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Free Market Innovation in Power and Transportation Infrastructure

Objective: Create millions of jobs, increase disposable income and transform the lifeblood of the economy from oil to ingenuity.

Repeat Success:
Repeat the success of re-tooling communications infrastructure after its 1984  return to a free market managed by performance standards, millions of jobs, better service, at lower prices.

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:

  Google, Apple, Yahoo, Microsoft, etc... innovate without getting permission from government bureaucracies. They are free to risk their money to please customers. Where it benefits the marketplace, standards are set, yet these standards are easily displaced when leaps in performance are achieved; as an example floppy disks were displaced by CD, DVD, BlueRay, thumbdrives, etc.... There is competition mixed with collaboration.
 
Innovation generally comes from outside the recognized experts:
  • The 1980 computer giant, IBM, did not see much value personal computers, licensing an operating system from tiny Microsoft.
  • Expecting oil companies to innovate solar and wind is as unrealistic as to expect them to create the iPhone.
  • Alternative energy and transportation systems will innovate when permission to innovate requires only meeting performance requirements for function, safety and pleasing customers.
  • Enough sunshine hits the Earth every hour to power all the world's economies for a year. We do not have an energy problem. The problem is that government planners think of transportation and energy innovation as IBM thought of personal computers.
  • In a free market, preempting waste provides incredible profit potential; $1.99 of every $2 goes to waste.
  • As valuable as education is, universities, National Labs and other institutes are unlikely sources of innovation. Steve Jobs and Bill Gates are college drop-outs. Of Franklin, Edison, Bell, Ford and the Wright Brothers, only the Wright Brothers finished high school. It seems the eduction required to forge a paradigm shift is self-driven, instead of institutional. The book Outliers illustrates the decade of effort required for mastery of a subject. If we want innovation, free markets are required so non-conforming people can finance and learn to scale their non-conforming ideas supported by and tailored to customers willing to pay for them for that decade gestation period.

    Author Note: Institutions are very important. If urban transportation is re-tooled to PRT, it will be in large measure because of support from US Military Academies alumni.
 

Theme parks are free to innovate and create ever more intense thrill rides. But because their safety record is about 12,000 times better that government planned highway networks, the theme park industry is simple and managed by commercial insurance companies at very low costs.

By fact, not intent, transportation regulators have blocked PRT networks from being deployed since Morgantown's PRT was built in 1975. They simply have no checklist for innovation. By definition, bureaucracies are the "institutionalized suspension of judgment," focused on becoming more consistent. The result is our nation has become ever more consistently dependent on oil. In the 1973 Oil Embargo the US imported 20% of oil needs. Today we import 60% of needs. Every President since Nixon has declared oil dependence a threat to national security, and since, the military, elected officials and bureaucracies have increased and made that dependency more consistent.

Here are several examples of this institutional barriers:

  • Congressional Office of Technology Assessment (COTA) study PB-244854, published in 1975 outlines how PRT can make US cities independent of oil. It also warns:
    • "Federally sponsored R & D has not included a coordinated program for conversion of successful products into operational systems."
    • "UMTA's R&D programs [US DOT Urban Mass Transit Administration]... have neglected near-term ... simpler approaches to correct transit problems."
    • "Finally, institutional failures may have hindered implementation."
  • Neither COTA study PB-244854 nor Morgantown's PRT network are listed at any DOE or DOT websites as solutions to oil problems. When talking with federal officials, they are always surprised to learn of Morgantown's success. "Not my job" is the typical answer received when asked if these federally approved items could be listed at web sites.
  • Numerous efforts have been made since Morgantown's PRT system was implemented to gain access to rights of way to build PRT networks. All in the US have failed. In the past year, networks have been constructed in Uppsala (Sweden) and Heathrow (NASDAQ:UK).
  • In 2008, the cities of San Jose and Santa Cruz, CA requested proposals which about 18 companies replied to. Those proposals are on hold, waiting for the cities to study the idea. Here is a link to the JPods proposal. Repeated delays are beyond the capital ability of small, innovative businesses.
  • Department of Energy issued Recovery Act-Transportation Electrification Funding Opportunity Number: DE-FOA-0000028 mandated the solution be led by a major car company and that the solution be an automobile. Here is a link to the proposal submitted by JPods.
  • In July 2008 information on Peak Oil and Solar Powered Mobility was provided and/or discussion held with 97 US Senate staffs, including Senators Obama and McCain. No action resulted.
  • A personal discussion and emails requesting they simply list COTA Study PB-244854 and Morgantown's PRT at their web sites. All have resulted in no action and "not my job" answers:
    • Joel Szabat, Deputy Assistant Secretary for Transportation Policy, U.S. DEPARTMENT OF TRANSPORTATION. And many other such discussions with federal, state and city officials.
    • Jan Brecht-Clark, Ph.D., Associate Administrator, RD&T, Research, Innovation and Technology Administration.
    • John Conger, Assistant Deputy Under Secretary of Defense, Installations & Environment
    • TRB and a list far to long to state. Emails will be published and searchable.
  • After four years of work and letters of interest from businesses to build a network at the Mall of America, a Letter of Intent was signed with the Mall of America, only to have it withdrawn canceling a $6 million project and 32 jobs. Letters listed below.


  • Congressman Oberstar

    Dave Haselman
  • Innovation is nearly always very risky. Even in the face of oil spills, Peak Oil, Climate Change and the collapsing economy, bureaucratic delays and administrative barriers require transportation innovation to get everyone's agreement and anyone can cancel the agreements at any moment, for any reason. In contrast, in a free market, ideas are terminated because they cannot attract or keep customers.

 

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):

  "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."

"A severe energy crunch is inevitable without a massive expansion of production and refining capacity. While it is difficult to predict precisely what economic, political, and strategic effects such a shortfall might produce, it surely would reduce the prospects for growth in both the developing and developed worlds. Such an economic slowdown would exacerbate other unresolved tensions, push fragile and failing states further down the path toward collapse, and perhaps have serious economic impact on both China and India. At best, it would lead to periods of harsh economic adjustment. To what extent conservation measures, investments in alternative energy production, and efforts to expand petroleum production from tar sands and shale would mitigate such a period of adjustment is difficult to predict. One should not forget that the Great Depression spawned a number of totalitarian regimes that sought economic prosperity for their nations by ruthless conquest."

"Energy production and distribution infrastructure must see significant new investment if energy demand is to be satisfied at a cost compatible with economic growth and prosperity."

"The discovery rate for new petroleum and gas fields over the past two decades (with the possible exception of Brazil) provides little reason for optimism that future efforts will find major new fields."

Foward by General James N Mattis

 

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 (NYSE: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.



Disclosure: Founder and shareholder in JPods, Inc.