R-Squared Energy Blog

Pure Energy

Which Way is the Wind Blowing Today?

Today, a story from CNN caught my eye:

Here comes $100 oil, and $3 gas

“Three dollar gasoline in this market is unavoidable,” said Stephen Schork, publisher of the industry newsletter the Schork Report. “At this rate, we’re going to see $4 a gallon.”

Norrish said it was fundamentals, not speculative investment money, driving oil prices – strong demand, falling inventories, no production increases from OPEC.

“The underlying market balance will continue to tighten, and if the geopolitical situation worsens we’ll get to $100 very quickly,” he said.

Barakat said there are now more traders betting oil will rise to $100 than there were betting it would cross $90 back when crude was still in the $80s.

And Schork noted the sheer amount of oil contracts trading, and the fact that OPEC tried to cool prices back in September with a production increase, did nothing but send prices higher.

“There’s a tremendous amount of bull energy in this market,” he said. ‘There’s no reason we can’t get to $100.”

The funny thing is that last month, they ran this one:

Why $80 oil won’t mean $3 gas

“If $80 a barrel holds, then it will trickle down to the pump,” said Sal Gilbertie, an energy trader at Fimat in New York. “But I have no faith in it staying up there.”

Gilbertie said the end of hurricane season should bring oil prices down, and also agreed that, with the end of summer driving season, the demand just isn’t there to push gasoline processing much higher.

“We have no specific, identifiable shortages,” he said. “The product is out there.”

One wonders if next month they will tell us that $60 oil is inevitable. I guess Yogi Berra was right: “It’s tough to make predictions, especially about the future.”

It is just amazing to me that market sentiment is so fickle. The fundamentals didn’t change that much in the past month. But it seems like once a critical mass of talking heads repeats a point, it becomes conventional wisdom. A month ago, oil was overpriced at $80. Today, $100 is all but certain. Again, this is why I invest based on the fundamentals, and ignore this short-term whiplash.

October 26, 2007 Posted by | CNN, gas prices, oil prices | 9 Comments

Which Way is the Wind Blowing Today?

Today, a story from CNN caught my eye:

Here comes $100 oil, and $3 gas

“Three dollar gasoline in this market is unavoidable,” said Stephen Schork, publisher of the industry newsletter the Schork Report. “At this rate, we’re going to see $4 a gallon.”

Norrish said it was fundamentals, not speculative investment money, driving oil prices – strong demand, falling inventories, no production increases from OPEC.

“The underlying market balance will continue to tighten, and if the geopolitical situation worsens we’ll get to $100 very quickly,” he said.

Barakat said there are now more traders betting oil will rise to $100 than there were betting it would cross $90 back when crude was still in the $80s.

And Schork noted the sheer amount of oil contracts trading, and the fact that OPEC tried to cool prices back in September with a production increase, did nothing but send prices higher.

“There’s a tremendous amount of bull energy in this market,” he said. ‘There’s no reason we can’t get to $100.”

The funny thing is that last month, they ran this one:

Why $80 oil won’t mean $3 gas

“If $80 a barrel holds, then it will trickle down to the pump,” said Sal Gilbertie, an energy trader at Fimat in New York. “But I have no faith in it staying up there.”

Gilbertie said the end of hurricane season should bring oil prices down, and also agreed that, with the end of summer driving season, the demand just isn’t there to push gasoline processing much higher.

“We have no specific, identifiable shortages,” he said. “The product is out there.”

One wonders if next month they will tell us that $60 oil is inevitable. I guess Yogi Berra was right: “It’s tough to make predictions, especially about the future.”

It is just amazing to me that market sentiment is so fickle. The fundamentals didn’t change that much in the past month. But it seems like once a critical mass of talking heads repeats a point, it becomes conventional wisdom. A month ago, oil was overpriced at $80. Today, $100 is all but certain. Again, this is why I invest based on the fundamentals, and ignore this short-term whiplash.

October 26, 2007 Posted by | CNN, gas prices, oil prices | Comments Off on Which Way is the Wind Blowing Today?

What’s On Tap

Update

Four essays, plus this one, finished off today:

The Problem With Biobutanol

This Week in Petroleum 6-13-07

Letter to CNN on Inaccuracies in “We Were Warned”

The Problem with CAFE

With that, I am on hiatus. I may come back and update TWIP on Thursday. Cheers, Robert

Taking a Break

I received a welcome surprise yesterday, and found out that I get to fly home this Friday to see my family. I have been away from them for 5 months (so the kids could finish out school) but on Friday I go home to retrieve them for their move to Scotland. Thus ends the most difficult 5-month period of my life. At that time, two things will happen.

First, I plan to take a break from writing. I have 5 months of time that I have lost, and I am going to try to get some of it back by sacrificing on the writing. If I wake up early and find that I have a few minutes, I may post a short essay. But it will be a while before I post another long one, or engage in any sort of extensive debate.

Second, I am going to take my e-mail address offline. Presently, it is a rare day that I don’t have over 100 e-mails in my inbox. Of those, typically 30-50 require responses of some sort. I have been able to manage this while living alone, but this isn’t going to be feasible once I am reunited with my family. If you already have my e-mail address, feel free to contact me. If you do not, but would like some information, feel free to post a query following a post. There is a good chance that someone will address it. And I do get an e-mail every time someone posts in a thread (no, that’s not part of the 100 e-mails) so if something really needs to be addressed I will do so. I may also put together a FAQ to cover some of the common themes in the e-mails I receive. Things like “What do you think about bio-butanol?”

In the Pipeline: Butanol, TWIP, CNN, and CAFE

I have 4 essays that I intend to finish prior to going on hiatus. First, as some of you know, I started to write an update on butanol a while back. I basically have all of the information pulled together, I just need to finish it. Second, I will write one more review of This Week in Petroleum. I think this week’s numbers will really give us an indication of the likelihood of more supply crunches. Third, I will post a letter I am writing to CNN challenging some of the errors contained in their “Out of Gas” series. Finally, I had started an essay on CAFE standards. I think I will publish that as a very short – maybe 2 or 3 paragraph – essay on just what I think is wrong with our approach there.

Additional Projects

I have been asked to contribute a chapter to a book on renewable energy that is being edited by a professor most people would immediately know. My chapter was to be on biodiesel, but I also requested and received approval to expand that to cover all renewable diesel. I will cover biodiesel, “green” diesel produced via hydtrotreating, and “green” diesel produced via biomass gasification and subsequent Fischer-Tropsch. I have sketched out an outline, but I need to fill in about 7,000 words of detail in the next 30 days.

Finally, I have recently been engaged with a group that has a very promising cellulosic ethanol technology. If it is what it appears to be (there are still some things I don’t know) then it would be the biggest leap in cellulosic ethanol technology since well before I was in graduate school. Bigger than Nancy Ho’s dual fermentation yeast. Big enough to demolish the economics of all the cellulosic ethanol plants currently being built. And I am not one given to hyperbole. I have placed an official inquiry with the corporate ethics department inside my company requesting clearance to assist on this project. I think it has incredible potential to make a contribution toward our energy needs. And I know that I have been very, very critical of ethanol here in the past, but that was because of the unsustainable nature of current ethanol practices, as well as loads of misinformation that was being pushed out there. My hope was to always see ethanol succeed, albeit it in a sustainable fashion. And I have always been willing to assist – and have done so many times over the years – in helping push promising projects forward.

June 12, 2007 Posted by | butanol, CAFE, CNN | Comments Off on What’s On Tap

What’s On Tap

Update

Four essays, plus this one, finished off today:

The Problem With Biobutanol

This Week in Petroleum 6-13-07

Letter to CNN on Inaccuracies in “We Were Warned”

The Problem with CAFE

With that, I am on hiatus. I may come back and update TWIP on Thursday. Cheers, Robert

Taking a Break

I received a welcome surprise yesterday, and found out that I get to fly home this Friday to see my family. I have been away from them for 5 months (so the kids could finish out school) but on Friday I go home to retrieve them for their move to Scotland. Thus ends the most difficult 5-month period of my life. At that time, two things will happen.

First, I plan to take a break from writing. I have 5 months of time that I have lost, and I am going to try to get some of it back by sacrificing on the writing. If I wake up early and find that I have a few minutes, I may post a short essay. But it will be a while before I post another long one, or engage in any sort of extensive debate.

Second, I am going to take my e-mail address offline. Presently, it is a rare day that I don’t have over 100 e-mails in my inbox. Of those, typically 30-50 require responses of some sort. I have been able to manage this while living alone, but this isn’t going to be feasible once I am reunited with my family. If you already have my e-mail address, feel free to contact me. If you do not, but would like some information, feel free to post a query following a post. There is a good chance that someone will address it. And I do get an e-mail every time someone posts in a thread (no, that’s not part of the 100 e-mails) so if something really needs to be addressed I will do so. I may also put together a FAQ to cover some of the common themes in the e-mails I receive. Things like “What do you think about bio-butanol?”

In the Pipeline: Butanol, TWIP, CNN, and CAFE

I have 4 essays that I intend to finish prior to going on hiatus. First, as some of you know, I started to write an update on butanol a while back. I basically have all of the information pulled together, I just need to finish it. Second, I will write one more review of This Week in Petroleum. I think this week’s numbers will really give us an indication of the likelihood of more supply crunches. Third, I will post a letter I am writing to CNN challenging some of the errors contained in their “Out of Gas” series. Finally, I had started an essay on CAFE standards. I think I will publish that as a very short – maybe 2 or 3 paragraph – essay on just what I think is wrong with our approach there.

Additional Projects

I have been asked to contribute a chapter to a book on renewable energy that is being edited by a professor most people would immediately know. My chapter was to be on biodiesel, but I also requested and received approval to expand that to cover all renewable diesel. I will cover biodiesel, “green” diesel produced via hydtrotreating, and “green” diesel produced via biomass gasification and subsequent Fischer-Tropsch. I have sketched out an outline, but I need to fill in about 7,000 words of detail in the next 30 days.

Finally, I have recently been engaged with a group that has a very promising cellulosic ethanol technology. If it is what it appears to be (there are still some things I don’t know) then it would be the biggest leap in cellulosic ethanol technology since well before I was in graduate school. Bigger than Nancy Ho’s dual fermentation yeast. Big enough to demolish the economics of all the cellulosic ethanol plants currently being built. And I am not one given to hyperbole. I have placed an official inquiry with the corporate ethics department inside my company requesting clearance to assist on this project. I think it has incredible potential to make a contribution toward our energy needs. And I know that I have been very, very critical of ethanol here in the past, but that was because of the unsustainable nature of current ethanol practices, as well as loads of misinformation that was being pushed out there. My hope was to always see ethanol succeed, albeit it in a sustainable fashion. And I have always been willing to assist – and have done so many times over the years – in helping push promising projects forward.

June 12, 2007 Posted by | butanol, CAFE, CNN | Comments Off on What’s On Tap

What’s On Tap

Update

Four essays, plus this one, finished off today:

The Problem With Biobutanol

This Week in Petroleum 6-13-07

Letter to CNN on Inaccuracies in “We Were Warned”

The Problem with CAFE

With that, I am on hiatus. I may come back and update TWIP on Thursday. Cheers, Robert

Taking a Break

I received a welcome surprise yesterday, and found out that I get to fly home this Friday to see my family. I have been away from them for 5 months (so the kids could finish out school) but on Friday I go home to retrieve them for their move to Scotland. Thus ends the most difficult 5-month period of my life. At that time, two things will happen.

First, I plan to take a break from writing. I have 5 months of time that I have lost, and I am going to try to get some of it back by sacrificing on the writing. If I wake up early and find that I have a few minutes, I may post a short essay. But it will be a while before I post another long one, or engage in any sort of extensive debate.

Second, I am going to take my e-mail address offline. Presently, it is a rare day that I don’t have over 100 e-mails in my inbox. Of those, typically 30-50 require responses of some sort. I have been able to manage this while living alone, but this isn’t going to be feasible once I am reunited with my family. If you already have my e-mail address, feel free to contact me. If you do not, but would like some information, feel free to post a query following a post. There is a good chance that someone will address it. And I do get an e-mail every time someone posts in a thread (no, that’s not part of the 100 e-mails) so if something really needs to be addressed I will do so. I may also put together a FAQ to cover some of the common themes in the e-mails I receive. Things like “What do you think about bio-butanol?”

In the Pipeline: Butanol, TWIP, CNN, and CAFE

I have 4 essays that I intend to finish prior to going on hiatus. First, as some of you know, I started to write an update on butanol a while back. I basically have all of the information pulled together, I just need to finish it. Second, I will write one more review of This Week in Petroleum. I think this week’s numbers will really give us an indication of the likelihood of more supply crunches. Third, I will post a letter I am writing to CNN challenging some of the errors contained in their “Out of Gas” series. Finally, I had started an essay on CAFE standards. I think I will publish that as a very short – maybe 2 or 3 paragraph – essay on just what I think is wrong with our approach there.

Additional Projects

I have been asked to contribute a chapter to a book on renewable energy that is being edited by a professor most people would immediately know. My chapter was to be on biodiesel, but I also requested and received approval to expand that to cover all renewable diesel. I will cover biodiesel, “green” diesel produced via hydtrotreating, and “green” diesel produced via biomass gasification and subsequent Fischer-Tropsch. I have sketched out an outline, but I need to fill in about 7,000 words of detail in the next 30 days.

Finally, I have recently been engaged with a group that has a very promising cellulosic ethanol technology. If it is what it appears to be (there are still some things I don’t know) then it would be the biggest leap in cellulosic ethanol technology since well before I was in graduate school. Bigger than Nancy Ho’s dual fermentation yeast. Big enough to demolish the economics of all the cellulosic ethanol plants currently being built. And I am not one given to hyperbole. I have placed an official inquiry with the corporate ethics department inside my company requesting clearance to assist on this project. I think it has incredible potential to make a contribution toward our energy needs. And I know that I have been very, very critical of ethanol here in the past, but that was because of the unsustainable nature of current ethanol practices, as well as loads of misinformation that was being pushed out there. My hope was to always see ethanol succeed, albeit it in a sustainable fashion. And I have always been willing to assist – and have done so many times over the years – in helping push promising projects forward.

June 12, 2007 Posted by | butanol, CAFE, CNN | 18 Comments

What’s On Tap

Update

Four essays, plus this one, finished off today:

The Problem With Biobutanol

This Week in Petroleum 6-13-07

Letter to CNN on Inaccuracies in “We Were Warned”

The Problem with CAFE

With that, I am on hiatus. I may come back and update TWIP on Thursday. Cheers, Robert

Taking a Break

I received a welcome surprise yesterday, and found out that I get to fly home this Friday to see my family. I have been away from them for 5 months (so the kids could finish out school) but on Friday I go home to retrieve them for their move to Scotland. Thus ends the most difficult 5-month period of my life. At that time, two things will happen.

First, I plan to take a break from writing. I have 5 months of time that I have lost, and I am going to try to get some of it back by sacrificing on the writing. If I wake up early and find that I have a few minutes, I may post a short essay. But it will be a while before I post another long one, or engage in any sort of extensive debate.

Second, I am going to take my e-mail address offline. Presently, it is a rare day that I don’t have over 100 e-mails in my inbox. Of those, typically 30-50 require responses of some sort. I have been able to manage this while living alone, but this isn’t going to be feasible once I am reunited with my family. If you already have my e-mail address, feel free to contact me. If you do not, but would like some information, feel free to post a query following a post. There is a good chance that someone will address it. And I do get an e-mail every time someone posts in a thread (no, that’s not part of the 100 e-mails) so if something really needs to be addressed I will do so. I may also put together a FAQ to cover some of the common themes in the e-mails I receive. Things like “What do you think about bio-butanol?”

In the Pipeline: Butanol, TWIP, CNN, and CAFE

I have 4 essays that I intend to finish prior to going on hiatus. First, as some of you know, I started to write an update on butanol a while back. I basically have all of the information pulled together, I just need to finish it. Second, I will write one more review of This Week in Petroleum. I think this week’s numbers will really give us an indication of the likelihood of more supply crunches. Third, I will post a letter I am writing to CNN challenging some of the errors contained in their “Out of Gas” series. Finally, I had started an essay on CAFE standards. I think I will publish that as a very short – maybe 2 or 3 paragraph – essay on just what I think is wrong with our approach there.

Additional Projects

I have been asked to contribute a chapter to a book on renewable energy that is being edited by a professor most people would immediately know. My chapter was to be on biodiesel, but I also requested and received approval to expand that to cover all renewable diesel. I will cover biodiesel, “green” diesel produced via hydtrotreating, and “green” diesel produced via biomass gasification and subsequent Fischer-Tropsch. I have sketched out an outline, but I need to fill in about 7,000 words of detail in the next 30 days.

Finally, I have recently been engaged with a group that has a very promising cellulosic ethanol technology. If it is what it appears to be (there are still some things I don’t know) then it would be the biggest leap in cellulosic ethanol technology since well before I was in graduate school. Bigger than Nancy Ho’s dual fermentation yeast. Big enough to demolish the economics of all the cellulosic ethanol plants currently being built. And I am not one given to hyperbole. I have placed an official inquiry with the corporate ethics department inside my company requesting clearance to assist on this project. I think it has incredible potential to make a contribution toward our energy needs. And I know that I have been very, very critical of ethanol here in the past, but that was because of the unsustainable nature of current ethanol practices, as well as loads of misinformation that was being pushed out there. My hope was to always see ethanol succeed, albeit it in a sustainable fashion. And I have always been willing to assist – and have done so many times over the years – in helping push promising projects forward.

June 12, 2007 Posted by | butanol, CAFE, CNN | Comments Off on What’s On Tap

What’s On Tap

Update

Four essays, plus this one, finished off today:

The Problem With Biobutanol

This Week in Petroleum 6-13-07

Letter to CNN on Ethanol Inaccuracies

The Problem with CAFE

With that, I am on hiatus. I may come back and update TWIP on Thursday. Cheers, Robert

Taking a Break

I received a welcome surprise yesterday, and found out that I get to fly home this Friday to see my family. I have been away from them for 5 months (so the kids could finish out school) but on Friday I go home to retrieve them for their move to Scotland. Thus ends the most difficult 5-month period of my life. At that time, two things will happen.

First, I plan to take a break from writing. I have 5 months of time that I have lost, and I am going to try to get some of it back by sacrificing on the writing. If I wake up early and find that I have a few minutes, I may post a short essay. But it will be a while before I post another long one, or engage in any sort of extensive debate.

Second, I am going to take my e-mail address offline. Presently, it is a rare day that I don’t have over 100 e-mails in my inbox. Of those, typically 30-50 require responses of some sort. I have been able to manage this while living alone, but this isn’t going to be feasible once I am reunited with my family. If you already have my e-mail address, feel free to contact me. If you do not, but would like some information, feel free to post a query following a post. There is a good chance that someone will address it. And I do get an e-mail every time someone posts in a thread (no, that’s part of the 100 e-mails) so if something really needs to be addressed I will do so. I may also put together a FAQ to cover some of the common themes in the e-mails I receive. Things like “What do you think about bio-butanol?”

In the Pipeline: Butanol, TWIP, CNN, and CAFE

I have 4 essays that I intend to finish prior to going on hiatus. First, as some of you know, I started to write an update on butanol a while back. I basically have all of the information pulled together, I just need to finish it. Second, I will write one more review of This Week in Petroleum. I think this week’s numbers will really give us an indication of the likelihood of more supply crunches. Third, I will post a letter I am writing to CNN challenging some of the misinformation contained in their “Out of Gas” series. Finally, I had started an essay on CAFE standards. I think I will publish that as a very short – maybe 2 paragraph – essay on just what I think is wrong with our approach there.

Additional Projects

I have been asked to contribute a chapter to a book on renewable energy that is being edited by a professor most people would immediately know. My chapter was to be on biodiesel, but I also requested and received approval to expand that to cover all renewable diesel. I will cover biodiesel, “green” diesel produced via hydtrotreating, and “green” diesel produced via biomass gasification and subsequent Fischer-Tropsch. I have sketched out an outline, but I need to fill in about 7,000 words of detail in the next 30 days.

Finally, I have recently been engaged with a group that has a very promising cellulosic ethanol technology. If it is what it appears to be (there are still some things I don’t know) then it would be the biggest leap in cellulosic ethanol technology since well before I was in graduate school. Bigger than Nancy Ho’s dual fermentation yeast. Big enough to demolish the economics of all the cellulosic ethanol plants currently being built. And I am not one given to hyperbole. I have placed an official inquiry with the corporate ethics department inside my company requesting clearance to assist on this project. I think it has incredible potential to make a contribution toward our energy needs. And I know that I have been very, very critical of ethanol here in the past, but that was because of the unsustainable nature of current ethanol practices, as well as loads of misinformation that was being pushed out there. My hope was to always see ethanol succeed, albeit it in a sustainable fashion. And I have always been willing to assist – and have done so many times over the years – in helping push promising projects forward.

June 12, 2007 Posted by | butanol, CAFE, CNN | 35 Comments

Letter to CNN on Inaccuracies

Dear CNN,

Over the weekend, I watched your special report We Were Warned: Out of Gas. I had previously seen the original version, “Out of Oil”, and wrote to CNN at that time pointing out a number of inaccuracies in the report. (It appears that the transcript still reflects the earlier version). Those inaccuracies remain in the newer version, so again I feel compelled to point them out. While I think the overall message of the report is essential, you give critics ammunition by not having all of your facts in order. So let’s look at some points.

First, we have Frank Sesno stating “Ethanol now accounts for nearly 40 percent of Brazil’s transportation fuel.” This is inaccurate. Diesel accounts for over 50% of transportation fuel. Gasoline provides 26%. Ethanol, by volume, comes in at 17%. But because ethanol has lower energy content, the actual energy contribution is around 10%.

Second, we have Sesno stating “Ethanol helped Brazil beat its oil addiction, and with sales and exports growing, its profitable, no more government money.” Considering that Brazil gets 90% of their energy from fossil fuels – including a large proportion from oil – I would hardly call that beating their oil addition. What they have done, as a result of aggressive domestic oil policies, is to use their own oil instead of depending on imported oil. This is possible because Brazil has an oil supply/demand picture far more favorable than does the United States. However, I would point out that the car that Sesno was driving around in has numerous parts that were derived from imported oil. So, Brazil still has an oil addition, just like the rest of the world.

Third, we have Sesno asking “So I’m thinking, why can’t I do this in America?” I can easily answer that question for him. The reason is that Brazil domestically produces over 3 barrels of oil per capita each year. This is almost enough to meet the demand, which is around 4 barrels per person. Other sources, including ethanol, are able to close that gap. The U.S., on the other hand, produces 11 barrels per person, but we use 27 barrels per person. The only way we can close that large gap is with imports. No way could we do it with ethanol, unless we drastically reduce that gap by reducing demand. We also need to consider the fact that Brazil makes ethanol out of sugarcane – far more efficient than doing so from corn – and that the population is quite a bit smaller than that of the U.S. The fact is that the U.S. couldn’t replicate what Brazil has done even by turning the entire corn crop into ethanol. The lesson we can take from Brazil is that we need to use a lot less oil in the U.S.

On the question of why distribution for E85 is limited, there seems to be this widespread misconception that this is preventing further penetration of ethanol into the market. In fact, the amount of ethanol we currently produce could not even provide a nationwide E10 blend. If we had E85 pumps at stations from coast to coast, most of them would simply have no product to sell.

Finally, on the topic of hydrogen, Sesno states “Pollution-free technology, but years, probably decades before these cars are king of the road.” This technology is far from pollution-free. Over 95% of all hydrogen is produced from natural gas. So while a hydrogen car may emit no pollution, there was a lot of pollution generated in the production of the hydrogen. The hope is that some day hydrogen will be economically produced via renewable sources, but the possibility is distant at best.

In conclusion, the report delivers a needed message. But the inaccuracies distract from the message. I hope that CNN will see fit to correct these errors in the future.

Sincerely,

Robert Rapier
Chemical Engineer
Aberdeen, Scotland

June 12, 2007 Posted by | Brazil, Brazilian ethanol, CNN | 4 Comments

Letter to CNN on Inaccuracies

Dear CNN,

Over the weekend, I watched your special report We Were Warned: Out of Gas. I had previously seen the original version, “Out of Oil”, and wrote to CNN at that time pointing out a number of inaccuracies in the report. (It appears that the transcript still reflects the earlier version). Those inaccuracies remain in the newer version, so again I feel compelled to point them out. While I think the overall message of the report is essential, you give critics ammunition by not having all of your facts in order. So let’s look at some points.

First, we have Frank Sesno stating “Ethanol now accounts for nearly 40 percent of Brazil’s transportation fuel.” This is inaccurate. Diesel accounts for over 50% of transportation fuel. Gasoline provides 26%. Ethanol, by volume, comes in at 17%. But because ethanol has lower energy content, the actual energy contribution is around 10%.

Second, we have Sesno stating “Ethanol helped Brazil beat its oil addiction, and with sales and exports growing, its profitable, no more government money.” Considering that Brazil gets 90% of their energy from fossil fuels – including a large proportion from oil – I would hardly call that beating their oil addition. What they have done, as a result of aggressive domestic oil policies, is to use their own oil instead of depending on imported oil. This is possible because Brazil has an oil supply/demand picture far more favorable than does the United States. However, I would point out that the car that Sesno was driving around in has numerous parts that were derived from imported oil. So, Brazil still has an oil addition, just like the rest of the world.

Third, we have Sesno asking “So I’m thinking, why can’t I do this in America?” I can easily answer that question for him. The reason is that Brazil domestically produces over 3 barrels of oil per capita each year. This is almost enough to meet the demand, which is around 4 barrels per person. Other sources, including ethanol, are able to close that gap. The U.S., on the other hand, produces 11 barrels per person, but we use 27 barrels per person. The only way we can close that large gap is with imports. No way could we do it with ethanol, unless we drastically reduce that gap by reducing demand. We also need to consider the fact that Brazil makes ethanol out of sugarcane – far more efficient than doing so from corn – and that the population is quite a bit smaller than that of the U.S. The fact is that the U.S. couldn’t replicate what Brazil has done even by turning the entire corn crop into ethanol. The lesson we can take from Brazil is that we need to use a lot less oil in the U.S.

On the question of why distribution for E85 is limited, there seems to be this widespread misconception that this is preventing further penetration of ethanol into the market. In fact, the amount of ethanol we currently produce could not even provide a nationwide E10 blend. If we had E85 pumps at stations from coast to coast, most of them would simply have no product to sell.

Finally, on the topic of hydrogen, Sesno states “Pollution-free technology, but years, probably decades before these cars are king of the road.” This technology is far from pollution-free. Over 95% of all hydrogen is produced from natural gas. So while a hydrogen car may emit no pollution, there was a lot of pollution generated in the production of the hydrogen. The hope is that some day hydrogen will be economically produced via renewable sources, but the possibility is distant at best.

In conclusion, the report delivers a needed message. But the inaccuracies distract from the message. I hope that CNN will see fit to correct these errors in the future.

Sincerely,

Robert Rapier
Chemical Engineer
Aberdeen, Scotland

June 12, 2007 Posted by | Brazil, Brazilian ethanol, CNN | 8 Comments