Fascinating MIT presentation by Fred Salvucci out about the role of chance in transportation and oil/energy markets.

The first commercial use of rail in the New World, Salvucci tells us, was to haul in granite for the Bunker Hill monument, and to bring dirt from the suburbs for Boston builders. When people realized they could use the new technology to transport farm products, the Boston & Worcester Railroad was born. But the idea of moving people around didn’t emerge until the 1800s, when the concept of living one place and working in another led to streetcars in Boston and elsewhere ...

Salvucci remarks on the numerous cases of “indirect causality” through human history, how things “built in ways that are unanticipated and probably unanticipatable.” In 1865, there were no electric street cars. By 1900, U.S. East Coast cities were covered by them. In 1900, there were 2,000 autos in the U.S., and by 1920, there were so many cars that city rail networks began dying out. Don’t be fooled into thinking you can “predict tomorrow based on yesterday plus a small delta,” warns Salvucci.

You can watch it by following this link.

Airlines are in the middle of radical service cuts. Not just increasing prices, but reducing the amount of air service to large and small cities in the U.S. It is partly because of a weakening economy, partly because of higher oil prices, and partly because of the market simply being over-supplied with airlines.

Whatever the cause, the upshot is the same: Less service in future. We all know this, or have at least heard it, but it has taken my friend Rick Seaney at FareCompare to really make it visceral to me. Because Rick has published a post detailing all the cities seeing material decreases this year in air service, as much as 40 % or more in some large cities, as well as some smaller cities losing commercial air service altogether -- the newly "can't get there from here" places.

Here are the cities in map form (thanks Greg), and you can click for a larger version:

Despite prices rising and generally being in short supply, Toyota's Prius hybrid is turning in a standout year for the Japanese car company. Check the following figure from Bloomberg:

In short, Toyota has sold more Prius cars in the first quarter of 2008 than all other major manufacturers have sold hybrids combined in the same period.

I had noticed that Supreme Court justices were more frequently recusing themselves from cases, but it took the Washington Post to put it in context. It's their many investments that are causing the problem. I should have known that spending all that time sitting around between cases would turns Roberts and his merry crew into daytraders:

The court said yesterday that it could not raise a quorum to consider review of a wide-ranging class-action lawsuit that accuses more than 50 U.S. businesses of helping South Africa's former apartheid regime.

According to the court, only five of the nine justices could hear the case, and six are needed for a quorum. Chief Justice John G. Roberts Jr. and Justices Stephen G. Breyer and Samuel A. Alito Jr. have holdings in some of the companies named in the suit. Justice Anthony M. Kennedy's son works for another, Credit Suisse Group. He has recused himself in previous cases that involved the firm.

The case at hand is unusual, but recusals by the justices are becoming more common as the court's docket includes an increasing number of business cases.

Roberts's investments in Pfizer kept him out of a recent case involving the drug Rezulin. The eight remaining justices announced they were evenly split, which means the lower court ruling was affirmed without an opinion from the court.

Breyer sat out what was considered the court's most important business case of the term, concerning investor lawsuits. Roberts was involved only because he took action to get back into the case -- probably selling stock -- after announcing his recusal. Alito's holdings in Exxon mean eight justices will decide the decades-long punitive damages lawsuit over the Exxon Valdez oil spill.

Somewhat seriously, while this is amusing, the deeper issue is that business cases are tough to get to the Supreme Court at the best of times. If the result increasingly is inconclusive because so many Supremes can't actually hear the case then that is a worrisome outcome.

Yahoo has been pounded by rumors ever since the Microsoft deal fell apart. There was the rumor that Microsoft would return. Or the one that it wouldn't return. Or that it had returned. Or the rumor that shareholders are suing. Or not. Or that a new board is being floated for Thursday's deadline. Maybe.

And today's Yahoo rumor: Carl Icahn, bored fellow that he is, is set to start a proxy contest for the company. While that's possible, and Icahn demonstrated an appetite for this sort of thing in tech land with messy Motorola, I pity the poor bastard if/when he starts messing with Jerry "lower case" Yang. It will be a collision between a septuagenarian force and a passive-aggressive object, and it will be so numbingly slow and litigious.

I'd like to propose that we all begin creating our own new Yahoo rumors. Choose from any or all of the following items, and Build Your Own Today:

Yahoo ...

____ is behind the Iran oil production cuts.

____ is driving up Baltic tanker prices in an effort to delay iPhone 2.0 shipments.

____ is using the subprime problem to mess with Google's CPCs.

____ has pictures of Steve Ballmer naked and sporting a strategically-placed Apple Macbook Pro.

You know, that sort of thing.

Just to be somewhat more serious on this rumored Carl Icahn proxy tussle with Yahoo: Do I think it could a) happen and b) work out? Sure it could. And, given how much internal cleanup is going to be required at Yahoo, a pure financial push from an aggressive shareholder like Icahn is arguably precisely what Yahoo needs.

More as news breaks on this.