Elon Musk's 16-Inch Pipe Obsession

Elon Musk just can’t take his eyes off of one very specific 16-inch pipe. 

In fact, he’s so enraptured by this pipe that he had to give it its own branding. 

Musk calls it Starpipe. 

I know, pretty unoriginal for the guy interested in colonizing Mars, right? 

Well, here’s the dirty little secret behind his pipe…

There are 2.8 MILLION miles of similiar ones criss-crossing the United States right now. 

But to understand the opportunity in Musk’s pipe fascination, let me tell you the story of a man named Samuel Van Syckel. He did something to the oil fields in western Pennsylvania that everyone thought was crazy.

Just six years after the now-famous Drake well was drilled by Edwin Drake along Oil Creek in Titusville, PA, Van Syckel decided to lay down five miles of two-inch iron pipe from the boomtown of Pithole to a nearby railroad.

For those of you that aren’t geography aficionados, Pithole was located about six miles away from Oil Creek. 

And up until that point, every single barrel out of Pithole was transported by wagon, pulled by a team of horses over roads so deep in mud they were half swamp.

Naturally, the teamsters driving those wagons had a lock on the business. They charged about $3 a barrel, and they could name their price whenever the weather turned.

However, Van Syckel only charged $1.

But there was another little catch to Van Syckel’s operation. 

You see, the crude flowed through his pipeline at roughly 81 barrels an hour. 

To compare, that’s the work of up to 300 wagon teams grinding through a ten-hour day.

You can guess how the teamsters felt about that.

They tore up his line, again and again, until he hired armed guards to walk it. More than 500 teamsters found themselves out of work within a matter of weeks. 

Now fast-forward 160 years and Musk’s love of his 16-inch steel pipe. 

He loves it so much that he’s directed SpaceX to build an 8-mile pipeline at the southern tip of Texas. 

Starpipe’s goal is simple and straightforward… 

Once the pipeline enters service in late January, it’ll transport natural gas from the Port of Brownsville to SpaceX’s Starbase launch site. 

In the process, this pipeline will replace the hundreds of tanker trucks that haul rocket fuel to the pad right now. 

Makes sense, right?

Except, that pipeline is only one piece of this puzzle. 

It’s not a stretch to say that any company building its own gas pipeline isn’t just a rocket company anymore.

Over the past three years, SpaceX has signed more than 100 oil and gas leases in Texas. 

Their desires weren’t exactly a secret, either. The company brass told us last June that it was planning to build its own pipelines, process its own propellant, and even explore drilling for its own natural gas.

Then last month, a job posting surfaced looking for a qualified candidate to build and lead a natural gas trading team, both the physical and financial trading aspects. 

And this new employee would be based at Starbase or Cape Canaveral… NOT Houston.

SpaceX even said that it is planning new gas-fired power plants for the Texas chip factory it’s developing with Tesla.

And in Louisiana? Well, that’s where a $100 billion spaceport across roughly 125,000 acres near Pecan Island will make its own methane, and generate its own power. 

Not surprisingly, access to natural gas was one of the reasons SpaceX picked the site, with the first launch targeted for 2029.

Make no mistake, this is a move to bring everything in-house, from fuel and power to the actual energy trade and launch sites. 

Don’t think I’m knocking this idea — I’m not. 

It’s a vertical integration on a scale we haven’t seen in a very long time.

It’s also SpaceX showing that it wants to eliminate its dependence on outside companies.

Sound familiar? Well, van Syckel didn’t just move oil more cheaply, he also took the teamsters out of the equation.

Look at what we’ve seen so far…

SpaceX has stopped accepting most new dedicated Falcon 9 and rideshare bookings beyond late 2028. Starlink’s share of Falcon 9 flights has climbed from 54% in 2020 to about 79% this year. In the second quarter, 28 of its 38 launches carried its own cargo. 

Just ten of them were for other customers.

Existing contracts stay in place, and critical government missions are expected to keep flying. 

But for new customers, however, the door is closing. 

Reportedly, at least nine of them have already found reservations unavailable past late 2028.

Think about that for a second.

For years, the small-satellite industry built its business models around SpaceX’s cheap seat. 

Those seats are now running out.

Meanwhile, the stock has been a wild ride of its own. We saw shares of SpaceX priced at $135 in June, and run to a high of $225.64 before crashing back to $104.83. 

Trust me, that ride has little to do with pipelines. 

The business is real. Second-quarter revenue came in at $7.81 billion, well ahead of expectations. However, last year it lost $4.9 billion on $18.7 billion in revenue, and no division turned a profit outside of Starlink. 

But the interesting thing for us is that it doesn’t matter much.

If Musk’s gamble works, SpaceX serves itself first. 

If the company stumbles, everyone who was counting on SpaceX has an even bigger problem.

Either way, outside operators need somewhere else to go.

The real question is where that overflow lands.

One satellite operator reminded us this summer that demand for rideshare launches is running hot. 

After all, those satellites still have to get to orbit somehow.

But then there’s the government’s part in all of this. 

In August, the Space Force officially asked Congress for $71.3 billion. We recently talked about how that’s more than double what it received last year. 

Keep in mind that the Space Force is still a tiny branch in the whole scheme of things, and that money doesn’t stay in the building. It goes out the door to the companies that actually build the satellites, sensors and spacecraft.

And let’s face it, no government wants its most important programs riding on the schedule of one company that’s now looking to only serve itself.

I’m not suggesting SpaceX is going anywhere. Chances are that Musk and friends will likely be the biggest launch provider on the planet for years to come.

More to the point, the real story isn’t over whether or not SpaceX will fail. No, dear reader, this is a company succeeding so completely that it’s now crowding out its own customers.

Perhaps the bigger picture is growing clearer for us. 

I know my colleague Jason Simpkins has been tracking this build-out for years. And he’s finally revealed the smaller players that are best positioned to catch what SpaceX leaves on the table.

I strongly recommend you check out the details on this opportunity for yourself, absolutely free.