Kerosene, Jet Fuel, Lockheed Constellation, Boeing 707, Boeing 747-400, Newton’s Third Law of Motion, Turbojet and Fan Jet

Posted by PITHOCRATES - October 3rd, 2012

Technology 101

The only way to make Flying Available to the General Public is to put as many People as Possible on an Airplane

Refined petroleum products have made our lives better.  We have gasoline to drive wherever we want.  We have diesel fuel to transport things on ships and trains like petroleum oil, iron ore, coal, food, medicine, smartphones, coffee, tea, wine, scotch whisky, bourbon whiskey, beer, fresh fish, sushi, etc.  Pretty much everything we buy at a store or a restaurant got there on something powered by diesel fuel.  And sometimes kerosene.  If it must travel fast.  And if it does then it finds itself on a jet aircraft.

Today aviation has shrunk the world.  We can order a new smartphone sitting on a shelf in California and have it the next day in New York.  We can even travel to distant countries.  Some in the time of a typical working day.  Some a half a day or longer.  When but a 100 years earlier it took a couple of weeks to cross the Atlantic Ocean.  While 200 years ago it took a couple of months.  We can travel anywhere.  And get there quickly.  Thanks to the jumbo jet.  And not just the super-rich.  Pretty much anyone today can afford to buy a plane ticket to travel anywhere in the world.  And one thing makes this possible.  The jet engine.

Airplanes are expensive.  So are airports, air traffic control and jet fuel.  Airlines pay for all of these costs one passenger at a time.  Their largest cost is their fuel cost.  The longer the flight the greater the cost.  So the only way to make flying available to the general public is to put as many people as possible on an airplane.  Dividing the total flying cost by the number of passengers on the airplane.  This is why we fly on jumbo jets for these longer flights.  Because there are more people to split the total costs.  Lowering the cost per ticket.  Before the jet engine, though, it was a different story.

The Boeing 747-400 can take up to 660 Passengers some 7,260 Miles at a Speed of 567 MPH

One of the last intercontinental propeller-driven airplanes was the Lockheed Constellation.  A plane with four (4) Wright R-3350-DA3 Turbo Compound 18-cylinder supercharged radial engines putting out 3,250 horsepower each.  Which is a lot considering today’s typical 6-cyclinder automobile engine is lucky to get 300 horsepower.  No, the horsepower of one of these engines is about what one modern diesel-electric locomotive produces.  So these are big engines.  With a total power equal to about four locomotives lashed up.  Which is a lot of power.  And what does that power allow the Constellation do?  Not much by today’s standards.

In its day the Lockheed Constellation was a technological wonder.  It could take up to 109 passengers some 5,500 miles at a speed of 340 mph.  No bus or train could match this.  Not to mention it could fly over the water.  Then came the age of the jet.  The Boeing 707 being the first largely successful commercial jetliner.  Which could take up to 189 passengers some 6,160 miles at a speed of 607 mph.  That’s 73.4% more passengers, a 78.5% faster speed and a 14.1% longer range.  Which is an incredible improvement over the Constellation.  But nothing compared to the Boeing 747-400.  Which can take up to 660 passengers (506% more than the Constellation and 249% more than the 707) some 7,260 miles at a speed of 567 mph.

Now remember, fuel is the greatest cost of aviation.  So let’s assume that a intercontinental flight costs a total of $75,000 for each plane flying the same route.  Dividing that cost by the number of passengers you get a ticket price of approximately $688, $397 and $114 for the Constellation, the 707 and the 747-400, respectively.  So you can see the advantage of packing in as many passengers as possible into an airplane to lower the cost of flying.  Which is why the jumbo jets fly the longest routes that consume the most fuel.  And why we no longer fly propeller-driven aircraft except on short routes to airports with short runways.  These engines just don’t have the power to get a plane off the ground with enough people to reduce the cost of flying to a price most people could afford.  Only the jet engine has that kind of power.

The Fan Jet is basically a Turbojet with a Large Fan in front of the Compressor

Newton’s Third Law of Motion states that for every action there is an equal and opposite reaction.  Think of a balloon you just blew up and are holding closed.  If you release your hold air will exit the balloon in one direction.  And the balloon will move in the opposite direction.  This is how a jet engine moves an aircraft.  Hot exhaust gases exit the engine in one direction.  Pushing the jet engine in the opposite direction.  And because the jet engines move the plane moves.  With the force of the jet engines transferred via their connection points to the aircraft.  The greater the speed of the gas exiting the jet the faster it will push a plane forward.

The jet engine gets that power from the continuous cycle of the jet engine.  Air enters one end, gets compressed, enters a combustion chamber, mixes with fuel (kerosene), ignites, expands rapidly and exits the other end.  The hot (3,632 degree Fahrenheit) and expanding gases pass through and spin a turbine.  Then exit the engine.  The turbine is connected to the compressor at the front of the engine.  So the exhaust gases spin the compressor that sucks air into the engine.  As the air passes through the compressor it compresses and heats up.  Then it enters the combustion chamber and joins fuel that is injected and burned continuously.  Sort of like pouring gas on a burning fire.  Only enormous amounts of compressed air and kerosene are poured onto a burning fire.  As this air-fuel mixture burns it rapidly expands.  And exits the combustion chamber faster than the air entered it.  And shoots a hot stream of jet gas out the tail pipe.  Which produces the loud noise of these turbojets.  This fast jet of air cuts through the surrounding air.  Resulting in a shear effect.  Which the next generation of jet engines, the fan jet, greatly reduces.

The fan jet is basically a turbojet with one additional feature.  A large fan in front of the compressor.  These are the big engines you see on the jumbo jets.  They add another turbine inside the jet that spins the fan at the front of the engine.  Which feeds some air into the compressor of what is basically a turbojet.  But a lot of the air this fan sucks in bypasses the turbojet core.  And blows directly out the back of the fan at high speed.  In fact, this bypass air provides about 75% of the total thrust of the fan jet.  Acting more like a propeller than a jet.  And as an added benefit this bypass air surrounds the faster exhaust of the jet thereby lessening the shear effect.  Making these larger engines pretty quiet.  In fact a DC-9, an MD-80, a 707 or a 727 with standard turbojets are much louder than a 747 with 4 fan jets at full power.  They’re quieter.  And they can push a lot more people through the air at incredible speeds over great distances at a reasonable price per passenger than any other aircraft engine.

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Obama Favors Protectionism to Save Manufacturing Jobs that Employ Few while Increasing Costs for Consumers Everywhere

Posted by PITHOCRATES - January 28th, 2012

Week in Review

In full campaign mode, Obama seeks the support of unions in the manufacturing industry (see Why Manufacturing Can’t Solve The Jobs Problem by Roya Wolverson posted 1/27/2012 on Time Business).

Among other things, Obama’s State of the Union speech Tuesday drove home the idea that U.S. industries need more protection. “Over a thousand Americans are working today because we stopped a surge in Chinese tires,” he said in his speech. That’s all fine and good if your goal is to hold on to U.S. manufacturing jobs. But it’s not going to solve the country’s overall unemployment problem. And in the end, it may cost the American consumer more than those jobs are worth.

For one thing, raising trade barriers on imported goods like tires makes tire-buying more expensive for American consumers, which, as Matthew Yglesias points out, only undermines those consumers’ ability to spend elsewhere. It also provokes countries like China to raise trade barriers on U.S. goods, which makes the job of increasing U.S. exports and export-related jobs even harder. Even if protections did save some manufacturing jobs, they wouldn’t be enough to move the needle on unemployment. It’s worth remembering that only 11% of U.S. jobs come from manufacturing, thanks to globalization, which has taken jobs abroad to lower-wage countries, and technological advances that have increased worker productivity. And that percentage has been declining steadily for several decades.

…And since we can’t reverse that process, the biggest gains in the job market can’t come from greater protections, but instead from gains in technology. Standard Chartered’s Gerald Lyons made the point today that, despite the enduring public perception that technology kills jobs, for every one job technology destroys, it creates 2.1 other jobs. Thus, instead of clinging to our past by supporting unproductive industries and erecting trade barriers, the U.S. has to find “the types of jobs that are fit for this country’s future,” argues Diamond.

Once upon a time the whale oil business was booming.  And a lot of people where employed in the whaling industry.  Until John D. Rockefeller came along.  Who created Standard Oil.  Introduced Americans to kerosene.  And put the whale oil business out of business.  Creating far more jobs in the petroleum exploration and refining business than the whale oil business ever did.  Now if President Obama were in office during this time he would have placed a tax on kerosene to protect those whale oil business jobs.  Because although he may talk about the jobs of the future, he wants to protect the jobs of the past.  Especially if they are protected by a strong union.

When only 11% of U.S. jobs are  in manufacturing, this protection of the jobs of the past is also very costly.  Because to save 11% of jobs in the economy he will raise prices on everything in the economy.  Meaning 100% will pay a surtax so the 11% can keep these jobs of the past.  So to sustain a little economic activity he will kill a lot of economic activity.  Which doesn’t make sense.  But it will protect union jobs.  And sustain contributions to Democrat coffers.  Which is the whole point of saving these jobs of the past.

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LESSONS LEARNED #20: “It is never a consumer that complains about ‘predatory’ pricing.” -Old Pithy

Posted by PITHOCRATES - July 1st, 2010

ECONOMIES OF SCALE and vertical integration can do two things very well.  Make industrialists rich.  And make the things they sell cheap. 

The more you make, the less each thing you make costs.  Businesses have fixed costs.  Big one time investments in plant and equipment.  Businesses have to recover these costs.  Each thing they sell has a portion of these fixed costs added to its price.  The more they sell, the less they need to add to each unit sold.  This is economies of scale.  Think of bulk goods.  Warehouse clubs.  Places where you can buy large quantities of things at lower unit prices.  You may buy an ‘economy pack’ of 3 bottles of shampoo shrink-wrapped together.  The purchase price of a 3-pack will be greater than the price of a single bottle of shampoo at your convenient corner drug store.  But the unit cost of each of the bottles in the 3-pack will be less.  You save more over time by buying 3 bottles at a time.  Spending more, then, means spending less.  In time.

Few of us buy raw materials.  Few have a need for crude oil.  Iron ore.  Coal.  Limestone.  Manganese.  But they make the stuff we buy.  A lot of things have to happen before those raw materials make it to us in those things we buy.  It has to be mined or drilled/pumped.  Transported.  Processed.  Stored.  Transported again.  Processed again.  Stored again.  Transported again.  There are many different stages between extracting raw materials from the earth and incorporating them into a final product we consumers buy.  At every stage there are costs.  And inefficiencies.  Which add to costs.  By reducing these costs along the way, the component materials used at the final manufacturing stage cost less.  This reduces the selling price of the final product.  This is what vertical integration does.  It puts everything from the extraction of raw materials to the incorporation of those processed materials into the final product for sale under control of the final user.  It brings in a high level of quality, cost containment and reduction of inefficiencies into the entire process resulting in a high quality, mass produced, inexpensive product.

Not everyone can do these things.  You have to live and breathe the industry you’re in.  You have to understand it intimately.  An industrialist at the top of his game can do this.  A politician can’t.  States trying to take control of their economy have failed.  Every time they’ve tried.  Why?  Politicians are ‘intellectuals’.  They’ve never run a business.  They only thought about it.  And, somehow, that gives them the moral authority to tamper in something they are simply unqualified to do.  And when they meddle, they destroy.  Purposely.  Or through unintended consequences.  In the process, though, they enrich themselves.  And their cronies.

ANDREW CARNEGIE WAS a brilliant entrepreneur.  After working for a railroad, he saw the future.  Railroads.  And he would build its rails.  And its bridges.  With his Keystone Bridge Company.  Which used steel and iron.  So he built his Union Mills.  Which needed pig iron.  So he built his Lucy blast furnace.  Which consumed raw material (iron, coke, limestone).  So he secured his own sources of raw materials. 

His Lucy blast furnace set world records, nearly doubling the weekly output of his steel competitors.  No one made more steel than Carnegie.  For less.  In about 20 years, he brought the price down for steel rails from $160/ton to $17/ton.  And got rich in the process.

Economies of scale.  Vertical integration.  And innovation.  Carnegie hired the best people he could find and used the latest technology.  Always improving.  Always cutting costs.  Always making steel more plentiful.  And cheaper.  His steel built a nation.  Dominated the industry.  And destroyed the competition.  Of course, that drew the attention of the government.  And they tried to break up the steel giant because it was unfair to the competition.  Who couldn’t sell steel as cheap as he could.

JOHN D. ROCKEFELLER was a brilliant entrepreneur.  After trying the oil drilling business, he saw the future.  The refining business.  For America lit the night with kerosene.  And he would provide that kerosene.  At prices that a poor man could afford.  And he did.  And he saved the whales in the process (his cheap kerosene put the whale oil business out of business).

Like Carnegie, cutting costs and production efficiencies consumed him.  He built his own kilns and used his own timber for fuel.  He made his own barrels from his own timber.  He used his own horse-drawn carts, boats, rail cars and pipelines.  He bought up competitors.  He grew to dominate the industry.  By far the biggest shipper, he got better shipping rates than his competitors.  And he constantly innovated.  When others were dumping the gasoline byproduct from refining kerosene into the river (no internal combustion engine yet), he was using it for fuel.  He hired the best talent available to find a use for every byproduct from the refining process, giving us everything from industrial lubricants to petroleum jelly (i.e., Vaseline).

His company, Standard Oil, was close to being a monopoly.  When they controlled 90% of the market kerosene was never cheaper.  He brought the price down from $0.26/gallon to $0.08/gallon.  And that was an outrage.  We can’t allow any one company to control 90% of the market.  Sure, consumers were doing well, but the higher-cost competitors could not stay in business selling at those low prices.  So the government broke up Standard Oil via antitrust legislation (the Sherman Act).  To protect the country from monopolistic practices.  And cheap kerosene, apparently.

BILL GATES WAS a brilliant entrepreneur in building Microsoft.  The personal computer (PC) was new.  You couldn’t do much with it in the early days unless you were pretty computer savvy.  But programs were available that made them great business tools (word processing and spreadsheet programs). 

IBM created the PC.  And they licensed it so others could make IBM-like machines.  IBM clones.  The PC industry chewed each other up.  But Gates did well.  Because all of these machines used his operating system (Microsoft’s Disk Operating System – DOS).  Apple developed the Macintosh (with a mouse and Graphical User Interface – GUI) but it was expensive.  Anyone who used one in college wanted to buy one.  Until they saw the price.  So they bought an IBM clone instead.  And when Gates came out with Windows, they were just as easy to use as the Macs.

Because of the higher volume of the IBM platform sold, Microsoft flourished.  Software was bundled.  New machines came preloaded with Windows.  And Internet Explorer.  And Windows Media Player.  You got a lot of bang for the buck going with a Windows-based PC.  And Windows dominated the market.  Consumers weren’t complaining.  Much.  Sure, there were things they did bitch about (glitches, drivers, viruses, etc.), but it sure wasn’t price.

Of course, Microsoft’s competitors were hurting.  They couldn’t sell their products if Microsoft was giving away a similar product free.  Because they were hurting their competitors, the government tried to break up the company with the Sherman Act. 

THE NORTHERN SECURITIES SUIT of 1902 found a holding company guilty of not yet committing a crime.  Teddy Roosevelt’s administration filed a Sherman antitrust suit against Northern Securities.  This was a holding company for Northern Pacific, Great Northern, and Chicago, Burlington, and Quincy Railroads.  What’s a holding company?  It replaced a trust.   Which large corporations created in response to government’s attacks on large corporations.

Small competitors feared large corporations.  They could not compete against their economies of scale and vertical integration.  The little guys couldn’t sell things as cheap as the big corporations could.  So the government intervened to protect the little guy.  So they could sell at higher prices.

But businesses grow.  All big corporations started out as little guys.  And the growing process doesn’t stop.  So the big corporations had to find other ways to grow.  They formed trusts.  Then the trust-busters busted up the trusts.  The next form was the holding company. 

The trust-busters said that the big corporations, trusts and holding companies were all trying to become monopolies.  And once they eliminated all competitors, they would raise their prices and gouge the consumers.  Northern Securities never did.  But they could.  So they were guilty.  Because they might commit a crime.  One day.

ALL BUSINESS OWNERS aren’t morally ethical and honest.  But the market is, albeit cruel.  Economies of scales will always put the little guy out of business.  Sad, yes, for the little guy.  But for every little guy put out of business, millions of consumers save money.  They can buy things for less.  Which means they have more money to buy more things.  New things.  Different things.  From new little guys who now have a chance with this new surplus of purchasing power.

But when politicians get involved, consumers lose.  When they help a competitor, they help them by keeping prices high.  To keep competition ‘fair’.  For the politically connected.

Consumers never complain about low prices.  Only competitors do.  Or their employees.  Those working on whaling ships didn’t like to see the low price of Rockefeller’s kerosene.  But the new refining industry (and its auxiliaries) created far more jobs than were lost on the whaling ships.  We call it progress.  And with it comes a better life for the many.  Even if it is at the expense of the few.

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