On February 20th 2008, EVE Online's economist Dr Eyjo published his fourth quarter economic newsletter for 2007. The newsletter discussed issues ranging from deflation to what ships players use and methods for estimating the total production of Eve. Among the pages of the economic newsletter was a small section commenting on the purchases of shuttles relative to tritanium prices and the ensuing discussion seemed to focus on this. In his more recent devblog, Dr Eyjo informed pilots that following a recent patch, the infinite NPC supply of shuttles was being removed from the market in order to alleviate what he calls "an artificial price cap of 3.6 ISK per unit".
It's no secret that shuttles and tritanium prices are linked. The effect that the supply of shuttles on the market has had on tritanium prices is a well-known and well-documented phenomenon that was even included in the second economist dev-blog back in September of 2007. If prices of tritanium ever increase above 3.6 per unit due to the laws of supply and demand in action, it becomes profitable to buy shuttles at 9000 ISK per unit and refine them into tritanium for sale or industry. The fact that there are people with perfect refine skills willing to do this for profit means that the price of tritanium can never rise any more than fractionally above 3.6 per unit before the shuttle-refiners push it back down.
Read on for a breakdown of the controversy and to find out how this change has affected the EVE markets.
Effects of the change:
The effect that this artificial price cap on tritanium has had on the market has been difficult to measure. Of the five to ten billion units of tritanium sold daily on the market in trade hub Jita, nobody knows how many unique units of tritanium are being sold and how many are being bought and resold. In his devblog announcing the change, Dr Eyjo ventured to suggest that this change "makes the mining industry more profitable", that "the price cap has been lifted" and "the price of tritanium will increase", bold claims that were put to the harsh scrutiny of the EVE populace.
In the midst of the resulting debate over whether or not an increase in tritanium prices was beneficial for the game, it became known that shuttles were not the only item upholding the artificial price cap of 3.6 ISK per unit. After a few days of initial price rises caused by market speculation, several pilots discovered that the Civilian Afterburner I module sold in starting school stations also refined into tritanium at a rate of 3.6 ISK per unit. Costing just 216 ISK each, this module refines for 60 tritanium. Dr Eyjo was slow to respond to the issue, eventually responding several days later by suggesting that "with lower quantity available in fewer places the price cap has effectively been lifted.".
Despite these words of reassurance that the artificial price cap on tritanium had been raised, market data continues to refute that position. The price of tritanium remains stable at a level just above 3.6 per unit in the main trade hubs, being pushed down as usual when it rises above that level. With sales of civilian afterburners of over 21 million units in the past week and their massive availability on the market, it's looking like the cap of 3.6 ISK per unit is here to stay.
Dr Eyjo's recommendation to remove NPC supply of shuttles has been in the pipelines since late September 2007 and has only now reached implementation almost seven months later. With a turnaround of over six months on the initial change, some pilots are left wondering whether a resolution to this issue will even be implemented by this time next year.
Dr Eyjo left pilots with the promise that "Other price caps will be removed in due time", a promise that offers little consolation to those who invested their ISK into playing the tritanium market following his advice that prices would rise. Although tritanium prices are not set to increase in the long term, the removal of shuttles has held some benefit for the EVE markets. With no NPC supply of shuttles on the market, players can now manufacture them for profit. Newcomers to industry could produce shuttles for a substantial profit margin in outlying systems where there are none on the market yet.
The underlying problem:
The main problem with the handling of this change was the short-sighted approach that was taken with it. The economist was aware of the fact that shuttles were being reprocessed to produce tritanium but never really explored the wider issue. If he had explored the issue further, he would have noticed that other price caps exist through other NPC-sold refinable goods and would have at the very least spotted the issue with civilian afterburners. Rather than examining the underlying cause, CCP were content to patch up the most visible and immediate symptom by removing the NPC supply of shuttles.
The underlying problem is that several of EVE's components and mechanics rely on something called the NPC base mineral price index. This is a set of values for minerals which all NPC-related game mechanics use. Everything from insurance to prices of NPC-sold ships and modules uses these values and according to them, tritanium should be worth 1 ISK per unit. NPC sell orders for refinable goods are always priced at 3.6 times their total mineral value according to the NPC base mineral prices and if the minerals that can be obtained from refining the item is greater than this, the item can be purchased and refined for a profit.
With shuttles and civilian afterburners, their abuse to form the 3.6 ISK per unit tritanium price cap is due to them being made entirely of tritanium. Other items like civilian armour repairers are made of mostly tritanium and a small portion of another mineral such as pyerite which is not currently worth over 3.6 times its NPC base price. These items are not currently profitable to refine but if lower tritanium price caps are removed, that could change. These issues are all part of the bigger underlying problem - EVE is starting to show its age and some old game mechanics still rely on the now-defunct NPC base mineral values.
Whether CCP intend to deal with this underlying cause at all and how they might do so is anyone's guess right now. One thing's for sure, this is one topic I will follow with great interest.