Archive for year: 2012
Brazil is oil independent, indeed, is an oil exporter, because its consumers have a choice of fuels at the pump. Most of the cars in the country, and nearly all in urban areas, can run on anything from a 20 percent/80 percent ethanol/gasoline blend up to 100 percent ethanol. And consumers decide which blend to use at the pump. When sugar prices are high, the consumer can choose more gasoline and vice versa. To accommodate the blended fuel mandate, every major automaker builds cars for Brazil that are flex-fuel vehicles. Consequently, about half of the fuel consumed in Brazil is ethanol.
China, on the other hand, faced with a similar dependence on imported oil, increased air pollution and a vertiginous increase in demand, is turning to methanol. Methanol can be cheaply made from natural gas, biomass (including garbage) and coal. Reports say that a number of provinces and municipalities in China already use a 15 percent blend of methanol and gasoline. In the U. S., methanol prices range from $1.15 to $1.38 per gallon. Even with less energy per gallon than gasoline, methanol is much cheaper on a miles per dollar basis than gasoline. Methanol is also cleaner from a carbon and conventional pollutant standpoint and does not contain benzene, toluene or xylene, additives to gasoline, which the EPA has identified as toxic.
The U.S. has abundant supplies of natural gas, corn and cellulosic products, and can credibly be called the Saudi Arabia of garbage. Following Brazil’s and China’s examples, we could replace most, if not all, imported oil with cheaper, cleaner American-made fuels.
The New York Times’ lead story today offers are lengthy and useful examination of the debate between more drilling, and more conservation and efficiency, in what the newspaper sees as signs of progress toward “energy independence”. Both drilling and efficiency are helpful, but unfortunately insufficient, to achieve this goal. Despite increased domestic oil production and a slowdown in U.S. demand, prices continue to rise, with gasoline now approaching $5 a gallon in some parts of the U.S. This is because oil demand in China, India and elsewhere in the developing world continues to ramp up as these nations rapidly urbanize.
As global demand outstrips supply, the commensurate price increases have substantial impact on those who require gasoline for transportation. Higher oil prices also increase costs of agriculture and food production, raising grocery bills. And the burden falls disproportionately on lower-income families, not just in the U.S., but around the world.
Oil is an internationally priced commodity so more U.S. drilling cannot meaningfully bring down the price. Given the growth in global demand, higher-cost U.S. domestic production will pressure global prices upward, further enriching the much lower-cost OPEC oil producers.
Even in the best case noted in The Times, we may only get to 10 million-barrels-a-day production by 2020, compared to current use of nearly 19 mmbd. The difference between the most optimistic estimates of domestic production and our actual oil consumption leaves us woefully dependent on foreign oil and with it the price swings that devastate our national economy and personal budgets.
In fact, virtually every recession since World War II has been preceded by a spike in oil prices, with devastating consequences.
What we need is a diversity of cheaper, cleaner, American-made and unsubsidized fuels to compete with gasoline at the pump. Viable options include natural gas, methanol, ethanol and electricity.
An article at The Atlantic recently pointed to the 2012 Annual Energy Outlook from the U.S. Energy Information Administration, and the possibility that we are weaning ourselves off of foreign oil, if all goes according to plan.
The United States isn’t breaking its reliance on foreign oil any time in the near future, but over the next couple of decades, we will be importing much less oil for two simple reasons. We’re drilling more crude, and we’re driving more efficient cars.
In 2010, the United States imported 49% of its petroleum supplies. By 2035, the country will be importing just 36%, according to the U.S. Energy Information Administration’s 2012 Annual Energy Outlook.
However, even if the expected reduction were fully realized, we would still import more than one-third of the petroleum we use, despite 23 years of effort. We believe that this timeline can and should be accelerated by the adoption of policies that open the fuel market to competition from abundant domestic sources such as natural gas, methanol and ethanol. Existing policies that are predicted to reduce demand-side foreign oil dependence rely to a large degree on attrition, as less fuel-efficient vehicles are retired in favor of new ones. On the other hand, a truly free fuel market would promote conversion of the existing fleet to flex fuels, reducing gasoline consumption during the useful life of cars and trucks we drive today.