I wrote a week ago about buying Belgian chocolate, and talking to the chocolatier and finding out about what goes into the average chocolate bar. We all know about the Chinese milk scandals involving replacing milk solids with melamine.
If you go to your local supermarket and buy garlic, you will probably find that it was grown in China. The oranges that provided the orange juice were probably grown in South America. In a flat world economy how do you determine whether the goods that you buy actually have in them what you assume they do?
We may not understand yet how much we need provenance.
In the art world provenance is about being able to determine authenticity. But we are fast approaching a time when we need it for everything. How else can we make important purchase decisions?
And it isn't just food that is important to be able to authenticate.
Its products of every kind.... Last week our less than two years old dishwasher broke down. This was the second time in a month. The first time it was a sensor that checks for water overflow. It was taken away and repaired under warranty. So no problems. This time, still under warranty, it was taken away for investigation, and this morning I got a phone call to say that the motor had blown up, or melted down and needed replacement...
While the repairman was pulling out the dishwasher I talked to him about the fact that we are going through a similar problem with our oven - the second oven in two years, with this one being a replacement for one where the hinges on the door wouldn't work properly. And now we have a similar problem with the replacement.
So I thought I would try to get the low down on which dishwashers are the best from the point of view of the guy that gets called out to repair them. So he started telling me how all the motors for all the dishwashers now come out of two, count 'em, factories in China. So his advice was basically, "Look - all the dishwashers are fundamentally the same, with slightly different designs with some being engineered better than others, but the working parts, circuit boards, motors, etc are fundamentally the same".
To me what this cries out for is provenance. We need to know where things actually come from. If we all knew that all the dishwashers are fundamentally the same, how much would that alter our purchase decisions? And then how much better would the manufacturers want to make the quality brand offerings?
Now there apparently are some exceptions to this rule. If you buy the absolute top of the line products you get quality. And that is the only alternative we have.
This is the fruit that we harvest from a globalized economy.
Provenance is the only option....
And it can probably be delivered by the use of RFID tags on absolutely everything. Imagine going into the store to identify a dishwasher that are considering and being able to scan the product for its working parts and where they came from so that you can then scan an alternative product. Determine whether they both came out of the same factory and just have a different front panel... I think that this would be pretty interesting. Not something that any brand would want. But if you could do it, I think it would change the consumer society radically and positively.
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Recent Articles
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Thursday, June 10
Saturday, April 17
Invoking Schumpeter
by
Chris Gilbey
on April 17, 2010 11:58AM (EST)
In the last couple of days I have been involved in meetings
with two fairly substantial companies on behalf of a client.
Both publicly listed, one is a manufacturing company that has a large slice of the market in Australia for its products (Company 1). The other is a company that is a relatively new company where the business model is driven very strongly by R&D (Company 2). But both are interested in clean tech energy solutions as a key future driver for their business models. Company 1 is essentially an old technology company and Company 2 is a disrupter. At the meeting with Company 2 I found out that one of the executives had previously been an engineer at Company 1. Consequently he had some insights into Company 1’s systems and underlying philosophies. Having been exposed to some of those earlier in the day, it was interesting to get a view through a different lens. His view was that Company 1 was so wedded to its production line and the investment in it to create a high level of efficiency and quality that management was unable to reconcile the concept of significant change. A product of the kind that they knew that they needed actually required a total rethink in terms of production line technology inputs and expectations as to volume outputs of their product. In effect Company 2 appears to be owned by its production capabilities rather than the other way round, and ironically shackled by its own success. This puts Company 1 into an interesting and not necessarily good position. As a result of the GFC its order book went from 120% of manufacturing capacity down to 75% of manufacturing capacity over a year and a half. Over the same period the spot price for the key raw materials for its manufacturing doubled. Even with the lay off of staff that was undertaken, margin shrinkage meant that the company is now only marginally profitable. Company 1 has a problem. Even with a highly efficient production line and continuing market leadership, the kind of investment into R&D that is required to maintain momentum has to be looking somewhat risky. Disruptive technologies are at the heart of the concept of Creative Disruption. Company 1 appears to me to be in the early stages of experiencing a major disruption. But if you were on the inside of the company you might see it differently. That is certainly the case in many businesses in Australia that have weathered the storm of the GFC and who are optimistically looking at a return to normal growth patterns in the near future. Many of them think that disruption happened and it was just a blip on the radar. They couldn’t be more wrong. How does a company that has been around for a long, long time alter its thinking to encompass the concept that the disruptive forces of innovation are not about incremental productivity gains. They challenge the model holistically. The only solution is to rethink the whole. Company 1 recognizes that it needs to introduce products that meet the needs of a new dynamic in customer demand, and a new set of regulatory constraints as carbon becomes more front of mind. I can imagine that the board of the company sees the picture from a quite different perspective to mine. Their view would be that they are undertaking a significant amount of R&D. The problem though is that the company appears to have established a set of specifications for that R&D that are driven by their sunken cost into an efficient production line, and a belief that they have thought through the problems fully and understand them fully. Their R&D partners have quite pragmatically accepted that they need to work to the company’s agenda, in order to unleash the funding from the relevant authorities. So even if they understand that Company 1 doesn’t get it, they agree to do the work, with the belief that they can change the philosophy over time. And that may happen. But this approach, while quite pragmatic may consolidate and deepens the problem, like the king’s new clothes. There is an answer, and it isn’t the one that businesses like to hear. Companies actually need to drive parallel R&D programs. These need to operate independently and competitively and need to address the problems within a clearly understood and shared strategic intent. They need to be prepared to embrace ideas that challenge the concepts of the existing production line or business model. They need to consider openly ideas that are contrarian by nature. They don’t need to immediately jump into rolling those out to market. But they do need to consider that there may be a greater risk to a business as a going concern by having a group of internal managers and decision makers whose recommendations and decision-making is driven by a rusted-on corporate culture that may owe more to rhetoric at the end of the day, than to reality. Revolutionary thinking is what drives innovation. Innovation drives disruption. And as Schumpeter says, wealth is destroyed as wealth is created. We continue to sail into waters that are unpredictable, where even giants can be humbled. Gaining insight into how to navigate the storm is the trick if you want to avoid being on wealth destruction side of the equation.
Keywords:
creativedestruction,
Schumpeter
Sunday, March 28
Empathy And The Common Good
by
Chris Gilbey
on March 28, 2010 08:46AM (EST)
We are living in a constantly changing world. More of those changes are taking place than we have ever experience before, and for some reason people are shocked by much of the change.
But we shouldn't be. Much of what is taking place should not really be surprising, because it is largely predictable. All this you probably realize. The big issue is how do you get some benefit from the insight? How do you get to predict not just the what but the when? I was listening to an interview with Jeremy Rifkin on the BBC the other day who was talking about the need to re-examine the philosophy that we have currently - built on enlightenment principles - and establish something new designed to reflect a global economy, a totally interconnected and interdependent human and planetary ecosystem. Very visionary stuff. (This is a link to the interview) That got me thinking about the dilemma that many companies find themselves in as a result of the tide of digital technology that has first generated huge productivity gains and now threatens to utterly disrupt their models. Enlightenment thinking is substantially reflected in the US Declaration of Independance - the notion that "all men are created equal, that they are endowed by their Creator with certain unalienable rights, that among these are Life, Liberty and the pursuit of Happiness". That concept drives not only the individual but the whole of modern capitalistic thinking - in essence the idea that through individual effort profit should ensue. That travels from the individual through to his or her family and the ability to generate wealth and assets. It may or may not have been the original purpose of Jefferson, but it certainly is the interpretation nowadays. This kind of philosophy travels through to the nation as a whole with countries whose politicians are tasked with developing and executing policies that will be of ultimate benefit to the nation, even though in some cases (as with Obama's recent health policy win) there are a lot of people who don't get it and don't agree with it. In between lie the companies and their goals of profit to deliver on the pursuit of happiness for the shareholders through increased and continuing dividends. But a lot of those companies are looking down the barrel of utterly unsustainable business models. Their solution is one that is quite logical - they put aside their natural enmity with their competitors and go to their industry association and ask the industry association to act on their behalf, "for the common good". This concept allows the cost of action and the benefit to be socialized, which generally makes sense. But the problem nowadays is that in developing a "common good" strategy, which is what it is, even if they don't express it in those terms, they start to butt heads with players that have an even bigger "common good" position. These are giant corporate players with massive balance sheets and huge revenue bases such as Google, Microsoft, Apple and other whose brands have become synonymous in the public perception with delivering - not necessarily benefit to humanity per se - but certainly empathy. The empathy that these companies promise - and deliver on in spades - is the thing that most of the companies that they disrupt do not provide. Jeremy Rifkin doesn't talk about tranformation management in the interview that I listened to, but does talk about the need for empathy on a global basis. I think this is a very powerful concept and is one that, if translated into corporate strategy, can help solve problems and re-invigorate profits. It is actually about delivering a bigger "common good" promise. Think about content companies as a start. They are fighting a losing battle against piracy in their view. Why? Because they insist that ordinary people sharing content is leeching away their profits. In acting to stamp this out they move to alienate a good deal of their customer base and demonstrate their total lack of empathy with their customer. Now the customer may be wrong to share the content, and may be breaking the law. But having a customer that is wrong is nothing new. All successful business is based on selling people what they want, and not necessarily what they need. But when you start to alienate your customer you are unlikely to sell them anything. Clearly the content companies need to understand that it is imperative to build empathy first and not destroy it. How do you get to do that when your profits are apparently going up in smoke because the latest iPod enables me to keep on it literally tens of thousands of songs? If I bought them on iTunes it would cost me tens of thousands of dollars. Clearly that isn't going to happen. Google enables me to find songs that I might want to download through a simple search mechanism. My Microsoft operating system allows me to develop data bases of information and to write down my ideas and more... Each of these companies actually has a very real contribution to an empathetic common good solution for me as a consumer. The big challenge for the content companies is to realize that in order to survive and thrive they are going to have to learn how to deliver the same promise as these companies. It can be done, but it isn't easy. If it was they wouldn't be struggling in the way that they are. But it isn't just content companies that face this challenge. Every business that can't figure out how to position itself and its model to deliver a common good outcome that is about the customer and not about the shareholder will find that it is going to be disrupted. As it tries to find solutions that are all about delivering shareholder value and not empathetic human value it will find that it keeps on going down a pathway that is ever more circuitous and doomed to failure. Wednesday, March 24
The Hunt for Billy Joel and GAME-ON-DUDE
by
Tom Koltai
on March 24, 2010 04:19AM (EST)
OR Why the Music Industry is Losing Money….. Whilst researching statistics for an article I am doing, I came across a little historical gem. The first CD ever issued back in 1982 was “ I looked it up on Wikipedia United States The Billboard Pop Albums 1[3] 76 7x Platinum[4] 7,000,000+ Which is not bad if you consider the Percent Sales Population
Or one in forty-seven people have a copy of the album in the There was a link on Wikipedia ^ The RS 500 Greatest Albums of All Time : Rolling Stone which took me to the Rolling Stones page. 352 on the Rolling Stones Magazine list of Greatest Albums of all time. . 52nd Street, Billy Joel and, I could listen now.
But only if I was in the But wait, there were other options available on the Rolling Stone page. Buy RS cover reprints! I clicked on Download the CD.
I clicked on the “Listen to Radio” button and was taken to the European site of http://europe.real.com/music/ Where my original search request had been dropped. I typed in
52ndsearch.gif
52ndresult.gif Which of course was not what I was looking for. I had lost the Rolling Stone page by this time. So I thought I would try Last.fm Curiously, Last.fm would let me listen to Billy. Facilitated by becoming a member. In other words, there was no option to remain anonymous. It’s a shame that the efforts of the industry at legitimizing music downloads don’t appear to extend beyond the borders of one or two countries. i.e.: In a perfect world, where a supplier is interested in engaging with me, the consumer, rather than being fobbed off with the: “For music and entertainment services available in your country, please click here……” Which, by the way took me to the same place that thought “ If American programmers can’t yet work GEO IP location databases to find out where an AU APNIC registered IP address originated from, then the music biz is in real trouble. Hint Rhapsody and Real…. Please see the Resources section below for free GEO-IP software and if you would like Aussies as customers maybe you could link them to a service that knows that the worlds first CD was Alternatively and until you do, users are probably still going to use the convenient, no hassles, works every time option….. Emule doesn’t require me to be any particular country, nor does it require that I offer up my user details for statistical analysis.
On Emule there were 45 instances (file versions) with 54 people offering to share their copy with me. Had I elected to download the track, I could have been listening to it within seconds, hassle free and still anonymous. There-in lies the principal challenge for the industry. How to replace the convenience and accumulated habits of consumers with revenue earning alternatives. We are impressed with many of the digital available alternatives. So I have but one question…. Why couldn’t I listen to Billy Joel via the Internet anonymously? For all those wondering what I have been up to for the last ten days with nary a blog post or a how’s your doody….. It’s been an interesting start to the year. Two reports came out in the last couple of weeks. The IFPI Digital Music Report 2010 Music How, When, Where You Want It – But Not Without Addressing Piracy and the independent report that emanated from Tera Consultants. Building a Digital Economy : The Importance of Saving Jobs in the EU’s Creative Industries For some time we have been saying that the downturn in sales [if any] has more to do with format change (Compact Disc to Digital) and the industry’s slow response to consumer demand than P2P.
Although we have found that there are positive indications of file sharing damaging catalogue sales, we are unable to come to the same conclusion on new releases. Whilst perusing the Terra report, found some criticism of the Oberholzer-Gee & Strumpf 2007 paper – Most studies conclude that the impact is negative and significant (even if, in some cases as Oberholzer-Gee and Strumpf (2007)133, the effect is supposed to be negligible) 133The results of Oberholzer-Gee and Strumpf (2007) were contradicted by Leibowitz (2007). A similar comment in the IFPI 2010 Digital Music Report; “There is one study (Oberholzer and Strumpf, 2004) that claims to find a zero impact but it has been frequently discredited. All the other studies find some degree of negative relationship between file-sharing and sales of sound recordings.” again in the Recording Industry In Numbers 2009 report; A well-publicised study by Oberholzer and Strumpf (2004) found no link between the fall in music sales and illegal downloading. This study was reviewed by Liebowitz who concluded that “it is probably something of an understatement to say that [their] results did not hold up well under this re-examination” (How Reliable is the Oberholzer and Strumpf Paper On File-Sharing?). Being a curious chap, I read the Leibowitz commentary and let Google do the walking….. Here are the concerns I have put to Professors Oberholzer and Strumpf. Secondary Issues: Your Instruments In Table 11 your instruments are different for each album. In Table 12, your instruments only have 17 observations, one for each week. That doesn’t seem like much information on which to explain the downloading behavior toward 670 albums. I am particularly concerned about the German school holiday variable. To start, I am surprised that the coefficient was even positive. I looked at German school holidays and I see that there are usually 12 days in October plus the typical Christmas holiday. Yet according to Table 3, October is when downloads were lowest. Is there something else going on here? Would you mind providing data on the number of German kids on vacation for each of your 17 weeks? (What a ridiculous question from a learned academic – I did not know that sarcasm was an approved method of querying statistical results or analysis.) There appears to be more going on here than meets the eye….. I always thought that academics earned their spurs by being dispassionate and independent. How important are the files of German school children to American downloaders? We really do not know. You only provide data on the total files of Germans used by Americans. That’s interesting, because although I am familiar with the work of Oberholzer-Gee and Strumpf and don’t exactly agree with all their findings, this was one area of research that I had conducted extensive samplings over – i.e.: increases and decreases in file sharing based on school holidays, work start times and work end times and our data correlated the small sample numbers of the Oberholzer-Gee and Strumpf analysis. This was obviously a velvet gloves off (game-on) situation, where analytical economic theory fails against actual raw data collection. Many of our readers are aware that we set-up and ran for six months (April-September 2009) an ed2k server (non-indexing) to collect search request data from Australian IP numbers. We restricted the access numbers to 1000 users but still amassed 6 GB per day of search request data. In part to assess the damage or lack of, that file sharing was causing to media creators and in part to confirm the Ipoque data that users were no longer as interested in downloading music files. With the server located initially in The Kademlia XOR next available bucket does not respect RIPE allocation of IP numbers. We briefly discussed the Kademlia Protocol in P2P with a Condom. (A blog article and not a formal research paper). However the relevance of the German school kids files to Americans would be in the time differences between the two continents and the habits of user in keeping their computers on all night. If on holidays, obviously, German kids computers are not being left on at night and not making available (average 800 files each) for the download of American kids. This unfortunately is a serious flaw in the understanding of Leibowitz. I wondered if a learned academic can make such an obvious mistake in the analysis of other academics data studies, was it time to speak up about the results of our own empirical data set? Not-withstanding my above comments, we have noticed a very similar effect related to a children’s television program called Hi-5. We covered this (briefly) in an article last year, Australians Digital Economy Request For Comments Q.23 Google discovered a new Oberholzer-Gee & Strumpf paper, from 2009, and I quote there-from; While the majority of papers reports some sales displacement, the four studies using actual measures of file sharing (Tanaka, 2004; Bhattacharjee et al., 2007; Oberholzer-Gee and Strumpf, 2007; Smith and Telang, 2008) find that file sharing is unrelated to changes in sales. What I found most interesting is that everyone ignored the official Economic and cultural effects of file sharing onmusic, film and games (TNO) Which is the only paper apart from a Canadian paper, (referenced) to have brought up the positive cultural aspects of file sharing. The research shows that the economic implications of file sharing for welfare in the consumers with access to a broad range of cultural products, which typically raises welfare. Conversely, the practice is believed to result in a decline in sales of CDs, DVDs and games. Therein lies the Dilemma for the European Union (and every country outside the Cultural enhancements for the community or blind allegiance to corporatism. At Perceptric we believe there needs to be a balance, ensuring cultural diversity, the welfare of the citizenry and that new content can continue to be created. So, for the last ten days readers, I have been refreshing the recent material on file sharing including the Leibowitz evidence in the Joel Tannenbaum case. Based on what I have read, it is time to revisit seriously the partially completed analysis of Australian file sharing that I carried out last year and rebut some statements that I consider erroneous and misleading. We thought we would look at actual sales data to ascertain the impacts of file sharing. Sales figures by Numbers of Sales, Record Albums, 1991 – 2009, No 1 Albums by Week (
annualalbumswk.gif Source: BillBoard Charts, Neilsen Soundscan Positive growth (however miniscule) over the whole period. Then again, what happens if we just look at the file sharing years? Sales figures by Numbers of Sales , Record Albums, 1998 – 2009, No 1 Albums by year (
Source: Neilsen Soundscan. Yes, it looks grim for the file sharing community (or someone). And that was before we allowed a factor for population growth numbers….. We leave you with just one more little graph…. Call it thinking music……
More later in the week. Resources: http://software77.net/geo-ip/ Reference: A Great Invention a 100 years on. http://www.sony.net/Fun/SH/1-20/h5.html
Keywords:
Charts,
Leibowitz,
2009,
Billy,
Oberholzer,
Terra,
Bestsellers,
Soundscan,
Rhapsody,
thinkingmusic,
Strumpf,
Neilsen,
BillBoard,
RIN,
Joel,
Real,
IFPI,
52ndstreet,
LastFM
Monday, March 8
The Dollar, the Oil and Szun Tzu. Part III The End of the World, Again ?
by
Tom Koltai
on March 8, 2010 08:05PM (EST)
Queuing outside the stadium
…… Prologue In 1992, George Soros took down the He bet that he could push
the price down to a position that he would win buy buying it back cheaply to
settle futures contracts. Actually, he astutely estimated that the George won, the UK Treasury lost. In the last article we said that
the IMF was looking at “thinking about alternatives to the dollar”.
So what does the worlds leading currency trader think…..? (He tells us that he's retired, but..... from the annals of Sun Tzu:
VII. Maneuvering 15. In war, practice dissimulation, and you
will succeed.) Interviewer: "So how are you positioned currently in the
Dollar?" Interviewer: “What about the British Mr. Soros: “Same thing applies.” Interviewer: “And the Euro ?” Mr. Soros: “I’m pretty
convinced that the Euro will hold together.” So
there you have it, George obviously agrees with the IMF (see Part II of this
series of articles). In
the interview, Mr. Soros did give some sage advice…. Mr. Soros: Now we
have a dual task… One is to stop the collapse… and the second to build a new
system. In Hungarian, "Soros" means, Tight, Strong, Enforce. He
probably wasn’t referring to major
banks assisting in the bankruptcy of a country…. IV. Tactical
Dispositions In
 Australian Liabilities in
Various Currencies
Australian
Position in the US Dollar – Decreasing Dollar Reserves  So
it would seem that we are reducing our US Dollar Assets (well since the beginning
of last year) , but increasing our US Dollar Liabilities. It would appear that
the Australian Reserve Bank is betting that the US Dollar will go down. By
doing this, we can buy Dollars in the future to pay off our increasing USD
liabilities, cheaper, which is good for Aussie Taxpayers. OK,
now lets see what currency has to do with oil. Australians
love their cars and their consumption of petrol and LPG shows it….. Australian
Annual petrol consumption per capita.  Source: http://www.abare.gov.au/publications_html/energy/energy_09/G_09.xls &http://www.abs.gov.au/AUSSTATS/subscriber.nsf/log?openagent&3105065001ds0003_2008.xls&3105.0.65.001&Data%20Cubes&8CB6A3D76A0F3ADFCA2574CC0010B8A6&0&2008&23.09.2008 However,
before you say, “Hey Koltai, we’re keeping it stable….. the above excludes diesel
(mainly because it’s too difficult to differentiate between semi-trailer fuel
and domestic use.) According
to the ABS; “Overall passenger
vehicle registrations increased by 13.1% between the 2004 and 2009 MVC
snapshots, yet the number of passenger vehicles registered with diesel fuel
increased by 80.0%.”  Source: http://www.abs.gov.au/ausstats/abs@.nsf/mf/9309.0/ O.K.
We’re at our seat in the stadium now… the pre-game tension is rising….. Koltai
looks around for the hot-dog vendor…… The term "Peak
oil" -- the notion that global production of oil will soon reach its
maximum, and will subsequently decline (even while demand continues to rise) --
is getting quite a bit of journalistic attention lately. It's not surprising;
peak oil is a useful metaphor for the broader problem of not paying attention
to longer-term problems, as well as an implicit driver for a move away from
fossil fuels.  Australian Crude and Condensate Production.  As one engineer put it….. There
are five types of “oil”: "black
oil", "volatile oil", "retrograde gas-condensate",
"wet gas", and "dry gas". The
distinctions are useful, but the boundaries are hardly distinct. The term
"black oil" is particularly imprecise and context-dependent; to a
reservoir simulation engineer like me, that means the simplifying assumption
that the fluid can be characterized by only two components, one of which can
exist in only one phase whose properties we can characterize the other
component dissolves in that phase; that phase is "black" as in box,
not color. Usually the non-partitioning phase is the "heavy"
component (separator oil may contain dissolved gas, but the gas phase contains
no oil), but it works the other way, too (separator gas can contain condensate
vapor, but condensate can dissolve no gas). When it's applicable, the black-oil
assumption saves *lots* of computational effort. "Condensates"
tend toward the lighter end of the spectrum, "crudes" to the heavier.
Since most hydrocarbon liquids are pretty close to (CH2)n
formula, the "energy" (heating value) content per pound is fairly
constant (to a decent first approximation, about 17000 BTU/lb IIRC; for
reference a thousand cubic feet of lean natural gas delivered for home uses
yields about 1 million BTUs [and weighs about 46 pounds {yes, that's 22000
BTU/lb, but it's mostly CH4). That is, a barrel of 50 API (a density
measure) condensate from Hugoton has less energy than a barrel of 12 API crude
from Midway-Sunset (API gravity is lower when density is higher). So if we are running out of
oil, how will we live?
Don’t Panic! This is not the first time that the “End
of the Industrialised world – as we know it” has been forecast. Nearly 30 years
ago “Limits
to Growth”, one of the most influential books of the 20th century, was published
(Meadows et al., 1972). It purported to
demonstrate, by means of a computer model, the imminent economic collapse of
industrial civilization due to the exhaustion of critical resources. It was followed shortly by the 1973 "oil
crisis", which immediately lent credibility to such scenarios. However, when queues at petrol stations went
away and oil prices dropped in the 80s, many people concluded the crisis was
"phony"--and by implication, resource shortages were too. It wasn't, and they aren't. Unfortunately, cheap foreign oil is limited.
Economists and consequently the Governments they work for have vastly
underestimated the effects that Peak Oil exploration and production will have
on our socio-economic oil dependent lifestyles.  A report http://criepi.denken.or.jp/en/e_publication/a2004/04kiban03.pdf
(no longer available) in March 2002 stated that oil prices would rise from $30
per barrel in 2000 to $40 per barrel by 2025. (Boy did he get it wrong…..) Although the prospect of "imminent resource
shortages" now has an ethereal real-time reality feel, it's simply been
postponed by cheap foreign sources. However, the devaluing US Dollar is ensuring that
those cheap sources are going to keep increasing the prices. It's also extremely disturbing that so many of the
technical community also seem unaware of the
degree to which the brave new high-tech future still relies on coal,
oil, and minerals all ultimately--and messily--dug out from the Earth. In
addition, the global communications revolution is causing a worldwide
revolution of rising expectations, which puts further pressure on the resource
base. If nothing else, exporters now
have other markets for those resources than the industrialized countries such
as the Eventually domestic political concerns may make
exporting resources politically impossible, as has already happened in many of
the industrialized countries. Australian Oil Imports –v- Exports  Source: ABS & Abare various Finally, resource issues are being exacerbated by
environmental concerns. As is well-known, present technology is polluting, and
a major part of that pollution stems from the production and consumption of
resources. The extraction,
transportation, and consumption of petroleum have familiar environmental
hazards ranging from oil slicks to photochemical smog. Coal is abundant and cheap, but byproducts
of its combustion include acid rain and fly ash, and its mining is both
dangerous and environmentally disruptive. There is a groundswell to clean up the environment and
find alternative fuel sources for both transport and power production. In fact it is the authors opinion that the Energy markets
are now at the same financial point as the Internet was in 1994. The ,most likely looking candidate are bio-fuels
including Hydrogen. Hydrogen gas is being explored for use in combustion
engines and fuel-cell electric vehicles. It is the third most abundant
element on the earth's surface, where it is found primarily in water and
organic compounds. It is generally produced from hydrocarbons or water;
and when burned as a fuel, or converted to electricity, it joins with oxygen to
again form water. Hydrogen is most commonly produced from sources such as
natural gas, coal, gasoline, methanol, or biogas through the application of
heat; from bacteria or algae through photosynthesis; or by using electricity or
sunlight to split water into hydrogen and oxygen. As stated above, Hydrogen can be extracted or
“re-formed” from many organic bases and can be done so extremely cheaply. However, the easiest, most economical and least talked
about methodology is the insertion
Removing the Fuel suppliers from the industrial world
would in fact present the financial world with some severe pressures on asset
revaluation and potentially remove trillions from market capitalization. (Probably, not a good thing to do during a global
financial crisis.) In other words, minerals in the ground have an asset
value that can be securitised and held as a guarantee over for example,
Insurance premiums. In fact this is just how some of our large “super
funds” are guaranteed. The following Table shows just how Crude affects our
balance of payments. Compare this chart with the graph above for Australian Crude Oil Balance of Payments  (So every Australian personally owns approx. $2,800.00 of our
overseas deficit just because we like to drive cars.) OK, I’ll do it for you….  Add to this the fact that your Government needs its
fuel excise tax to balance its budget and the problem becomes not a technical –
how do we make/store/burn Hydrogen, but an economical, how can we
introduce Hydrogen into our economy without undermining the very foundations on
which our house mortgages, social security payments and public transportation
rely on. But remember, Mr. Soros said – that we had to develop
a new system…… And he’s right. The above chart shows that if we keep
importing oil, the country will go bankrupt. So, how about that condensate stuff….. can’t we just
convert all our cars to LPG? Condensate is not actually natural gas or LPG per
se….. but let’s not swap our present time bomb for another. Economically, there is little doubt that we need to
divorce ourselves from fossil based fuels. Jules Verne in 'The Mysterious Island' in 1870, wrote: So let’s talk about Hydrogen. Hydrogen can be stored as compressed gas in high pressure
cylinders or liquefied at -253˚C in cryogenic tanks. But these ways of storing hydrogen are cumbersome and
expensive. Furthermore, outside a limited area in The cost of pure hydrogen is also relatively high
compared to the cost of conventional liquid fuels. The cheapest (commercially
available) hydrogen is made from natural gas, has an on-site cost of about $4.85
per gigajoule (i.e. $0.15 per litre equivalent gasoline), whereas liquid
hydrogen (delivered) now costs $16.00 per gigajoule (i.e. $0.64 per litre equivalent
gasoline). Delivered, compressed hydrogen costs up to $3.20 per
litre equivalent gasoline, due to the weight of the cylinders transported along
with it. For future transportation needs it could therefore be more suitable to
generate hydrogen on board from a primary fuel such as a fossil fuel (gasoline
or diesel) or from a chemical intermediate (ammonia, methanol or higher
alcohols). It can also be made from wood (gasifiers), water (electrolysis),
methane (sewerage). Actually, you can even grow plants and use their
photosynthesis to extract hydrogen. Hydrogen is a widely utilized chemical whose industrial
production has been considered common technology for over a century. Various
processing options exist depending on the type of primary fuel considered and
on the purity of gas needed. Today, in industry, most hydrogen is produced by steam
reforming or partial oxidation of hydrocarbons (76% from natural gas and 23%
from light or heavy oil distillates). But, for small hydrogen quantities, or when
high-purity hydrogen is required, processes such as water electrolysis, ammonia
decomposition or methanol reforming are also used. The largest consumption of
hydrogen occurs in petroleum refining and in the petrochemical industries for
ammonia and methanol synthesis, Many trade-offs for on-board hydrogen production therefore
exist, both in the choice of fuel and in the choice of the process. And of course, for the economy to convert to a
Hydrogen base, it would need to be taxed. One option would be to tax Hydrogen on a Vehicle Miles
Traveled (VMT) basis. In From the introduction page of the “Vehicle Miles of Travel
(VMT) is the sum of distances traveled by all motor vehicles in a
specified system of highways for a given period of time.  Source:
http://www.oregon.gov/ODOT/TD/TDATA/tsm/docs/VMT_Graph.PDF So there you have it, a different methodology of
assessing taxable value, no longer dependant on the distribution of a declining
resource. Clever people those Oregonians…. So now, (if VMT is taken up by every State and Federal
Government globally) the way is open to allow citizens to run their car on
anything they like. Bio-deisel, Ethanol, Compressed Natural Gas (from your
at home gas supply…..), LPG or plain old Hydrogen. So the only question that remains, is that if we
converted all vehicles to run on Hydrogen, and oil is no longer the black gold
that it has been, what will the world use as securitization for credit. I have three answers for that: a)
cash savings (let’s go back to basics – only buy what
we can afford to pay for.) b)
Consumer
generated Carbon Credits – (in effect more cash). c)
It still has all it’s other precious mineral reserves
to use for securitization. Consumer generated? Yeah, why not. Let the poor schmucks
that generate the pollution – also obtain benefit by not generating the
pollution. After all the banks have had their way for the last 98 years, I think
it’s the turn of the little guy. I suggest the world votes for any Politician that
mandates consumers are capable of earning REC’s (Renewable Energy Certificates),
thereby removing the ability of a limited few to control all the wealth of the
world. With Consumer generated REC’s, the world is your
oyster, the sky is the limit and Planet Earth will breathe a big thank-you. Your earning capacity will only be limited by your own
lack of inventiveness. Imagine earning money for walking. I wrote about this
last year…. A
beginning methodology of Calculating Walking REC’s for Consumers.
Man could be the master of his destiny. No longer reliant on Total, Chevron, Shell or BP. No longer at the whim of his bank manager. No longer at the whim of his employer. No longer just a sheep to be harvested. I wonder if this is the level of change that George
Soros meant? (Koltai, ducking and running…… changing my name to
Smith. Moving to a bullet proof cave in the
In our next exciting installment, we will discuss –
“Home Experiments with Hydrogen”.
The above is a page scanned from the October 1936
issue of Popular Mechanics.
References: Soros: Dollar's Strength a Measure of System's "Sickness"; Euro
Will Remain Viable
Banks defend use of sovereign CDS
trade to hedge risk
http://www.ft.com/cms/s/0/62c2e19e-28bf-11df-b86f-00144feabdc0.html?nclick_check=1 ON
BOARD HYDROGEN GENERATION FOR FUEL CELL POWERED ELECTRIC CARS M. PRIGENT Institut
français du pétrole The properties of petroleum fluids
By
William D. McCain Population
Statistics 4102.0 - Australian Social
Trends (ABS) Monday, March 1
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