7 ms·

Really sad that economics makes a bunch of massive ships travel thousands of miles out of their way, burning tons of extra fuel, just because a bunch of guys ch

by gleenn 11y ago

Really sad that economics makes a bunch of massive ships travel thousands of miles out of their way, burning tons of extra fuel, just because a bunch of guys charge way too much to drive through a canal that was built a long time ago.

dmm 11y ago
Markets provide price discovery and efficient[0] prices are very valuable. In that sense it's not a waste. Is this even a significant phenomenon? The article mentions 100 ships going the long way but wikipedia says the Suez averages 46 ships per day, or more than 16,500 per year. [0] The definition of efficient in economics is roughly "It's not possible to make anyone better off without making someone else worse off".
- Amorymeltzer 11y ago
  >Over 100 ships did this between late October 2015 and the end of the year. That's somewhere between 1 and 1.5 ships a day, which is between 2-3% of daily entrance figures. That's certainly not nothing.
  - esmi 11y ago
    But it's also not "taking shipping routes back to the 1800s".
- pcarolan 11y ago
  I think he means waste as in unaccounted externalities such as putting co2 into the atmosphere without paying the social costs.
- davidw 11y ago
  > The definition of efficient in economics is roughly "It's not possible to make anyone better off without making someone else worse off" That's a terrible definition, because a lot of the economy is not a zero sum game, and it's hard enough as it is to break people out of that kind of thinking.
  - deleted 11y ago
    [deleted]
  - gozur88 11y ago
    Beyond the macroeconomics, two people will not agree on a price unless in doing so they'll both be better off in some way.
  - eru 11y ago
    Oh, dmm is just defining pareto efficiency. Said in a more positive light: `a situation is pareto efficient if all mutually beneficial transactions have been done.' (And thus in dmm's words, only the non-mutual beneficial ones remain.)
mathattack 11y ago
Let's put externalities (CO2, etc) aside... The only reason that things like canals get built is because people can charge money to recoup their costs. Many infrastructure projects get built and don't earn their capital investment back. (One might argue most) The reason people still build them is a few are enormously profitable. Once "going the long way" gets significantly cheaper, the folks in charge of the canal will lower their price so that equilibrium still means going through them.
- rosser 11y ago
  No, let's not put externalities aside. That's the whole problem with externalities: putting them aside. However negligible the contribution to global CO₂ concentrations these 100-odd ships over the last couple of quarters have made, they still made it, and it was done to the world I have to live in without consulting anyone or anything but their owner's own bottom line. That's why there needs to be something like a carbon tax (however poorly designed so many of the proposals thus far have been). Because those externalized costs aren't free, and they should be borne by the people who impose them on everyone else. There is absolutely no penalty for pissing in the pool the rest of us happen to be swimming in, and I call bullshit on that. EDIT: And the canal wasn't built so its owners could charge for the privilege of using it. It was built because it took weeks off transit times. Charging for its use is how it was paid for, not why it was built. That is some serious cart-before-the-horse action, right there.
  - gus_massa 11y ago
    Building and maintaining a channel also has a cost in CO2 emission. How many tons of CO2 do saves a ship in fuel using the channel? How many tons of CO2 is the prorated cost of each ship traveling though the channel? I think that the Suez channel has no recent upgrades, but the Panama channel is currently being expanded, and the expansion cost a los of money and a lot of CO2. And there are some projects to build a channel in Nicaragua ...
    - rosser 11y ago
      With a quick search, it looks like container ship emissions are about ~.04kg of CO₂ per ton-mile. Let's ballpark the capacity of a container ship at around 15000 TEU (Twenty-foot Equivalent Unit, or a single 20' container). That seems to be a pretty good median, based on the numbers I'm seeing. It's hard to find reliable numbers for the weight of a TEU, but I'm seeing references to a "maximum gross mass" of 21 and change metric tons, and an empty weight of 2.4 mt. Let's make the math easy and suppose each of the 15k TEUs on a single ship are filled to half capacity, netting a little under 140000 mt. The "long way" is some 3500 extra miles, which, at .04kg/ton-mile, is 1.96 million kg, or 19.6 thousand (metric) tons of CO₂. Per ship. Per trip. And that's just the extra emissions for going the "long way". For sake of comparison, the notional "average" car emits about 4 metric tons of CO₂ per year. I have no idea what the maintenance costs of the canals are in terms of emissions, but they'd have to be amortized across every ship that traverses them. Per another poster, almost 17.5k ships sailed through the Suez Canal in 2015, so you're looking, with very back-of-the-envelope math at a little under 20000 metric tons versus 1/17500th of the annual maintenance emissions for a ~200km long canal. For a single ship's passage through the canal. The construction costs of a canal, on the other hand, have to be amortized across every ship that has ever traversed it. The fractions get ludicrously small there (though they are, admittedly, of a rather larger number). Without knowing the actual emissions numbers for construction or maintenance, I can't be sure, but I'm going to go ahead and predict a clear winner... EDIT: Corrected some bad inputs to my math. Please, someone double-check my calculations. It is, after all, the end of the day on a Friday. My brain may be a smidge soft...
tacostakohashi 11y ago
Also putting externalities aside... Really great that economics, innovation and competition have driven down the cost of shipping (larger containerized ships, better fuel efficiency, smaller crews / labor component) and oil extraction down so low that there's now a cheaper option than that imposed by the canal folks. It's not merely an expensive toll that has brought this situation about, it's also cheap shipping.
- rosser 11y ago
  The major contributing factor to this practice being economically viable is that the big oil producers are trying to undercut one another. That isn't an "advance" in economics, or innovation, or fuel efficiency, or anything else.
  - oatmale 11y ago
    I like how you put the word advance in quotes implying that the poster you're responding to used that word, when in fact they did not.
  - ArkyBeagle 11y ago
    It's a bizarre case where the House of Saud is paring all other factors back to only their lift cost and the rest be damned. It has the flop sweat of desperation to it. The more that happens in That Region, it just makes the people who live there harken back to the Caliphate under the Ottoman Empire only even moreso.
slyall 11y ago
Egypt spent around $8 billion on a Suez Canal expansion in 2014 & 2015 in order to double the Canal's capacity. https://en.wikipedia.org/wiki/New_Suez_Canal https://en.wikipedia.org/wiki/New_Suez_Canal
ArkyBeagle 11y ago
Prices are sticky some times.
ryuuchin 11y ago
Doesn't it also have to do with safety as well? I remember reading that going the long way around also avoids some pirate areas as well (which could also be considered economics, e.g. insurance, etc).
lumberjack 11y ago
It's their land and there are a lot of costs associated with maintianing the canal. The failure of economics, that you should look at is in the price of oil. The are polluting the atmosphere and damaging the climate and not reimbursing anyone for the damage they are causing.
- bedhead 11y ago
  "They"??? No, not they. You. Me. Us. Give me a break with this sanctimonious drivel. Ship owners don't drive around the oceans aimlessly for fun. They are facilitating global trade. The computer you wrote your post on was probably delivered via cargo ship. Ditto half the stuff in your life that you obviously take for granted. So I hate to break this to you, but you are just as responsible for "polluting the atmosphere" and "damaging the climate" as the ship owner, because without you that ship has no need to sail. Please let me know how you plan on reimbursing me. I accept Paypal.
  - goldenkey 11y ago
    Just for kicks, how do you feel about the gigawatts used to mine bitcoins, or rather, keep the blockchain ledger ticking?
  - danharaj 11y ago
    If the person you replied to just died today, virtually nothing would change about global capitalism. Also, what kind of ethics do you subscribe to that validates your reasoning? I can't imagine your definition of responsibility being useful at all except as an excuse to tell people to stop complaining about the flaws of a system far too large to be at all under their influence except collectively. Granted that we have collective responsibility for human activity, then only by collective action can we assume stewardship of our responsibilities. The basis of collective action is first consensus, which is achieved through communication. Therefore the grandparent is taking a perfectly rational action in communicating their distaste for the system. I feel second-hand embarrassment for your combative and flimsy dismissal.
  - mistermann 11y ago

by gleenn 11y ago

dmm 11y ago

Markets provide price discovery and efficient[0] prices are very valuable. In that sense it's not a waste. Is this even a significant phenomenon? The article mentions 100 ships going the long way but wikipedia says the Suez averages 46 ships per day, or more than 16,500 per year. [0] The definition of efficient in economics is roughly "It's not possible to make anyone better off without making someone else worse off".

Amorymeltzer 11y ago
>Over 100 ships did this between late October 2015 and the end of the year. That's somewhere between 1 and 1.5 ships a day, which is between 2-3% of daily entrance figures. That's certainly not nothing.
- esmi 11y ago
  But it's also not "taking shipping routes back to the 1800s".
pcarolan 11y ago
I think he means waste as in unaccounted externalities such as putting co2 into the atmosphere without paying the social costs.
davidw 11y ago
> The definition of efficient in economics is roughly "It's not possible to make anyone better off without making someone else worse off" That's a terrible definition, because a lot of the economy is not a zero sum game, and it's hard enough as it is to break people out of that kind of thinking.
- deleted 11y ago
  [deleted]
- gozur88 11y ago
  Beyond the macroeconomics, two people will not agree on a price unless in doing so they'll both be better off in some way.
- eru 11y ago
  Oh, dmm is just defining pareto efficiency. Said in a more positive light: `a situation is pareto efficient if all mutually beneficial transactions have been done.' (And thus in dmm's words, only the non-mutual beneficial ones remain.)

mathattack 11y ago

Let's put externalities (CO2, etc) aside... The only reason that things like canals get built is because people can charge money to recoup their costs. Many infrastructure projects get built and don't earn their capital investment back. (One might argue most) The reason people still build them is a few are enormously profitable. Once "going the long way" gets significantly cheaper, the folks in charge of the canal will lower their price so that equilibrium still means going through them.

rosser 11y ago
No, let's not put externalities aside. That's the whole problem with externalities: putting them aside. However negligible the contribution to global CO₂ concentrations these 100-odd ships over the last couple of quarters have made, they still made it, and it was done to the world I have to live in without consulting anyone or anything but their owner's own bottom line. That's why there needs to be something like a carbon tax (however poorly designed so many of the proposals thus far have been). Because those externalized costs aren't free, and they should be borne by the people who impose them on everyone else. There is absolutely no penalty for pissing in the pool the rest of us happen to be swimming in, and I call bullshit on that. EDIT: And the canal wasn't built so its owners could charge for the privilege of using it. It was built because it took weeks off transit times. Charging for its use is how it was paid for, not why it was built. That is some serious cart-before-the-horse action, right there.
- gus_massa 11y ago
  Building and maintaining a channel also has a cost in CO2 emission. How many tons of CO2 do saves a ship in fuel using the channel? How many tons of CO2 is the prorated cost of each ship traveling though the channel? I think that the Suez channel has no recent upgrades, but the Panama channel is currently being expanded, and the expansion cost a los of money and a lot of CO2. And there are some projects to build a channel in Nicaragua ...
  - rosser 11y ago
    With a quick search, it looks like container ship emissions are about ~.04kg of CO₂ per ton-mile. Let's ballpark the capacity of a container ship at around 15000 TEU (Twenty-foot Equivalent Unit, or a single 20' container). That seems to be a pretty good median, based on the numbers I'm seeing. It's hard to find reliable numbers for the weight of a TEU, but I'm seeing references to a "maximum gross mass" of 21 and change metric tons, and an empty weight of 2.4 mt. Let's make the math easy and suppose each of the 15k TEUs on a single ship are filled to half capacity, netting a little under 140000 mt. The "long way" is some 3500 extra miles, which, at .04kg/ton-mile, is 1.96 million kg, or 19.6 thousand (metric) tons of CO₂. Per ship. Per trip. And that's just the extra emissions for going the "long way". For sake of comparison, the notional "average" car emits about 4 metric tons of CO₂ per year. I have no idea what the maintenance costs of the canals are in terms of emissions, but they'd have to be amortized across every ship that traverses them. Per another poster, almost 17.5k ships sailed through the Suez Canal in 2015, so you're looking, with very back-of-the-envelope math at a little under 20000 metric tons versus 1/17500th of the annual maintenance emissions for a ~200km long canal. For a single ship's passage through the canal. The construction costs of a canal, on the other hand, have to be amortized across every ship that has ever traversed it. The fractions get ludicrously small there (though they are, admittedly, of a rather larger number). Without knowing the actual emissions numbers for construction or maintenance, I can't be sure, but I'm going to go ahead and predict a clear winner... EDIT: Corrected some bad inputs to my math. Please, someone double-check my calculations. It is, after all, the end of the day on a Friday. My brain may be a smidge soft...

tacostakohashi 11y ago

Also putting externalities aside... Really great that economics, innovation and competition have driven down the cost of shipping (larger containerized ships, better fuel efficiency, smaller crews / labor component) and oil extraction down so low that there's now a cheaper option than that imposed by the canal folks. It's not merely an expensive toll that has brought this situation about, it's also cheap shipping.

rosser 11y ago
The major contributing factor to this practice being economically viable is that the big oil producers are trying to undercut one another. That isn't an "advance" in economics, or innovation, or fuel efficiency, or anything else.
- oatmale 11y ago
  I like how you put the word advance in quotes implying that the poster you're responding to used that word, when in fact they did not.
- ArkyBeagle 11y ago
  It's a bizarre case where the House of Saud is paring all other factors back to only their lift cost and the rest be damned. It has the flop sweat of desperation to it. The more that happens in That Region, it just makes the people who live there harken back to the Caliphate under the Ottoman Empire only even moreso.

slyall 11y ago

Egypt spent around $8 billion on a Suez Canal expansion in 2014 & 2015 in order to double the Canal's capacity. https://en.wikipedia.org/wiki/New_Suez_Canal https://en.wikipedia.org/wiki/New_Suez_Canal

ArkyBeagle 11y ago

Prices are sticky some times.

ryuuchin 11y ago

Doesn't it also have to do with safety as well? I remember reading that going the long way around also avoids some pirate areas as well (which could also be considered economics, e.g. insurance, etc).

lumberjack 11y ago

It's their land and there are a lot of costs associated with maintianing the canal. The failure of economics, that you should look at is in the price of oil. The are polluting the atmosphere and damaging the climate and not reimbursing anyone for the damage they are causing.

bedhead 11y ago
"They"??? No, not they. You. Me. Us. Give me a break with this sanctimonious drivel. Ship owners don't drive around the oceans aimlessly for fun. They are facilitating global trade. The computer you wrote your post on was probably delivered via cargo ship. Ditto half the stuff in your life that you obviously take for granted. So I hate to break this to you, but you are just as responsible for "polluting the atmosphere" and "damaging the climate" as the ship owner, because without you that ship has no need to sail. Please let me know how you plan on reimbursing me. I accept Paypal.
- goldenkey 11y ago
  Just for kicks, how do you feel about the gigawatts used to mine bitcoins, or rather, keep the blockchain ledger ticking?
- danharaj 11y ago
  If the person you replied to just died today, virtually nothing would change about global capitalism. Also, what kind of ethics do you subscribe to that validates your reasoning? I can't imagine your definition of responsibility being useful at all except as an excuse to tell people to stop complaining about the flaws of a system far too large to be at all under their influence except collectively. Granted that we have collective responsibility for human activity, then only by collective action can we assume stewardship of our responsibilities. The basis of collective action is first consensus, which is achieved through communication. Therefore the grandparent is taking a perfectly rational action in communicating their distaste for the system. I feel second-hand embarrassment for your combative and flimsy dismissal.
- mistermann 11y ago