The Space Business in Turmoil

Recently, Boeing, Lockheed, the U.S. Air Force and many others have been scrambling because Congress, in a fit of sudden awareness, passed the National Defense Authorization Act of 2015. It requires American-made rocket engines for military flights starting in 2019.

The law was passed after SpaceX and others pointed out that we’re not supposed to be engaged in major trade with Russia because we support sanctions against the country based on its invasion of Crimea.

Because of this, extraordinary factors are at work to completely disrupt the space business as we know it. The disrupters include:

Private development: Space is a new frontier that is rapidly becoming the province of private companies, not governments, and is increasingly being explored by billionaires. They include Sir Richard Branson, who is developing Virgin Galactic; Microsoft co-founder Paul Allen, who is developing his own rocket called Stratolaunch with Orbital ATK; Google chairman Eric Schmidt and CEO Larry Page, who are developing an asteroid mining company called Planetary Resources; Elon Musk, the CEO of SpaceX, and Amazon CEO Jeff Bezos, who has successfully tested the first stage and crew capsule of his Blue Origin rocket.

SpaceX: Just eight years ago, Elon Musk’s company had not fired a single rocket successfully. Now he can launch most payloads into space for about half what the Boeings, Arianespaces, Lockheeds and Russians charge. More radically, he is trying to make rockets reusable, which will cut their cost of launch by a factor of 1,000. SpaceX is now certified to launch secret military payloads, which is destroying the old system of cost plus contracts that ULA has enjoyed for nearly a decade. SpaceX has also forced companies like Airbus, which owns Arianespace, and ULA to come up with reusable rockets or lose their businesses altogether. In 2017, SpaceX and Boeing are scheduled to fly astronauts to the International Space Station.

Blue Origin: Jeff Bezos is running an entirely new rocket company that plans to charge for a ride into space but has its focus on much deeper penetration of the orbital launch market. It too is developing reusable rockets and rocket engines. It has a contract with ULA to develop the BE-4 rocket engine for Vulcan, the replacement rocket for the Atlas V. That engine will be methane and liquid oxygen-fueled, instead of the more traditional kerosene and liquid oxygen. SpaceX is also at work on its own methox rocket engine.

Asteroid mining: The Earth’s surface will be just about mined out of most easily accessed metals in less than 100 years, including iron and copper. A small asteroid can contain billions of dollars’ worth of metals. Two asteroid mining companies have already been established, including Planetary Resources, funded by Google Chairman Eric Schmidt, Google CEO Larry Page, and movie maker/explorer James Cameron.

Russian decay: As the U.S. is forced to develop its own rocket engines again, it is likely to move ahead of Russian rocket technology quickly, not to mention Airbus’ rocket technology. With so many private companies trying to get into space so quickly, and all of them U.S.-based, including Sir Richard Branson’s efforts, spaceports have already cropped up in New Mexico and Texas and Virginia and are likely to proliferate.

Secondary competitors: From Sierra Nevada’s new spaceplane to Bigelow’s desire to build a space hotel ($1 million a night for a room) to the prolific imagination of Burt Rutan and his Scaled Composites manufacturing company in Mohave, California, America is crammed with commercial space startups and an entrepreneurial spirit focused on the frontier beyond our atmosphere.

Space will be the next big opportunity.

But most of the best players in space either aren’t public — SpaceX and Blue Origin come to mind — or are space dinosaurs, like Boeing and Lockheed Martin.

The options are few. But there’s one thing we can be certain of that future spacecraft are going to need — rocket engines. And because the center of the space race is still in the United States and because Congress doesn’t like Russian rocket engines, a U.S. company that makes rocket engines is likely to succeed in the long run.

To your health and wealth,

Stephen L. Petranek
for The Daily Reckoning

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Stephen Petranek

Stephen Petranek’s career of over 40 years in the publishing world is marked by numerous prizes and awards for excellent writing on science, nature, technology, politics, economics and more. He has been editor-in-chief of the Miami Herald’s prestigious Sunday magazine, Tropic, and has covered a wide range of topics for Time Inc.’s Life magazine. His...

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