Link to Tor Martinsens’s LinkedIn profile

I am pleased to host a guest post by Tor Martinsen, a student in my “Monetary and Financial Theory” class. This is the 14th student guest post this semester. You can see the rest here. Tor’s thesis is this:

The Hyperloop will have long-term economic effects as it disrupts many industries, the first being the container shipping industry.

Elon Musk’s vision for the hyperloop is finally coming to fruition. This innovation will disrupt the transportation industry as soon as it is implemented, and help clear up traffic immediately.

The Hyperloop is described as:

That far-out idea billionaire industrialist Elon Musk proposed in a 58-page white paper in August 2013 for a vacuum-tube transport network that could hurtle passengers from San Francisco to Los Angeles at 760 miles an hour. Laughed off as science fiction, it is as of today an actual industry with three legitimate groups pushing it forward, including Hyperloop Technologies, the team in Harry Reid’s office. They emerge from “stealth” mode with this article, armed with an $8.5 million war chest and plans for a $80 million round later this year. “We have the team, the tools and the technology,” says Bam Brogan. “We can do this.” The 21st-century space race is on.

This vacuum tube has been compared to sci-fi fantasies, but it is finally becoming a reality, “Fortunately for futurists and people who enjoy picking apart complicated plans, an El Segundo, California-based startup has taken Musk up on his challenge to develop and build the Hyperloop.” This innovation will immediately change the dynamics of transportation. As the channels to utilize this form of transportation expand between major hubs, it will allow cargo to be shipped at high speeds throughout these hubs. This will allow a car made in Detroit to be shipped to its buyer in Los Angeles in a matter of just a few hours. This will also clear up some of the hated traffic on highways. Companies will be able to utilize the hyperloop for long distance shipping, for much faster delivery.

One potential problem I see with implementing this technology (assuming first that some firm develops the technological and economic capabilities to build the hyperloop) is that truck drivers will oppose this with ferocity, but it could actually be good for them. Due to the large expensive infrastructure necessary for the hyperloop, it will only be installed between major cities initially, meaning there will still be a need for truck drivers to then make the delivery from these transportation hubs to their final destination.

The reason that high-speed travel like this has not been previously invented is simply because of the problems related to air. A simple example of this problem is “At walking speed, air is ephemeral stuff. But, as any child who has stuck his hand out of a car window at speed knows, the faster you go the more obvious its effects become. In fact, the grunt needed to counteract air resistance rises with the cube of speed.” Elon Musk proposes to counteract this problem air causes by keeping the tunnels at a much lower atmospheric pressure than sea level cutting the air resistance dramatically. The next problem then becomes that “Hyperloop capsules are designed to sit snugly within their tubes. At high speeds, they would act like a plunger in a syringe, compressing the air ahead of them. That would require large amounts of power to overcome, undoing many of the advantages of a vac-train in the first place. Mr Musk’s proposed solution is to fit each pod with a fan designed to blow what little air is present through a pipe in the capsule and out of the back—essentially drilling a hole in the plunger.” This proposal has all the theoretical support to make it work and sounds like a plausible solution, however it remains to be seen whether this proposal can be turned into a reality, and a financially viable one at that!

The hyperloop will change entirely the container shipping industry immediately by increasing the speed at which goods can be delivered to their final destination. It also has large-scale implications for human travel one day too, as Bruce Upbin wrote in his article, “The hyperloop, which Musk dubs “the fifth mode,” would be as fast as a plane, cheaper than a train and continuously available in any weather while emitting no carbon from the tailpipe. If people could get from Los Angeles to Las Vegas in 20 minutes, or New York to Philly in 10, cities become metro stops and borders evaporate, along with housing price imbalances and overcrowding.” While this may be a long ways in the future, it at least now has the chance to become a reality, rather than just a dream of some sci-fi author.