"Solving technical and marketing problems for companies in the energy and environmental industries."
-The Freebie-
Geoff Dolbear’s Freebie Newsletter
- Issue 68 - June 2008 -
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Spilled Soup Letter
According to an old and probably apocryphal story told to me by David Martin, a man is eating in the diner on a cross-country train when the train passes over a bump and the jolt causes his soup to splash out of the bowl onto his lap. When he gets home from the trip, he writes an angry letter to the president of the railroad complaining about the mess it all made. Soon he receives a soothing letter from the railroad president who apologizes for the mess and inconvenience, tells the man this has never happened before, and promises to send out a crew to check that section of track for problems.
Attached to the president’s letter is the man’s original letter, now with a note on the top margin saying, “Send this guy the spilled soup letter.”
I think we have all gotten “spilled soup letters” from people we deal with. I remember one from the president of a now-defunct airline (Air California) who responded to my complaints of overcrowding in a 737, saying that the airline was complying with all safety requirements. I wrote back a nice letter saying I would be flying another airline in the future.
The important thing is to recognize a spilled soup letters for what it is: the writer’s way to get the complainer off his case so he or she can go back to something important. Recent history has taught us never to expect companies to change the way they do business unless they have bankruptcy or a legal gun to their heads (and often not then!). The recent unpleasantness with the airlines and safety inspections of certain planes shows this to be the case, but airlines are far from the only bad guys here.
So remember this the next time you see the CEO of some big company telling a congressional committee that he is sorry his product is so expensive but the huge profits are his company’s reward for creativity. This is a clear spilled-soup-letter response.
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The Law of Difficult Exits
It is much harder to get out of a mess than it is to get into it.
James Dulebohn
Bio-Gasoline
The current fuss over the use of ethyl alcohol in gasoline reminded me of a strange proposal I reviewed in about 1981. An inventor had written my company’s CEO proposing to make gasoline from sugar by direct conversion of the sugar to hexane using his wonderful new process. The letter was bumped down to me for review, and I was fascinated by the megalomanic last sentence of the letter, which is forever burned in my memory: “During the upcoming world-wide depression, we will buy all the world’s sugar cane fields and then build plants to make gasoline to supply the world.”
The chemistry employed in this proposed process made use of phosphorous chloride as a catalyst. I had in my research group at the time Al Schwartz, a true genius who was (and still is) a walking encyclopedia of organic chemistry, among other topics. I asked Al if he had any ideas what the fellow was proposing. Al recognized it immediately as the original Fischer sugar degradation, chemistry that brought Emil Fischer the 1902 Nobel Prize in Chemistry. (Fischer used it to prove that dextrose contains six carbons). So the chemistry actually worked. The bad news was that the reaction consumes elemental phosphorous, a material far more expensive, and containing more energy, than the gasoline made by the process. Al added the valuable information that the chemistry is also messy, with poor yields and unpleasant byproducts.
Those who follow the bio fuels area will immediately recognize a parallel here, since there is today a running argument over whether fuel ethanol requires more or less energy from petroleum to grow the corn and convert it to fuel than is contained in the resulting ethanol. It is a legitimate argument, with the corn growers on one side and the oil companies on the other. The answer depends on what factors you include in the calculation. To me, the important result of these calculations is that even the most positive estimates put the energy in the ethanol at about 50% more than the petroleum inputs, not the double or triple that would justify all the construction. That’s why makers require large tax incentives from you and me.
Fuel Prices
The ongoing upward spike in oil and gasoline prices is generally attributed to a combination of factors, with tight supplies and increasing demand at the center. While that may be true, I have not read of any refinery anywhere in the world that has needed to cut back operation due to shortage of crude oil. (Actually, some refineries appear to have cut back crude runs in response to reduced gasoline demand; doing so has helped push diesel prices upward, since diesel and gasoline are sort-of coproducts.)
And unlike the cases in 1973 and 1979, there is no apparent shortage of gasoline to force the price upward. Demand “at the pump” is, in fact, down. Gas stations are not running out of product, and no lines have formed down the street and around the block. In 1973 and 1979, we all sat in lines every time we went to fill up the car; I recall being limited to five or ten gallons several times. I recall rules covering which day of the week I could buy gas. All of this would be preposterous today.
Somehow, I suspect that shortages in crude and gasoline are only a small contributor to the price increases. I think the situation is more like the tech stock bubble of the 90s, housing prices in 2005-6, and the tulip madness in 17th century Holland. Inflation is said to be the result of too many dollars chasing a limited commodity, which is clearly the case in the energy futures market – but not at the gas pump, where demand is down.
Book of the Month
Opinions abound on what to do in Iraq. It is easy to find one you like, since they run the gamut from “Leave this week” to “Never give up”, and everything in between. The range of opinions on how we got into this mess, however, is rapidly narrowing as information continues to emerge from dark corners of the government. Books on the topic seem to come out weekly, such as Scott McClellan’s recent What Happened, apparently centered on White House intrigue.
For an unmatched overview, however, I do not see how it will be possible to beat Fiasco, by Thomas E. Ricks. The subtitle is “The American Military Adventure in Iraq”, with the word “adventure” used in an uncomplimentary way. The book contains all manner of information that we have all seen in the papers and the evening news, pulled together in a single well-written text with extensive endnotes. I found it a page-turner, hard to put aside.
A recurring theme is the hubris of Donald Rumsfeld and the people around him. Convinced that they were smarter than the accumulated wisdom of the existing military staff, they forced bad decision after bad decision on the planners and the troops on the ground. Anyone who effectively stood up to these people did so at the expense of his or her career. That’s why there are so many retired generals available for comment on the evening news.
The Army itself was quite unprepared for what we got into in Iraq. Of course, the initial weeks went really well, the blitzkrieg-like race to Bagdad. Once that was complete, the Fiasco started. Initially there was no planning for how to govern when we got to Bagdad, not even to the apparently simple decision of whether our military or our civilians would be in charge. With no decision on this, and the leaders of the two factions not speaking to one another, problems grew exponentially.
Great book, highly recommended.
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