Space Exploration is Going Private

By Michael Collins | More Articles by Michael Collins

Neil Armstrong landed on the moon in 1969 and delivered his pre-prepared line that became famous: “That’s one small step for man, one giant leap for mankind.” Except he misspoke. What Armstrong said was nonsense. He meant to say “a man” rather than just “man”.

Whatever. Armstrong’s statement rang true. From the start of the space age in 1957 when the Soviet Union’s Sputnik satellite orbited the Earth, six-plus decades of mainly US government-funded, -designed and -staffed space exploration has brought many rewards. Apart from stirring national pride and showcasing bravery, space exploration has boosted knowledge of the universe and led to much innovation related to satellites, global positioning and weather forecasting.

Even if Armstrong blew his line, he was more profound than Jeff Bezos on his return to Earth on July 20 after being blasted into the atmosphere just past the Karman line that, 100 kilometres (62 miles) from Earth, generally marks outer space. “Best day ever,” was Bezos’s verdict on flying for 10 minutes in a pilotless rocket built by Blue Origin, a company he founded in 2000.

Perhaps Bezos should have said something more Armstrong-like as did Richard Branson when, nine days before Bezos, he zoomed to an altitude of 80 kilometres in a piloted space plane built by Virgin Galactic, which Branson set up in 2004. “We are at the vanguard of a new space age,” Branson said.

What’s new is that an entrepreneur-led drive into space is underway. Bezos and Branson – joined soon perhaps by other private companies – are vying with Boeing and Elon Musk’s Space Exploration Technologies Corp. to commercialise space.

SpaceX, as Musk’s creation of 2002 is known, is ahead. The company’s most notable feat is that in 2015 it pioneered reusable rockets, which is regarded as the “single transformative technology shift” driving today’s space race because it has slashed launch costs.

Many benefits are likely to flow from the commercialisation of space that already amounts to a US$350 billion industry. Space tourism is likely to grow, after commencing on September 15 when SpaceX launched its first privately funded three-day spaceflight of just tourists. The standard offering (at US$450,000 a pop with Virgin Galactic) will be orbiting the Earth to experience weightlessness and gain an astronaut’s view of the world. Another prospect is vacations on commercial space stations. A later step could be tourist trips to the moon.

A second, and bigger, commercial motivator is adding to the more than 5,000 satellites already orbiting the Earth. SpaceX, for instance, plans to add another 11,000 satellites via its Starlink mega-constellation and has filed for US permission for another 30,000.

Private enterprise heading into the cosmos is rekindling and aiding government space efforts. Nasa, as well as employing SpaceX to return to the moon under its Artemis Program, plans more voyages to Mars and intends to search Jupiter’s moon Europa for life. China in May landed a vehicle on Mars for the first time, two years after the country became the first to land a craft on the far side of the moon. Beijing and Moscow in June announced plans for a permanent base on the moon.

Commercial space efforts are bound to advance scientific knowledge. The hope is that ‘microgravity’ will allow for unique research that could lead to discoveries previously kept hidden by gravity. Another motive is to enable people to live beyond Earth. Bezos sees “a future where millions of people are living and working in space”. Musk talks of ‘terraforming’ Mars, by which he means nuking Mars to make the planet habitable for humans.

The commercialisation of space comes with risks and disadvantages that could limit such exploration (ignoring complaints about the cost). The biggest risk is that space travel is dangerous. Much can go wrong with rockets, and fatal events could derail space exploration, as they have in the past.

Another problem is space exploration is likely to intensify global political tensions. Whoever rules space controls an avenue to deliver thermonuclear weapons via ballistic missiles and much else. China’s moves into space look likely to intensify Chinese-US rivalry. The US in 2019 created a Space Command as its sixth military sphere to thwart China in space. A third drawback is the space race will come with environmental damage, especially with respect to climate change from fossil-fuelled rockets.

Whatever the doubts or drawbacks about the question, the better economics of space exploration are overriding them. A privately led space adventure has begun that has already notched achievements and, amid controversy and setbacks, is likely to post many more.

To be pedantic, private companies have long helped Nasa while the commercialisation of space could be dated to the turn of the century, so it’s not new, just intensifying. The role of Nasa and other government agencies in this private quest shouldn’t be underestimated. These private companies will need to be willing to lose much money. A techno-utopian element bordering on the unbelievable pervades the private space quest. Some, perhaps much, disappointment lies ahead.

No doubt. But the entrepreneurs pioneering today’s drive into space are wealthy visionaries who won’t be deterred easily. Get set for a space race pursued by people who think they are on a philanthropic mission.

 

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About Michael Collins

Michael Collins is an investment specialist at Magellan. Since 2000, Michael has worked as an investment specialist/commentator for money managers, AMP Capital, IOOF/Perennial, Barclays Global Investors (now BlackRock) and Fidelity International.

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