The Tacoma Methanol Plant Objections

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I’m going to do a series on the objections people seem to have about the Methanol Plant. The outline is:

  1. Why building here is best for the world and best for us
  2. Why methanol manufacture is safe
  3. Why the methanol industry is good for the environment
  4. Why Using our water is a good thing for us
  5. How we should act as responsible citizens

Each of these topics I believe will answer all the hysteria that certain environmentalists are inspiring. There is a lot that people who are not familiar with the chemical industry don’t know, and I intend to clear everything up. I am going to show why true environmentalists will enthusiastically endorse the construction of the methanol plant right here on the tide flats.

By way of disclaimer, let me disclose all the relevant facts about myself.

  1. I currently live in Northeast Tacoma. I can see the flats from my house.
  2. Although I am living here, my house is for sale. I plan on moving not too far away, just across the border into Federal Way.
  3. If the methanol plant was moving forward at this time, I would be slightly more encouraged to stay here. Having a profitable business right in my backyard would do wonders to alleviate the tax burden I carry and even increase the quality of life here.
  4. I do not work in the chemical industry nor am I being paid to write these articles.
  5. My training is in Physics (BS) and math (minor). I work as a software developer for a startup in Seattle, and I’ve been doing that since 2000, more or less.
  6. I have a wife and five kids, and they are my highest priority. If I thought for one moment that building the methanol plant here would hurt them, I would be protesting it.

Let’s begin with the first topic: Why building here is best for the world and best for us.

There are two reasons why it is best: One has to do with simple economics. The other has to do with economic reality.

Simple economics says that profit is revenue minus costs.

  • Revenue is what a company earns. It is usually the money coming in, but it can be anything that is accumulated.
  • Costs are what the company has to pay to stay in business and make that money. It can be measured in dollars, but it is also measured in units of time or effort or even discomfort.
  • Profit is what is left over. Again, it can be measured in dollars, but sometimes it is simply a sense of satisfaction of a job well done.

In simple math terms, Profit = Revenue – Costs.

Simple economics says that people will not do unprofitable things for long, if at all. In fact, people will try to maximize their profit.

This is pure greed and selfishness, the same greed and selfishness that compels you to protest the building of a methanol plant in your backyard. We are all looking out for #1 — ourselves. Or rather, we are all looking out for the things we want, even if it comes at the expense of what others want.

Mother Theresa is a great example of this. She wanted, more than anything else, to serve Jesus Christ by going to India and helping the poor there. So she decided that “paying” for her service by living in a third-world country and struggling each day to treat the innumerable sick and poor was worth the benefit of serving her Lord and Master.

We often associate economic things in terms of money, but really, most of what we decide to do has little to do with money and everything to do with less monetizable factors. For instance, someone might choose to live near their aging parents. Others might choose to live in the Puget Sound area because of the mild climate or friends or associates. These people could make more money or live in bigger houses with higher property values if they chose to move to other parts of the country, but they choose not to because whatever non-monetizable factors are at play are more important for them.

Indeed, money can’t buy everything, and everyone knows this. We can’t put a price tag on human life, and so we choose to be much poorer than we otherwise would be if we trivialized human life.

But the simple economics remain the same: Profit = Revenue – Costs. If there is no profit, there is no reason to do the thing. And you should always look to maximize profits.

Considering the above, why do the Chinese want to build the world’s largest methanol plant here in Tacoma? Because Profit = Revenue – Costs. They believe that they will maximize their profits by locating their methanol plant here in Tacoma. They have included, of course, monetary factors, but being Chinese, I am 100% certain that they have included non-monetary factors as well. I know this because I know, for a fact, that Chinese are humans too, and all humans don’t value money above everything else.

Suppose we tell the Chinese “No.” Just flat out, “No, you can’t build here, no matter what you do.” What will they do? Well, they could give up building the plant altogether, or they will move to a different, less profitable location. I believe they will choose the latter.

What will be the effect? The effect will be that the people who want to build the plant will earn less profit. There will be less benefit for them. It may not show up in their pocketbooks, but it may manifest in terms of time spent away from their families, the quality of the methanol, or the costs of keeping it environmentally clean.

Regardless, they will get less benefit.

Now, suppose that we say, “Yes, but there are conditions.” We carefully consider what conditions we should place on the construction, additional costs that they will have to bear. We could demand, for instance, higher than normal worker safety, or less than normal pollution. If we are wise, we can attach these kinds of conditions, but not so many that they will decide to go elsewhere. The point here is that when profits are being made, then we can negotiate better conditions for us, because they have more to give away. This is the key fact, the reason why profit is important not just for them, but for us.

Consider this. Let’s say your neighbor comes over to your house and says, “Hey! I got this great deal on this 72″ TV!” What is your immediate reaction? You can react with envy, thinking, “I should’ve gotten this, not him.” This is a purely selfish emotion with no good in sight. Or, you can celebrate with him the fact that he made a ton of profit. This is how many more traditional communities look upon profit. When their neighbors profit, they are happy. Isn’t this a wiser way to live? Doesn’t it just sound more stress-free and simply happy?

Why would cultures develop this habit of feeling good for their neighbor’s success? I think it is because we know that when those around us are profitable, then we will benefit. My neighbor having a huge TV might invite me over for football games so I can enjoy it as well. Or he might have extra cash to pay my kid to mow his lawn. Who knows? All I know is that profit is spent, and in a way, everyone benefits.

This is all simple economics. The key takeaways are:

  • Economics deals with much more than money.
  • Profit = Revenue – Costs
  • People try to maximize their profits.
  • Where there are profits, you can negotiate for better prices.
  • Profits benefit everyone.

Now, let’s talk about economic reality. Why would building here in Tacoma be better than anywhere else in the world?

Let’s look at the geography. The methanol plant will be, for all intents and purposes, built along the shore of a remarkably calm bay. This area is known for its lack of dangerous storms, only minor earthquakes, and a mild climate. If you can tolerate the wet climate, it is one of the easiest places to live and build things. There are not many places like it. Combine that with the fact that we have something most of the rest of the world doesn’t have — political stability — and you should see why Tacoma, along with  the entire Puget Sound region, is prime real estate for chemical plants.

The access to the bay and thus the ocean means you can literally ship whatever you need in or out at rock-bottom prices. In the days of sailing ships, the cost to move things across the ocean was the food needed to feed the crew and the materials needed to keep the ship well-repaired. Today, it’s even cheaper as the crews are dramatically smaller and the ships built out of steel and fueled with crude oil. This fact works both ways: it’s cheaper to bring things in and it’s cheaper to take things out.

Tacoma has the curious property of having a vast excess of potable water. We are fed by glacier water and the annual snowfall in the mountains. The vast majority of this water simply runs through our vast wilderness, untouched by human hands. We tap into a tiny portion of it for all of our water needs, and we have more than enough with our current supply. Yes, occasionally we have droughts, but our droughts are nowhere near as serious as the ones experienced in California. In Eastern Washington, there are a series of dams designed to help Eastern Washington thrive despite the occasional droughts, but we have needed no such system here. California, on the other hand, is using so much water that they literally can’t keep their dams stocked with enough supply to weather the occasional droughts. We have no such problem.

The other factor that Tacoma has is we have access to some of the best educated, honest and hard-working people in the world. I beg you to try and find anywhere else in the world where blue and white collar workers compose themselves with such dignity and respect. People don’t realize this, but the reason why Microsoft, Amazon, Facebook, and Google want to import Chinese and Indian engineers here in Seattle is because when they bring those engineers here, they learn how we do things in the Pacific Northwest. Boeing is the #1 engineering company for a reason. They have the #1 engineers out there. No other company can really compete with their engineering experience and talent. Along with that, our machinists and others are also top-notch.

If you want to build a chemical plant right, you need the right people and the right culture to do it. That culture and those people are here.

I don’t think people really “get” this fact. So let me propose to you a scenario, and you tell me what you think would happen in your workplace. Suppose that your boss comes to you, and says, “We want to ‘bend’ the rules a bit, business is tough, and we’re not making enough money. Surely we can be a little more lenient when it comes to safety protocols and engineering standards.”

What would you do? I am pretty certain that everyone of you would tell your boss to stick it where the sun don’t shine. I think this culture came from Boeing, where every engineer knew that their decisions could doom hundreds or thousands of people to a fiery death. But I have found in my startup experience that this culture exists pretty much everywhere. People here insist on doing things right.

We haven’t had a lot of corruption issues with our government, either. When things go wrong, as they occasionally do, our voters are very consistent with voting in change and new leadership. We are, after all, more purple than blue. Sure, here in Tacoma, we are mostly democrats, but we have the strong republicans in Eastern Washington that keep us honest. It’s an ideal system. Should any one person or party become wholly corrupt, rest assured that the other party will capitalize on it. Look at the flak that Governor Inslee is getting over the early release of prisoners, and you see what I mean. No one is immune to criticism and political repercussions here.

If I were a Chinese communist official, and my job was figuring out where to build this Methanol plant, and I were facing the kinds of environmental issues that I see China facing, along with the inevitable corruption and lack of spine among the engineers, I would like to see my country learn from the Puget Sound region. I would like to have my Chinese engineers work side-by-side with Tacoma engineers and come back to my country with their insights and experience.

After all, given all that we do here in the Puget Sound region, our place is pretty dang clean. We have worked out, more or less, a good set of compromises that has allowed our region to flourish even in dark economic times.

Most of these things are intangibles that are hard to quantify with dollars. However, they are real economic advantages that make Tacoma a uniquely ideal place to build this particular plant.

What will be the effect of having the world’s largest methanol plant in our backyard?

  • More jobs for us
  • More tax revenues for us
  • We get to show the world how to do things right
  • We get to hold the methanol industry to the highest standards of conduct
  • We get to show everyone that environmental responsibility can be combined with economic prosperity.

Having the world’s biggest methanol plant will make the entire world turn their eyes to us. Foreign engineers and managers and executives are going to come here to see how we balance things, how we make things work. Foreign activists will come here to see how we can be responsible activists, balancing the interests of environmental cleanliness with economic prosperity. Perhaps we can be the “shining beacon on the hill” that will allow China to completely reform their economy so that they can enjoy the same high standards of living we enjoy and at the same time, have a pristine environment that anyone would be proud of.

If that were the outcome of building the plant here, wouldn’t you be in favor of it? Imagine future generations of Chinese industrialists and engineers saying things like, “I studied the Tacoma Methanol Plant, and I believe we can make things better here if we do things more like how they do things.”

In the next post, I’ll discuss why methanol manufacture is safe and why we shouldn’t worry about it, as long as we keep the proper oversight and safety protocols in sight.

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