entrepreneurship, allowing aspiring chefs to open a small eatery to showcase their skills and tastes, while avoiding many of the sometimes insurmountable obstacles of running a traditional brick-and-mortar restaurant. The concept has been gaining traction nationwide, and Worcester even held the Fourth Annual Food Truck Festival on June 20, 2015.

City Manager Edward M. Augustus Jr. announced that the city will be “crowdsourcing” opinions about welcoming food trucks and other vendors in the city. Current rules prohibit food trucks from operating near store-front restaurants, and near the DCU Center. The regulations also limit the operating hours of food trucks, and, most prohibitive of all, trucks are required to move at least 500 feet every five minutes. These regulations allegedly help prevent food trucks from competing with stationary restaurant businesses.

Food trucks are good for business, because they are business. They are the very embodiment of the American dream—small entrepreneurial business, set in an automobile, serving favorite recipes. Food trucks are more versatile than permanent eateries, with significantly lower barriers to entry.

Emilee Morreale is a caterer in Worcester, and an aspiring food truck owner. “I think its worth focusing on the fact that street food is prominent in most countries all over the world, and in our country—where we have such advanced sanitation—it’s only hurting local economies and cultures to not encourage people to capitalize on their traditional recipes or innovative ideas.” She mentions that so many TV chefs have contributed to the concept’s popularity, and that access to food trucks, “[is] truly what the people want.”

Morreale also mentions that locally-owned business keeps the local economy healthier. Right now in Worcester, “Vacant shop fronts have been available for months and years with no bites…” There is no demand from prospective restaurateurs to lease a brick-and-mortar location. Instead, changing the rules would allow more local chefs to open their own new tax-paying businesses, and share their passions on the streets of Worcester.

Councilor-at-Large Frederick C. Rushton, chairman of the City Council Economic Development Committee, said his committee plans on taking up the city administration’s food truck strategies at its next meeting, July 21.


One-Year Extension for Massachusetts to Comply with Obamacare

Massachusetts has been given an additional year to comply with the Affordable Care Act, following a trend of deadline extensions. Initially granted a one-year extension in 2013, they have now been granted another year to get the program aligned with federally mandated standards. Governor Baker has asked for an “indefinite extension” citing that the reduction of qualifiers used to determine premiums could cause a ripple effect of “instability” in the insurance marketplace. The new deadline allows them until January of 2018 to fully comply with ACA requirements.

Currently, Massachusetts Health Connector uses nine identifiers to determine health premiums, under Obamacare, that number would need to be reduced to four—only age, family size, geographic area, and tobacco use would be considered. The extension allows insurance companies to use their full range of factors—such as industry, group size, and participation rate—until 2017 when determining health care premiums. Another point of contention is the definition of small businesses under the ACA requirements. Governor Baker has asked that the definition of a small business in Massachusetts remains 50 employees rather than the ACA specified 100 employees.

The hope is that these allowances will help prevent small business from falling prey to huge rate hikes in insurance and the associated risk of having to downsize or even close shop should the premiums become too large for a small business to afford. Administrators from both sides have continued to negotiate the specifics of the requirements over the last few weeks.
This is just the latest chapter in the story of MassHealth’s continued difficulties complying to the federal ACA requirements and regulations. Just last month it was reported that the US attorney served a subpoena in January of 2015 for the Massachusetts Health Connector records dating back to 2010 in an attempt to figure out the difficulties MassHealth has encountered when trying to meet the ACA regulations. Massachusetts’ continued trouble complying with the ACA is an interesting puzzle, given that the ACA was modeled in large part after Massachusetts law, Chapter 58: An act Providing Access to Affordable, Quality, Accountable Health Care. This leaves one to wonder whether there are true difficulties with and concerns about the ACA regulations or whether the changing winds of political rhetoric and special interests are at the source of these current difficulties.

Massachusetts Contract Manufacturer Helps Urban Garden Get Off the Ground

At the heart of every great business, from two-man start-ups in the garage to Fortune 500 giants, is one common factor: a great idea. But for many start-ups, that great idea may be all they have. While small businesses provide the opportunity and flexibility for innovation, many of these organizations lack the resources to move beyond the prototype stages. Too many brilliant ideas have been waylaid by simple logistical errors that could be avoided through partnership with an established contract manufacturer—especially one that is well versed in the needs of small businesses.

It was at this crucial juncture, moving from prototype and proposal to market-ready production, that the environmentally-focused Massachusetts start-up Freight Farms stepped up to the plate and hit a home run. By partnering with an established manufacturer like Columbia Tech they were granted access to world class facilities and years of experience—something most small businesses only gain over years of trial and error.

Freight FarmsThe Freight Farms model is simple: a repurposed 40-ft freight container is converted into a self-contained, modular environment for growing fresh vegetables in any locale, regardless of climate or available resources. On paper this idea might even look easy, but the challenge the project developers faced was daunting. How would they build containers at a rate that satisfied demand and remained profitable? How would the ‘farm-in-a-box’ be transported to its final destination?

While the project founders knew these concerns existed, they were focused on the big picture of creating a sustainable food source that could eventually reduce or eliminate world hunger. An ambitious task, but with these intimidating goals in mind, they turned to Columbia Tech’s expert teams, who helped them standardize production at maximum efficiency. Utilizing a contract manufacturer helped Freight Farms sidestep the delays that accompany building a new production facility, allowing them to move rapidly from concept, to prototype, to market.  By selecting a partner that had a strong background in container-based manufacturing, the Freight Farms team could keep their focus on the product and rely on the experience of Columbia Tech to guide them through the sometimes arduous process of turning their great idea into reality.

Worcester Businesses Meet to Discuss Growth and Regulation

Four local business leaders met in Worcester recently to discuss the fact that the city is growing at a phenomenal rate, despite the tight rein of regulations on business in the area. The discussion, which was named “Acting Locally”, was hosted by the Worcester Regional Research Bureau, and featured guest speakers from some of the most important businesses in the area.

The meeting focused largely on the need for Worcester business establishments to connect and focus more strongly with their local community. Participating at the conference were three distinguished members of the Worcester business community, including Frederick Eppinger, President of Hanover Insurance; Nick Smith, President of Rand Whitney; and Neil McDonough, CEO of FLEXcon. The conference was moderated by Michael Mulrain of Polar Beverages.

Loosening The Grip Of Regulation: A Common Theme

One of the most commonly voiced themes was the need for authorities in Worcester to loosen the reins of business regulation in the area. More than one of the speakers at the meeting touched upon this theme, and it was generally agreed by many in attendance that the city could afford to be a bit more welcoming and cooperative when it comes to the proposals of entrepreneurs, whether local or national, to establish new businesses in the area.

Several of the panelists noted that, for a small business in Worcester, its owner has to pass through a sea of red tape and regulations before it can win approval for their proposals from local officials. The process can take up to five years before anything is achieved. By contrast, business owners in the Southeastern region of the country, such as Georgia, can usually get approval from city officials much sooner and with far less conditions placed on that approval.

Improving The Quality Of Local Life

Despite the difficulties presented by state regulations, the local Worcester business leaders at the conference expressed their continuing commitment to improving the life of the local community and surrounding towns. Mr. Eppinger, whose company has played a valuable role in the redevelopment of downtown Worcester, applauded the City’s collaborative approach. As Nick Smith pointed out, Worcester’s willingness to work with businesses has been a contributing factor in their desire to continue investing in the development of the area.

It was agreed by all of the panelists that looser regulations on establishing businesses, combined with a strong community commitment from those businesses, is the key to ensuring the growth and continuing good health of the Worcester region.  In addition, all of the assembled panelists made encouraging comments stressing the value of local education and training for the next generation of civic and business leaders in Worcester.

MassHealth Mistakes Cost Taxpayers Over $500M

In an audit of MassHealth—the MA Medicaid agency—released Tuesday, June 16th, by Massachusetts Auditor, Suzanne Bump, reported that the commonwealth’s health care program has wasted over 500 million dollars over the last five years. The errors resulted in duplicate payments being made for health services that were provided in the years studied. This error is the largest financial error uncovered by Bump’s office in nearly thirty years.

500 Million in Misapplied Funds

The audit of the MassHealth system covered the years between October 2009 and September 2014. During that five year period, the MassHealth system racked up an astonishing 500 million dollars in misapplied funds and unnecessary expenditures. Some 233 million dollars of the total amount was squandered by paying medical providers directly, in direct violation of existing laws that provide for those services to be paid for by a state qualified MCO (Managed Care Organization).

Doubly Charged for a Single Service

According to the audit, the problem that caused these errors has to do with MassHealth’s record keeping. MassHealth did not maintain a master list detailing which medical procedures must be covered by the MCOs program-wide. This meant that the MassHealth claims system was unable to identify the services that should have been covered by the MCOs. As a result, payments were made to direct medical providers for services that were already paid for through the MCOs. This happened not once, but on a total of nearly 1.5 million occasions. The bill has naturally been passed on to the state’s taxpayers, making this an issue that will have far reaching financial, social, and political repercussions.

A Shocking and Shameful Sum

In addition to the 233 million dollar error by the state’s Medicaid system, Auditor Bump’s report also managed to expose an additional 288 million dollars that was wasted when the MassHealth agency spent that amount on services that it was not required to provide. It turns out that these services—although not provided for under the terms of a legally binding contract—were often covered by MCOs in the commonwealth. As a result, the total expenditure of misapplied funds has risen to an officially estimated $521 million.

Disputing the Findings

Following the revelation of these unprecedented charges, MassHealth has struck back in its own defense. The agency has issued statements to the public in which it claims that only $60 million (of the alleged total of $233 million) was wasted in payment for duplicate funds. It also claims that $127 million of the total figure was spent in an appropriate fashion. However, MassHealth also stated that it needed to make their policies more clear and would implement “all actionable recommendations” from the audit.