Tuesday, March 22, 2011
Elon Musk on the 3 inventions that will change the worldElon Musk is a 39-year-old engineer and serial entrepreneur. At 28, he co-founded popular e-payment company Paypal. He then went on to start SpaceX, the first private company to launch a rocket into space, and Tesla Motors, which builds electric cars.
I recently talked to Musk about inventions he thinks will change the world. You can check out the transcript below and watch part of our Skype conversation, which encapsulates Musk’s particular brand of big, big thinking (in particular, why we should expand human life into space).
Amar Bakshi: What three inventions do you foresee changing the world in the years ahead?
Elon Musk: One of the most important things that I think that will be invented this century, hopefully by SpaceX, is the first (1) fully reusable orbital rocket. It’s the fundamental invention necessary for humanity to expand to the stars and to become multiplanetary. (Check out the video above to see why Musk thinks expanding to the stars is important for humanity.)
The cost of fuel is only about 0.2% or 0.3% of the cost of the rocket. In fact, the cost to refuel one of our Falcon 9 rockets is about as much as the cost to refuel a Boeing 747 plane.
However, a 747 can be used tens of thousands of times. And that’s the reason a ticket to London doesn’t cost a half a billion dollars (a 747 is about a quarter-billion dollars, and you would need two of them for a round-trip flight if you didn’t have reusable planes). Now you’re paying a few thousand dollars for the ticket because you can reuse the craft.
(2) Rapid, low-cost, perfect DNA sequencing will have a huge effect on humanity. Human DNA has not yet been completely decoded. The most that anyone has gotten is about 91% or 92%, and that has been with a huge numbers of errors. Trying to read our DNA is like trying to understand software code - with only 90% of the code riddled with errors. It’s very difficult in that case to understand and predict what that software code is going to do.
That’s where things are right now in DNA decoding. There’s a company called Halcyon that’s trying to solve that problem. I’m an investor, and I’m on the Board of Halcyon, but I think if Halcyon succeeds in doing perfect DNA sequencing, it will have a huge impact on humanity.
I should mention another important thing. With DNA, you have to be able to tell which genes are turned on or off. Current DNA sequencing cannot do that. The next generation of DNA sequencing needs to be able to do this. If somebody invents this, then we can start to very precisely identify cures for diseases. It will be a really huge advancement for humanity.
We’ll be able to design treatments specifically for individual people and be able to tell beforehand if certain treatments would result in negative side effects for certain individuals.
There are a lot of people that think (3) viable fusion is not possible. But fusion is the “energy forever” solution. You know all energy in the universe originates with fusion. We get our energy from the sun, so that’s indirect reliance on fusion.
Do I think it will be solved this century? It may not be possible – or at least, not on a commercially viable scale. It’s a very, very difficult technical problem, one of the most difficult technical problems that humanity will ever try to solve. But if we solve it, we will have “energy forever.”
Bakshi: Where do you think these innovations are going to happen? Around the world? Or mostly on the west coast of the U.S.?
Musk: Primarily the west coast of the U.S. It is remarkable how much is invented in California. It’s kind of ridiculous. It’s not necessarily the people who were born in California. It’s just that people come here because this is an environment that is really conducive to invention despite the high taxes and all the constraints that one faces.
I was born in Africa. I came to California because it’s really where new technologies can be brought to fruition, and I don’t see a viable competitor. It’s not to say that California is perfect – far from it. But it’s the least imperfect of any place in the world that I know of for bringing new inventions to mass market.
Silicon Valley has evolved a critical mass of engineers and venture capitalists and all the support structure – the law firms, the real estate, all that – that are all actually geared toward being accepting of startups.
You go to some other part of the world, and you know you can't get a lease because your company hasn’t been around long enough; the law firm won't give you legal advice, nobody will give you funding, you can't find the technical talent you need. But in California, all this has arisen organically.
CNN's Amar C. Bakshi
Sunday, March 20, 2011
less than 200 miles from the epi-center of the earthquake these turbines stand tall and provide electricity to Japan. I recognize that the nuke plants were hit by earthquake AND Tsunami but the point still remains, a diversified energy portfolio protects you best from unforeseen disasters.
Thursday, March 3, 2011
Why Oil Companies Need A Windfall Profit Tax .
Thursday, 03 March 2011 Green Chip Stocks .As oil prices rise, oil companies should be assessed a windfall profit tax to prevent profiting from deceiving their customers. Oil companies' failure to notify customers of Peak Oil is the same as cigarette companies deceiving their customers about cancer.
The following graph illustrates the basic nature of oil field geology. Oil companies understand oil field geology and have publicly denied it to the peril of their customers.
Trust is essential to free market capitalism. Profits drive action. Each of us specializes in order to profit from our primary talents. We pay a profit to vendors that specialize in filling other needs to be reliable suppliers. Society benefits as each of us specializes in tasks where we can compete most profitably, adding the greatest value at the least cost. Benefits of specialization and collaboration collapse as trust diminishes.
In his book The Wisdom of Crowds, James Surowiecki notes:
Modern capitalism made the idea of trusting people with whom you had "no prior personal ties" seem reasonable, if only by demonstrating that strangers would not, as a matter of course, betray you. This helped trust become woven into the basic fabric of everyday business. Buying and selling no longer required a personal connection. It could be driven instead by the benefits of mutual exchange.
Through social experiments, Surowiecki illustrates how free markets build trust through reciprocity, rewarding fair dealing with profits and punishing breaches of trust. Capitalism requires profits and punishment of vendors who violate their customers’ trust by incompetence, deceit or failing to inform them of critical information relative to the vendor’s specialty:
Cigarette companies misled their customers about links between cigarettes and cancer for decades. Eventually they were held accountable. Now that cigarette companies are more honest about cancer, lawsuits are fewer and less punishing.
Oil companies are dishonestly profiting from rising oil prices because they have failed to warn their customers about Peak Oil, misleading customers by reassuring them that there is plenty of oil (which there is) without informing them that:
The conventional crude oil on which we build our infrastructure and economy has peaked and is in permanent decline, as noted by IEA’s 2010 World Energy Outlook and the U.S. military’s Joint Forces Command’s Joint Operating Environment 2010.Six or more years are required to develop an oil resource. Customers are being led to believe they can currently rely on oil that will not be available for a decade.
Capital to develop these oil resources has not been allocated and may never be.
Previous attempts to develop some of these oil sources failed after billions of dollars were invested -- so there is no certainty that technical skills exist, within plausible financial limitations, to develop the oil fields.
Net Energy from these resources may be less than 5:1. Oil as the lifeblood of the U.S. economy is based on Net Energy of greater than 10:1. At 5:1, it will take twice as much oil, at far greater costs, to obtain the oil we use to accomplish the economic work that is required to sustain the current economy.
The price of gasoline from such sources may far exceed $5 a gallon.
Windfall Profit Tax on Oil Companies
Life requires energy. Less affordable energy, less life. Because energy is critical to life, and energy infrastructure takes decades to replace, energy vendors have a responsibility to inform their customers of energy risks far enough in advance of those risks for customers to adapt. Customers’ lives, livelihoods and families are at stake. Instead of warning their customers, oil companies encouraged and lobbied governments to subsidize the creation of oil’s Potato Famine potential: A monolithic dependence on a single source of energy 65% beyond the nation’s ability to control.
Peak Oil (the limits of oil field geology) was proven in 1970 when U.S. domestic oil production peaked as predicted in 1956 by Dr. Hubbert. World Crude Oil Production effectively peaked in 2005 at 74 million barrels per day (mb/d). Oil companies such as Exxon (XOM), Chevron (CVX), Arco, Shell (RDS.A), BP, etc., do not deserve to profit from deceiving, misleading and failing to inform their customers of these global conditions. Federal government officials also failed to warn citizens, and they are culpable for the consequences.
Awareness and Action
If you are surprised by rising gasoline prices, then hold the vendors accountable. By about 2030, there will be 95% less Net Energy from oil. If this surprises you, then your vendors have not informed you of risks in a meaningful way.
The United States of America existed in 1900 with little use of oil. Today we know far more about materials, technology, manufacturing and science than in 1900. We have applied these insights to the communications infrastructure since 1984, creating millions of jobs, vast innovation and re-tooling of a fundamental infrastructure. Power and transport infrastructure networks remain frozen in the government’s central planning that mobilized World War I (see below). We have the gas mileage of the Model T. The highway and oil are monolithic government solutions.
In a free market, the lifeblood of our economy will change from oil to ingenuity.
Consequences of Peak Oil are so huge that picking single companies or even market segments is as difficult as forecasting Apple (AAPL), Microsoft (MSFT), Google (GOOG), and Facebook in 1984.
But this general principle will hold true. Life requires energy. Less affordable energy, less life. More efficiency, more life.
Long-term energy investments focused on Net Energy solutions of 20:1 or better will likely do very well; wind and solar both fit this category. Investments in efficiency products will do well. Investments in depleting resources will likely do poorly.
Investing in companies that deceive their customers is very risky. Protecting capitalism requires vendors be trusworthy or be prevented from profiting by deceipt or incompetence. My best guess is oil products will be rationed sooner than later, likely when gasoline hits $5 a gallon.
Network investments seem likely to be big winners. The government subsidies to oil and central planning of highways limit efficiency to 32 passenger-miles per gallon. Free market networks, such as railroads, are 97 times more efficient, averaging 436 ton-miles per gallon. When governments end central planning, innovations applied to communication networks will be applied to power and transport networks. Investing in this shift seems attractive.