Blockchain, Data Analytics, and the Future of Energy and Transportation

Blockchain, a digital ledger in which transactions made in cryptocurrencies are recorded chronologically and publicly, is most closely associated in the public mind with BitCoin, a crytocurrency that is undergoing a mania like the 17th-century Dutch tulip crisis. I venture no predictions about the future of BitCoin, but I’m increasingly reading that blockchain has the potential to disrupt all kinds of industries.

One of those, according to this article in Oilprice.com, is the energy sector. By enabling peer-to-peer trading, blockchain is disrupting traditional markets and enabling decentralized networks. That’s particularly promising for renewable energy and distributed energy grids. Writes the author:

Blockchain has the potential to shake up the energy industry in countless ways, but perhaps the most disruptive would be a new, radical level of transparency. A wide-scale adoption of blockchain would create significantly more transparency at all levels. On a grand scale, every time a barrel of oil is bought or sold, it would be documented on a digital ledger, leaving an unprecedented “paper” trail. While the buyers and sellers themselves will remain anonymous, these transactions will be publicly visible like never before.

But before you break out the bubbly and toast the end to fossil fuels, consider this: The same article discusses how oil & gas companies are using data analytics to help drillers move faster, make better decisions, and recover more oil and gas at a fraction of the price.

(Hat tip: Rick Gechter)

Perhaps the bottom line is this: Blockchain, data analytics, the Internet of Things, and other technologies are enabling a new wave of innovation that will make energy — fossil fuels and renewables alike — cheaper. Does anyone remember the goal of achieving energy independence? Well, we’re almost there. The Persian Gulf can kiss my grits!

Some say the U.S. economy has entered a slow-growth era in which there are no transformative technologies to drive invention and productivity to new heights. Building another social media app won’t make a material improvement to our lives. The pessimists might be right about social media apps, but I suspect that’re missing a lot of action in the real world.

What does this mean for public policy in Virginia? When technology is scrambling the economics of the energy industry, we should be careful about making large, long-term investments that run the risk of becoming obsolete. Absent some technology breakthrough, nuclear is not looking like a good way to go. Speaking in broad generalities, the electricity future looks like renewables and natural gas.

I’d issue the same warning for investment in transportation infrastructure. The Uber revolution, driverless cars, and electric vehicles will upend the personal-mobility industry. There is no way to predict with any confidence how it will shake out. All I can say is that we should scrutinize any large public investment in highways and mass transit predicated on the assumption that the driving and commuting patterns of the next 50 years will look like the driving and commuting patterns of the past 50 years.

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4 responses to “Blockchain, Data Analytics, and the Future of Energy and Transportation

  1. Excellent Post, Jim.

    As to the face that “some say the U.S. economy has entered a slow-growth era in which there are no transformative technologies to drive invention and productivity to new heights”, I would say the total reverse. We have only started the revolution where change after change can come fast and furious. All as you suggest. I totally agree with your bottom line, including re. the subjects you mentioned, not to mention many that will hit by surprise.

    And I suggest that at this point I see this sort of revolution as the only long term fix for Northern Virginia’s transport problems. That fix may come far faster that we might otherwise expect, if only because we have to choice in the matter, because the place may collapse in on itself otherwise, if drastic action is not taken.

  2. I don’t understand all I’d like to about blockchain technology but if the transactions are public the principals are not and I suspect that’s among the reasons why those engaging in illegal activities or those seeking to avoid taxes, fees, etc…

    Blockchain technology itself however, is an UBER disruptive technology that is going to change things we don’t even know what in ways that we do not know either perhaps in ways that may well totally change the way we currently use money, and pay fees and taxes on transactions.

    but blockchain technology has a problem with what is known as “scaling” in that the bigger the ledger and the more transactions the longer it takes to replicate the ledger because it’s decentralized AND distributed … so blockchain is never going to become one giant monolithic ledger because transactions would no longer be virtually instantaneous… and transaction delays invite fraudulent transactions when a transaction cannot be quickly verified. There is even a question as to how big Bitcoin could get before such delays start occurring.

    Think of it as going to the ATM and your transaction takes 5-10 minutes instead of a minute or two.. what do you do? You can’t walk away after you’ve made a withdrawal and the money has not yet spit out.

    Right now – the “linkages” that allow ATMs to function is a labyrinth of proprietary network connections… Before it gives you your money.. it’s got to find it’s way to your bank account and verify it belongs to you and the card and pin do match… etc… and they’re getting even more sophisticated with some now requiring biometric identification – like some phones now do.

    At any rate.. if you thought the technology “divide” was bad before.. wait til the younger generation becomes the blockchain/bitcoin generation and us geezers are still toting around wallets with paper money and plastic cards!

  3. OK. I happen to work for the company that is largely considered the leader in blockchain technology. To find out who that is … Google “blockchain leader” and read the first few results. But this comment is no more about blockchain than Jim’s article was about blockchain.

    Jim –

    Good for you for seeing the distinction between blockchain and bitcoin. However, how you managed to ramble from blockchain to not building new roads was worthy of a Clownie Award. As you know, the Clownies are awarded at the end of each legislative session of Virginia’s General Assembly to the Delegates and state Senators who have demonstrated that they uphold the highest tradition of clown like behavior in the long history of The Imperial Clown Show in Richmond. Of course, like the Academy Awards, there are categories – Twisted Logic, Abject Uselessness, Oratorial Blather, etc. I see this post as being in the Twisted Logic category. Of course, not being a member of the General Assembly you’re not really eligible for a Clownie but let’s pretend.

    Blockchain, a decentralized ledger, could be used to track the sale and purchase of barrels of oil. Ok. The sale and purchase of oil is recorded today without a blockchain. So, the blockchain might make the accounting more efficient and maybe remove some middlemen or middlewomen. Got ya.

    Moving from there, “The same article discusses how oil & gas companies are using data analytics to help drillers move faster, make better decisions, and recover more oil and gas at a fraction of the price.” Ok. I guess we put blockchain the the rear view mirror and moved onto analytics. Cool. Analyzing geological data, for example, can help you find oil. Got ya.

    “Blockchain, data analytics, the Internet of Things, and other technologies are enabling a new wave of innovation that will make energy — fossil fuels and renewables alike — cheaper.” Yep. Lots of cool stuff going on. Glad I work in the technology sector.

    Is that a wrap for the column? No? What’s next?

    “Does anyone remember the goal of achieving energy independence? Well, we’re almost there. The Persian Gulf can kiss my grits!”

    Nice reference to “Alice”, an unbearably unfunny sitcom from 40 years ago. But moving on, did blockchain defeat OPEC? Or was it analytics? Doesn’t OPEC use analytics to find oil? Or … is it fracking that really put a crimp in the sheik’s caviar diet?

    “Some say the U.S. economy has entered a slow-growth era in which there are no transformative technologies to drive invention and productivity to new heights. ” Hmmm. Actually I think some say that the Industrial Revolution has petered out and that why the US economy has gone sluggish. But anyway, what happened to the fracking track we were on?

    “What does this mean for public policy in Virginia?” Virginia’s oil drilling business will be more efficient if we use analytics to find the stuff and blockchain to sell it? Anyway, good question.

    “When technology is scrambling the economics of the energy industry, we should be careful about making large, long-term investments that run the risk of becoming obsolete.” Like the Atlantic Coast Pipeline? Or the next Dominion nuke on the fault line at Lake Anna?

    The end of the seventh paragraph and we get , “Speaking in broad generalities, the electricity future looks like renewables and natural gas.” Was that because blockchain and analytics make oil exploration and sale so much more efficient? Shouldn’t that favor, oh I don’t know … oil?

    At this point, seven out of eight paragraphs, you’re not even close to a Clownie. But wait …

    “I’d issue the same warning for investment in transportation infrastructure.” The shark is jumped, the Clownie is at hand! A complete non-sequiter! Let me guess … this is prelude to some completely unrelated politically inspired pseudo-point.

    “There is no way to predict with any confidence how it will shake out. All I can say is that we should scrutinize any large public investment in highways and mass transit predicated on the assumption that the driving and commuting patterns of the next 50 years will look like the driving and commuting patterns of the past 50 years.”

    And there’s the Clownie!! Changes in blockchain, analytics, oil exploration, fracking, natural gas and renewables prove that transportation cannot be predicted 50 years into the future. So, Simon says, FREEZE! Let’s all stand idly by and sip bourbon and branch water out of tumblers on the front porches of our houses on Monument Avenue because the world is changing.

    Let’s go “full Virginia” and stop all progress. Let the worst traffic problem in the United States become the worst traffic problem in the world because … we can’t predict 50 years into the future “with confidence”. Don’t repair Metro when flying cars could be just around the corner. Flying cars? Hell, teletransportation – like on Star Trek. Beam me up, Jimmy.

    A classic Clownie!

  4. This is an example of what kids in K-12 are NOT being taught.

    By the time those kids graduate from high school – dramatic changes will already have happened with blockchain… and those kids will, in a lot of cases, not know a thing about the technology or the skills or knowledge needed to understand it , deal with it in their lives, much less seek jobs in industries that now rely on blockchain technology.

    Yes.. we’ll still be cranking out those Liberal Arts Majors who can speak the King’s Language and have wonderful “soft” skills, etc.. but are clueless as to how the real world is actually operating.. using that technology like a lot of folks know flip light switches or firing off text messages without a clue as to how the underlying technology works…

    I gotta congratulate DJ… for being among the first to discover and implement blockchain technology .. even if he did stumble into it accidently…. 😉

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