Category Archives: Business

Who Says It’s Inelastic?

Has our oil consumption dropped to 2002 levels? We’ll see what effect it has on the economy. It has to be hurting tourism.

[Late morning update]

Paul Dietz mentions Bob Zubrin’s flex-fuel crusade in comments. It looks like both candidates may be on board with a mandate for this:

The really good news is that both Senators John McCain and Barak Obama have declared their support for the Open Fuel Standard that must be adopted to ensure that each of the roughly 17 million cars we buy in this country every year are Flexible Fuel Vehicles.

Thanks, Florida!

Florida just bought 300 square miles of cane fields in the everglades to return them to wetlands. They paid $1.75 billion. That buys out US Sugar that was responsible for 10% of the US sugar lobby. In April, in response to one of Rand’s posts, I wrote that we needed to find a way to buy out big sugar. For 6 MT times $0.10 implicit subsidy/lb, that’s $1.2 billion/year. US Sugar’s share of that is $120 million per year. So $1.75B is a pretty good price for their concession.

Sweet deal, Rand! Thanks for taking one for the team as a Floridian to lower sugar prices nationwide.

An Engineering Manpower Crisis

There’s an interesting article over at the NYT about the Pentagon’s difficulty in getting good engineers, particularly systems engineers.

In short, the pay is too low, it’s not seen as exciting as a lot of the other opportunities for new grads (e.g., Google, or other fields such as finance), programs take too long and are technologically obsolescent, and there’s too much bureaucracy. Sounds kind of like the reasons I left fifteen years ago.

This was amazing to me, but I guess that after almost three decades in the business, it shouldn’t be:

Their report scolded the Air Force as haphazardly handling, or simply ignoring, several basic systems-engineering steps: considering alternative concepts before plunging ahead with a program, setting clear performance goals for a new system and analyzing interactions between technologies. The task force identified several programs that, hobbled by poor engineering management, had run up billions of dollars in overruns while falling behind schedule.

I’ve seen this happen at NASA many times over the years, but that doesn’t surprise me because space isn’t important. National defense is, or at least should be. One wonders how to change the incentives in the system to get better performance. Part of the problem is that the services themselves, particularly the Air Force (with which I have the most experience) don’t value procurement highly enough as a career path. It’s a lot easier to become a general via the cockpit than it is through logistics or development. The other problem is that you often having young lieutenants and captains given responsibility for programs of a size far beyond what they’d be managing at a similar experience level in private industry. This is good from the standpoint of encouraging recruitment, but it often means that they lack the experience to handle the job, and even (or especially) when they’re good, they may be promoted up and out of the program. That’s one of the Aerospace Corporation’s primary functions–to provide program support to the blue suits, and maintain an institutional memory to make up for the fluidity of personnel changes of the AF staff.

In theory, it’s a big opportunity for people like me (I actually have a masters degree in aerospace program management), but it’s hard to get consulting work as an individual due to arcane procurement rules. Also (though the article didn’t mention it) it’s a hassle to deal with a clearance, and I’m not in any rush to renew mine, though I’m starting to consider it, because I really do need the income. Blogging just isn’t paying the bills.

Oh, one other thing. The description of the problems above bears a strong resemblance to a certain controversial large NASA project, where maintenance of the job base and pinching pennies seems to take precedence over actually accomplishing the goal. Or “closing the gap.”

[Via Chicago Boyz]

Where Is The Money Coming From?

And where is it going, in commercial space?

I have to say, I thought this was pretty funny:

Virgin Galactic has already been watching its back with the EADS suborbital space plane (pictured above), set to make its first flight by 2012. But now there’s cash across the pond. “We have invested substantial money into this project,” Auque said without citing exact figures. “The problem is that we need to create this market.”

I doubt very much that Virgin Galactic is worried that EADS Astrium is going to raise a billion dollars to build a suborbital tourist vehicle. There’s a reason that Auque didn’t cite “exact” (or even approximate) figures. He expects to do it mostly with someone else’s money, if he can find a sucker (like ESA?).

The Rough Road To Space

I have a new piece up over at Pajamas Media on space transportation and the Interstate Highway System.

Hey, it was Mike Griffin who made the analogy, not me.

I should also note that while the title is mine, the subheadline is theirs.

[Late afternoon update]

Only Mark Whittington would have the native talent to so misread this piece as to think that I was “expressing astonishment.” Of course, it’s not the first time that he’s fantasized about my views.

[Another update]

Now Mark is fantasizing that I actually want, or expect NASA to build the Interstate to space.

Well, it’s totally in character for him.

I sure wish he’d learn to read for comprehension.

Only Cat 5?

For that kind of money, I’d expect Cat 8, at least.

An audiophile and his money are soon parted.

[Update a few minutes later]

As noted, the Amazon customer reviews are hilarious.

[Update in the evening]

Stephen Dawson (from Down Under) has a defense (albeit pretty flimsy. as he admits) of Denon.

I have to admit my disappointment as well. I’d always respected Denon up until this. As someone in comments said, one hopes that the marketing person responsible will have a few of these cables run through them from one end to the other. Or be keelhauled with them.

I’m Sure It’s Just A Coincidence

Another jump in oil prices.

Think it has anything to do with the fact that both presidential candidates favor a hidden tax on energy and oppose expanding domestic oil production?

You know, in the past, when I’ve said that prices in this range are not sustainable, I always assumed that, at least at some point, sanity would reign in Washington. What a dumb assumption.

[Thursday morning update]

Wise words from Lileks:

…there’s hope. An article in the paper last week said that the gyrations in the oil market may indicate that the laws of supply and demand no longer apply. Well, clever us, to live in an age where immutable laws are abolished with ease; no doubt faster-than-light travel is now possible as well. Whenever someone says that the old laws no longer apply, it’s a sure sign that the laws are about to reassert themselves with brutal force.

Three-buck gas by October? Likely.

As Carl notes in comments, even when you know you’re in a bubble, you don’t know when it’s going to pop.

[Update a few minutes later]

Four-dollar gasbags:

Anyone wondering why U.S. energy policy is so dysfunctional need only review Congress’s recent antics. Members have debated ideas ranging from suing OPEC to the Senate’s carbon tax-and-regulation monstrosity, to a windfall profits tax on oil companies, to new punishments for “price gouging” – everything except expanding domestic energy supplies.

Amid $135 oil, it ought to be an easy, bipartisan victory to lift the political restrictions on energy exploration and production. Record-high fuel costs are hitting consumers and business like a huge tax increase. Yet the U.S. remains one of the only countries in the world that chooses as a matter of policy to lock up its natural resources. The Chinese think we’re insane and self-destructive, while the Saudis laugh all the way to the bank.

And unfortunately, both presidential candidates are economic ignorami:

Recent weeks have seen some GOP stirrings on Capitol Hill, but John McCain has so far refused to jettison his green posturings, such as his belief in carbon caps and his animus against offshore development. A good reason for a rethink would be $4 gas. At present, it is charitable to call Mr. McCain’s energy ideas incoherent, and it may cost him the election.

Of course, Obama’s even worse, but even if McCain wins, it will be a lot closer than it need be. And prices will continue to soar. Needlessly.

I’m Sure It’s Just A Coincidence

Another jump in oil prices.

Think it has anything to do with the fact that both presidential candidates favor a hidden tax on energy and oppose expanding domestic oil production?

You know, in the past, when I’ve said that prices in this range are not sustainable, I always assumed that, at least at some point, sanity would reign in Washington. What a dumb assumption.

[Thursday morning update]

Wise words from Lileks:

…there’s hope. An article in the paper last week said that the gyrations in the oil market may indicate that the laws of supply and demand no longer apply. Well, clever us, to live in an age where immutable laws are abolished with ease; no doubt faster-than-light travel is now possible as well. Whenever someone says that the old laws no longer apply, it’s a sure sign that the laws are about to reassert themselves with brutal force.

Three-buck gas by October? Likely.

As Carl notes in comments, even when you know you’re in a bubble, you don’t know when it’s going to pop.

[Update a few minutes later]

Four-dollar gasbags:

Anyone wondering why U.S. energy policy is so dysfunctional need only review Congress’s recent antics. Members have debated ideas ranging from suing OPEC to the Senate’s carbon tax-and-regulation monstrosity, to a windfall profits tax on oil companies, to new punishments for “price gouging” – everything except expanding domestic energy supplies.

Amid $135 oil, it ought to be an easy, bipartisan victory to lift the political restrictions on energy exploration and production. Record-high fuel costs are hitting consumers and business like a huge tax increase. Yet the U.S. remains one of the only countries in the world that chooses as a matter of policy to lock up its natural resources. The Chinese think we’re insane and self-destructive, while the Saudis laugh all the way to the bank.

And unfortunately, both presidential candidates are economic ignorami:

Recent weeks have seen some GOP stirrings on Capitol Hill, but John McCain has so far refused to jettison his green posturings, such as his belief in carbon caps and his animus against offshore development. A good reason for a rethink would be $4 gas. At present, it is charitable to call Mr. McCain’s energy ideas incoherent, and it may cost him the election.

Of course, Obama’s even worse, but even if McCain wins, it will be a lot closer than it need be. And prices will continue to soar. Needlessly.