Mining the air
October 19, 2016 1:21 PM Subscribe
Is there any machine created commodity? That is, could you set up a machine and make something that could be sold at a market price?
By commodity, I mean like a farmer can take corn or soybeans to a grain elevator any time of the year and get the market price. Whereas if you were to set up a machine to make clothespins or paperclips, you'd have to sell retail or at least wholesale. Bitcoins are one of few examples I can think of. You could purify argon out the air, but I think it would be difficult to sell.
By commodity, I mean like a farmer can take corn or soybeans to a grain elevator any time of the year and get the market price. Whereas if you were to set up a machine to make clothespins or paperclips, you'd have to sell retail or at least wholesale. Bitcoins are one of few examples I can think of. You could purify argon out the air, but I think it would be difficult to sell.
I'm really sure I'm not following but here goes: I have a lathe with which I can make bowls. I can sell the bowls at a craft fair. That's a machine created commodity sold at a market price. You can also extract and concentrate oxygen out of the air and sell it it at market price. I know because that's how my father made his living. Now explain to me how that is not what you're after, please - I gotta know.
posted by Hobgoblin at 1:39 PM on October 19, 2016
posted by Hobgoblin at 1:39 PM on October 19, 2016
That's . . . not really how selling grain works?
posted by aspersioncast at 1:40 PM on October 19, 2016 [3 favorites]
posted by aspersioncast at 1:40 PM on October 19, 2016 [3 favorites]
It sounds like you're looking for a machine where there's no (apparent) raw material input...you just turn it on and (somehow) it makes something you can sell. But your argon example is perfect: you can sell argon (as well as nitrogen, carbon dioxide, oxygen, and anything else you can purify). Those gases all have industrial applications, and people buy them. And (at least theoretically) you could build a machine that produces them (by refrigerative condensation) from thin (!) air.
I don't know whether any industrial gases are actually made this way; I believe most hydrogen is produced from oil / natural gas (I think that's less expensive than electrolyzing water).
posted by spacewrench at 1:51 PM on October 19, 2016
I don't know whether any industrial gases are actually made this way; I believe most hydrogen is produced from oil / natural gas (I think that's less expensive than electrolyzing water).
posted by spacewrench at 1:51 PM on October 19, 2016
I'm really sure I'm not following but here goes: I have a lathe with which I can make bowls. I can sell the bowls at a craft fair. That's a machine created commodity sold at a market price. You can also extract and concentrate oxygen out of the air and sell it it at market price. I know because that's how my father made his living. Now explain to me how that is not what you're after, please - I gotta know.
I think he means, an item where the price fluctuates a lot. "Market price" like the fish of the day has a "market price."
posted by showbiz_liz at 1:59 PM on October 19, 2016
I think he means, an item where the price fluctuates a lot. "Market price" like the fish of the day has a "market price."
posted by showbiz_liz at 1:59 PM on October 19, 2016
I think there's a much bigger supply chain in commodities than you might be thinking. Anyone who produces anything needs a buyer, who then uses or modifies it and sells it to some one else, etc etc. There's no such thing as a market price that everyone gets, it's all about what you negotiate with the buyer.
Also, while you could produce argon or oxygen from the air, then you have to package it and transport it and find a buyer, who may not be willing to pay what you need to cover the costs of producing it.
posted by cabingirl at 2:00 PM on October 19, 2016 [1 favorite]
Also, while you could produce argon or oxygen from the air, then you have to package it and transport it and find a buyer, who may not be willing to pay what you need to cover the costs of producing it.
posted by cabingirl at 2:00 PM on October 19, 2016 [1 favorite]
To some extent, computing itself is a commodity, Amazon web services is an example.
posted by theora55 at 2:01 PM on October 19, 2016 [1 favorite]
posted by theora55 at 2:01 PM on October 19, 2016 [1 favorite]
But I think if a machine existed that could reliably churn out [product], then [product] would by definition not be subject to the market fluctuations you're talking about.
posted by showbiz_liz at 2:01 PM on October 19, 2016 [2 favorites]
posted by showbiz_liz at 2:01 PM on October 19, 2016 [2 favorites]
In some jurisdictions users producing a surplus of their own electricity can sell power back to the grid i.e.: one could build their own solar farm.
posted by mce at 2:03 PM on October 19, 2016 [1 favorite]
posted by mce at 2:03 PM on October 19, 2016 [1 favorite]
As such a solar producer, I can say that just about any utility will accept the power. But only some will pay you a decent rate for it, or even better let you use that production counter to offset your consumption counter (net metering). In other words, solar power production fed back into the grid is usually NOT economical.
But if you live in an state that offers "net metering" for solar, GET SOLAR NOW. Do not wait another year. The payback is almost immediate, and we don't know how much longer that incentive will be in place.
So that's one example of producing "something for nothing" :)
posted by intermod at 2:27 PM on October 19, 2016 [6 favorites]
But if you live in an state that offers "net metering" for solar, GET SOLAR NOW. Do not wait another year. The payback is almost immediate, and we don't know how much longer that incentive will be in place.
So that's one example of producing "something for nothing" :)
posted by intermod at 2:27 PM on October 19, 2016 [6 favorites]
Diamonds may be an example, at least imperfectly. They can be manufactured; man-made diamonds are less valuable than natural ones, but the market for natural ones is kept artificially high by a cartel.
posted by randomkeystrike at 2:37 PM on October 19, 2016
posted by randomkeystrike at 2:37 PM on October 19, 2016
Depending where you live you can sell any kind of electricity into the grid: there are privately owned gas-fired power plants, solar farms & wind farms.
But a market price is sort of an illusion: with, say, wheat you have a lot of buyers and a lot of sellers and it's a standardized product and there's a huge volume of it so you get a stable market BUT each transaction is still negotiated although neither side has a lot of leverage. Thus, market prices.
There are very few manufactured products that have the same scale as wheat or corn or soybeans or even salmon. I suppose that common mechanical components like screws or washers might fit into this category but I doubt there are enough buyers for one specific type of screw that there's a liquid market for them.
posted by GuyZero at 2:38 PM on October 19, 2016
But a market price is sort of an illusion: with, say, wheat you have a lot of buyers and a lot of sellers and it's a standardized product and there's a huge volume of it so you get a stable market BUT each transaction is still negotiated although neither side has a lot of leverage. Thus, market prices.
There are very few manufactured products that have the same scale as wheat or corn or soybeans or even salmon. I suppose that common mechanical components like screws or washers might fit into this category but I doubt there are enough buyers for one specific type of screw that there's a liquid market for them.
posted by GuyZero at 2:38 PM on October 19, 2016
I'm still not totally clear on what the salient aspect of these examples is, but as far as literally "mining the air", the Haber process is used to manufacture ammonia from atmospheric nitrogen, which is then mostly used to make nitrogen fertilizer.
posted by XMLicious at 2:42 PM on October 19, 2016 [2 favorites]
posted by XMLicious at 2:42 PM on October 19, 2016 [2 favorites]
Clothespins and paper clips require raw materials as input, so I guess that's not a dealbreaker. I think there are several items in Wikipedia's list of traded commodities that could be called "machine-created," depending on where you draw the line between refining a natural commodity and creating a new thing:
- Frozen, concentrated orange juice
- Sugar
- Rubber
- Cocoa
- Assorted refined fossil fuel products
I believe all of these are machine-processed in their globally traded forms.
posted by contraption at 2:45 PM on October 19, 2016 [1 favorite]
- Frozen, concentrated orange juice
- Sugar
- Rubber
- Cocoa
- Assorted refined fossil fuel products
I believe all of these are machine-processed in their globally traded forms.
posted by contraption at 2:45 PM on October 19, 2016 [1 favorite]
I think you may be misunderstanding the notion of commodities somewhat. In a very shallow sense, a commodity is any sort of raw or primary material where the producer is largely irrelevant. In your grain example, your grain goes to a silo and gets mixed in with every other farmer's grain and then gets shipped farther out the supply chain. At that point, I don't know or care whether I'm buying your grain or your neighbors.
What immediately came to mind for me is semiconductors. They're not necessarily lumped into a big pile and parceled out again, but as a somewhat primary ingredient to make more complicated electronics, I really only care about price when I'm buying several hundred thousands units of them. Your fab's 555 timers (I'm using a dated example, sue me) are essentially identical to Joe Shmoe's timers, so as long as he can give me a better price I'm going with his.
In some circumstances, cheese also fits the bill. It's even in the name as "commodity cheddar" or "commodity provolone", the large 10+lb. bricks that are made and then sold to delis or other food manufacturers. My commodity cheddar is largely the same as yours, so a market can exist to trade them.
Other "primary" manufactured items don't really meet the criteria of commodity because of their differences. Plastic buttons might almost be considered a commodity except that they come in a variety of sizes and colors, for example.
posted by backseatpilot at 2:53 PM on October 19, 2016 [2 favorites]
What immediately came to mind for me is semiconductors. They're not necessarily lumped into a big pile and parceled out again, but as a somewhat primary ingredient to make more complicated electronics, I really only care about price when I'm buying several hundred thousands units of them. Your fab's 555 timers (I'm using a dated example, sue me) are essentially identical to Joe Shmoe's timers, so as long as he can give me a better price I'm going with his.
In some circumstances, cheese also fits the bill. It's even in the name as "commodity cheddar" or "commodity provolone", the large 10+lb. bricks that are made and then sold to delis or other food manufacturers. My commodity cheddar is largely the same as yours, so a market can exist to trade them.
Other "primary" manufactured items don't really meet the criteria of commodity because of their differences. Plastic buttons might almost be considered a commodity except that they come in a variety of sizes and colors, for example.
posted by backseatpilot at 2:53 PM on October 19, 2016 [2 favorites]
NPR Money did a podcast series on buying oil, episode two delves into the idea of market prices and commodities.
Almost all commodities require a machine to be built to create/generate them to the point where they could be sold to the 'market'? Oil needs well pumps, cotton is worthless without a gin or press. You'd could argue that coffee needs at least a truck.
posted by Static Vagabond at 3:07 PM on October 19, 2016
Almost all commodities require a machine to be built to create/generate them to the point where they could be sold to the 'market'? Oil needs well pumps, cotton is worthless without a gin or press. You'd could argue that coffee needs at least a truck.
posted by Static Vagabond at 3:07 PM on October 19, 2016
There are two sources of imprecision here, I guess:
1) What's a "commodity?" The word gets tossed around to describe anything that can thought of as generic, even consumer electronic stuff like flash drives or TVs. There are global commodity markets where quantities of stuff are traded like stocks, and then there are things like screws and semiconductors that are literally interchangeable and are bought and sold in huge quantities on the industrial market, but I'm not aware of any system whereby the products of different factories are pooled together and sold on without regard to who made what (though aggregators like DigiKey might blur this line a bit.)
2) What's "machine created?" Is it sufficient that a raw material goes in and a more refined raw material comes out? Or are you looking for discrete items like nails or paperclips? Or, as in your argon harvesting and BTC mining examples, are you looking for something that takes no input other than energy? Or, is the important thing that the machine just hums along and creates the product all by itself, without any human intervention beyond tending the input and output ports?
posted by contraption at 3:15 PM on October 19, 2016
1) What's a "commodity?" The word gets tossed around to describe anything that can thought of as generic, even consumer electronic stuff like flash drives or TVs. There are global commodity markets where quantities of stuff are traded like stocks, and then there are things like screws and semiconductors that are literally interchangeable and are bought and sold in huge quantities on the industrial market, but I'm not aware of any system whereby the products of different factories are pooled together and sold on without regard to who made what (though aggregators like DigiKey might blur this line a bit.)
2) What's "machine created?" Is it sufficient that a raw material goes in and a more refined raw material comes out? Or are you looking for discrete items like nails or paperclips? Or, as in your argon harvesting and BTC mining examples, are you looking for something that takes no input other than energy? Or, is the important thing that the machine just hums along and creates the product all by itself, without any human intervention beyond tending the input and output ports?
posted by contraption at 3:15 PM on October 19, 2016
Response by poster: The features of a commodity that I am interested in are 1) no salesmanship necessary on the producer's part and 2) the ability of the market to absorb excess by lowering the market price (rather than a producer finding a price point by experimentation). The wooden bowl example doesn't fit my needs because a) you have to be the sort of person who can sell at farmers markets and b) if you set up a cnc lathe you could quickly flood the wooden bowl market.
posted by 445supermag at 3:18 PM on October 19, 2016
posted by 445supermag at 3:18 PM on October 19, 2016
A machine doesn't produce anything, it converts some raw material(s) into useful derivatives. You can try to drive prices up by slowing production artificially, but then anyone can make more machines and replace that production. So the real throttle on production is the availability/cost of raw materials, and you're back where you started. If demand fluctuates more quickly than speedups/slowdowns in production, the price should fluctuate accordingly.
Amazon's commodity computing power is limited by the prices and availabilities of raw materials, namely space, power, the speed/capacity of technology, labour, etc. Those things don't change quickly, but demands on the infrastructure do. Their whole business revolves around a system that adjusts market prices in real time.
There is no commodity that doesn't require salesmanship to move, perhaps unless you have a monopoly, in which case, you still have to interface with buyers somehow.
posted by klanawa at 3:53 PM on October 19, 2016 [1 favorite]
Amazon's commodity computing power is limited by the prices and availabilities of raw materials, namely space, power, the speed/capacity of technology, labour, etc. Those things don't change quickly, but demands on the infrastructure do. Their whole business revolves around a system that adjusts market prices in real time.
There is no commodity that doesn't require salesmanship to move, perhaps unless you have a monopoly, in which case, you still have to interface with buyers somehow.
posted by klanawa at 3:53 PM on October 19, 2016 [1 favorite]
could you set up a machine and make something that could be sold at a market price
Yes. You could set up a computer--which is a machine--to aggregate stolen credit card numbers, then divide them into lists to be sold to criminals
There's a flourishing market in buying and selling stolen credit card numbers, with lists of 5,000 or 10,000 or 25000 changing hands at a market price determined by supply and demand.
In this way, stolen credit card numbers become a machine created commodity
posted by BadgerDoctor at 4:14 PM on October 19, 2016 [1 favorite]
Yes. You could set up a computer--which is a machine--to aggregate stolen credit card numbers, then divide them into lists to be sold to criminals
There's a flourishing market in buying and selling stolen credit card numbers, with lists of 5,000 or 10,000 or 25000 changing hands at a market price determined by supply and demand.
In this way, stolen credit card numbers become a machine created commodity
posted by BadgerDoctor at 4:14 PM on October 19, 2016 [1 favorite]
maybe you are looking for things that are machine made, fungible and traded at auctions?
that seems to meet your requirement for there to be no particular marketing of the product, and for efficient pricing.
i don't know of anything (arguably jessamyn's initial answer was on the money), and a quick search doesn't show much, but auction trading is the kind of thing that startups do, so you might expect it to become more widespread over time.
posted by andrewcooke at 4:14 PM on October 19, 2016
that seems to meet your requirement for there to be no particular marketing of the product, and for efficient pricing.
i don't know of anything (arguably jessamyn's initial answer was on the money), and a quick search doesn't show much, but auction trading is the kind of thing that startups do, so you might expect it to become more widespread over time.
posted by andrewcooke at 4:14 PM on October 19, 2016
I really like the semiconductor fab example. They literally turn sand into a commodity product. OK, it's not air, but the inputs are very low value, and the output is a high-value commodity. Nearly 100% of the price is just the cost of capital to build the fab in the first place (which may be billions of dollars). In addition to cheap stuff like 555 timers, RAM chips and SSDs are basically interchangeable, produced by a number of companies, and need no marketing to sell.
Another example would be Bitcoin, at least during the period when mining Bitcoin was still profitable. At this point, it isn't possible to do for less than the cost of electricity.
posted by miyabo at 4:23 PM on October 19, 2016
Another example would be Bitcoin, at least during the period when mining Bitcoin was still profitable. At this point, it isn't possible to do for less than the cost of electricity.
posted by miyabo at 4:23 PM on October 19, 2016
Your point of "no salesmanship required to sell the product" is a tricky one, and certainly excludes things like grain and argon. If I have a machine here that extracts argon from the atmosphere, I still have to "sell" it. My customers would want to know all sorts of things -- how pure it is, what independent testing I have regularly performed to ensure it's what it says it is, how safe the bottling and storage and supply method is, whether I comply with whatever local and national laws on its storage / employee conditions and that sort of thing, how reliably I can supply and in what quantities, which areas and countries I can supply to. Even for basic grain, the purchaser is going to want to know the conditions and purity of the product before they mix it into whatever they are supplying on -- whether it is GM or not, whether it is organically produced or not, what procedures I have in place to ensure there aren't too many weevils in there (or whatever it is that shouldn't be in grain deliveries).
What I'm saying is that almost all products require some form of salesmanship, even with a product that the customer actively wants and needs in your definition of the market for "commodities". Salesmanship is how you convince the trader or market to buy your product, and keep on doing so.
posted by tillsbury at 8:57 PM on October 19, 2016 [1 favorite]
What I'm saying is that almost all products require some form of salesmanship, even with a product that the customer actively wants and needs in your definition of the market for "commodities". Salesmanship is how you convince the trader or market to buy your product, and keep on doing so.
posted by tillsbury at 8:57 PM on October 19, 2016 [1 favorite]
Response by poster: Your point of "no salesmanship required to sell the product" is a tricky one, and certainly excludes things like grain
Actually, grain is exactly what I had in mind - I grew up on a farm and we just drove a loaded truck to the grain elevator and they bought it. It was examined for weed seeds and analyzed for moisture (if it was wet, it would have to be dried so as not to mold, so they would knock some off the price to pay for the fuel it would take). No bargaining (the daily price was set by the commodity market in Chicago), no wondering if they would take it because they had too much already. This is not to say that skillful salesmanship couldn't pay off - futures, contracts, waiting until later in the year to sell, selling directly to an end user, etc., but it wasn't necessary.
posted by 445supermag at 9:24 PM on October 19, 2016
Actually, grain is exactly what I had in mind - I grew up on a farm and we just drove a loaded truck to the grain elevator and they bought it. It was examined for weed seeds and analyzed for moisture (if it was wet, it would have to be dried so as not to mold, so they would knock some off the price to pay for the fuel it would take). No bargaining (the daily price was set by the commodity market in Chicago), no wondering if they would take it because they had too much already. This is not to say that skillful salesmanship couldn't pay off - futures, contracts, waiting until later in the year to sell, selling directly to an end user, etc., but it wasn't necessary.
posted by 445supermag at 9:24 PM on October 19, 2016
The word you're looking for (as noted by andrewcooke above) is fungible.
I can't think of an example off the top of my head that meets your criteria, though -- the raw material has to come from somewhere, and only things that are relatively close to raw commodities are fungible, so your machine can't do much processing. Perhaps you could produce pure hydrogen from water via electrolysis, but current methods aren't very reliable or efficient.
posted by mekily at 9:38 PM on October 19, 2016 [2 favorites]
I can't think of an example off the top of my head that meets your criteria, though -- the raw material has to come from somewhere, and only things that are relatively close to raw commodities are fungible, so your machine can't do much processing. Perhaps you could produce pure hydrogen from water via electrolysis, but current methods aren't very reliable or efficient.
posted by mekily at 9:38 PM on October 19, 2016 [2 favorites]
Another thing that might fit is salt, which has been made by boiling or other evaporation of seawater during most of history (at least, anywhere distant from a salt mine.)
Conversely, I guess this is sort of what's happening anywhere fresh water is produced by desalination of seawater? I also saw something about an Italian project trying to design inexpensive dew-collecting tower structures for use in Ethiopia, I think, though I believe the intention was to provide them as community resources rather than for profit. The latter one would again be pulling a resource straight out of the air.
posted by XMLicious at 10:41 AM on October 20, 2016
Conversely, I guess this is sort of what's happening anywhere fresh water is produced by desalination of seawater? I also saw something about an Italian project trying to design inexpensive dew-collecting tower structures for use in Ethiopia, I think, though I believe the intention was to provide them as community resources rather than for profit. The latter one would again be pulling a resource straight out of the air.
posted by XMLicious at 10:41 AM on October 20, 2016
It's possible to have a solar panel setup where if you're producing more than you use, your excess goes back to the grid and you get money from the utility company.
posted by hydrophonic at 2:19 PM on October 20, 2016
posted by hydrophonic at 2:19 PM on October 20, 2016
Bottled water might be a good example. Not quite so fungible as oil or grain, but all you need to make it is a bottling plant and a municipal water supply, and you could probably negotiate an ongoing contract with a distributor to take it off your hands as quickly as you could produce it.
posted by contraption at 4:14 PM on October 20, 2016 [1 favorite]
posted by contraption at 4:14 PM on October 20, 2016 [1 favorite]
This thread is closed to new comments.
posted by jessamyn at 1:26 PM on October 19, 2016