The Trade: The Power Behind the Throne at the Federal Reserve

High Court to Mull Power to Suspend Judges

The Supreme Court has decided to hear oral arguments on whether it too has the authority to suspend jurists, or if that is a power left solely to the Court of Judicial Discipline. The oral argument in the case is set for September.

Understanding Juror Emotion: The Power of Mad

Sympathy is a central part of any injury case, but from what I have seen in jury research and in trial, the true damage accelerator for defendants is anger.

Wheels Blog: Porsche and GMC Rank Highest in New Version of J.D. Power Initial Quality Study

Porsche The 2013 Porsche 911 50th Anniversary Edition. Porsche received top marks in J.D. Power’s revised Initial Quality Study.

J.D. Power released the results of a new version of its Initial Quality Study on Wednesday at a news conference with the Automotive Press Association in Detroit. The 2013 study was redesigned to measure better the quality of new technology that is becoming common in vehicles – including features like voice-recognition, blind-spot-monitoring, lane-departure-warning and self-parking systems.

The study scores automakers by brand and by model on the number of problems per 100 vehicles, or “pp 100.” A lower number signifies a better rating, indicating that owners have reported fewer problems for that brand or model.

The top scorers in the brand rankings were Porsche at No. 1 with a score of 80 problems per 100 vehicles, followed by GMC (90), Lexus (94), Infiniti (95), Chevrolet (97), Acura and Toyota (tied at 102), Honda (103), Jaguar (104), Hyundai, Kia and Mercedes Benz (all tied at 106). Because of the changes in the study’s methodology and content, the pp 100 scores cannot be directly compared with scores from previous years. But it is still possible to compare the brands’ relative rankings.

The redesigned study found that nearly two-thirds of the problems that owners experience with their new vehicles in the first 90 days are related to design and not manufacturing. In some cases, a component may be working as it was designed to, but can still pose a problem for the owner because it is difficult to understand or operate.

While this may seem like good news – because it involves fewer breakdowns – it is actually bad news because design-related problems are more difficult, if not impossible, to resolve.

Because design problems are not the result of breakdowns or malfunctions, the study found that just 9 percent of the problems are taken to a dealership within the first 90 days of ownership. And when they are, the problem is fixed only 13 percent of the time, whereas in the case of an actual defect or malfunction, the problem is fixed 42 percent of the time.

Many of the problems owners had with a vehicle were related to the driver’s interactions with it. These interface problems often involve voice recognition or hands-free technology, Bluetooth pairing for mobile phones and navigation systems.

What was J.D. Power’s takeaway message for consumers? When test-driving a vehicle you intend to purchase, spend as much time evaluating the technology and how easily you interact with it as you spend evaluating how well the vehicle drives, David Sargent, vice president for global automotive at J.D. Power, said in a telephone interview.

The study also found that initial quality had decreased from last year and that the decline was due mostly to technology design issues, Mr. Sargent said.

General Motors made a strong showing in this year’s survey. “GMC is second; they haven’t been anywhere near that before,” Mr. Sargent said. “Chevrolet is fifth; they’ve not been near that before. Buick and Cadillac were above the industry average.” Mr. Sargent added that they G.M. had worked “incredibly hard” to overcome its problems, noting that its recently introduced models included some, like the Buick Encore and Chevrolet Malibu, that score well on quality.

Indeed, at the news conference Mr. Sargent said that if the rated brands were combined under their parent corporations, G.M. would have a better score than any other company in this year’s study. G.M.’s trucks scored particularly well, he said.

Conversely, Nissan fell conspicuously and is now 30th out of 33 brands because of problems with three major new models — the Altima, Pathfinder and Sentra. “The competition is so tough these days, you don’t have to get much wrong to fall down in the rankings a long, long way,” Mr. Sargent said.

Ford remained in relatively the same position it has occupied for the last two years when it was hit hard with complaints about its MyFord Touch driver interface. Ford was 27th out of the 33 rated brands. Even though the interface is improving as Ford brings out updates, Mr. Sargent its inclusion in more vehicles has resulted in continued complaints.

As in years past, the Initial Quality Study surveys the owners and lessees of new vehicles after the first 90 days of ownership. This year it was based on responses from more than 83,000 owners of new 2013 passenger vehicles. Owners were asked whether they had any of 233 possible problems, which included mechanical defects and malfunctions, as well as design issues.

In this year’s redesigned study, design problems accounted for two-thirds of the total number of questions. Previously, design issues accounted for about half of the survey. For the first time, the study is conducted online, which allowed J.D. Power to get more detailed feedback on each of the problem areas.

This is the fourth generation of the study, which was begun in 1987. It was also updated in 1998 and 2006.

Public Utilities: Must Electric Utilities Enter Homes Before Restoring Power?

In a case the defendant electric utility is claiming could have broad implications on power companies' ability to restore Pennsylvanians' power, the state Supreme Court is set to decide whether a Western Pennsylvania utility had a duty to enter a customer's premises and inspect its electrical facilities before restoring power.

Many Cruise Ship Lack Backup Power Systems, Vexing Regulators

“It was really hell,” said Bernice Spreckman, who is 77 and lives in Yonkers, N.Y. “I used my life jacket, which was flashing with a little light on it, to find a bathroom it was so dark.”

Ms. Spreckman was not among the 4,200 people aboard the Carnival Triumph who this month endured five days of sewage-soaked carpets and ketchup sandwiches. Her trial at sea came in 2010, on another ship run by Carnival Cruises, called the Splendor, which carried 4,500 passengers.

On both ships, fires broke out below decks, destroying the electrical systems and leaving them helpless. A preliminary Coast Guard inquiry into the Splendor found glaring deficiencies in its firefighting operations, including manuals that called for crew members to “pull” valves that were designed to turn.

But more than two years after the episode, the final report about what happened on the Splendor has yet to appear, a reflection of what critics say is a pattern of international regulatory roulette that governs cruise ship safety.

While the Splendor was based in the United States, the ship was legally registered in Panama, meaning the Panamanian Maritime Authority had the right to lead the investigation. But after the 2010 fire, Panamanian regulators chose to have the Coast Guard take over the inquiry. Then, officials in both countries apparently spent months trading drafts of their reports.

One official in Panama said the authority had completed its review of the Splendor report in October 2012. But a Coast Guard spokeswoman, Lisa Novak, said it still had not “finalized” the report. In the case of the Carnival Triumph, the regulatory scene will shift to the Bahamas, where that ship was registered.

In a recent letter to Coast Guard officials, Senator Jay Rockefeller, Democrat of West Virginia, said that cruise ships seemed to have two separate lives. Only during days near port are they closely monitored.

“Once they are beyond three nautical miles from shore, the world is theirs,” said the letter from Senator Rockefeller, who has headed recent inquiries into cruise ship safety.

Cruise industry officials point out that seaborne vacations are extremely safe and that some 20 million people go on cruises annually, with few problems. The most glaring exception to that record occurred last year when a vessel operated by a subsidiary of Carnival, the Costa Concordia, ran aground off the coast of Italy, resulting in 32 deaths.

In the Triumph’s case, the Coast Guard has said that the ship’s safety equipment contained the blaze. And both the Triumph and the Splendor returned from their aborted voyages without serious injuries to passengers or crew.

But those successes also underscore what most travelers do not realize when they book cruises: nearly all ships lack backup systems to help them return to port should power fail because to install them would have cost operators more money.

The results are repeated episodes involving dead ships, with all the discomforts and potential dangers such situations can bring. In another case, in late 2012, the Costa Allegra cruise ship, a sister ship of the Concordia, lost power after a fire in the generator room and it had to be towed under guard from its location in the Indian Ocean.

In many ways, passengers aboard boats like the Triumph and Splendor were lucky because their ships were disabled in calm weather, when instead they could have been knocked out during storms, or when they were far out at sea or in pirate-infested waters, experts said.

“Anything that knocks a ship dead in the water is serious,” said Mark Gaouette, a safety expert and former Navy officer.

This article has been revised to reflect the following correction:

Correction: February 25, 2013

A caption with an earlier version of this article misstated the number of passengers on the Carnival Splendor when it was disabled at sea. There were 4,500 aboard, not 14,500.

This article has been revised to reflect the following correction:

Correction: February 25, 2013

Because of an editing error, an earlier version of this article misstated the performance of the safety equipment on the Triumph. It contained the blaze; it is not the case that it failed to contain it.

Understanding Juror Emotion: The Power of Mad

Sympathy is a central part of any injury case, but from what I have seen in jury research and in trial, the true damage accelerator for defendants is anger.

With 2 Big Deals Approaching, Rosneft Stands to Become a Global Oil Power

At the heart of the maneuvering is the country’s third-largest oil company, articles about TNK-BP." href="http://topics.nytimes.com/top/news/business/companies/tnk_bp/index.html?inline1=nyt-org">TNK-BP, which is a joint venture between the British oil giant BP and four Russian billionaires. Rosneft is negotiating to buy out one or both partners.

If either or both of the sales are concluded, Rosneft, whose headquarters is a mansion across the Moscow River from the Kremlin, is sure to expand its power on global oil markets. If both deals get done, Rosneft would become the world’s largest publicly traded oil company in terms of crude oil production, with the Russian government as the majority owner. The transactions would also lift the fortunes of Igor I. Sechin, a former spy and close aide to President Vladimir V. Putin, who has championed them as Rosneft’s chief executive.

The company has been trying to play down negative associations with state ownership. Rosneft is like a teddy bear, Mr. Sechin told a group of investors in London this month, in a video posted on the company’s Web site. “We love our teddy bear. We clean it, look after it and take care of it.”

The shift of BP’s Russian operations from private to state hands is fraught with risks, both for the company and the Russian industry more broadly.

BP’s partnership with private sector billionaires has yielded a return of 34 percent annually since it began in 2003. BP has earned $19 billion in dividends on an $8 billion investment and is now poised to sell its stake for a reported $25 billion to $28 billion.

BP’s investment in Rosneft stock from 2006, when the state company held an initial public offering, brought BP a loss.

“The state is tempted to milk the oil industry as a cash cow,” Peter Westin, the chief equity analyst at Aton, an investment bank in Moscow, said by telephone, referring to both high taxes and expanding government control.

The Kremlin, eager for investment to maintain the flow of oil that props up Mr. Putin’s popularity and the improved living standards of ordinary Russians, has sought both control and market-oriented policy changes under Mr. Putin.

Rosneft is listed on the London Stock Exchange and is among a group of oil companies that are owned or closely affiliated with governments that control access to oil reserves but are also open to private sector investment, like Petrobras in Brazil and Statoil in Norway.

The company has taken pains to emphasize that it will be run efficiently, hiring former executives from Exxon Mobil and TNK-BP in anticipation of the deal with BP. It has also reaffirmed its privileged access to new exploration sites in the Arctic Ocean after Mr. Sechin blocked a proposal by a liberal wing of the Russian government to open offshore drilling to competition.

Cliff Kupchan, an analyst at the Eurasia Group, which conducts risk analysis on Russian politics and economic policy for large investors including oil companies, wrote in a research note that Rosneft’s expansion could tempt the Russian government to use it strategically, just as Aramco, the Saudi Arabian company, is used to influence oil prices. This would come with a distinction: unlike Saudi Arabia, Russia would be unlikely to coordinate such moves with the United States.

Rosneft, if the acquisitions are completed, would pump about four million barrels of oil a day, or about 40 percent of the output of Saudi Arabia.

Oil analysts say Russia is unlikely to withhold oil, even as this becomes more feasible, because shutting down continent-spanning oil pipelines is too expensive. Also, many Siberian oil wells cannot be stopped without destroying them because permafrost surrounding their upper portions would freeze the well bore solid.

BP is hoping a deal with Rosneft might follow a similar arc of profit as its deal with the oligarchs.

BP made a fortune in Russia by applying Western oil field techniques to Soviet-era wells and infrastructure, which worked well despite BP’s blundering technical reputation after the Gulf of Mexico spill.

Sometimes, engineers made adjustments as simple as opening the spigot wider at the mouth of a well because the previous owners, following the Soviet axiom that they would pretend to work for pretend pay, had never bothered to check if more oil could flow.

From the mid-1980s to mid-1990s, Russian oil output dropped by half to just more than six million barrels a day, before deals like the creation of TNK-BP helped reverse the trend.

Overall production is now at about 10 million barrels a day, about tied with the levels of Saudi Arabia, but again in decline.

But future growth from fixing sloppy late Soviet work is unlikely, and a new chapter is opening in the history of the Russian oil industry.

“The landscape going forward looks a lot less attractive than the experience of the last 10 years,” said Peter Hutton, an analyst at RBC Capital Markets. Referring to the revival of old fields in Siberia using Western technology, he said: “TNK-BP has been able to get fairly low-hanging fruit in the brownfield revolution. Getting additional reserves is going to be a lot more difficult.”

One senior oil company executive close to BP said the partnership could similarly transfer know-how to Rosneft.

“Mr. Sechin and Mr. Dudley have known each other for years,” he said, referring to BP’s chief executive, Robert W. Dudley, a former director of TNK-BP. “There is a willingness on the part of the leadership of Rosneft to get expertise and people from BP to improve the capability of Rosneft.”

Andrew E. Kramer reported from Khanty-Mansiysk, Russia, and Stanley Reed from London.

How and Why Female Attorneys Should Pursue Power

Why talk about power?

Power is part of leadership. Women constitute just 15 percent of equity partners and hold only 20 percent of the seats on the highest governing committees at the nation's top law firms, according to the "Report of the Seventh Annual National Survey on Retention and Promotion of Women in Law Firms," a forthcoming study by The National Association of Women Lawyers and The NAWL Foundation.

Now, more than ever, as legal organizations adopt new strategies to deal with a rapidly changing profession, women's voices are desperately needed at the table. Studies by Catalyst and other organizations show increased profitability and lowered risk with three or more women on corporate boards.

Power impacts success and satisfaction. The reality is that women succeed within their organizations when their ambition is fed, their contributions valued and their work-life balance manageable. Challenging assignments, equitable compensation and access to flexible schedules all flow from having power.

Power creates choices. Equity partners working part time experience less stigma than fixed income partners, according to a September 2009 study for the Project for Attorney Retention, "Reduced Hours, Full Success: Part-Time Partners in U.S. Law Firms." The power derived from having a book of business gave the part-time partners the ability to take lead roles in their cases, to structure the work on their cases in a manner consistent with their schedules and the work, to choose the attorneys with whom they worked and to negotiate for proportional compensation.

Power affects pay. The 2012 Partner Compensation Survey by Major, Lindsey & Africa found that the gap between women partners' compensation and their male counterparts' has grown to 46 percent. Male partners now earn an average of $734,000, while female partners are paid $497,000. Importantly, while origination fees may account for some of the disparity, a gap persists even when the findings are adjusted for comparable books of business.

A potential reason for this disparity may be inequities in the credit process, according to "New Millennium, Same Glass Ceiling? The Impact of Law Firm Compensation Systems on Women," a July 2010 study for The Project for Attorney Retention and Minority Corporate Counsel Association. In that study, 55 percent of women partners reported being denied their "fair share" of credit; nearly 30 percent reported intimidation, threats or bullying over credit; and 39 percent reported dissatisfaction with how disputes over credit were resolved.

Getting a critical number of women in positions to influence compensation decisions is crucial to eliminating real and perceived inequities in the compensation process.

Notably, the fifth NAWL annual survey on retention and promotion found that the few large firms that had three or more women in their top 10 rainmakers had eliminated the gap in male/female compensation.

PATH TO POWER

DealBook: In Citigroup Shakeup, a New Show of Power by Boards

Shannon Stapleton/ReutersMichael O’Neill, the chairman of Citigroup, in 2009.

The departure of Vikram S. Pandit shows clearly who is in charge of Citigroup: the board of directors. For good or for bad, boards are increasingly taking charge of corporate America. The reign of the imperial chief executive is over.

No reason was given in the news release announcing that Mr. Pandit had stepped down. And while the reports of what happened behind the scenes will slowly emerge as each side spins its story, there is no doubt that this was an unexpected and abrupt resignation. He left without the words that you usually see in such announcements about “spending more time with your family” or even language about “retirement” — and just as his compensation was beginning to rise again into the tens of millions of dollars.

The new show of power by the board is a remarkable turn of events. In the years leading up to the financial crisis, boards were criticized for letting chief executives rule unchecked. Remember, Citigroup was the place where Sandford I. Weill reigned supreme for years. It led to Charles O. Prince III, who lacked the ability to run the financial conglomerate but also lacked a board that could appropriately supervise and monitor his actions let alone make a decision about the direction of the company. (Mr. Prince was the one, you may recall, who said in the years leading up to the financial crisis that “as long as the music is playing, you’ve got to get up and dance.”

Board supremacy is a general trend. In the wake of the financial crisis, the big banks have been forced to reconstitute their boards, with Citigroup and Bank of America at the top of the list. But others like Goldman Sachs have also been pushed to bring in more competent people. The new directors are much more aware of what happened in the years leading up to the financial crisis, and to take action.

Not only have boards been pushed to bring in new, more active people, political and market forces are pushing boards into a greater role in the banks themselves. The Dodd-Frank Act charges boards with an enhanced duty to monitor systemic risk at financial institutions and requires the creation of risk management committees made up of independent directors for these banks.

Corporate governance advocates, meanwhile, are pushing boards to take a more active role not only in the hiring and firing of the chief executive but in the operation of the company.

The consequence is that not only do boards have more legal responsibility to run the company, they are being exhorted to do so. Boards are listening. The change is real and amply underscored in the shakeup at Citigroup. Mr. Pandit’s resignation is remarkable because it goes beyond what had been the traditional board role, which has been to stand back and hire or fire the chief executive. Here, the board appeared to want to change the course of Citigroup’s operations against the wishes of Mr. Pandit.

The lesson of Pandit’s departure is that boards are now expanding their focus and looking to veto or change a company’s direction and operations. And that it is happening at a place like Citigroup, where for years being a director was more like being a minor royal – not much responsibility, but nice perks — is doubly remarkable.

The real question though is whether boards can run companies better than chief executives can. Boards comprise part-time members who don’t have the same interests at stake. They are also committees and thus may lack the wherewithal to properly execute. In fact, some blame the financial crisis on the failure of boards to correctly monitor financial institutions. But that is a developing story.

For now, we’re now in a new world where the boards rule and are unafraid to exert their power. Chief executives, beware.

Today's Economist: Simon Johnson: Money, Power and the Rule Of Law

Simon Johnson is the Ronald A. Kurtz Professor of Entrepreneurship at the M.I.T. Sloan School of Management and co-author of “White House Burning: The Founding Fathers, Our National Debt, and Why It Matters to You.”

Economic policy is always torn between helping the broader social interest – lots of ordinary people – and favoring particular special interests. Unfortunately, special interests typically win out in the kind of situation we have in America in 2012, when it’s all about spending money to win friends and influence people.

Perspectives from expert contributors.

The most effective way to push back against powerful special interests is to have the same rules for everyone – and to enforce those rules fairly, even when they are broken by the richest and most politically connected people in the land. Attorney General Eric Schneiderman of New York took a major step toward restoring the rule of law this week, by bringing a case against JPMorgan Chase. But it will be an uphill battle; the forces against him are incredibly strong, including some within the Obama administration.

Special interests always want to take over and organize society for their own benefit. In the terminology of economics, there are always some “rents” to be had – meaning some form of extra compensation that you get from tilting the playing field in your favor. Powerful people are always “rent-seeking,” another way of saying that they would like to feather their own nests. And such activities impose costs on society, lowering incomes and limiting opportunities for everyone else.

When money is the primary source of power, the special interests win hands down. They can create advantages for themselves. One way is through the market mechanism – as monopolists did with railroads and industrial sectors at the end of the 19th century.

Or they can capture the government and use state policies to help themselves – for example, by deregulating the financial sector and allowing excessive risk-taking in big banks. The ability to take such risks hurts all consumers and taxpayers while helping the special interests who get this advantage.

In a brilliant satire, Steven Pearlstein recently put his finger on a central problem: powerful people want one set of rules for themselves and different, less advantageous rules for everyone else. In modern America, Mr. Pearlstein points out, the rich and powerful also like to complain a lot.

Democracy can be a countervailing force. But if this is only about holding elections, and money buys votes, it is not much of a constraint on powerful people. At the beginning of the 20th century, the Senate was known as the “millionaires’ club” for a reason – most of its members were rich or very close to rich people.

In his classic book “The Logic of Collective Action: Public Goods and the Theory of Groups,” Mancur Olson articulated another central problem: it is hard to organize people around broader social interests, while special interests know exactly what they want and coalesce much more readily.

In this situation, it is essential to have elected officials who seek to enforce the law in an even-handed fashion. This was what Theodore Roosevelt did with antitrust law at the beginning of the century. J.P. Morgan (the man) was shocked that the Sherman Antitrust Act could possibly be applied to him, and he brought a great deal of political pressure against it.

Fortunately, Roosevelt was not prone to backing down, and we developed a broad and effective antimonopoly approach in the early decades of the 20th century.

In the case brought against JPMorgan Chase on Monday, Mr. Schneiderman’s complaint is straightforward: Bear Stearns (acquired by JPMorgan Chase in early 2008) misrepresented securities that it sold to the public before 2008.

“Bear Stearns led its investors to believe that the quality of the loans in its RMBS had been carefully evaluated and would be continuously monitored,” the summary of the complaint issued by Mr. Schneiderman’s office said, referring to residential mortgage-backed securities. “In reality, Bear Stearns did neither.”

As with the cheating by Barclays on Libor, or the recent money-laundering cases against HSBC and Standard Chartered, management was at best negligent (for background on those cases, see my Economix posts from the summer). More likely, in the case of Bear Stearns, misleading investors was a deliberate decision by top people.

The broader social costs of these reckless actions by Bear Stearns and others were enormous. If you have not already seen the recent report by Better Markets on the real costs of the financial crisis, you should read it, or its summary, immediately – it puts put total losses of gross domestic product at $12.8 trillion.

As Brian Kettenring of the Campaign for a Fair Settlement, Dennis Kelleher of Better Markets and others pointed out this week, this should be the first case of many to be brought by Mr. Schneiderman and presumably the relevant federal authorities. By all accounts, Bear Stearns behaved badly, and so did many other companies engaged in the business of issuing residential mortgages and turning them into securities that could be sold to investors.

The pushback against the New York attorney general is already intense, with bankers and their lobbyists mustering all possible political clout to prevent further cases and to force a small and inconsequential settlement when cases are brought.

The bankers assert that great damage will be done to the economy if they are held accountable. In fact, the greatest damage has already been done through their lack of accountability.

Since early 2009, the Justice Department and other government agencies have repeatedly declined to enforce the law as it applies to large financial sector companies. Jeff Connaughton provides chapter and verse in his compelling recent book, “The Payoff: Why Wall Street Always Wins,” which I wrote about in August. People at the very top of the Obama administration deferred excessively to the very largest Wall Street banks.

Have we now turned a corner? Watch carefully what Mr. Schneiderman is able to accomplish and what kind of political support he draws.

Green: Green Power on the Edge of Practicality

An offshore wind farm is an awesome sight that needs to be visited up close to be fully appreciated. Gunfleet, which is thought to derive from Viking words meaning Gunna’s Harbor, has 48 identical, white steel towers, each more than 200 feet, or 61 meters, high. They are planted in neat rows over 5.8 square miles, or 15 square kilometers, on a shoal so shallow that some of the foundations are out of the water at low tide. The three fiberglass blades of each turbine have a span of 150 feet and spin at close to 155 miles an hour, or 250 kilometers an hour, under the best wind conditions.

Already the sandbars off places like Brightlingsea, a seaside town with pastel-shaded bath houses northeast of London, bristle with massive turbines. On this crisp autumn day we could pick out three other wind farms in the distance from our vessel.

Having colonized the shallows, wind companies are drawing up new projects further offshore, where they will be out of sight of people who complain that they spoil the view.

“This is an industry that is creeping up on people; soon there will be thousands of turbines offshore,” said Jason Halsey, head of operations at the British installations of Dong Energy, the Danish company that is the largest offshore wind farm owner.

Harnessing ocean breezes has a certain logic for countries like Britain that want to replace fossil fuels with cleaner energy sources — countries where the winds howl around the rugged coasts much of the time. Bloomberg New Energy Finance predicts that offshore wind will surge in Britain, providing more than 10 percent of electric power in 2020 compared with a little less than 2 percent in 2011.

If countries like Britain and Germany are to meet their carbon reduction targets, “offshore wind is absolutely fundamental,” said Fraser Johnston, a Bloomberg New Energy analyst. “They don’t have enough space for solar and onshore.”

Utilities are just figuring out how to build and operate these monster projects. The machines are becoming more reliable, operators say, and they can be largely run from shore. Technicians from Dong Energy and Siemens, which builds the turbines, manage Gunfleet by computer from the comfort of a light-filled new building in Brightlingsea.

The turbines still require offshore visits for maintenance — and this will become tricky as they are placed further from shore. Dong is even considering emulating the oil industry by having overnight accommodation for workers at new farms.

Still, there is as yet no assurance that offshore wind will claim a prime spot in the energy mix of the future. In fact, the industry is at a crossroad. In the current economy, offshore energy operators — like other renewable energy producers — must show that they can bring sky-high costs down or risk hitting a wall.

At present, exploiting offshore wind to generate electricity is twice as expensive as using onshore wind and far more expensive than using fossil fuels, analysts say.

“Offshore wind is inherently expensive because it is offshore,” said Dieter Helm, a professor of energy policy at the University of Oxford. “The main reason we are building offshore wind is because people don’t like onshore wind.”

Offshore wind is feasible only because the governments of Britain and other countries provide generous price supports. Britain’s direct offshore wind subsidy amounted to £288 million, or $464 million, in the 2010-11 fiscal year. “The governments are not going to support this forever; over the next three years the industry needs to show it can stand up and deliver and be more cost effective than today,” said Tom Murley, who runs a $1 billion renewables fund at the private equity firm HgCapital in London.

Rounding up the money for projects like Gunfleet, which cost about £550 million, is growing increasingly difficult as banks reach their lending limits and utilities feel financial strain. People in the renewables business say the offshore industry’s reputation has been hurt by troubled projects like Greater Gabbard, a big wind farm in the Thames Estuary that has been plagued by construction problems that have led to legal disputes.

A key is going to be tapping into long-term, deep-pocketed investors like pension and sovereign wealth funds. Dong Energy sold a stake in Gunfleet to Marubeni of Japan and brought in the green energy company from Abu Dhabi, Masdar, as a partner on a $1.5 billion new wind farm called the London Array.

Graeme Walker, chief financial officer of Baryonyx, an Austin, Texas, company that wants to build offshore wind farms in the United States, says the vast scale possible for these projects will eventually bring down the price tag for the electricity they generate.

He says he also believes competition from Chinese and other non-Western manufacturers will eventually loosen the monopoly that European companies have on making the offshore turbines, leading to “more honest pricing.” There are, as yet, no offshore wind projects in U.S. waters.

An effort to reach greater scale and lower costs was visible at Gunfleet Sands.

A special boat from Denmark called the Svanen was preparing to ram the foundations for a new turbine. This turbine, the first of a planned 300, will have a capacity of six megawatts — nearly double that of the others at Gunfleet. A tugboat had just arrived from the Netherlands, towing the monopile, or foundation piece, which will be hammered deep into the seabed. On this day, at least, money was still flowing into offshore wind.

This article has been revised to reflect the following correction:

Correction: October 3, 2012

An earlier version of this article stated that the wind turbine blades at Gunfleet Sands spin at close to 400 miles an hour, or 645 kilometers an hour, in optimal conditions. The figure should have been 155 miles an hour, or 250 kilometers an hour.