Category Archives: Business

Geography Matters: Lots of Oil – Not Enough Ships

The December 16 Issue of Bloomberg Businessweek has an article about a shortage of ships to haul oil between US ports. (The oil moves from ports near where it is produced to ports near where it is refined.) The shortage in ships is due to a 1920 law that requires ships moving between US ports to be built in the US and staffed by US sailors. This odd law makes it more expensive to move ships between US ports than it is to ship oil between US ports and Canada. This law resultsĀ  in a giant gas tax on the US driver.

This is another great example of how geography (in this case political geography) matters.

Landon Blake

The Economist Magazine: US Congress Tries to Fix Software Patents…Again

The December 7, 2013 Issue of the Economist Magazine has an article that explains the US Congress is taking another stab at patent reform. The first attempt was the 2011 Patent Reform Law passed by Congress. However, the 2011 law hasn’t stopped patent trolls from shaking companies down for bogus software patents. The “Innovation Act” (the current attempt at patent reform) is supposed to fix that.

The article indicates that the Innovation Act will shift the costs of litigation to the loser and will force the patent holder to disclose how the company being sued is infringing on their patent, something that isn’t now required.

It sounds like this is a step in the right direction. It is too bad that Congress didn’t get this job done the first time.

Landon Blake

Geography Matters: Unaffordable Housing In San Francisco

The December 7, 2013 Issue of the Economist Magazine has an article about the affordable housing crisis in San Francisco. The City currently has the most expensive apartment rents in the United States. Part of the reason for the high prices of living space is the strong employment in the technology sector. But that isn’t the whole story. Land use laws and land use policy also contribute. The article says: “Thanks to restrictive zoning laws, a Byzantine permit process, and a pathological culture of NIMBYism, San Francisco has dismally failed to meet demand for housing.”

These land use regulations and land laws artificially raise the cost of housing, and ultimately harm all residents of the City. This is another example of how geography matters.

Landon Blake

Business Lessions from Shipyards in Korea and Singapore

The November 23, 2013 Issue of the Economist has an article entitled “The Deeper the Better” talks about steps taken by shipyards in Korea and Signapore to build the world’s biggest marine vessels. The article comments on efforts made by the shipyards to stay competitive against shipyards in China: “The Koreans, and their Signaporean counterparts, are making money in a competitive market by focusing on complex vessels…often for the offshore market…South Korean firms have spent heavily and wisely in becoming more technically sophisticated. Each of the big Korean yards has thousands of in-house designers and engineers. This has made them world leaders in the new generation of fuel-efficient, cheap-to-run eco ships”.

There are valuable lessons in the story of these ship builders for businesses around the world.

Landon Blake

Geography Matters: Why Fracking Is Successful In America

The November 23, 2013 Issue of the Economist Magazine has an article that explains why fracking for oil and gas has been so successful in America, and why this success may not be easy to duplicate in other countries. The article states: “It is a very American success. Geologists have long known that these reserves existed, but they could not get at them. A combination of innovation, finance, and enterprise have now opened them up, often to small oil and gas firms with low costs. America’s property laws, which grant mineral rights to the land owner, have people clamoring to get their land explored. Countries with less flexible capital markets, different laws and less enterprising oilmen will make a lot less of their shale oil and gas.”

This is another example that geography matters. We can’t always expect a technology to simply be transplanted to another part of the world with the same results.

Landon Blake

Geography Matters: Tourism and Oil/Gas Interests Clash In Utah

The December 11, 2013 Issue of the Wall Street Journal reports on a conflict between tourism business owners and oil/gas businesses in Utah. The article reports that many thought Eastern Utah was done producing any significant amount of oil and gas just a few years ago. Advances in oil extraction technology, including fracking and horizontal drilling, have changed that. Last year Utah produced more oil than it had since 1988. Utah also has large amounts of oil sands.

This renewed productivity in oil and gas is creating a conflict between tourism businesses and those that profit from hydrocarbon extraction in Eastern Utah. The article explains that a coalition of Utah tourism businesses and environmental groups recently influenced the BLM to reconsider some oil and gas leases on public land in the state.

This is an interesting example of the intersection between technology, geography, economics and land use issues. It is another case proving that geography matters.

Landon Blake

Geography Matters: Amazon Drives Cheap (And Free) Retail Shipping

The December 10, 2013 Issue of the Wall Street Journal had an article entitled “Retail Store Clerks Become Web Shippers” that describes a recent trend in holiday shopping spurred on by Amazon. The article describes large retail chains like Sears and KMart that are using there own stores as shipping centers to get items purchased to customers online. The packages are delivered more quickly than they would if coming from a distant warehouse, and it usually doesn’t cost the customer anything.

What is driving this move by big retailers to use their network of stores as shipping centers? It’s mainly competition from online retailer Amazon. The article quotes Jeff Starecheski, who explains the strategy: “If you want to go head to head with Amazon, you go out and build a bunch of distribution centers…We’re already close to customers.”

This is a great example of how geography really matters…and how it pays to be geographically near your customers.

Landon Blake