Thursday, May 01, 2008

Stick to Mars, Dr. Zubrin

With his alarmist call for American oil independence (“Breaking OPEC’s Grip”), Robert Zubrin joins a long tradition of pundits who have used national security as an excuse to abandon consumer markets in order to forward their Big Government schemes. Add the Mideast “oil cartel” to Japan and China as declared threats to our manufacturing base requiring protection...Whatever the merits of his argument, Zubrin sadly uses the same rhetorical device to sell flex-fuel mandates as Gore & co. make for Kyoto: if you disagree, you are a proponent of petroterrorism, or in the latter case, a polar-bear killer...Flex Fuel Folly, Henry Payne, Planet Gore National Review Online, 2/22/08

The trouble with a smart guy like Dr. Zubrin is that, with his origins in big science, funded primarily by Big Government, he has a limited understanding of such things as market. The primary principle in analyzing a market is supply and demand. In a given market, if you divert a commodity's supply, as with a government subsidy of ethanol production from corn, it will directly impact supply of corn for other purposes, such as food.

NASA, to which Zubrin presented his Mars Direct program some years back, had a fling with "market" back in the planning stages of the space shuttle, one which the author's father, a very successful marketer, was invited to participate in. The idea was that payloads would pay for the shuttle's operations. The author's father later said he wished he had never taken the offer, for a simple reason. A government agency has no conception of business operations. In the business world you can't call on the Commerce Committee to introduce new funding authorization if your project isn't making money. The shuttle's costs were never properly analyzed. In the end, there was no way the payloads could pay for operations if the shuttle was to be a competitive launching system.

Zubrin seems to have about the same idea regarding the energy problems of the early 21st century.

He says that all Congress has to do is “pass a law requiring that all new cars sold in the U.S. be flex-fueled” (that is, alcohol-fuel compatible) and — voila! — alcohol fuels will become competitive....(Flex-Fuel Folly, cont'd)

This kind of magic thinking has surrounded legislation for a long time, so Dr. Zubrin can't be fairly accused of original ignorance. He's only going into an old frontier where thousands have gone before.

Heavily dependent on OPEC oil, Brazil embarked on a national plan of oil independence during the last oil price panic in the 1970s. Dubbed “Proalcool,” the central government nationalized its largest energy company to goose ethanol production, massively subsidized sugar ethanol, mandated the production of ethanol cars, and mandated at least a 25 percent mix of ethanol in gasoline. In effect, government took over its domestic energy sector in the name of national security....there were unintended consequences. Inflation soared thanks to government spending and an agricultural economy now skewed towards fuel — not food — production. Brazil suffered widespread environmental degradation with the rush to convert cropland to fuel, and ultimately — with the collapse of oil prices a mere decade later — the program failed because ethanol is fundamentally an uncompetitive fuel source relative to oil....(Flex-Fuel Folly, cont'd)

The problem with many scientists is that they only see individual processes, not the whole ecology as it were. The whole direction of science since the 18th century until the stirrings of chaos and complexity theory in the 1960s was precisely opposite the strategy of studying overall views and consequences. This is great if you're trying to derive a fundamental law, such as the behavior of a gas under pressure. But that method's dependency on a closed system is fatal in large-scale analysis.

A practical understanding of broader consequences, called "seeing the big picture" by business people, is informed by market decisions too complex to analyze individually, as one might a container of pressurized helium. A business has to take the measure of consequences by broad statistical analysis in market studies. The methods aren't very different from those used to study individual processes, but are held in contempt by representatives of and advocates for state intervention in the economy. Payne emphasizes this strongly but I doubt Dr. Zubrin will pay attention until food rioters are at his local supermarket.

U.S. prosperity is due in part to free markets determining our most efficient fuel sources. Indeed, as oil topped $50 a barrel, Canadian oil sands have become viable, making that country our leading oil exporter (hardly Zubrin’s caricature of a terrorist oil country holding us hostage)...Left alone, free markets might ultimately determine that coal-to-oil is the best alternative to gas, or hydrogen, or even ethanol. . . . But Zubrin would rather strangle the U.S. economy with subsidies and decrees for an ethanol technology that has not yet proven itself worthy in the marketplace....(Flex-Fuel Folly, cont'd)

Dr. Zubrin's conceptions for interplanetary, human-crewed travel are brilliant, but as an economist, he offers very little except politically easy answers for a very complex problem that affects the entire industrial world. In sum, we have reached the stage where the quantity of petroleum is not sufficient to meet demand. Price, the most powerful indicator in a market, is shouting a message: either find a way to increase the energy output of existing supplies, or develop something new.

Ethanol from corn or sugar is not new, does not work well, and can only be supported with subsidies and state intervention in markets. That support causes a major problem in food markets, now noticed in screaming headlines across the world. Even Greens are starting to advocate nuclear powerplants. We've known for thirty years that there's enough shale oil and gas in Wyoming to fuel America for centuries. Congress refuses to do anything except mandate bad solutions like ethanol. It is time perhaps for Congress to start representing the people, instead of a single special interest that shells out bucks for campaign money, and for Dr. Zubrin to figure out a way to privately finance Mars Direct.


No comments: