Bill James'  Instablog

Action: Return transportation and power infrastructures to free markets managed by performance standards. As an example Performance Standard, grant access to use public rights of way to anyone willing to:

• Risk private capital to build networks, and;
• Build transport that exceed 120 passenger miles per gallon, and;
• Build transport that is 1,000 times safer than the highway network.

We know cleaner, faster, safer and more affordable transportation is practical:

• Government planned highway networks move a person at about 18-34 miles per gallon.
• Commercial railroad networks average about 436 ton-miles per gallon, about 99.5 times more efficient than the highway network moves a person.
• The Personal Rapid Transit (PRT) network at Morgantown, WV has delivered 110 million injury-free, oil-free passenger miles since going into operation in 1975 as a solution to the 1973 Oil Embargo. In that same period the highway network has killed 1.3 million Americans. Published in 1975, Congressional Office of Technology Assessment (COTA) study PB-244854 outlines how PRT, or PodCars, can make our cities independent of foreign oil.
• JPods version of PRT has been created without government financing, operate at about 260 passenger-miles per gallon and is efficient enough to harvest the power needed from solar collectors mounted over the rails.
• Next time you put $40 of gas in your tank, consider:
  • $1.99 of every $2 goes to waste.
  • A freight train could move your weight the same distance across country for 20 cents.
  • JPods could have chauffeured you in a city the same distance for $5.23.


• Millions of jobs can be created implementing what Thomas Edison noted was possible in 1910:
  

  "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...."

  
  

Background on Innovation:

Problem Only Innovation Can Solve
More of what is failing, will fail.

With good intentions, government planners and politicians taxed for and created our current transportation and power infrastructures. For a century policy actions incrementally made oil more important until it became the lifeblood of our economy. Then, with the slow sureness of geology, fundamental assumptions failed:

• The oil supply will always grow. Current: Peak oil at 74 million barrels per day in 2005.
• Oil energy at less than $30 per barrel; gasoline would stay below $1.45. Current: $75 a barrel.
• Net energy of 20:1 (20 barrels of useful energy for every barrel required to extract it). Current: less than 10:1.
• Economic growth can be powered by oil supply growth. Current: Oil supply stopped growing in 2005 and exiting oil fields are depleting at 6.7% per year (IEA data).
• Debt can increase to buy and consume oil. Current: the bank system failure in 2008-2009, debt threatens the breakup of the European Union and inflation in the US.
• That the balance of nature is unaffected by the heavy use of oil and coal. Current: Gulf oil spill, CO2 imbalance, obesity.

For a century we planned and built infrastructure. Incrementally, specifications became more defined and required approval of ever more tiers of government, multiple commissions and special interests. Plans became ever more rigid. As assumptions shifted, our economic structures became incrementally more brittle. Debt was used to subsidize costs which could not be financed, making the economy even more brittle.

When energy prices doubled between 2002 and 2006, the banking system was shattered by foreclosures as more and more families had to choose between paying for the commute and their mortgage. Unintended, the infrastructure we worked so hard to create, created civilization killers of Peak Oil and Climate Change. It is "no one's fault," everyone is just following the rules.

Proven technologies fail when the fundamental assumptions on which they are based fail.

The current Gulf oil spill is an example of political and bureaucracy institutional acceptance of ever more risks because they have a checklist instead of a deep understanding of performance standards which might have assured safety measures were adequate for working in 5,000 feet of water.

Few policy makers understand invention. Abraham Lincoln was the only President to be issued a patent. Policy makers do not have to understand innovation if they govern instead of manage; if they define performance standards for what is needed, instead of checklist of what to do. Since 1984 communications infrastructure has been governed by performance standards, creating millions of jobs and unimagined innovations.

Source of the Problem
Mobilizing to fight World War I communications infrastructure was monopolized, transportation and power infrastructures were socialized as "natural monopolies". Policy makers created agencies to manage infrastructure that implemented the great innovations at their founding of Ford, Edison, Bell and the Wright Brothers. Progress was powered by fossil fuels. To stabilize the economy, ever more costs of using fossil fuels were socialized instead of capitalized in the price of gasoline and electricity:

• Cost of wars to protect oil supply lines.
• Cost to restore potential energy for future generations.
• Cost of cleanup and maintaining the balance of nature.
• When government could not afford these costs, ever more were paid for by foriegn debt and printed money.

By not capitalizing costs, free market mechanisms for adapting to changing circumstances were blinded, resulting in a century without innovation:

• We have the same gas mileage as the Model-T. Highway networks (government planned) operate at about 18-34 passenger-miles per gallon.
• Passenger light rail (government planned) operates at 41 passenger-miles per gallon.
• Thousands of miles of railroads were lost when highways/oil were subsidized as the monolithic answer to all ground transportation. Yet long-haul freight rail (commercial networks) averages 436 ton-miles per gallon.
• We get better at surviving car crashes, but not at not crashing.
• We have a Potato Famine potential with the monolithic dependence on a single source of energy outside our control.
• We are shifting the chemistry that balances climate. Oddly, obesity seems to be the human manifestation of this imbanance. Obesity is epidemic in our nation.
• Our self-reliance has been lost to heavily subsidized central power generation, the highway network and oil:
  • If trucks do not deliver groceries to store, American will not eat.
  • As was common 50 years ago, gone are the vegetable gardens, family farms, windmills, walking, biking and other personal and localized aspects of self-reliance.
  • Physical fitness has been displaced by an obesity epidemic.
• Solar, wind, tides and other sustainable energy technologies, that had supported life and economies prior to World War I, were abandoned by central planners and made non-competitive by oil subsidies.

Scale of the Problem, Civilization Killers
Geology is slow but certain. Peak Oil was theorized in 1956 and proven when US crude oil peaked in 1970. Peak Oil does not mean we are out of oil, there is plenty left. But extracting the second half of oil fields is much slower, more energy intense and pushes the safe limits of extraction technology. In 2005 World Crude Oil Production peaked at 74 million barrels per day. Net energy from oil will decline by 90% in the next 20 years. If we do not transition to solar energy, then less oil means less life.

Joint Forces Command (all US military services) recognized crisis is coming in 18 months in the Joint Operating Environment 2010 (JOE-2010):

Life requires energy. As energy becomes less affordable, life and quality of life diminishes. Surplus oil production capacity tightened between 2002 and 2006 as China and India began buying significant amounts of oil. Gasoline prices increased from $1.45 to $2.92 a gallon; families lost about $2,000 of disposable income forcing many to choose between paying for their commute and their mortgage. Foreclosures collapsed the banking system. In the following graph:

• Gold - Disposable Income relative to how much oil it can buy. This is a leading and trailing indicator.
• Green - Oil Supply Growth (OSG).
• Blue - GDP or Economic Growth.
  
  There are three distinct patterns over the past 50 years, Pre-1973, 1975-2005, Post Peak Oil 2005-future. Disposable income began collapsing in 2002. Oil Supply Growth and Economic Growth began collapsing in 2005 when World Crude Oil Production peaked at 74 million barrels per day. The oil powered economy is collapsing.
  

We are returning the energy levels of 1910 with radically better understanding of science and engineering. People in 1910 did just fine. If we initiate re-tooling immediately, we can re-tooling in time to incrementally push die-off ahead of us until we mitigate the threat. The next 20 years can be as creative as communication innovations since 1984.

The momentum established in the next 18 months will play out over the next 20 years in what looks like one of two choices:

1. Left graph: We will reduce the energy required per passenger mile by 85%, self-reliant, living within a solar budget.
2. Right graph: Nature will reduce the number of passengers by 85%. Graph on the right resulting in Malthusian Collapse.

Bad News
Government planned infrastructure created a Potato Famine risk of monolithic addiction to oil. Governments clinging to oil, artifacts of oil (cars, highways) and their checklists and rules:

• Issueing permits to drill for oil beyond the safe limits of the technology and skill.
• Despite the fact that families cannot afford to pay for oil's rising costs and their mortgages.
• Despite the fact that debt from buying oil is inflating currencies and threatening government defaults.

This is the classic "turkey problem" noted in the book, The Black Swan. Everyday the turkey's experiences reinforce that people are kind and helpful, caring for its every need. Day after day, experience strengthens belief that tomorrow will be the same as today, until the day before Thanksgiving, its understand goes through a revision shift. Thinking oil will be available tomorrow, because it was available yesterday, is to accept the turkey's fate.

Good News
The good news is we have an administration problem, not an energy problem. Enough solar energy hits the earth in one hour to power our economies for a year. In a free market, we have the technologies, talent and resources to innovate.

The solution is local, self-reliance is an Economic Lifeboat:

• Victory Gardens. Plant a garden and get everyone you know to plant a garden. When the oil supply system has outages, there will still be food.
• Feed-in Tariffs. Generate some of your own electricty, sell the spare to the grid. Germany has created 250,000 jobs by striving to be self-reliant.
• JPods, bikes, and other forms of self-reliant local transport of people and cargo. Similar to before 1960, railroads will be arteries for logistics; different, JPods will be the capillaries.
• Localization of manufacturing and other essential skills.

All but the last 100 years of human history, humans lived within a solar budget. With our deep understanding of technology and our experience with PRT and 400 ton-mpg railroads, we can give the future twice as much energy with 10 times the efficiency, all balanced within a solar budget; if innovation is allowed in a free market.