I just finished reading Sam Dinkin's paper on Orbital Access.
I can still remember once sitting down and doing a little research. I took the total tank capacity of the Space Shuttle External Tank, and did some number crunching. Using the cost of Liquid Hydrogen that I could find, I calculated how much a Space Shuttle launch costs just in terms of fuel, just in terms of the External tank not including the Solid Rocket Boosters.
Right know the average cost of single Shuttle flight works out to about 1/2 a billion US. All it took was some simple arithmetic to figure out that the cost of the fuel in the external tanks was a mere fraction of this number. It was an eye opener. I suddenly started to research more and more about where exactly these costs were going. The majority I found were from operation of the launch site.
Sam Dinkin's paper was like a lightingbolt. The two major obstacles to lowering the cost of launch vehicles seems to me to be range costs, as they are with the space shuttle, but also insurance. They alone account for over %70 of the costs of launching a rocket in the scenario he's described. Ranges are regulated by governments, and they charge a flat fee for their use. He's suggesting that instead a tax be put on range usage, on a per pound, or on a percentage of revenue basis. Also he talks about rocket launching operations self-insuring themselves to further reduce costs.
I doubt that Sam Dinkin could have botched his numbers to the extent that those two factors aren't at least a significant portion of the costs of access to space.
It's amazing that those two components are the biggests obstacles to space exploration. I wonder though how Mark Oakley would respond to this though. He's always argued that some sort drastic technological improvement in propulsion technology needs to happen for launch costs to lower below the $1,000/pound range. But he's been kidnapped by TGV-Rockets since sometime last year.