Re: "The Only Thing They Learn" -- does anyone else find it irritating?

On Wed, 18 Jun 2008 18:16:05 -0400, lathamr@xxxxxxxxxx (Richard D. Latham)
wrote:

John Schilling <schillin@xxxxxxxxxxxxx> writes:

On Wed, 18 Jun 2008 07:09:12 GMT, Gene <gene@xxxxxxxxxxxxx> wrote:

John Schilling <schillin@xxxxxxxxxxxxx> wrote in
news:0m8h54trrku1hf0bg124vkvkfa1llus1p9@xxxxxxx:

The reality is, even if we had retro-futuristic too-cheap-to-meter
nuclear power, you'd *still* be driving a car that burns $4/gallon
gasoline. Two completely different markets, now and for years to
come.

If energy is too cheap to meter, what is the cost associated with production
of hydrogen from water or methanol from air? It seems to me the price could
easily undercut those kinds of gas prices.

If by "easily" you mean "after tens of gigabucks and tens of years of
investment", sure.

I think you are wildly over-estimating the capital formation
difficulties. I mean, yeah, $10 billion sounds like a lot of money,
but it probably less than 1% of what the various investment entities
are going to end up writing off, by the time we have the current
housing bubble behind us.

Yes, but "various investment entities", plural. And really, that
one comes down to millions of eagerly optimistic amateurs each
dealing with a few hundred thousand dollars at a time.

Oil refineries and the like, require tens of billions of dollars
all at once, from a single "investment entity". If you think
that's easy, or even really plausible, I recommend you give it
a try.


And this isn't "invention required" stuff, like fusion is.

Who said anything about invention being required?


This is just bog-standard chemistry that we've known how to do,
and done, on a commercial scale, in war conditions.

Yes, by way of many billions of dollars of investment and many
years of effort.

This is a persistently baffling blind spot in the SF community -
the belief that once an invention has been invented, and the
necessary raw materials identified, the problem is solved and
the part where stuff actually gets built can be handwaved off
into exercise-for-the-student territory.

I suppose this could be a way of suspending disbelief for all
those lone-genius-transforms-the-world! plots, cutting out the
boring parts in the middle. But the real world doesn't work
that way, and IMO it's been a long time since SF where it works
that way has been really credible.

If Dr. Morbius shows up tomorrow with plans for the Krell Machine
(now with Id-supression safety interlocks!), it's going to be a
long, long, *long* time before dreams start coming true.


But almost nobody who is investing big money for the long haul, seems
to think that gasoline is going to stay at $4/gallon for more than a
year or two. And if it drops back down to $1.50/gallon, well, you'll
be paying $500/gallon for all the red ink your accountants will need
to explain that shiny new hydrogen plant in the back lot.

Now we're off into a "peak-oil" discussion. I will note that, right
now, there seem to be a lot of people investing pretty big money in
the bet that gas prices are going to go _up_ from $4 a gallon.

Yes. *Next year*.

And I suspect they're wrong even about that, but it's far from a
sure thing either way. Predicting short-term market fluctuations
is mostly a fool's game.

But there's a difference between buying gasoline at $4/gallon[1]
today because you think you can sell it for $5/gallon next year,
and buying a synfuel plant that will only be seriously profitable
if gasoline *stays* at $5/gallon for the next *twenty* years.


My personal only slightly informed position is that OPEC (Saudi
Arabia, primarily) has shot their wad, meaning that I don't think
they _can_ raise production enough to satisfy demand and drive prices
back to the 2004 level. I think China and India are just growing too
fast to permit that outcome.

The Chinese and Indian economies have grown by about 40% since 2004.
That's impressive, but the Chinese and Indian economies combined
only make up about 10% of the global economy[2]. So all their
economic growth since 2004, will have resulted in a ~4% increase
in the global demand for oil over that period.

Actual world oil production has increased by more than 10% over
the same period.

Furthermore, even if world oil production hadn't increased at all,
the short-term price elasticity of oil is in the 0.1 to 0.2 range.
That means a 4% increase in global demand, only translates into a
20-40% oil price increase.


This is one of those issues where you really, really need to have
done the math to understand what's going on.


[1] Well, the corresponding wholesale price.

[2] In dollar terms, which isn't usually the proper measure of an
economy but very much is when it comes to that economy's oil-buying
power.


--
*John Schilling * "Anything worth doing, *
*Member:AIAA,NRA,ACLU,SAS,LP * is worth doing for money" *
*Chief Scientist & General Partner * -13th Rule of Acquisition *
*White Elephant Research, LLC * "There is no substitute *
*John.Schilling@xxxxxxxxxxxxxx * for success" *
*661-951-9107 or 661-275-6795 * -58th Rule of Acquisition *
.

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