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Being a fuel agnostic and a believer, simultaneously

enemyBeing agnostic about certain things in life either makes you a person of little faith or willingness to leap across no or partial data; a wise person who is intellectually and emotionally strong enough to reflect on his or her personal doubts; a person who would prefer not to think about life’s complexities; or, succinctly, a person who is intellectually and emotionally lazy.

No, I am not going to discuss God at this time. But I do want to talk about fuel agnosticism. When people ask me which fuel I like, most times I reply that I am fuel agnostic. Put another way, except for gasoline, I have only strategic short-term fuel favorites among the fuels now on, or soon to come on, the market. As far as gasoline, I agree with the president, almost all environmentalists and a growing number of business leaders, that America must wean itself off gasoline. It just does not cut it, given the country’s air quality, GHG, pollution, economic and security objectives.

Happily, drivers, particularly owners of flex-fuel vehicles (new or converted) have fuel choices at the present time besides gasoline. They are not perfect by any stretch of the imagination. But they are better than gasoline with respect to key public policy and quality of life commitments.

Flex-fuel vehicles (FFVs) can use E85 ethanol blend, the vast majority of which is made from corn; battery powered vehicles can power up on electricity; vehicles with fuel cells can fill up with hydrogen. Natural gas-based ethanol likely will come on the market relatively soon, perhaps within the next 3 to 5 years. This is only a partial list, but they include the “biggies” with respect to alternative fuels.

Obstacles exist restricting consumer ability to exercise their choices among alternative fuels. Among them:

  • lack of investment in infrastructure — fuel stations, pumps etc.
  • franchise agreements excluding sale of E85 at brand-name stations

Both electric and hydrogen-cell cars, on average, are too expensive right now for most Americans to purchase, and reliance on batteries increases the psychiatrist’s bill for many drivers because of mileage constraints. Fear of being stuck on a freeway without electricity and without proximity to fuel stations induces lots of pre-driving psychodrama and expands the use of Ambien the night before driving relatively long distances. Misery, in this case, doesn’t like company. Sort’ve up the crowded creek without a paddle. However, on the good news side, we may have a paddle soon, as electric car producers are aiming at batteries capable of “driving” cars longer distances and producing cheaper sticker prices. Hopefully, with increased use of natural gas, wind and solar power as substitutes for coal, electric cars will become even better than they are now concerning life-cycle GHG emissions.

Corn-based ethanol is presently the best alternative fuel capable of competing with gasoline on a large scale and simultaneously responding to environmental, pollution and GHG objectives. Independent retailers selling E85 have grown in number and locational diversity. Better land management by farmers and an ample supply of corn have lessened the intensity of the food vs. fuel dialogue. While varying over time, the price of ethanol now in most areas of the nation is very competitive with gasoline on a mileage-per-gallon basis. The price differential between the two fuels seemingly has stabilized at between 20 and 26 percent.

Detroit, aided by available federal incentives, has put more than 17 million FFVs on the road. And even though there is a paucity of fuel stations, sales of E85 have still increased modestly.

Because of costs related to development and certification, only one EPA-approved conversion kit exists to change internal combustion engines to FFVs. It is very expensive. Even though consumers, including drivers of fleet vehicles, administered by the public sector, indicate driver satisfaction with the kit, its limited use to convert EPA-approved vehicles to FFV status is understandable. An increase in the number of certified kits would bring down their price and lead to expanded conversion of existing gasoline-only autos.

Natural gas-based ethanol has stimulated a good deal of interest. The process of making ethanol from natural gas seems doable. Coskata, Inc., has developed and tested a process to convert natural gas to ethanol. It results in a product that is relatively inexpensive and responds well to environmental and GHG objectives. The company is seeking financing to build one or more facilities. Its success will provide a strong contender among alternatives for consumer fuel dollars.

It is important that we extend the menu of choices at the pump. Right now, the nation has no real strategy to get from where we are now, which on paper and in a limited way at your friendly gas station is promising, to an effective nationwide menu of consumer fuel choices. Acting now to secure such a strategy is important, in light of GHG emissions, pollution and security problems, including growing tension in the Middle East and our allies’ continued need for imported oil.

We need an immediate, transitional and long-term strategy that increases competition, over time, among multiple fuels — fuels able to respond to national economic, social welfare, and environmental as well as GHG objectives. Through public-private sector partnerships, the nation should be aiming at low-hanging fruit (substitute fuel) like corn-based ethanol E85, and, when it’s ready, natural gas-based ethanol.

Electric vehicles and hydrogen-fuel vehicles are not yet ready for prime time, but both, with technological, cost, and design improvements, could be a necessity in the intermediate and long-term future. Let’s not meet the enemy only to find out that he or she is us (Pogo). We have the data to become a believer concerning the benefits of a transitional and growing fuel menu, while at least for now being fuel agnostic.

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Pig power: A messy problem becomes a fuel solution

You can thank Hernando de Soto for bacon and pork chops.

The Spanish explorer gets credit for introducing the pig to America, having brought 13 of them to Tampa Bay, Florida, in 1539. By the time of de Soto’s death, three years later, that passel of piggies had grown to more than 700. Yes, pigs grow quickly. They also poop, 24 hours a day, in great quantities.

That manure can be transformed into fuel for vehicles. So even though we’ve let all that pig poop — and cow poop, for that matter — go to waste all these centuries, more of it is being processed to extract methane, the principal component of natural gas.

All over the country, this renewable form of methane is being collected and fed into the nation’s natural-gas pipelines, and then transported to fueling stations to be used as compressed natural gas (CNG) and liquefied natural gas (LNG). The fuel is not only much cheaper than petroleum-based vehicle fuels, it burns cleaner: It contains about 23 percent less in greenhouse-gas emissions than diesel and 30 percent less than gasoline. Capturing all that methane instead of letting it float away from farms is also important, since the gas is more than 20 times worse for the environment than carbon dioxide.

There are some 191 renewable-methane projects on farms in the United States, according to the American Biogas Council (the EPA’s AgSTAR Stories project has profiles on many of them). These farms use anaerobic digesters, which involve storing the manure in tanks or ponds. The fecal matter, as well as food scraps and other farm waste, is broken down into smaller molecules, and the material usually is covered, to help elevate the temperature inside. That allows anaerobic bacteria (which don’t take in oxygen) to go to work on them. Methane is made as a result, and machines vacuum off the gas, cleanse it of impurities (like CO2) and ship it off to be used as fuel.

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A Clean Energy renewable-methane plant outside of Memphis.

Clean Energy Fuels of Newport Beach, California, has invested heavily in what it calls Redeem, its proprietary biogas made from organic waste. Twelve of its contracted projects in North America are at landfills — discarded food produces large amounts of methane, as does cellulosic trash like cardboard and paper — and three other projects are agricultural.

“There’s a tremendous energy potential in waste, and this is one of the more efficient and cost-effective ways of capturing that,” says Harrison Clay, president of the company’s subsidiary, Clean Energy Renewable Fuels. “I think there’ll be more and more opportunity at these large, concentrated agricultural operations to take their waste and turn it into an energy project, from a problem to a solution.”

Methane accumulates in large landfills, and many are legally required to flare it once it starts to seep out. Clean Energy’s equipment captures it instead. “So it’s a tremendous GHG emission benefit,” Clay said, “because you’re capturing all this methane that otherwise would go into the atmosphere, and you’re turning it into fuel and displacing oil.”

Ingenious ideas for turning waste into fuel are coming from all quarters: In England, a passenger bus called the Bio-Bus runs on human waste, as well as inedible food waste, culled from a sewage treatment plant.

Livestock is uniquely suited to be a renewable fuel source, because cows and pigs are prolific producers of manure. According to the USDA, dairy cows account for about 80 pounds per day (per 1,000 pounds of animal weight). The equivalent in hogs accounts for 63.1 pounds per day.

At Circle Four Farms near Milford, Utah (about halfway between Salt Lake City and Las Vegas), a million and a half hogs are raised and taken to market each year. It’s the largest pig farm in the western United States, and every day those hogs produce a million gallons of manure.

Three years ago, a Provo firm called Alpental Energy Partners, which finances alternative-energy projects, noticed the potential of the massive farm. (How could one not notice? The odor from the facility can be smelled for miles.) Alpental built anaerobic digesters that turn all that poop into electricity that powers more than 3,000 homes in a town hundreds of miles away.  (Here’s a great local TV report on the project.)

Such a project could easily provide the same benefits, but for drivers of cars, trucks and SUVs that run on natural gas, which also happens to be a “feedstock” for alcohol fuels that can run in flex-fuel vehicles.

Paul Stephan, managing partner at Alpental, said various incentives, including carbon credits and investment tax credits, which enhanced the revenue stream from the pig project. But those were complicated to secure. “If we didn’t have one of those [revenue] attributes, it would probably be more profitable for us to sell it as transportation fuel,” he said. “I think if I was going to go look at doing another project in the United States off of pig manure and methane, I’d probably sell it as transportation fuel.”

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Natural gas touted as the next alternative fuel in San Diego

“I’m not proud of it, but I’m a reformed diesel guy,” said Andrew Douglas, senior VP of sales and marketing at Agility Fuel Systems of Santa Ana, California.

Douglas was among the dozens of attendees at the L-NGV2015 conference in San Diego last week, a gathering mostly aimed at the compressed natural gas (CNG) and liquefied natural gas (LNG) industry. Agility retrofits tractor-trailers to run on CNG, and has produced 25,000 such vehicles since it was founded in 1996.

cylinder_stackMore and more companies are converting to CNG: In the early years the customers were mostly city transit buses and garbage trucks, but the shipping sector is taking advantage of systems that can stash more fuel on board and propel the big trucks longer distances. On the company’s new Saddle Creek Gen 5 model, four cylinders of CNG totaling 160-gallon diesel equivalent are stacked up behind the driver’s cab. The setup weighs more than 3,000 pounds, but it can travel 750 to 850 miles without refueling.

But the industry has challenges: Douglas said the goal is to get 10 percent of the nation’s heavy-duty trucks running on natural gas by 2020. The cost of such vehicles is steep, although Agility says companies can make that money back within 2 years.

“Eighty years ago there was a transition to an alternative fuel going — diesel,” he told a conference room of about 40 people. The industry is seeing a migration to a “new alternative fuel,” natural gas. Just as decades ago, price is the motivator.

Diesel is averaging about $2.86 a gallon, compared with $2.11 for CNG.

“I think we’re seeing an evolution to a cheaper fuel source, in this case, natural gas,” he said.

Later, showing off one of Agility’s behind-the-cab systems on a Frito-Lay truck in a cavernous room of the San Diego Convention Center, Douglas talked about being a trucking guy at heart, trying to convince trucking companies to switch away from a fuel that has been synonymous with big trucks for decades.

“Sometimes you have moments of doubt. And whenever I go there, I think to myself, No matter what the obstacles are, it’s about the price of fuel — or the differential (between NG and diesel). That’s what’s going to drive this.”

CNG truck22Fuel Freedom Foundation co-founder and chairman Yossie Hollander presented on the same panel as Douglas and Greg Roche from Applied LNG of Westlake Village, California. Hollander praised CNG and LNG, saying it’s going to be a “sustainable business for a long time.” But he reminded the panelists that the market for light-duty vehicles is 3.5 times bigger than the market for larger vehicles. “That’s the larger market here.”

One solution is to make liquid alcohol fuels, like ethanol and methanol, out of natural gas. Those fuels can run in many of the vehicles Americans drive already, without the need to buy a new vehicle or undertake an expensive conversion.

Fuel Freedom seeks to open the fuels market so all fuels, including CNG, LNG and alcohol fuels, are available to the consumer, not just gasoline. “We don’t have favorites,” Hollander said. “What we want is a supermarket.”

L-NGV conf banner

Natural gas center of attention at L-NGV2015

We’re headed to the L-NGV2015 conference in San Diego, where natural gas will be in the spotlight.

Natural gas has been getting a lot of attention lately, because the United States is producing so much of it. As Jude Clemente wrote in Forbes earlier this month:

U.S. proven natural gas reserves continue to soar to record highs. We now have some 360 Tcf [trillion cubic feet] of proven gas in the ground, recoverable under current market conditions, experiencing increases of 5-8% per year. Driven by the Marcellus shale play in the Appalachian Basin, Pennsylvania and West Virginia have registered the largest gains, with both state reserve totals more than quadrupling since 2010. In fact, Pennsylvania and West Virginia have accounted for about 60% of new U.S. gas reserves since 2008, although mighty Texas continues to plug along, upping its reserves by 20% since then.

The surge has occurred despite a steady decline in prices. Henry Hub spot prices are about $2.80 per million British Thermal Units, down from an average of $8.86 per MMBtu in 2008, as Clemente notes.

NG is running about 70 percent lower in price than the equivalent amount of oil, even with oil’s precipitous drop from last summer. That’s what makes natural gas an attractive alternative for transportation fuel.

Much of the discussion at L-NGV2015 will center on compressed natural gas (CNG) and liquefied natural gas (LNG), which is being used in municipal fleets (official vehicles and transit buses) and industrial trucking (delivery, garbage-hauling) around the country. These fuels not only cost less than gasoline and diesel, they burn much cleaner, which is better for air quality and the environment.

Natural gas can also be converted into alcohol fuels to run in the cars, trucks and SUVs driven by the rest of us.

NG is “very, very cheap, and we need to take advantage of that,” Fuel Freedom co-founder and chairman Yossie Hollander said recently during a discussion about energy in Israel. “The greatest opportunity is a transportation one. Using a natural-gas product, whether compressed natural gas, liquid natural gas, ethanol from natural gas – you can make ethanol from natural gas, and another fuel called methanol – if we use all of them in transportation to replace oil, this will replace a $3 trillion industry around the world.”

We’ll be presenting more about this topic at L-NGV2015. Check out our Twitter feed (@fuelfreedomnow) for regular updates.

propane school bus

Propane gains as an alternative for vehicles

School bus drivers in Macon, Georgia, have noticed one advantage to their new propane-driven school buses. “The children are much quieter,” says bus driver Esther Muhammad. “That’s because the engines don’t make as much noise. The kids can actually hear themselves talk.”

Quieter engines are only one of the advantages school districts around the country are finding as they convert their fleets to propane. Lower fuel costs, lower maintenance charges and longer engine life are among the advantages. So are lower emissions and compliance with the 1995 Clean Air Act. A propane engine produces 25 percent less carbon emissions, 66,000 pounds less nitrous oxide and 2,700 pounds less particulate matter over the course of a year compared with petroleum. “Because of these new propane buses, children will no longer be exposed to diesel fumes when boarding or disembarking our buses,” says Peter Crossan, fleet and compliance manger of the Boston Public Schools, which just put in an order for 86 Blue Bird Propane Vision buses, manufactured in Georgia.

The move toward propane — which is also called “autogas” — is picking up steam. Propane buses now run in 19 of the top 25 school bus markets, including New York, Chicago, Houston, Philadelphia, Miami and Phoenix. In the Mesa County Valley district of Grand Junction, Colorado. Administrators recently signed a five-year, $30 million contract that includes 122 propane buses, according to The New York Times. Altogether there are now 143,000 propane vehicles on the road in the U.S.

Propane is a gas that is easily stored as a liquid under only 160 pounds of pressure. It is a by-product of both gas and oil production, with 65 percent of our propane coming from natural gas refining and the remaining 35 percent from oil. “We have enough natural gas to last us 200 years,” says Stuart Weidie, president of Alliance Autogas. “We’re not going to run out of propane.”

Propane has been used to run cars since 1912 and is still the third most used fuel, behind gasoline and diesel. Because it’s a little more difficult to handle than gasoline and has only 85 percent of the energy content, however, its use in standard automobiles has been limited. Instead, propane is employed mainly for home heating in rural areas where gas pipelines to not extend, and for laundry dryers, water heaters, backyard barbecues and portable stoves. There are about 10,000 filling stations around the country now. Propane sells for $1 per gallon less than gasoline, which gives it a price advantage.

Right now propane is starting to be used for medium-, heavy-duty and fleet vehicles such as garbage trucks, police cars, taxis, city buses and emergency vehicles. There are 450,000 forklifts running on propane, since their exhausts are easier to tolerate in enclosed spaces. The 2016 Ford F-150 light-duty truck will be suited for propane conversion, making it the eighth Ford model to be so outfitted. However, conversion of your automobile to propane can cost from $5,000 to 10,000 and is not for the faint of heart. A lot of computer adjustments are necessary on late-model cars, and they must be outfitted with an extra gas tank. Usually cars run on both gasoline and propane, since it isn’t always easy to find a propane filling station. The payoff is $1 per gallon saved on gasoline, but since most cars consume only about 500 gallons per year, that’s a long payback. Fleet vehicles like police cars that may log 50,000 miles a year, however, become economical. United Parcel Service has 750 vehicles running on propane.

Around the country, towns and cities are starting to buy into propane. The city council in Roanoke, Virginia, has just voted to convert part of the city’s police fleet to propane, as has Springfield, Illinois. ConocoPhillips will deploy more than 300 of its vehicles to “autogas” over the next five years. The Suburban Mobility Authority for Regional Transportation (SMART) in southeast Michigan is converting 61 “connector buses” that provide door-to-door service for the elderly and handicapped.

The movement has reached the point where STN Expo will sponsor a one-day “Green Bus Summit” in Reno on July 29th. The participants will discuss current and pending regulatory issues and funding opportunities for propane conversions.

In moving toward propane power, the United States is actually trailing several countries that have shifted to propane because of difficulties in acquiring imported oil. South Korea, Poland, Turkey and India all run more than 50 percent of their vehicles on propane. All these countries converted after being hit hard by the oil crisis of the 1970s. In the United States, however, the price of gasoline of diesel fuel remained low enough that we didn’t have to pursue alternatives. Now that is changing.

The propane industry foresees a strategy in which the increasing use of propane by fleet vehicles and light- and medium-duty delivery trucks will eventually lead to the construction of more propane filling stations. This will give motorists enough confidence to start buying propane-enabled vehicles or convert their cars from gasoline. “That’s the way it’s happened in Europe,” says Stuart Weidie of Autogas Alliance. “I think you’re going to see it happen here as well.”

(Photo credit: Roush Cleantech)

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Utah governor: Alt-fuels have to stand on their own

Utah Gov. Gary Herbert believes in an “all of the above” approach to energy. That means renewable fuels have to stand on their own merits and compete against established transportation fuels like oil and natural gas.

“We don’t think government should pick winners and losers; we think consumers should pick winners and losers,” Herbert said Thursday at the fourth annual Governor’s Utah Energy Development Summit in Salt Lake City. “The competition between the greener sources of energy and the traditional sources of energy are acute and demanding. What I see is, because of the competition between the various sources of energy, those that are greener and cleaner are having to find ways to compete and be economic.”

That also means that there’s pressure on the oil and gas industry, too, to get cleaner. Herbert, a Republican, said energy must achieve three objectives: sustainability, affordability and less dirty.

“There is a raised sensitivity in our society to make sure we’re responsible stewards of our home, the Earth.”

Although he announced no new initiatives for cleaner energy, he touted a new state report showing the strong impact the energy sector has on the state economy. Oil, natural gas, coal and other natural resources contribute $21 billion a year in activity for the state, the report said.

Herbert said the biggest challenge he faces is how to make sure there’s sufficient infrastructure, including enough energy — coal and natural gas for electricity generation, cost-effective gasoline and diesel for drivers — to meet the demands of a growing state.

“If anything keeps me awake at night, it’s, ‘How can I handle the challenges of growth? Well, energy is a big part of that also. Part of the challenge we have is planning and anticipating for the growth pressures that surely are going to happen, whether we like it or not. I actually think growth is a healthy thing.”

Later, during an onstage discussion with Gov. John Hickenlooper of Colorado, Herbert maintained that working with the private sector has helped Utah clean up its notoriously dirty air, which accumulates along the Wasatch Front in wintertime, an affliction known as “inversions.”

“We’ve reduced the pollution levels on the Wasatch Front by 87 percent,” he said. Some critics “it’s dirtier now than ever … well, it’s not.”

After a joke from moderator Jack Gerard of the American Petroleum Institute about Hickenlooper, a Democrat, possibly being a Democratic contender for vice president, Herbert said energy policy shouldn’t be a partisan issue in the 2016 campaign.

“The focus should be on the economy, having a healthy economy. We’re not there yet in this country. This is the longest, driest recovery period we’ve had since the Great Depression. Something’s not working right. … If your focus is on the economy, it’s got to be at least part of the focus on energy.”

“We have an opportunity to have a sustainability where we don’t have to risk national security, or our economic well-being, because the people we have to deal with [importing oil] don’t like us.”

(Photo: Utah Office of Energy)

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Economist touts natural gas at Utah energy summit

The natural-gas industry and people who promote gas as a cleaner fuel alternative need to “manage” environmental concerns about fracking, a key economist said at the fourth annual Governor’s Utah Energy Development Summit.

Dan North, chief economist for the credit-insurance company Euler Hermes North America, said Wednesday that despite the abundance and cheapness of natural gas compared with oil, only 3 percent of natural gas is used in transportation.

He said there are 17 million passenger vehicles around the world that run on natural gas (primarily CNG and LNG), but only 100,000 such vehicles in the United States. “This is an enormous opportunity going forward,” North said. “It’s terrific that we have this cheap natural gas.”

But, he added, “WE do have to manage one thing, which is the environmental concerns about fracking.” After listing all the countries, states and municipalities that have banned the oil-and-gas drilling technique also known as hydraulic fracturing, North said: “Environmental concerns have not been addressed well enough.”

4 Non Blondes, The King and I and alternative fuels

4-non-blondes-650-430“Twenty-five years [lots more years for me] and my life is still
Trying to get up that great big hill of hope
For a destination”

Combine the lyrics from 4 Non Blondes with the personal frustration suggested by the “it’s a puzzlement” comment from the King of Siam in “The King and I,” expressed when he was perplexed by a changing world, and you will understand why many are confused by three relatively recent actions that limit or impede the growth of alternative fuels.

Most advocates of consumer choice at the pump and the end of Big Oil’s near-monopoly concerning transportation fuel praised the president’s State of the Union address a couple of years ago. He proposed that the nation wean itself off of oil. Wow, some fuel choice advocates were thrilled, almost orgiastic. Just think, in a couple of years customers might search for fuel stations selling a range of lower-cost alternative fuels, instead of only gasoline. Environmentalists welcomed the president’s comments. Less pollution and fewer GHG emissions! Most economists were pleased. They saw more jobs and further GNP growth. Servicemen were happy. They would be asked to fight fewer wars for oil.

In this context, there was hope that the cheaper cost of oil, and its derivative, gasoline — both of which are now rising in cost — juxtaposed with the regulations resulting from the BP Deepwater Horizon oil spill, Shell’s failure to use its original drilling permit to drill successfully and the availability of less expensive competitive fuels, would end the prospect of drilling in the pristine Arctic Circle off of Alaska’s coast. It would be just too costly. Good news! We can dream, can’t we!?

Similarly, some of my colleagues and friends who support fuel choice and a better shake for consumers than gasoline (concerning costs and GHG emissions), were hoping that improved technology, lower prices, and inventions like Elon Musk’s just-announced solar storage unit, could soon generate an increased ability for solar energy to power many coal-fired utilities, homes and even vehicles. In the aggregate, the U.S. would produce significantly fewer emissions and pollutants. What a welcome, possible, short-term happening! Musk for president!

The increased popularity of battery electric vehicles (BEVs) from Tesla (among those who can afford them) and the emergence of cheaper battery-powered vehicles from Detroit have also lent hope to those who are fuel agnostic or favor a long-term, robust renewable fuel market and more consumer choices at the pump. While electric cars offer a vision of the future, their broad acceptance by the public depends on design and technology improvements to both end the fear of running out of battery power while on the road, and provide more internal space — both at costs most Americans can afford. Both problems seem to be on the way to resolution, based on the pronouncements from Tesla and Detroit. We can only hope!

But despite the optimism gene internal to most Americans, the great “big hill of hope” has recently become even bigger to climb. While alternative fuel advocates remain relatively quiet and often unable to speak with one effective voice, federal and state policies and regulations have been changed to limit the ability of alternative fuels to secure significant market penetration. Despite large subsidies to the oil industry, neither the administration nor Congress has been willing to seriously try to weaken the ability of Big Oil to restrict alternative fuel sales at local gas stations. Indeed, several attempts to enact open fuels legislation have failed to even get out of Congressional committees.

Although the country seems awash in oil, just this week, the president gave conditional approval to Shell to drill in the Chukchi Sea off of Alaska, despite the company’s mismanagement of earlier attempts to do the same, and despite the objections of many environmental groups and Alaskan natives. Both industry and critics of the permits note that drilling will be risky, given very high waves, icy seas, strong winds, bitter cold weather and the need to protect the routes of migration and feeding areas for marine mammals. As The New York Times indicated this week, the permit is a “major victory for the petroleum industry and a devastating blow to environmentalists,” and for consumers, I would add. Estimates of the oil in the Chukchi Sea range all over the place. However, if oil companies are able to overcome high drilling costs and secure a significant flow of oil, even for a relatively short time, they will increase their ability to limit sales of alternative fuels among their franchises and through differential pricing, the sales of alternative fuels by independent retailers.

It doesn’t get any better. Just as opportunities to secure and store solar power — power that could be used to power homes, autos and utilities — seem almost ready for prime time, many of America’s utility companies — another great supporter of competition (excuse the cynicism) — have begun to seek legislative relief to impede solar’s growth. Their argument deserves discussion. If solar power grows, it could well be at the expense of improvements in the grid. But the use of their political power with state legislatures to seek ad-hoc remedies, different in each state, is not in the public interest. Legislative efforts to lower the price solar users secure from utilities when they put excess power on the grid may or may not be good policy or practice. Shouldn’t we know before such policies are enacted by states? Similarly, putting up regulatory impediments impeding the sale of solar units, including storage units, would likely really hurt what is now a risky start-up industry. The net result of poorly conceived state-by-state initiatives to protect the utility industry would be to limit the capacity of solar energy to substitute for coal in powering utilities and to reduce options to produce cleaner electric cars with almost zero GHG emissions. Similarly, restricting the storage of solar energy would end up slowing down the development of another alternative fuel — one based on solar-derived power.

Finally, the continuing efforts by several states to change Tesla’s business model have and will reduce competition for fuels and the use of electricity as a fuel. Why? Several state legislatures, under political pressure from auto dealers, have banned its direct-sales approach. If Tesla wants to sell its electric-powered cars in Texas, for example, it must sell through an auto dealer. Remember, some Texans recently wanted to secede from the union in order to free the state from “federal dictatorship” and, ostensibly, extend personal freedom and its corollary market competition! (I thought of signing the petition that was floating around to let Texas go.) Passing laws to protect one kind of business from another is un-American…almost like sending the Texas National Guard to monitor the training of U.S. soldiers to be sure they are not digging tunnels under Walmart and engaging in other nefarious activities contrary to the interest of the good citizens of Texas. Davy Crockett would be offended. The bottom line is that Texas and other states with similar regulations are limiting fuel choice by placing a Berlin Wall around their boundaries and not letting Tesla and its electric vehicles in. Ah. Freedom!

So, supporters have some big hills to climb and sometimes it may be a puzzlement to the climbers. But, as the singer Billy Ocean once vocalized, “When the going gets tough, the tough get going.” Building a coalition among the willing supporters of alternative fuels should not be difficult. They share goals concerning the need for increased consumer choices and the value of open fuel markets. If they reach out to include, rather than define boundaries to exclude; if they acknowledge that absolute wisdom concerning strategies does not exist; if they are willing to work toward consensus and bring their respective constituencies along with them; and if they recognize that time is of the essence concerning achievement of key public interest and quality of American life objectives, following Robert Frost, they will travel the road less traveled, and will likely soon begin to see light at the end of their travails and travels.

 

Photo Credit: Getty Images

Canada, oh Canada, will your tar-sands oil help or hurt US fuel objectives?

Tar Pit #3I just finished a recent Forbes article by Jude Clemente, “Canada is North America’s Great Oil Security Blanket.” Gosh, it’s good to know that Canada can supply 10 million barrels a day for the next 675 years. Just think of the biblical proportions of Canada’s reserves. Methuselah lived only 969 years! I feel safer already.

I am (fairly) comfortable that the French won’t take over Quebec and act out residual imperial desires and that the British won’t try to recapture their former colonies. So, sleep easy and leave a note in the morning to your children, their children and their children’s children, ad nauseam. Future generations of U.S. residents won’t have to worry about the definitions of peak oil or real oil shortages, and we will always have fossil fuel in our future. Our very valued friend to the north can and will produce whatever oil the U.S. requires for centuries.

Aren’t we lucky?! Our decedents will be able to depend on what the author calls “ethical Canadian oil.” Why? He argues that “Canada is a democracy and a free market sought by investors that desire less risk.” Wow…freedom to choose and capitalism; John Rawls and Adam Smith. I am crying with joy. But my emotional high lasts for only a few minutes.

Do we need to substitute Middle East imports for Canadian imports, even though Canada is a trusted ally? Are Canadian oil reserves a real, long-term, strategic benefit to the U.S. and are they ethical (a funny term used in the context of big oil’s historical behavior, speculation with respect to investment in oil and the perils of surface mining)? According to many analysts, oil from tar sands is among the most polluting and GHG emission causing oil in the ground. Aren’t you happy? In light of reserves, we can tether ourselves to fossil fuels for hundreds of years and a range of environmental problems, including, but not limited to, air pollution, landscape destruction, toxic water resulting from tailing ponds and excessive water use. Many scientists warn of increased rates of cancer and other diseases. While the tar sand industry, to its credit, has tried to limit the problems, according to the Scientific American article by David Biello, “tar sands may be among the least climate- [and health-] friendly oil produced at present.” By the way, conversion to gasoline will likely result in higher prices for the least advantaged among us, not exactly Rawlsian ethics.

We are in a difficult position, policy wise. Sure, we can establish long-term institutional relationships with Canada and its provinces that will assure U.S. on-demand access for Canadian oil sands. To do this would be comforting to vested interests and some leaders who still believe that oil is the key to America’s economic future. But business, academic, nonprofit, community as well as government leaders are increasingly searching for alternatives that will be better for the economy, the environment and national security. Weaning the U.S. off of oil, as the president has sought, will require, at least for the transportation sector, substituting a “drill, baby, drill” mentality for a strategy that includes increased use of alternative fuels, open fuel markets and flex-fuel vehicles.

Alternative fuels are not perfect, but for the most part, they are much better than gasoline in light of national energy and fuel objectives. Many replacement fuels, like natural gas and natural gas-based ethanol, cannot compete easily because of government regulations (e.g., RFS, etc.) and oil company efforts, despite large subsidies to limit their purchase by consumers (e.g., lobbying against open competitive markets, franchise agreements, price setting, etc.). Most alternatives appear to have sufficient reserves to provide the consumer with cheaper and better fuel than gasoline for a long time. For example, natural gas seems to have more than a proven 100-year supply, and that’s without further exploration.

The policy framework is easier to define than implement given America’s interest group politics. It would go something like this: As soon as they are ready for prime time and reflect competitive prices, design and miles per tank, increasing numbers of electric and perhaps hydrogen-fueled cars will appeal to a much wider band of U.S. consumers than they do now. The nation should support initiatives to improve marketability of both thorough research and development. Until then, the good or the better should not be frustrated by the perfect or an unreal idealization of the perfect. Please remember that even electric cars spew greenhouse gas emissions when they are powered by utilities that are fired up by coal, and that the most immediately available source of hydrogen-based fuel is natural gas. Currently, there are no defined predictable supply chains for hydrogen fuel. Perhaps, more important, neither electricity nor hydrogen fuel cells can be used in the 300,000,000 existing cars and their internal combustion engines.

So what’s a country to do, particularly one like the U.S., which is assumedly interested in reducing GHG emissions, protecting the environment, growing the economy and decreasing dependence on foreign oil? Paraphrasing, the poet Robert Frost, let’s take the road less traveled. Let’s develop and implement a strategic, alternative-fuels approach that incorporates expanding consumer choices regarding corn and natural gas-based ethanol, a range of bio fuels and more electric and hydrogen fuel cars. Let’s match alternative fuels with initiatives to increase Detroit’s production of new FFVs and the capacity (through software adjustments and conversion kits) for consumers to convert their existing cars to FFVs. To succeed, we should take a collective Alka-Seltzer and build a diverse strong fuels coalition that will encourage the U.S. to develop a comprehensive, alternative fuel strategy. The coalition, once formed, should place its bet on faith in the public interest and good analysis to gain citizen and congressional support. I bet the nation is ready for success — just remember how Linus of the famous Peanuts comic strip ultimately gave up his security blanket.

 

Photo Credit: http://priceofoil.org/

Oil, petrodollars and war. Does the U.S. need to permanently police the Middle East?

Soldiers Conduct Combined Clearing OperationThe U.S. interest in going to war or supporting war efforts on behalf of our “democratic” allies like Iraq, Qatar, the United Arab Emirates, Egypt and Saudi Arabia is not based, as said by some political leaders, on converting those countries to democracies or providing their citizens with increased freedom. Neither is it, primarily, aimed at reducing terrorism possibilities here at home. For the most part, it is instead aimed at protecting the U.S. and our allies’ interests in oil and stability in some of the most corrupt, autocratic oil-producing states in the Middle East.

Surely, recent history indicates that use of patriotic and compassionate language reflecting America’s historical ethos to justify our actions often wins initial public support for “Operation This” or “Operation That,” but as conflicts drag on and U.S. soldiers, sailors or marines suffer physical and emotional wounds, the gap between articulated justifications and reality becomes clearer to the public. When the fog of war or near-wars lifts a bit, support for U.S. military activity, often becomes muted among the citizenry.

Concern for protecting oil resources, production and distribution has been, and is currently, a paramount objective of the U.S. The U.S. and its allies have helped overturn governments, remake global maps, redefine national or tribal borders, create new nation states and abandon old ones and dispatch national leaders. Contrary to Gen. Powell’s admonition, we sometimes have failed to own the disastrous results of the wars that we have fought (Libya, Iraq, etc.). Based on our own desire for oil, we have tolerated sometimes exotic and many times terrible behavior among private oligarchs and despotic rulers, which, regrettably, often, escapes coverage in text books and in the media. Clearly, the link between our large-scale addiction to oil and its negative political, social and economic consequences in several Middle Eastern countries lacks sustained attention in our public policy dialogue.

The importance of oil and the U.S. willingness to go to war or engage in covert activities to protect it has been intensified by the relationship between petrodollars and the U.S. economy. Since 1944 at The Bretton Woods Conference, the global reserve currency has been the good old U.S. dollar. First, gold was the back-up to the dollar. As reported by the Huffington Post, the dollar was pegged at $35 to an ounce of gold and was freely exchangeable. “But by 1971, convertibility of gold was no longer viable as America’s gold resources had drained away. Instead, the dollar became a pure fiat currency (decoupled from any physical store of value) until the petrodollar agreement was concluded by President Nixon in 1973. The essence of the deal was that the U.S. would agree to military sales and defense of Saudi Arabia in return for all oil trade being denominated in U.S. dollars.” We as a nation committed to go to war in return for ostensible economic benefits and access to oil.

Was it good for the American economy? Sure, at least in the short run. The dollar became the only currency for energy trading. All foreign governments desiring to secure and trade for oil had to hold U.S. currency. The dollar was easily converted into barrels of oil. As the Huffington Post indicated, the dollar costs for oil flowed back into the U.S. financial system. What a deal!

Recently, lower U.S. interest rates, a troubled, slow-growing U.S. economy and the rise of oil-shale production in the U.S. has muted the almost-absolute, four-decade direct relationship between the dollar, and other nations’ need for oil and or export of oil. Instead of “next year in Jerusalem,” some nations like China, Russia and even France and Germany have indicated next year either a return to gold or the use of their own currencies as a peg to trading. However, the petrodollar still plays an important role in the exchange of oil in the global trading system. Its demise, as Mark Twain suggested about reports of his death, is, if not greatly, (at least) somewhat exaggerated. I suspect the petrodollar will be with us for some time.

Our nation’s willingness to militarize support of countries that depart radically from supposed U.S. norms of global behavior (encoded in the U.N Charter and other international agreements), because of their oil resources and the post-World War II emergence of dollar-based trading in oil and its benefits, has muddled U.S. foreign policy. Critics have questioned our not-so benign initiatives in countries throughout the Middle East and, as a result, they have raised issues concerning supposed American exceptionalism.

We have more than just a Hobson choice (that is, there is no real choice at all) if we choose to break from oil dependency. Increased U.S. oil production to secure profits and reach demand will still require both importing and exporting oil. This fact, coupled with the desire to keep the dollar the key oil-trading denomination, will sustain U.S. entanglements and the probability that we will continue to play oil policemen in many places.

A different future could be achieved if we took the president seriously and tried to “wean” ourselves off of oil. Paraphrasing liberally and adding my own meaning, Léon Blum, former French leader, “Life doesn’t give itself to one [nation] who tries to keep all of its advantages at once…morality may consist solely in the courage of making a choice [between energy sources and fuels].” The U.S. has not had the political guts yet to really focus on converting from an oil- and gas-based economy and social structure to an alternative energy and fuel-based one (e.g., natural gas, ethanol, methanol, biofuels, electricity and hydro fuels). Such a strategy would allow consumers greater freedom at the pump. It would be fuel agnostic and let consumers pick winners and losers based on cost, and impact on the quality of their lives and the nation’s life. We know that if we do make alternative energy and fuel choices now, based on equity, efficiency, GHG emissions and pollution reduction criteria, we can secure important environmental, economic, social and security benefits. To fail to act is an act itself, one that will harm the nation’s efforts to become the country on the shining hill and pave the way for other countries and itself to access a better, more peaceful future for present children and their children.

 

Photo Credit: www.defense.gov