I’M driving 550 miles in three days, all by myself, mainly for the fun of it—and I’m not an environmental villain. Behind the wheel of a borrowed bright-red electric Tesla Model S, I click off the miles as I head south from the San Francisco Bay Area on Interstate 5 through California’s San Joaquin Valley, feeling virtuous because my tailpipe spews no pollution.
Lasers vaporize radioactive material and cause a fusion reaction — in effect, a small thermonuclear explosion (credit: Patent Yogi/YouTube)
“We don’t think people will give up their own cars. Americans like to do everything in the cars. They eat in cars, they drink in cars, they have entertainment in cars and they change clothes in cars — people who leave the office at lunch and sleep in their cars, or wait in their cars for an hour at a time for their children. Driving is really the distracting thing we do in cars.” Read more
Tim Urban, of Wait But Why, recently received a phone call from Elon Musk’s staff asking if he would like to write about the automotive, aerospace, and solar power industries through personal interviews with Elon Musk and his teams. Tim Urban said yes, and the first three of essays / articles are already posted on his site.
“SpaceX just announced an official contest open to university students and independent engineering teams. The company will release detailed rules, criteria, and tube specifications in August. … The challenge will be to build “human-scale pods” to be tested on the Hawthorne, California test track that will be built next to the SpaceX headquarters, but the company is careful to note that no humans will ride in the pods. All the designs submitted must be open source.”
Uber, the multibillion-dollar on-demand rides company, wouldn’t be able to execute its global grand plan without the million drivers who have offered rides on its platform. Over the past five years, the company has relied on myriad tactics to lure new drivers in and keep them happy: rallies, ads, word-of-mouth, even a quarterly magazine. Now it’s trying another strategy: a videogame.
The company today released UberDRIVE, an iOS game that essentially mimics what it’s like to drive for Uber. Players “pick up” passengers and drive them from point A to point B. The more efficient the route they choose, the more points they can rack up in the game. If players earn consistently high ratings, they can unlock new cars and explore new areas of the city. The game also includes fun facts on important landmarks in the city, as well as a “trivia mode” where riders quiz drivers (the player) on certain destinations on the map. At launch, the game only includes a virtual San Francisco, though it’s available to play nationwide. If the game is successful, Uber says it will add new cities to the app soon. Read more
“If he was paid by the oil and gas industry lobby he couldn’t have written a more favorable article for them.”—Elon Musk
It’s been awhile since the cost of gasoline topped $4 in the U.S. The national average hit $4.11 on July 11, 2008 and came close in May 2011 at $3.96. On New Years Day 2015, I drove through the night from Chicago to Boston. Despite the cold weather, the economics of fuel made it the best day for a road trip in years. I bought gas at a Pilot service station just off the Ohio Turnpike at $1.92/gallon. For me, it seemed like a bargain. Yet, 23 states charge less for gasoline than Ohio.
Now, at the end of May 2015, gas is rebounding from that low. Drivers on Memorial Day weekend faced the highest cost for gasoline of the year so far.
It’s tempting for politicians to advocate using tax breaks to smooth price spikes. With energy often surpassing the expense of food and rent and with so many individuals using fuel to make a living, reducing user fees or taxes during periods of very high fuel cost seems like the humane thing to do.
It seems humane, but it has the opposite effect. In fact, it is deeply punitive! That’s because the cost of gas is not an act of nature, nor even of free market economics. It is a product of cartels, special interests, conflict and FUD (fear, uncertainty and doubt). Offering relief during price spikes sustains demand while doing absolutely nothing to increase supply. This, in turn, exacerbates the spike, creates shortages for critical services and transfers enormous sums of money from consumers to producers. In effect, it is a free gift for producer nations.
In fact, consumers and consuming nations are best served by a raising taxes in lockstep with fuel price increases.
In May 2011, as gas prices were spiking to an all time high, a group calling itself National Taxpayers Union or NTU launched a $1.25 million campaign to fight energy taxes, like the fuel tax added to the cost of gasoline at the pump in most countries.* One of the group’s less controversial public service announcements (or more accurately, a lobbying effort) consist of magazine ads and videos that encourage Americans to write their legislators and demand a roll back of gas taxes whenever market prices spike.
I hate consumption taxes, especially the ones that target individual commodities or categories, such as alcohol, cigarettes, luxury purchases, or any system of import tariffs. They are a form of social engineering and they bastardize free markets. But when an energy consumer nation gives consumers breaks during periods of price spikes, the result counters the social intent. In fact, each time that oil prices rise, the best thing our government can do is to force them higher still! This may sound crazy, but when the supply of a commodity is controlled a few foreign cartels, it is no longer a commodity. Artificially lowering the consumer price by subsidizing the price simply stimulates consumption. It does not expand supply, and so the subsidy goes directly into suppliers’ pockets.
Apparently, I am not the only one who thinks that lower gas prices is a bad idea. Folling the 2011 gas spike (the highest cost gas spike in U.S. history), Motley Fool columnist, Travis Hoium filed an Op-Ed entitled, 3 Reasons the US Should Want Higher Oil Prices. (At the same time, I cautioned against tax relief tied to gasoline price hikes). His analysis and opinion is articulate and adequately supported, but none of his reasons point to the fundamental economic reason that for a country that aspires to energy independence, oil should be taxed higher whenever the market cost of externally sourced oil rises. Let me spell it out…
What happens if we lower the cost of a commodity to consumers in an effort to counteract a higher supply price? It doesn’t take an Economist to analyze. Since the supply is not increased, throwing a subsidy to the buyers “fuels” an even faster rise in prices and hands all that money to the supplier.
Let’s say that C = Amount of fuel needed for critical purposes
…getting to work, heating our home, manufacturing
Let’s say that D = Amount of fuel needed for discretionary purposes
…vacation travel, backyard BBQ, mowing the lawn, etc
Of course, with a limited personal budget, high fuel prices influence a consumer’s decision to classify an activity as ‘critical’ or ‘discretionary’. Additionally, the use of fuel is greatly affected by how efficiently you perform a task (taking a train to work instead of driving, vacationing nearby instead of far away, etc).
Foreign cartels wish to maintain high prices and high revenue, so they limit the foreign supply of oil. For them, it makes more sense to charge a lot of money for less product than to charge less money for a lot of product. If we consider again our classification of consumption into two categories, Critical and Discretionary, the supplier limits leave us with only enough fuel to support this much activity:
100%C + 80%(D)
Now if we counteract their production limits and insulate consumers from the higher cost, the formula doesn’t change. We continue to use just as much fuel.
In a free market, limited supply causes prices to rise and this forces consumers to cut back on discretionary use. Some consumers with less money must cut back on critical needs. That’s because some people can afford the keep buying and of course the cost of fuel rises.
In a free market — at least on our side of the ocean, this normally leads to several things — all of them very good:
• Increase exploration and domestic production (Motley Fool covers this one)
• Develop alternative fuels, especially domestic and environmentally friendly
• Increase conservation:
• Change modalities:
If consumers are suddenly subsidized when the cost of fuel rises, something terrible happens. Instead of producing more domestic energy, we are not at all affecting the supply. We are simply handing the foreign seller more cash — directly from the taxpayer to their pockets. And they didn’t even ask for it! They raise the cost by $1 per gallon and we give them $2 extra. Heck, why not? It makes us feel good.
What happens if we increase taxes when suppliers raise prices? First, we benefit by all the good things listed above.
Second, since some foreign suppliers are not truly constrained in their production (that is, they have plenty of oil), they will keep costs low in order to sustain revenue. There are plenty of places this “cost reduction” tax can be inserted: at point-of-sale, at import, or in the distribution chain.
What do we do with the money that is raised by taxes? That’s easy too. Give it back to consumers or use it to fund the development of energy sources that are domestic, inexpensive and environmentally safe.
This is how supply and demand should work. Of course, the government can still subsidize those in need. But do it in a way that doesn’t bastardize market dynamics. As a society, we provide assistance to the consumers who cannot afford energy for critical needs, and not by handing money to the supplier (effectively, a reward for cutting production). In this way, we reduce consumption, increase domestic production and provide direct assistance to those who are less fortunate. The effect of subsidizing some buyers will force some other buyers to reduce discretionary use. For example, if some of the higher cost went to taxes, it could be used to help ease the consumers who can no longer afford the “critical” fraction of their use.
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* Americans are taxed for automotive fuel at the pump: A federal tax of 18.4¢ plus a state tax that varies between 12~35¢. The average state tax is about 23¢/gal, so the typical American pays about 41½¢ tax on each gallon, or approximately 10%.
Philip Raymond is Co-Chair of The Cryptocurrency Standards Association and CEO of Vanquish Labs.
An earlier draft of this article was published in his Blog.
Until 2006 our Solar System consisted essentially of a star, planets, moons, and very much smaller bodies known as asteroids and comets. In 2006 the International Astronomical Union’s (IAU) Division III Working Committee addressed scientific issues and the Planet Definition Committee address cultural and social issues with regard to planet classifications. They introduced the “pluton” for bodies similar to planets but much smaller.
The IAU set down three rules to differentiate between planets and dwarf planets. First, the object must be in orbit around a star, while not being itself a star. Second, the object must be large enough (or more technically correct, massive enough) for its own gravity to pull it into a nearly spherical shape. The shape of objects with mass above 5×1020 kg and diameter greater than 800 km would normally be determined by self-gravity, but all borderline cases would have to be established by observation.
Third, plutons or dwarf planets, are distinguished from classical planets in that they reside in orbits around the Sun that take longer than 200 years to complete (i.e. they orbit beyond Neptune). Plutons typically have orbits with a large orbital inclination and a large eccentricity (noncircular orbits). A planet should dominate its zone, either gravitationally, or in its size distribution. That is, the definition of “planet” should also include the requirement that it has cleared its orbital zone. Of course this third requirement automatically implies the second. Thus, one notes that planets and plutons are differentiated by the third requirement.
As we are soon to become a space faring civilization, we should rethink these cultural and social issues, differently, by subtraction or addition. By subtraction, if one breaks the other requirements? Comets and asteroids break the second requirement that the object must be large enough. Breaking the first requirement, which the IAU chose not address at the time, would have planet sized bodies not orbiting a star. From a socio-cultural perspective, one could suggest that these be named “darktons” (from dark + plutons). “Dark” because without orbiting a star, these objects would not be easily visible; “tons” because in deep space, without much matter, these bodies could not meet the third requirement of being able to dominate its zone.
Taking this socio-cultural exploration a step further, by addition, a fourth requirement is that of life sustaining planets. The scientific evidence suggest that life sustaining bodies would be planet-sized to facilitate a stable atmosphere. Thus, a life sustaining planet would be named “zoeton” from the Greek zoe for life. For example Earth is a zoeton while Mars may have been.
Again by addition, one could define, from the Latin aurum for gold, “auton”, as a heavenly body, comets, asteroids, plutons and planets, whose primary value is that of mineral or mining interest. Therefore, Jupiter is not a zoeton, but could be an auton if one extracts hydrogen or helium from this planet. Another auton is 55 Cancri e, a planet 40 light years away, for mining diamonds with an estimated worth of $26.9x1030. The Earth is both a zoeton and an auton, as it both, sustains life and has substantial mining interests, respectively. Not all plutons or planets could be autons. For example Pluto would be too cold and frozen for mining to be economical, and therefore, frozen darktons would most likely not be autons.
At that time the IAU also did not address the upper limit for a planet’s mass or size. Not restricting ourselves to planetary science would widen our socio-cultural exploration. A social consideration would be the maximum gravitational pull that a human civilization could survive, sustain and flourish in. For example, for discussion sake, a gravitational pull greater the 2x Earth’s or 2g, could be considered the upper limit. Therefore, planets with larger gravitational pulls than 2g would be named “kytons” from the Antikythera mechanical computer as only machines could survive and sustain such harsh conditions over long periods of time. Jupiter would be an example of such a kyton.
Are there any bodies between the gaseous planet Jupiter and brown dwarfs? Yes, they have been named Y-dwarfs. NASA found one with a surface temperature of only 80 degrees Fahrenheit, just below that of a human. It is possible these Y-dwarfs could be kytons and autons as a relatively safe (compared to stars) source of hydrogen.
Taking a different turn, to complete the space faring vocabulary, one can redefine transportation by their order of magnitudes. Atmospheric transportation, whether for combustion intake or winged flight can be termed, “atmosmax” from “atmosphere”, and Greek “amaxi” for car or vehicle. Any vehicle that is bound by the distances of the solar system but does not require an atmosphere would be a “solarmax”. Any vehicle that is capable of interstellar travel would be a “starship”. And one capable of intergalactic travel would be a “galactica”.
We now have socio-cultural handles to be a space faring civilization. A vocabulary that facilitates a common understanding and usage. Exploration implies discovery. Discovery means new ideas to tackle new environments, new situations and new rules. This can only lead to positive outcomes. Positive outcomes means new wealth, new investments and new jobs. Let’s go forth and add to these cultural handles.
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Ben Solomon is a Committee Member of the Nuclear and Future Flight Propulsion Technical Committee, American Institute of Aeronautics & Astronautics (AIAA), and author of An Introduction to Gravity Modification and Super Physics for Super Technologies: Replacing Bohr, Heisenberg, Schrödinger & Einstein (Kindle Version)
