Bill James'  Instablog

In 2006 the linked document was provided to the Commanding General of the Army Corps of Engineers (a West Point classmate). This outlines how hurricane defenses could be incrementally build, paid for by the shift of urban transportation from oil-powered to solar-powered. Here is link to talking points from an April 2011 meeting with the Deputy Commanding General.

Everyone I have met at the Corps of Engineers is a dedicated professional. The problem is that central planners are constrained by their institution's primary objective of consistency, better "know-how." Innovation is disruptive, a consistency aberration, a change in "know-what." This results in innovations being studied, but not allowed to disrupt.

The Weather Channel's "It Could Happen Tomorrow" gives a clear warning of why preparation is essential.

Free markets reward disruptive behavior that create a 10x, ten times productivity gain (link to 10x: A Transportation and Power Infrastructure Economic Boom). Giants of the mainframe computers were wiped out by disruptive startups of Apple and Microsoft. Government control of the means of production in power and transportation infrastructure, consistency as a primary objective, has created civilization killers of debt, Peak Oil and Climate Change.

Given a free market, companies will accomplish what Thomas Edison noted as practical in 1910 (full quote):

"Sunshine is spread out thin and so is electricity. Perhaps they are the same, Sunshine is a form of energy, and the winds and the tides are manifestations of energy.”

“Do we use them? Oh, no! We burn up wood and coal, as renters burn up the front fence for fuel. We live like squatters, not as if we owned the property.

“There must surely come a time when heat and power will be stored in unlimited quantities in every community, all gathered by natural forces. Electricity ought to be as cheap as oxygen...."

Investments in communications after a free market was returned in 1984 had many boom and bust returns.  But, in general, massive wealth was created. The same will be true when power and transportation are returned to free markets.


Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Additional disclosure: Author is founder of JPods, Distributed Grid and co-founder of Soleil Micro. These companies intend to disrupt central planning of power and transportation infrastructure.

The self-reliance so common in the US before the 1960's has been displaced by centralized power and a monolithic dependence on imported oil (oil's Potato Famine potential). Most people do not have more than a weeks food. Dependence on Just-in-Time delivery of electricity, food, water and jobs is the norm.

Irene is likely to disrupt power for more than a week. She is likely to disrupt 7% of US oil refining and 400,000 barrels a day of gasoline imports and distribution. The food system may be disrupted for more than two weeks.

Irene seem about to teach the US, the lesson Japan is learning after the recent tsunami, distributed systems, self-reliance has an economic value not appreciated by government central planning of infrastructure.

As happened after 1984 in communications, over the next decade there will be a dramatic shift in the archicture of power and transportation from centralized to distributed. Personal Energy Servers will be as common as Personal Computers.  Here are some early guesses at technologies: Victory Gardens, King Power, Knowledge Publications, Millienum Reign Energy, SkyTran, Taxi2000, ET3, VectusPRT, ULTraPRT and MisterPRT. My efforts are in JPods, Distributed Grid and Soleil Micro.


Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Currently oil futures are at bargain prices for fear of a double-dip recession. Demand destruction on oil prices will have only temporary impact.

Oil resources with Net Energy greater than 10:1, seem likely to increase in value by more than 4 times in the next 24 months for the following reasons:

• Life requires energy, so the market will pay what ever it costs to have energy. 
• Between 1950 and today government actions made oil the lifeblood of our economy. Until there is a Constitutional Amendment oil will likely remain the lifeblood of our economy.
• Joint Forces Commands warning to all US military commands:  "By 2012, surplus oil production capacity could entirely disappear, and as early as 2015, the shortfall in output could reach nearly 10 million barrels per day."
• IEA World Energy Outlooks note that the world has passed Peak Oil; that the economic future of 2012 will depend on oil fields "yet to be found" and "yet to be developed." 
• Mexico's government will face collapse from reduced income and increasing demand; depleting oil, increasing domestic consumption of oil, lower food inventories, higher food prices and drug wars. The US will lose our second largest oil supplier.
• As economic recession/depression sets in, oil exporters may start hoarding their resources to develop their own economies. Oil supply will drop.
• There is a string of tropical depressions forming in the Atlantic. If anyone of this Falls hurricanes hits Venezuela, Mexico or the US oil fields hard, recognition of oil supply fragility will drive oil prices much higher.
• LA is due an earthquake that will significantly disrupt the oil supply chain in the West.
• Terrorism and other risks all will drive the value of easily obtainable energy prices higher.
• Net Energy greater than 10:1 (energy out:energy required to get energy) because as oil prices leap, costs to extract oil sands and shale will become uneconomical.

Next to investments in Personal Rapid Transit (PRT or PodCars) no asset seems more likely to increase in value as much as easily extracted conventional crude oil.

My efforts and investments focus on replacing oil in transportation (disclosure, author is founder of JPods, Inc. a PRT company). PRT is essentially a physical version of the Internet, packet switched computer networks direct ultra-light robotic vehicles on ultra-light railroads to chauffeur people and goods using about 1/10th the energy of highway networks.

Here is the most specific investment advice I can give:

• Mimic T. Boone Pickens.  He understands and invests in oil and gas based on a clear understanding of Peak Oil. Invest in companies that have  domestic oil reserves with Net Energy over 10:1.
• Mimic Warren Buffett and buy railroads. When about buying BNI he noted they can move a ton at over 470 miles per gallon. That economies are hard to judge, but in the long run efficiency will win. My opinion is that in an energy constrained economy, railroad will be the logistical arteries and PRT will be the logistical capillaries.
• Invest in PRT companies knowing they are as risky as personal computer makers in 1982. The companies are tiny. Like communications infrastructure before 1984, there is no market for transportation innovation. I do expect government debt, higher oil prices and need for jobs to breaks the government monopoly on transportation infrastructure. When the market opens a flood of 10x (ten times) productivity solutions will commercialize.  Picking Apple, Microsoft, Google in pre-1984 is as difficult as guessing which companies will dominate the shift to sustainable infrastructure. Here are some early guesses:  King Power, Knowledge Publications, Millienum Reign Energy, SkyTran, Taxi2000, ET3, VectusPRT, ULTraPRT and MisterPRT. My investments are in JPods, Distributed Grid and Soleil Micro.

The PRT network in Morgantown, WV has delivered 110 million oil-free, injury-free passenger-miles since being built as a solution to the 1973 Oil Embargo. Modern PRT networks are being built at Hearthrow Airport, Masdar and Sweden. JPods has an agreement to build in China.


Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Additional disclosure: Author is the founder of JPods, Inc., a Personal Rapid Transit company.