New Markets

I find myself exploring the wonderful world of POSs in EVE. Having grinded ALMOST enough faction to get my POS up and running, I'm exploring what all is required, and I'm finding (again!) a new world of ridiculous complexity awaiting me. Turns out, the following is what's needed for a POS.

Determine a control tower (probably Caldari due to the CPU but I'm considering Gallente to hedge against the goons killing Ice again).
Figure out what you can fit in the tower based on CPU and Powergrid available from your tower.
Figure out what kind of bare bones defenses you can field just to provide deterrent to griefers.
Find a system that works for you.
Find a moon in that system that is unoccupied.
Arrange everything. Apparently this involves 30 minutes to an hour of moving stuff around and anchoring fun.

All in all, the investment looks to be about 200-250 million isk in capital costs (tower, labs, assembly arrays and defenses) with a fuel requirement of approximately 100mil per month.

I should be able to fairly easily cover that. But the complexity is a bit daunting.

The Vagaries of the T2 Market

Ship building in Eve is something that you can really get whipsawed on. The problem is that it takes time to bring product to market. If you're building in high-sec without a POS, it can take nearly a month to make the copies and then another 2 days to do the invention, 1 day to build the parts and 2 more days to build the ship. That's a long delay. Even if you have the BPCs handy (because you planned ahead with a little library), you're still looking at 4-5 days to get the ship online for sale.

When I started playing again, Huginn's were a ludicrously profitable item. They cost about 160mil in isk to build and could easily be sold for 205mil in Jita to buy orders (208 on sell orders, IIRC). Now they're selling for 158mil in Jita and cost about 168mil to build.

Likewise, Zealots last week were stupidly profitable (inventing with Circular Logic had a net EV per invention attempt of 78mil isk) but that very quickly evaporated to today's prices (which are still profitable but only about 17mil isk per attempt).

T2 ship building is a tricky business and there's some general tips you should follow
Get all of the component pieces (except for maybe reactor units, more on that) and research them: This requires metallurgy 5 so it takes some training but I highly suggest it. You're not going to build all of your components necessarily but you'd like to be able to. If money / research time is tight, at least get the big 5 (Microprocessor, Armor Plate, Capacitor Unit, Sensor Cluster, Shield Emitter... In that order). Those 5 represent 90%+ of the build cost of most T2 ships. The first three generally represent nearly 80%.

Diversify: The game goes through both macro cycles and micro cycles for both factions and ships. Minmatar are on a bit of a high right now but Amarr and Gallente both have some strong items. Many of the Caldari ships are struggling although there's some gems in there for the intrepid explorer. You'd like to be ABLE to build any of them.

Never stop copying: Copying will be your bottleneck 99% of the time. Even with a copy heavy POS setup, the ship copy times are ludicrously long for only a few copies. It takes about two weeks to get 5 copies of a cruiser BPO. It takes 5 days (inventing consecutively) to chew through those. Modules are a little bit better but not much.

Be ready to either sit on inventory or dump supplies: Sometimes the market turns so abruptly (as it did with the Huginns) that you can't build profitably at all (vs. the zealot which is just LESS profitable to build then it was). That's fine if you have some other T2 BPCs of that faction stocked away. If you don't, you have a decision to make. Sit on the inventory waiting for something to come back, or just dump the inventory. Frankly, dumping the inventory isn't a bad idea. Most of the time there's pretty decent spreads on the components anyways (I think you could make a reasonably good living just building T2 components, honestly). In particular, the shield emitter's have some stupidly high margins fairly regularly for some reason. You can currently build a Deflection Shield Emitter for about 15000 isk and sell one for about 25000 isk. The faster selling Armor plates, Sensor Clusters and Microprocessors generally have a 15-25% markup.

Be prepared to take your lumps: I had a Huginn built earlier in the week. Initial sell order was 185mil which was about 10mil lower already than what i was thinking when I hit the build order. Now it's competing with 158mil sell orders in Jita. If I think that market isn't coming back, I'd probably dump it for the cash. In this case, I think it's just a flood of product from when it was stupidly profitable three weeks ago. It's important, however, to look at the underlying component cost. In this case, Fernite Carbide has actually gone up while nanotransistors are roughly even. Technite hasn't yet come down to where it will probably level out (Akita T indicates a guess of about 90k isk per unit and I've learned not to bet against her). So I expect the market to come back on those. So I'm holding at my 185mil bid. There's about 20 sell orders in front of me which is about 5 day's worth of activity in Domain. So I'll just hold off and see. If it gets worse, I'll either slash my price to liquidate or pull the unit and move it to Dodixie or Rens for a better price (I hate making that trip though).

Work on your faction grind: As you're trolling around, keep the Agent finder open and find the easy distribution missions you can do. Faction is a pain but you really need to get it to 5.00 or better so you can anchor a hi-sec POS. POS maintenance costs are not super expensive (about $60mil per month). They can allow you to very profitably do module invention (hard to do with the copy wait times in hi-sec) while also allowing significantly faster ship invention/copying. Building 3 blockade runners should cover you for the month. Grinding faction is a pain but I've gotten mine up from negative to above 3.0 in just a few weeks.

Reading the Headlines (aka Thanks Mittani)

So for any would be industrialist, I'd suggest putting themittani.com on their preferred reading list. The Mittani (and how ego driven do you have to be to put "The" in your name?) is the leader of one of the most storied alliances and coalitions in Eve currently. GSF (Goonswarm Fleet) and their coalition, CFC (no idea what that stands for).

Now I plug the site, not because it is a good, enteraining read (which it is) nor because it is pro-industrialist (which it largely isn't) but rather because the numerous battle reports are very, very important to read for getting a sense of what you should be building. They tell you typical builds and you can take guesses at modules and ships that are being used. Then you can go to the market and see the affects these are having.

For example, NCDot started using Zealots heavily lately. Whether they produced their own or bought them from the market, either way, that's a big change and the market for zealots has skyrocketed (inventing them with the right decryptor yields an insane yield at present).

Likewise, CFC has started trying to use unprobable sniper Tornados. There's only a couple ways to get something unprobable and sniping implies a fairly specific build.

NCDot is also using instalocking recon ships (though I don't know what type... I'm guessing Huginn's or Lachesis??).

All of that creates demand on the market (or reduced suppl, which, for our purposes is the same price increase). And all of that was gleaned from a few battle reports.

These are opportunities that you should research (to confirm) and then jump on. They won't last long. Other people will figure them out and the market will level out. But until it does, enjoy the isk faucet.

What sets Eve apart?

EVE has been, by any stretch, a very successful MMO. It's not been a WoW or EQ, but nor has it been any of the zillions of failed MMOs. My gut is that it's roughly on par with City of Heroes in terms of commercial success. But what sets it apart from those MMOs? What should other MMOs look at it for?

The knee jerk reaction is to say PVP and Player run Economy. And those are certainly true answers from a certain context. PVP is built into every facet of the game and no one can fully opt out of it. Likewise, the economy is very nearly fully player run. Some things are still made by NPCs but largely these are the very low-level building block items (blueprints and skill books). But even these, at least in the case of blueprints, are "player run" in the sense of being regionalized such that if you want to buy a Megathron Blueprint in Caldari space, you have to either travel to Gallente space or buy one from a player.

Some people, upon further reflection, would probably also add "single server". The game has not been localized by region (in fact, the strongest alliances have to balance their EU Time Zone against their US Time Zone to make sure they can defend and attack at any time of day). So when you read about "The Mittani" and his "Goonswarm Fleet" you know that it's YOUR server and those people are people YOU could see someday.

But I think those initial responses miss the broader point. The real beauty of Eve is that player decisions matter. Your decisions change things. PVP isn't fun just because it's PVP. It's thrilling and heart pounding because the results actually matter. The penalty for losing in PVP is pretty brutal. It's punishing for making bad decisions. Likewise, Eve has built up trade hubs for no other reason than geography. People figured out that certain sections were high traffic. That system got more buy and sell orders and it snowballed. As a result, we have Jita which organically grew to 60+% of all economic activity in game. And the single shard is beautiful. It completely strips away anonymity. It's hard to scam someone. You can't pay to transfer servers afterwards. You have a reputation and you're stuck with it.

This is the first MMO where player's really, truly make a difference. In WoW, I could clear the highest level dungeon every night for a year and nothing would really change. EQ had a little bit of this with raids needing to sign up or else the placeholder PC would train the whole zone to the warp in just to screw you for not signing up on the appropriate calendar. Those kinds of things have occurred on a very low level but never as a driving principal of a game.

So to future game makers, make sure you take the right lesson from Eve. While I love the player run economy and would like to see it emulated, what I REALLY think you should focus on is making me and my choices matter.

Akin's idiocy

I normally stick to economics issues but this Akin thing is such a big deal that I need to say something. The republicans are, to quote Sorkin, doing a big thing badly.

They should very, very quickly introduce legislation that strips rapists of their parental rights. The fact that women can be forced into ongoing contact with their convicted rapist in some states is so abhorrent that it should be slammed shut RIGHT NOW.

6 Simple Steps to building a Manufacturing spreadsheet

For Eve Industrialists, it's a giant spreadsheet. But anyone who's ever built a spreadsheet knows that you have to conceptualize it in your head before you build it. Sure, the randomly sprawling, ad hoc development CAN work. But generally it results in a hodge podge that only one person can effectively use and becomes harder and harder to make changes to. So what should your spreadsheet focus on? Here's a list:

1) Profit calculation: This is the king and it all should be focused towards this goal. There's a number of items that play into this, however, that you'll want to take into account.

2) Profit Margin: This is the easiest one to calculate (although Eve's math rubric makes it decidedly non-trivial) and it's arguably the most important. Generally, you should have SOMEWHERE on your sheet that tells you which items are highly profitable and then you should explore them as construction options.

3) Production time: This is the length of time it takes to produce. It does you no good to do something that creates $200million isk if it took you 10 steps across three weeks. There were probably better things to build.

4) Sales volume: This is a commonly forgotten item. You don't want to be single-handedly doubling the supply of a product. If you do, you'll either slow wayyyy down the sales rate or you'll lower the price (or both).

5) Chain management: This is one I've been guilty of ignoring and I'm trying to rectify in my own spreadsheet now. Ask yourself, "What's the most efficient slot allocation I can handle?" Can you structure your manufacturing jobs to go in 24 hour increments? What would such an arrangement look like.

6) Chain Management part 2: T2 ships are a great example of proper chain management. Is it more efficient to build the best margin ships from each faction and focus on armor plates and microprocessors? Or is it better to built exclusively one faction's ships and build the entire T2 chain? I don't know. But a great industrial spreadsheet would help you figure it out.

Ultimately, it needs to pass the test of usability. If it's not giving you easy access to data, you should consider stripping it down for parts and rebuilding a new one. I'm in the process of developing a cheat sheet. Something I can print out and read from that tells me my target buy prices for the things I want to buy, build quantities for the things I want to build and sell price for the things I want to sell. That way I avoid alt+tab-itis. Those kinds of usability items are nice to have.

Answering my own question

A couple days ago I asked if there was a real world example of the cobalt - alchemy - tritanium effect that we could look at. As it turns out, there is a near perfect example available to us and it's not even far away from us.

Cobalt - Alchemy - Tritanium = Corn - Ethanol - Petroleum

In a bid to drive gas prices down, Ethanol was introduced. This turned corn into car fuel (technically, it replaced part of the petroleum with Ethanol but did not fully wipeout gasoline as an input... same as Technetium).

The affect of this was essentially a tax on people who consume a lot of corn. This drove up corn based sugar products in the US some, but food makers quickly moved back to real sugar cane (and advertised it!!). But our neighbors to the south could not do that so readily. Corn is a huge part of the traditional Mexican diet and dietary needs (unlike specific, easily substitutable ingredients) are difficult to change.

As a result, Ethanol was a secret tax (wrong word in a technical sense but sufficient for our purposes) on Mexico. So Mexico is the Gallente of Earth (at least for now).

Warning: Real world politics / economics incoming!

Most of the political coverage right now is focused on, what can only be described as, Mediscare tactics from both sides. I wanted to explain, in as neutral a fashion as possible, the truth about where each group is coming from. Let's establish some terminology first.

Obamacare / PPACA: This is the law currently being operated under
Ryan budget #1: Paul Ryan's first budget (circa 2009)
Ryan budget #2: Paul Ryan's current budget (circa 2011)
Romney Plan: The Presidential candidates plan

Here's what each of them does with Medicare:

Obamacare / PPCAC: Reduces Medicare by $700B (true). It does this over 10 years (a really critical distinction) and it does it by reducing reimbursement rates. It is a debatable point whether it reduces them too much (i.e. to the point where it makes the medicare transaction unprofitable and pushes people out of the market). It partially offsets this with a plug of the doughnut whole of Medicare Part D.

Ryan budget #1: Contains the same $700B in medicare cuts and gets at them in a different way (i.e. reducing reimbursements). My understanding is that this would immediately flip people (perhaps only newly retired people, unclear) to a voucher system (note: the Republicans don't like "voucher" because it doesn't really test well and the plan has some differences... but voucher is the best word I can think of for it) . It is a (highly?) debatable point on whether or not this would result in decreased benefits for seniors. Medicare Advantage is somewhere between "no cheaper" and "20% more expensive" depending on who you listen to. But no one that I know of is trying to claim that Medicare Advantage has resulted in cheaper care. So if the reimbursement rate (i.e. value of the voucher) is fixed at something lower than health costs rise, seniors are either going to get cheaper care or less care.

Ryan budget #2: Contains the same $700B and vouchers but because of changes in the voucher system, some of Obamacare's reimbursement reductions are brought in. The new plan would allow bidding on health care with the option of taking existing medicare or the 2nd cheapest plan in the bidding. This sounds like a net INCREASE in medicare costs (why wouldn't you choose the plan that gave you more and therefore probably cost more) but with the reimbursement cuts, it might not be. If Medicare becomes a less desirable option for health care (because it's hard to find a doctor who will take it) then the issue becomes less clear.

Romney budget: I'll admit, this one has me stumped. Romney stated clearly and unequivically yesterday that he'd change nothing for those 55 years and older. He would institute means testing for people below that age (when they hit retirement age). He indicates that this would attain solvency for the system. My rough math indicates that the means testing would have to mean no benefits for the top 1/3rd of earners (obviously, it would probably be scaled so it could affect a significantly wider swath).

Summary, Obamacare, Ryan #1 and Ryan #2 all result in $700B in savings over the next ten years (note: these are savings ALREADY built into the current budget numbers... so if you hear someone talk about Obama's $22T national debt projected in year 10 then remember that that's $700B lower than it would have been otherwise). Romney's plan would add $700B to this baseline. Obamacare, Ryan #1 and Ryan #2 all result in savings to the budget. They all will affect current seniors in some way (the magnitude of the affect is unclear). Romney's plan claims to return Medicare to solvency but it's hard to see how that realistically occur.

Mineral prices

There's some buzz on the forums right now regarding mineral prices and a general consensus that it's "wrong" that Scordite is worth more than Bistot. But blaming the market for this is a little silly. Better to examine the causes.

Since there are very, very limited hard, variable  costs associated with mining, it's total cost can be set based on the following

Amortized cost of capital (i.e. what rate of return do I want for my exhumer purchase): This part is trivial given the volume of mining that typically gets done
Cost of crystals (they do decay): This is trivial. Most crystals last a long, long time
Risk cost (what are the odds that I'll need to buy a new exhumer on any given night?)

and then the "where to sell decision" has one other concern:

Transport costs (how much could I have earned by more mining and selling in system vs. transporting to Jita/Amarr/wherever)

I would stipulate that these latter two costs are very, very different in null and hi-sec.

For the larger alliances, mining operations are generally REASONABLY safe. How many Hulk/Mackinaw/Skiff kill mails do you see originating in null-sec? But permanent hulkageddon has really changed the equation for miners. It's also pushed miners into mining missions which tend to be a little bit safer (forcing any hulkageddon pilots to fit a probe which is one less gun in their Catalyst or, more realistically, one less catalyst as someone has to fly the Covert Ops ship).

The other part is the transportation costs. I think that not very much null-sec Tritanium is making it to high-sec markets. Why would I fill up a Jump Freighter with Tritanium (or compressed modules made primarily from Tritanium) when I could fill it up with Mexallon/Isogen/Nocxium, etc? On the other hand, Arkonor, Bistot and Crokite are so prevalent in null-sec (relatively speaking) that there has to be an over-abundance of it that gets shipped regularly to high-sec. By my math, at current prices, a freighter filled with Megacyte is worth about 150billion Isk... The transportation cost is infinitesimal to that. But filled primarily with Tritanium and Pyerite, you're looking at about 1/200th of that (less than 1bill). So why wouldn't I keep it in null-sec and build super-caps with it? Note also, you probably have trouble supplying the raw volume of Trit/Pyerite that you need so your return trip (from dropping off your megacyte) is probably a freighter full of tritanium/pyerite.

In previous times, you had some significant market distortions caused by afk botters mining in significant numbers. There was little risk cost and they strip mined everything. With the bannings and hulkageddons, the number of these people have declined and the economics of their business model no longer work.

So now you're seeing a null-sec driven shortage of low-ends and abundance of high-ends. There's nothing wrong with that... it's just the market at work.

Eve Decryptors. A complicated world of funny economics.

One of the most esoteric areas of industrial game play is T2 invention. The formula are complicated. The outcome is chance based. The market is illiquid. And the options are nearly limitless.

Nowhere is this more apparent then in the market for Decryptors. These little talked about objects are found by intrepid explorers (people willing to move little 2D spheres around on a fiddling background trying to find a dot in simulated 3D space). Their function is to modify the end product of an invention run.

Typically, inventions on modules and ammo are done with max run BPCs and result in 10 run BPCs with ML -4 and PL -4 (essentially adding 40% to material waste and production time). Ships are usually done with single run BPCs and get 1 run T2 BPCs (same ML/PL though). The decryptors allow you to modify that though. There are five "types" of decryptors with one each for each faction. Every item in the game has a faction assigned to it for invention purposes. Sometimes these are obvious (T2 Hybrid charges are Gallente) while sometimes they are arbitrary (T2 cargo expanders are Minmatar). It reminds me of trying to learn the gender of things in Latin and Spanish class sometimes.

Each of the decryptors has a "signature" thing about them. This is how I've labeled them in my spreadsheet:

+9 runs (also .6 probability, -2ML, +1PL)
+2 runs (also +1ML, +4PL)
+3ML (also 1.1 probability, +3PL)
+5PL (also 1.2 probability, +2ML)
1.8 probability (also +4 runs, -1ML, +2PL)

I've used four of the five above but the last one (the 1.8prob) one escapes me completely.
These are the most expensive (by far!) decryptors with costs running up to $32mil for Stolen Formulas (Gallente) and as low as $18.3mil for the Amarr one. NONE of the items in my database work at these prices (and I've tried on almost every Amarr item since its the cheapest right now). The problem is that the cost doesn't play well with the -1ML. For that expense, it can only make sense on something with a reasonably high profit margin where the invention cost is a significant factor (i.e. LOTS of datacores). There appears to always be a better option for invention. I've found a single exception which makes me think there might be single other exceptions (the decryptors are so rare that these single exceptions could be driving the market) so I'm wondering what they are.

Lost a bit of respect for Marco Rubio this morning

First off, I really like Marco Rubio. I think he brilliantly articulates the idea for limited government without losing sight of the human compassion needed for a politician. He doesn't just follow the party in lock step and he's willing to stand up and say, "This area is grey and I understand that. But here's MY position and let me tell you WHY I feel this way. And oh by the way, I'm not going to call you a satan-worshipping, hippy, communist if you disagree."

But his editorial today is non-sensical in the extreme

http://www.usatoday.com/news/opinion/editorials/story/2012-08-13/Olympic-Tax-Elimination-Rubio/57040234/1

I don't want politicians deciding what's "worthwhile" or "patriotic" and providing (yet another) loophole. These athletes don't need to worry about "an additional bill". It's not like they're being rewarded with a non-cash prize (like a car) that comes with a nasty cash tax bill at the end of the year. This is a cash prize that they PROBABLY didn't count on (I mean who COUNTS on winning a gold medal?).

It's also a little ludicrous to say that the tax laws are complicated so let's make them MORE complicated with ANOTHER exemption.

There's no way around the fact that this is income. It's nothing more than the bonus I get at work. Furthermore, logic like this would have you believe that we should not tax Congressman and Senators. Firefighters and Policeman. The President and Pastors. Soldiers and Sailors. The fact is, income is income and we should ALL pay our share. We can debate the LEVEL that that should be but elevating some individuals to some sort of "super patriot" status such that they don't have to pay taxes is ludicrous in the extreme.

Senator Rubio, please focus your attention on ACTUAL tax reform. It would be a far more patriotic thing to do!

Mineral Equilibrium achieved?

Last week I posted that my estimate for mineral equilibrium would be approximately

1    1.603365385    9.465144231    11.79592118    74.11182562    126.7146452    368.5215626

as of this morning, it was

1    1.973298002    9.029147982    13.2951488    72.39094986    129.2344068    367.0536078

Pyerite is still an annoying anomaly (and I really need to do some research on that... i could be as simple as, "meta 1 and 2 modules reprocess to have far more pyerite than they should have" but it's hard to tell). Otherwise, it's a near dead on agreement with the theory which is nice.

Still a big opportunity for high-sec miners to mine the crap out of Scordite...

Economic ripple effects

Eve has a really interesting thing occurring and I wonder if there's a reasonable real world corollary. I'll try to stay away from EVE specific verbiage because I think there's applicability for a wider application.

Up until last month, there was a specific resource that was heavily localized (Technetium) such that it had come under a strong cartel (both a military cartel and economic cartel as I understand it). This kept the price very, very high (this one material was contributing almost 50% of a ship's price, IIRC). The game designers felt this was unbalanced and made a change. The alteration was to introduce "alchemy" that could be used to convert another mineral (a more common one) into the rare one. Thus increasing supply greatly but doing so somewhat inefficiently so that there was a soft-cap on the price (or at least a cap on the ratio BETWEEN the two minerals).

The result is, somewhat predictably that mineral A (Technetium) has fallen and mineral B (Cobalt) has risen.

Here's where things get interesting.

Because of way ship construction works, each of the four "nations" has a specific alloy that they use in all of their advanced ships. Only ONE of these uses Cobalt (the nation called "Gallente"). As a result, the rise in the substitute mineral's value has hit that nation's ships harder than it would have hit other people.

It would be as if, in an effort to fight high Petroleum costs and break up OPEC, someone figured out a way to make oil out of Iron. But Japan is the only country in the world that makes cars out of Iron. So the OPEC breaking solution is also a (smallish?) tax on the Japanese people.

It's an interesting thing that's happening... Can anyone think of a real world corollary?

--
It is better to be silent and thought a fool than to speak and remove all doubt
-Abraham Lincoln

The problem with Internet quotes is that you can never be certain of their accuracy
-Abraham Lincoln

Combat Recon vs. Force Recon Ships

Like I said the other day, the economics of EVE fascinate me. Nowhere is that more interesting then in the economics of T2 ships. They are, arguably, the most complicated things in the game to produce. Now that PI has been implemented, they require:

1) Moon's are mined
2) Moon minerals are refined once
3) Moon minerals are refined twice
4) Components are manufactured into 1 of 4 different "families" of parts (one for each race)
5) A T1 hull ship is produced (from the standard 7 minerals)
6) Construction blocks are created (from PI)
7) Datacores are researched (from agents)
8) A decryptor is found (from exploration)
9) A BPO is copied
10) the copy, decryptor and datacore are combined for a CHANCE at creating a T2 BPC
11) The T2 BPC, MORE minerals, the components (step 4), the hull and the construction blocks are combined to make a ship

And that leaves out a couple small steps (building RAMS, finding the decoder in the first place, etc).

So it's very, very difficult to determine price and profit accurately (lots of places to make mistakes).

One of the areas I'm confused by, and if anyone has any observations, I'm all ears.

Is in the price discrepancy between Force Recon and Combat Recon.

These are unusual ships in that they use the same hull and have NEARLY identical construction costs (basically differing by 2 sensor clusters which run about $17k apiece).
They are VERY similar ships with the Force Recon trading a EWAR combat boost of some flavor for cloaking ability and the ability to fit a Cynosular Field Generator to create jump points. What I find interesting is the current market situation for them is "off" to say the least. They should have either identical prices or perhaps some directional bias for Force Recon being preferred over Combat Recon (or vice versa). But they have nearly identical supply side economics.

Instead, we get this (based on best Jita Sell price as of this morning)
Force Recon Ships:
Pilgrim $145MM
Rapier $164MM
Arazu $157MM
Falcon $151MM

Combat Recon Ships
Curse $137MM
Huginn $209MM
Lachesis $203MM
Rook $119MM

I'm left with a couple possible conclusions.

1) Huginn and Lachesis are the preferred Combat Recon Ships while Pilgrim and Falcon are the preferred Force Recon Ships. This seems unsatisfactory to me as the Curse is, by all accounts, a very popular combat ship... it should be a popular purchase and a popular death (although it can fit a heckuva tank)

2) The T2 BPO market is supplying the market for Rooks and Curses. This seems possible.

3) Some sort of nerf/buff has occurred on some of the ships that has flipped the market on its head.

Any thoughts?



--
It is better to be silent and thought a fool than to speak and remove all doubt
-Abraham Lincoln

The problem with Internet quotes is that you can never be certain of their accuracy
-Abraham Lincoln

Eve Economics

So I started playing EVE again (it's an addiction, I know) and realized that there's very little on the internet regarding substantive economic discussion of the EVE world. Which is odd as it's a (nearly) totally player run economy comprised of some 400,000 people. That makes it the most complicated and lively economy in any MMO that I'm familiar with (most other games, like WoW, split their player base across a horde of identical worlds... so 400,000 in one world is huge). EVE used to have a Chief Economist (talk about my dream job!) but he's no longer there and his quarterly economic news letters (which came out more like every 4-5 months) are no longer, sadly.

So getting back into it, one of the first things I did was update my spreadsheet and start looking for things to make. I'm an industrialist at heart and that's what really gets me excited.

And boy how things have changes. There's been a significant shift in value of minerals thanks to the elimination of what is commonly referred to as "drone poo" as well as the meta 0 removal. There was a time when something like two thirds of the Nocxium in the economy was being supplied by drones (and I think a significant percentage of Isogen as well). This distortive affect messed with mineral equilibrium and pricing in some pretty severe market distortions and contortions throughout the years. With the removal of those items, the vast majority of minerals will now be supplied by mining. So naturally, I wanted to figure out what the prices would settle down to. My first clue that something was wrong with the current prices came when I updated my spreadsheet for ore values. At present, the most valuable ore to mine is Arkonor at 108.9% of Veldspar (which is what I use as a baseline). The fact that Veldspar is only 8.9% less valuable than Arkonor was shocking enough. But the really crazy thing was when I noticed that Scordite was number two at 106.6%, Bistot is basically the same as Veldspar (100.6%) and Crokite is at 85%.

I did a little research and three things came up as explanations.

1) The current political climate in the north is significantly calmer than it used to be. The big Technetium mining alliances have settled down and formed OTEC (like OPEC but for Technetium). So the war efforts have been curtailed. This probably hasn't stopped the arms race (I'm sure they're still building dreadnoughts, battleships and other weapons of war at an alarming rate) but it's likely made null-sec mining significantly safer than it used to be.

2) Wormhole life and therefore wormhole mining continue to mature. As people figure out the best techniques for WH compression, getting minerals to market is less of an issue. And in wormhole space, you just mine what you can get by strip mining everything in a location (to force a respawn) and building with it as best you can.The population living in Wormhole space has also increased.

3) Hulkageddon (this time funded by the Goons?) and CCP's continued (renewed? new??) effort to ban botters has worked. As a result, high-sec mining has declined.

So putting it all together we have:
1) Null-sec and unknown space mining has increased
2) High-sec mining has declined
3) Drone poo removal still a bit in flux

So it's not really surprising that the ore yields are currently VERY flat (by way of reference, when I left 8 months ago, Arkonor was about 250% of Veldspar in value). Whether this can be maintained is a totally different guess. But it allows us a somewhat unique opportunity to examine mineral prices from a purely mathematical standpoint. Let's examine the price of Scordite. It's nearly impossible to say, "This is the fair price for Scordite / Pyerite / whatever" in EVE. But with certain things we can fairly comfortably say, "Here's the right price for X in relation to Y." It turns out that this is fairly easy and clean for comparing Pyerite to Tritanium.

The vast majority of Tritanium gets produced from Veldspar and Scordite (76% if you're mining even amounts of every roid). Similarly, over half of the Pyerite comes from Scordite (about 56% with another 31% coming from Plagioclase).

Each 1m3 of Veldspar yields about 30 units of Tritanium (30.03 to be exact).
Each m3 of Scordite yields 16.67 units of Tritanium and 8.33 units of Pyerite.

Since Veldspar and Scordite are the two universal ores and appear everywhere at all times in every system with no regional or security status affects, we can and should assume that their value would be nearly identical in a post drone poo world (allowing for small fluctuations due to the market and due to reprocessed meta loot). If we do this, we can assume that 30.03T = 16.67T + 8.33P. The way I've solved all of these are to assume that Tritanium is the base for everything and solve things as a multiple of Tritanium's value. so in this case, P = 1.603T.

Currently, Pyerite is trading at between 1.85T and 2.0T.

There are only a few possibilities
1) Reprocessing of meta loot is providing significantly more tritanium / less pyerite than is needed
2) The market hasn't settled down yet
3) There is a coming surge of inflation and Pyerite is the leading indicator
4) There is a coming surge of deflation and Tritanium is the leading indicator

I tend to think it's a combination of 2 and 3 with mostly 2 being the cause. And the reason is the ore prices. It's just not sustainable long term in the game for Scordite to be the best (or within a couple percentage points of the best) ore in the game. Every Tom, Dick and Harry miner should be pounding high-sec (.9 and above) space mining 2 of the four most valuable roids in the game. Unless Hulkageddon is still supressing high-sec supply, this affect should occur rapidly.

Now it's possible to construct a set of equilibrium equations based on an ore basket. I did this a bunch of ways (I'm going to put up a detailed post on the forums) but I think I've established the likely trading range (again, as expressed as a multiple of Tritanium) for the major minerals (Morphite is disconnected).

Pyerite: 1.6T - 1.6T (this should settle down in a VERY narrow range)
Mexallon: 9.46T - 10.1T (varies almost entirely based on the viability of Pyrox as a minable ore because otherwise Plagioclase sets this price)
Isogen: 11.8T - 18.1T (If high-sec mining returns such that Kernite is largely supplying Isogen then 18.1T is probably the right range but if null-sec is strip mining things like Hedbergite, Hemorphite and *shudder* Omber then they're going to oversupply Isogen and drive the price down)
Nocxium: 74.1T - 142.6T (Jaspet's inclusion is what drives Nocxium down)
Zydrine: 114T - 212T (If Zydrine is coming from ABCs almost exclusively, it goes way up but those little bits supplied by Hedbergite, Hemorphite and Jaspet add up over time)
Megacyte: 246T - 458T (this is driven by Zydrine primarily. If Zydrine prices are high, so are Megacyte. Megacyte significantly rarer than Zydrine (both in quantity but also in variety)

The algebraic "best guess" equilibrium point is
1.6 / 9.46 / 11.8 / 74.1 / 126.7 / 368.5
vs. today's ratio of
1.84 / 8.6 / 12.7 / 75.2 / 115.9 / 334.1

so that's fairly close agreement. My gut is that Pyerite will take a big hit in value (it should fall something like 15%) but the rest are within a kind of "market fluctuation" range that I think is reasonable. Long term, I'd expect the spread on Zydrine to rise as things heat up in null-sec again (whenever that happens) and/or mining volumes return to high-sec.

I'm going to try to post some sort of economic analysis at least weekly... We'll see how long that resolution lasts ;)

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