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Anything But Oil

The 2009 EIA Energy Conference is history, and I will write a summary as soon as can. One of the things I commented on today is that I am concerned about the path we are headed down on our domestic oil and gas industry – and if things don’t go according to plan it will mean more dependence on OPEC. A great line by Paul Sankey today (he had many) was that the policy imperative seems to be “Anything but oil.”

I really do understand the desire to move away from oil. A portion of my career has been devoted to developing replacements for petroleum. But as I said today, I am also a realist. Let’s suppose for a second that the following happens. Policies are put into place that hasten the downfall of our domestic oil and gas industry. Marginal wells become uneconomic and are shut in. According to Morgan Downey in Oil 101 there are 500,000 producing oil wells in the U.S., 80% of which produce 10 bpd or less. Yet those 10 bpd wells account for 20% of U.S. production. What happens if we put these marginal producers out of business?

Some of you will say “That would be great. That’s what we need to combat climate change.” OK, I respect that opinion. However, there is now a shortfall in production to deal with. We either reduce demand or we have to find something renewable to fill the void. Right now, I don’t see anything that can fill even a 10% shortfall in U.S. production in the next few years. So that means either higher prices or some incentives (paid for by higher taxes) will be needed to reduce demand (and I don’t think that’s a bad thing) or we will become even more dependent upon OPEC – the outcome that I think is most likely in this scenario.

Robert Bryce* – author of Gusher of Lies which was the other book I mentioned today – just wrote a provocative essay that touches upon this theme of declaring war on our domestic oil and gas industry. He notes that while it is seemingly a great idea to have Treasury Secretaries from Wall Street, being from the energy industry almost immediately disqualifies a person from being energy secretary:

Let Exxon Run the Energy Dept.

This is stunning. At the same time that the Treasury Department has begun looking like a wholly owned subsidiary of Goldman Sachs and the other Wall Street mega-firms that are too big to fail, the top leadership at the Department of Energy remains a bastion of anything-but-Big Oil. “It’s the mythology of the Beltway,” one Houston energy analyst told me recently. “You are hopelessly compromised if you are anywhere close to the oil industry.”

Bryce runs through the history of our Energy Secretaries:

A Nobel Prize-winning physicist, Chu has experience in energy-related issues, including his job as director of the Lawrence Berkeley National Laboratory, but he’s never been in the energy business.

Jimmy Carter named James Schlesinger—an apparatchik with no history in the energy sector—as the nation’s first Energy secretary.

Ronald Reagan claimed he was going to dismantle the Department of Energy. His pick for Energy secretary was James B. Edwards, a man who understood drilling—he was a dentist.

Bill Clinton’s choices for the top Energy spot were: Hazel O’Leary, a lawyer; Federico Pena, another lawyer; and finally Bill Richardson, a politico and diplomat.

George W. Bush’s choices to head the Department of Energy included Spencer Abraham, a lawyer who’d just lost his seat in the U.S. Senate, and Samuel Bodman, an engineer whose professional career was in investments and chemical production.

I understand that there are many who still think if we can only run Exxon out of town, we will live happily ever after in a low-carbon, renewable world. I would just warn against the law of unintended consequences, as it is quite possible that Chu’s pleas to OPEC to keep production flowing will take on a more urgent tone if we pursue the extinction of our domestic oil and gas industry.

* Incidentally, if you guessed based on his views on energy, you would probably incorrectly guess Bryce’s political leanings. And if you want to be disabused of the notion that he is involved in the oil industry, read the book he wrote called Cronies: Oil, The Bushes, And The Rise Of Texas, America’s Superstate.

April 9, 2009 Posted by | EIA, Morgan Downey, oil production, Paul Sankey, Robert Bryce | 157 Comments

Anything But Oil

The 2009 EIA Energy Conference is history, and I will write a summary as soon as can. One of the things I commented on today is that I am concerned about the path we are headed down on our domestic oil and gas industry – and if things don’t go according to plan it will mean more dependence on OPEC. A great line by Paul Sankey today (he had many) was that the policy imperative seems to be “Anything but oil.”

I really do understand the desire to move away from oil. A portion of my career has been devoted to developing replacements for petroleum. But as I said today, I am also a realist. Let’s suppose for a second that the following happens. Policies are put into place that hasten the downfall of our domestic oil and gas industry. Marginal wells become uneconomic and are shut in. According to Morgan Downey in Oil 101 there are 500,000 producing oil wells in the U.S., 80% of which produce 10 bpd or less. Yet those 10 bpd wells account for 20% of U.S. production. What happens if we put these marginal producers out of business?

Some of you will say “That would be great. That’s what we need to combat climate change.” OK, I respect that opinion. However, there is now a shortfall in production to deal with. We either reduce demand or we have to find something renewable to fill the void. Right now, I don’t see anything that can fill even a 10% shortfall in U.S. production in the next few years. So that means either higher prices or some incentives (paid for by higher taxes) will be needed to reduce demand (and I don’t think that’s a bad thing) or we will become even more dependent upon OPEC – the outcome that I think is most likely in this scenario.

Robert Bryce* – author of Gusher of Lies which was the other book I mentioned today – just wrote a provocative essay that touches upon this theme of declaring war on our domestic oil and gas industry. He notes that while it is seemingly a great idea to have Treasury Secretaries from Wall Street, being from the energy industry almost immediately disqualifies a person from being energy secretary:

Let Exxon Run the Energy Dept.

This is stunning. At the same time that the Treasury Department has begun looking like a wholly owned subsidiary of Goldman Sachs and the other Wall Street mega-firms that are too big to fail, the top leadership at the Department of Energy remains a bastion of anything-but-Big Oil. “It’s the mythology of the Beltway,” one Houston energy analyst told me recently. “You are hopelessly compromised if you are anywhere close to the oil industry.”

Bryce runs through the history of our Energy Secretaries:

A Nobel Prize-winning physicist, Chu has experience in energy-related issues, including his job as director of the Lawrence Berkeley National Laboratory, but he’s never been in the energy business.

Jimmy Carter named James Schlesinger—an apparatchik with no history in the energy sector—as the nation’s first Energy secretary.

Ronald Reagan claimed he was going to dismantle the Department of Energy. His pick for Energy secretary was James B. Edwards, a man who understood drilling—he was a dentist.

Bill Clinton’s choices for the top Energy spot were: Hazel O’Leary, a lawyer; Federico Pena, another lawyer; and finally Bill Richardson, a politico and diplomat.

George W. Bush’s choices to head the Department of Energy included Spencer Abraham, a lawyer who’d just lost his seat in the U.S. Senate, and Samuel Bodman, an engineer whose professional career was in investments and chemical production.

I understand that there are many who still think if we can only run Exxon out of town, we will live happily ever after in a low-carbon, renewable world. I would just warn against the law of unintended consequences, as it is quite possible that Chu’s pleas to OPEC to keep production flowing will take on a more urgent tone if we pursue the extinction of our domestic oil and gas industry.

* Incidentally, if you guessed based on his views on energy, you would probably incorrectly guess Bryce’s political leanings. And if you want to be disabused of the notion that he is involved in the oil industry, read the book he wrote called Cronies: Oil, The Bushes, And The Rise Of Texas, America’s Superstate.

April 9, 2009 Posted by | EIA, Morgan Downey, oil production, Paul Sankey, Robert Bryce | 99 Comments

Peak Demand Before Peak Oil?

There has been a lot of talk in the media lately about the possibility that oil demand will peak soon (or has peaked already), which will render a geologically-induced peak in oil production irrelevant. In other words, peak oil is a non-issue because people won’t be demanding as much oil as can be produced (which is true presently). In fact, I just did a Google search of my blog, and the phrase “Peak Demand” shows up 239 times over the past 2 years. Regular reader Benjamin Cole was beating the peak demand meme long before I heard the media start to pick it up. (Here he is arguing this point two years ago).

Over the weekend I saw a new article that argued this point:

Study predicts oil demand will peak well before supplies run out

I think calling this a ‘study’ is being very generous, and I have some big problems with multiple aspects of the article. Let’s have a look:

Management consultancy Arthur D Little has turned peak oil fears on their head with a report suggesting that the global economy will have begun to abandon oil well before supplies peak.

A bit of hyperbole, don’t you think? If anything has turned peak oil fears on their head it has been the collapse of oil prices – not the opinion of someone I never heard of. Hard to be concerned that there is a crisis around the corner when oil prices reflect a belief of an abundantly supplied market.

The Beginning of the End for Oil?, written by Peter Hughes a former executive at natural gas giant BG Group, address the prospect of falling demand for oil, rather than fears over dwindling supplies. It suggests that a mixture of drivers is forcing a broad policy change that will continue to reduce consumption. Fears over climate change, security of supply, and price volatility, will form a holy trinity to drive policy redirection, he said.

There are significant drivers for policy redirection, but working against those drivers is the issue of oil prices. They have already fallen to the point that they have spurred a recovery of demand. This is why I don’t subscribe to the peak demand > peak oil argument. We just don’t have anything that can compete with oil, especially at current prices. Crude oil is like a giant lake of underground energy that nature already did the heavy lifting on. Even though the lakes are becoming harder to access, they are still more economical than processes that require that humans do the heavy lifting (e.g., you have to input a lot of energy to turn straw into a liquid fuel). Peak demand is only going to occur if there are alternatives with low fossil fuel inputs that are competitive. Those are not on the immediate horizon, therefore demand is going to recover before it starts to shift to something else. Because I believe we will reach peak oil before anything is competitive with oil, I think peak oil will occur before peak demand.

Hughes also points to the Energy Information Administration’s (EIA) reduction of long-term oil consumption forecasts last year. It said the world would be using 10m barrels less per day in 2030 than it had predicted previously

Yet still more than we use today. And the current version of This Week in Petroleum reads “Under almost all EIA long-term projection scenarios, global demand for crude oil and petroleum liquids increases through 2030.”

But why does the EIA predict slower growth in petroleum demand? Because they are predicting that the ethanol mandates will result in production of almost 30 billion gallons of ethanol per year in 2030 – most of it cellulosic. (Less than two years ago the same agency was predicting less than a billion gallons of cellulosic in 2030 – amazing how effective mandates are at creating new technology!)

Despite the huge increase in ethanol production, they forecast a very modest rise in natural gas consumption. This begs the question “Where are all the energy inputs going to come from to drive production of 30 billion gallons of ethanol?” Because of the nature of ethanol production – which unlike oil does not comes to us as an underground lake that nature has largely processed – it takes substantial energy inputs to produce finished ethanol. That is not reflected anywhere in the EIA forecasts. It appears that the assumption is that it will take no incremental fossil fuel production to produce this much cellulosic ethanol. The problem is that no such technology has been invented, so the peak demand argument has to rely on new technologies yet to be invented. That is an incredibly weak argument.

Oil industry experts have predicted that any decline in oil demand in developed economies will be more than compensated by increased consumption in China and other BRIC countries as disposable income rises.

But Hughes argues that these emerging economies would be driven by the same desire to cut oil demand that is already being felt in developed economies. “The Chinese think very coherently and very long term,” he said. “They have identified the threat to the long-term sustainability of their growth path by relying increasingly on imported energy.”

I can’t make too much sense of this. China’s plan for long-term sustainability involves relying increasingly on imports? Wow, then the U.S. is really on their way to a sustainable future. We have increased our imports to something like 2/3rds of our liquid fuel needs.

The report has little in the way of numbers, and insiders admit it is more an opinion piece by Hughes based on almost 30 years in the energy business.

That’s pretty obvious.

But Hughes is not alone in predicting that fears over peaking oil supplies are largely unfounded, on the grounds that economies will find replacement sources of energy at a faster rate than the oil industry expects.

Amory Lovins, co-founder of the Rocky Mountain Institute, has been similarly outspoken on the subject of oil demand. “Oil is going to become, and has already become, uncompetitive, even at low prices, before it becomes unavailable even at high prices,” he said in a 2007 Newsweek interview. “So we will leave it in the ground. It’s very good for holding up the ground, but it won’t be worth extracting.”

Yes, Amory Lovins predicts the same. Now there is a great endorsement. As Robert Bryce pointed out in a 2007 article on Lovins, Lovins does not have a good track record with his predictions. Some of his past predictions:

1. Renewables will take huge swaths of the overall energy market. (1976)
2. Electricity consumption will fall. (1984)
3. Cellulosic ethanol will solve our oil import needs. (repeatedly)
4. Efficiency will lower consumption. (repeatedly)

Bryce systematically demolishes Lovins’ predictions in his article, and wonders why people still listen to him.

So I am firmly in the camp that we are going to see a peak in oil production before we see a massive move to alternatives. On the topic of peak oil itself, my current thinking remains as it has for several years. We are close, but not there yet. I have said several times that I expect oil to peak at around 90 million barrels per day (for ‘all liquids’ production). Christophe de Margerie, the CEO of Total, was recently quoted as saying he thought 89 million barrels per day will be the peak. Jim Mulva, CEO of ConocoPhillips, has expressed similar sentiments. After the IEA came out and predicted oil demand of 116 million barrels per day in 2030, Mulva said he didn’t see how we would ever get past 100 million barrels per day.

I do continue to be bemused by those who suggest that oil production peaked in 2005. When I was posting regularly at The Oil Drum, this was an issue that frequently found me at odds with many of the readers. I felt like there was insufficient evidence, and that many of the arguments suggesting an immediate peak were flawed. That didn’t stop people like Matt Simmons and Ken Deffeyes from making definitive statements that peak oil has passed. Both have been saying for several years now that we are past peak. Here’s Deffeyes in February 2006 saying that oil peaked in December 2005 and claiming “I can now refer to the world oil peak in the past tense. My career as a prophet is over. I’m now an historian.JD at Peak Oil Debunked points out that peak oil has been a moving target for Deffeyes. Here’s Simmons in early 2007 saying that the world has peaked. T. Boone Pickens called the peak in 2004. Here’s one of the TOD contributors calling “Peak Total Liquids of 85.52 million barrels/day on Aug 2006.”

So where do things stand? All of these guys were wrong. Per the EIA database, 2008 eclipsed 2005 as far as total oil produced, and the present monthly record is now July 2008 for crude production plus condensate. In the ‘all liquids’ category, daily production in 2008 was about a million barrels per day higher than it was in 2005 at 85.6 million barrels per day (and several months checked in just short of 87 million barrels per day).

If anyone can point me to a place where any of the “Peak Oil Historians” admitted to being in error, I would appreciate it. Prior to the credit crisis I thought we would see peak by 2012 at no more than 90 million barrels per day. With the crisis, it may delay peak by a year or so, but also make it less likely that we make it to 90 million barrels per day. We are certainly knocking on the door of peak oil (IMO), and if someone suggests that for all practical purposes we are there I couldn’t disagree. But I think it demolishes credibility to go on TV and make a claim like “Peak Oil occurred in May 2005.” I have advised people that no matter how sure you are about that, if you stick your neck out and are wrong, you are the boy who cried wolf and your message will lose any semblance of credibility.

At the present time, demand has been destroyed the point that there are several million barrels per day of excess capacity. I think that most of the rise in oil prices since 2002 can be explained by my Peak Lite scenario, which boils down to erosion of excess capacity. When prices got out of hand, significant demand was destroyed and we find ourselves with 2002-like spare capacity. I think going forward, we are going to see the gradual return of Peak Lite. The only question in my mind is when the climb begins. But since I am a long-term investor, I have the patience to wait it out.

February 23, 2009 Posted by | EIA, ken deffeyes, Matt Simmons, Peak Demand, Peak Lite, Peak Oil, Robert Bryce | 59 Comments

Book Review: Gusher of Lies

Gusher of Lies by Robert Bryce

I have been a fan of Robert Bryce’s writing for a long time. His style is witty and entertaining, and he is a debunker-extraordinaire. His newest book, Gusher of Lies: The Dangerous Delusions of Energy Independence,is a must-read for anyone interested in energy issues. Concerning the topic of energy and the many myths associated with energy issues, this is a debunker’s bible.

If you aren’t familiar with Bryce, he is the Managing Editor of Energy Tribune, a cornucopia of energy news and analyses (and a regular stop for me), as well as the author of several other books topical to energy. For more, here is his biography from Amazon:

About the Author

Robert Bryce is one of America’s foremost energy journalists. He is currently the managing editor of Energy Tribune and a contributing writer for the Texas Observer. The author of Pipe Dreams: Greed, Ego, and the Death of Enron,and Cronies: Oil, The Bushes, and the Rise of Texas, America’s Superstate,he lives in Austin with his wife, Lorin, their three children, and a hyperactive bird dog named Biscuit.

In the book, Bryce takes on many of the myths that are ingrained in the collective psyche of politicians and the general public. He explains why we are so attracted to the idea of energy independence, but then spends the bulk of the book arguing that the idea of energy independence is delusional. He targets the delusions of both Democrats and Republicans, suggesting that neither major party is serious about addressing America’s energy needs. As Bryce states (and this would be a good description of my own position): “I am neither Democrat nor Republican. I am a charter member of the Disgusted Party.”

Thoroughly researched, with hundreds of references, the book is full of thought provoking and interesting facts. One of the most interesting bits to me was a table showing just how dependent the U.S. is on a wide range of strategic materials. We are at the 100% dependence level on quite a few of them. But the book’s real strength lies in the myth-busting. The book debunks such energy independence myths as: 1). We can farm our way to energy independence; 2). We could abandon the Persian Gulf if we achieved energy independence; 3). Energy independence would reduce the flow of money to terrorists. For a flavor of Bryce’s writing – including some of the themes he tackles in the book, see his Washington Post editorial:

5 Myths About Breaking Our Foreign Oil Habit

In this editorial, Bryce writes:

With oil prices still flirting with $100 a barrel, everyone is talking about the need for “energy independence.” Late last year, President Bush signed the Energy Independence and Security Act of 2007; Sen. John McCain has declared, “We need energy independence”; and Sen. Barack Obama has called for “serious leadership to get us started down the path of energy independence.”

This may all be good politics. But the idea that the United States, the world’s single largest energy consumer, can be independent of the $5 trillion-per-year energy business — the world’s single biggest industry — is ludicrous on its face. The push for energy independence is based on a series of false premises. Here are a few of the most pernicious ones…

While you will often find yourself nodding in agreement while reading the book (or thinking “I did not know that”), there will be things in the book you disagree with – and perhaps sharply. You may raise your eyebrows at Bryce’s assertion that energy independence is not desirable. I read that, and I thought “Not achievable any time soon? Sure. But not desirable?” Some won’t like his take on Peak Oil. Some will feel that some of his writing on terrorism is a digression. I disagree with him on the subject of carbon taxes (more on that below). And corn ethanol supporters will need to round up an army of lobbyists to address his chapter on ethanol.

The ethanol chapter alone is greatness. [Full Disclosure: Bryce referenced me a number of times in the book, but especially in the ethanol chapter. You could thus argue that I have a conflict of interest in this book review – if that makes you happy ;)]. Bryce goes further than I ever have by tying all of the arguments up in one neat package. He covers the subject from angles I have barely touched upon. I can probably now retire from ethanol debunking, because after reading the ethanol chapter I thought “There’s nothing left to debunk.” (In fact, progress on the ethanol FAQ I have been working on ground to a halt after I read Bryce’s ethanol chapter. He covered everything I covered, and more.)

This is not a Peak Oil book. Peak Oil is covered over just a few pages, and the subject is treated agnostically – or maybe even slightly atheistically. The Oil Drum does get a mention in this section, as well as peakoil.com and hubbertpeak.com. But if you are expecting a long discussion of peak oil, that’s not what this book is about.

There was a time when I couldn’t see an iota of difference between Bryce’s positions on various energy topics and my own. It seemed we agreed on everything – right down to small details. However, Bryce gradually abandoned his position that we needed higher carbon taxes, and this is an issue upon which we now clearly diverge. And it took me a while to really pin down why we now disagree on this issue.

I am looking at the issue of carbon taxes through Peak Oil lenses. I see carbon taxes as a way individuals and individual countries can ramp down their energy usage so they are less impacted by supply shocks. I think Bryce is less concerned about these sorts of supply shocks, and is looking more at policies that will increase energy supplies, rather than those that reduce demand. This became clear to me when reading his chapter on energy efficiency. Bryce also feels like it will be impossible to make the tax revenue neutral such that it isn’t regressive. He feels like the U.S. will be putting ourselves at a competitive disadvantage to the rest of the world if we pass higher carbon taxes.

However, to that I say that Europe already has very high carbon taxes, and I don’t believe it is a coincidence that they drive much more fuel efficient cars, don’t have a lot of suburban sprawl, have excellent public transportation, have about half the per capita energy consumption of the average American, and yet still enjoy a very high standard of living. They are more insulated from price shocks than we are, because they are less dependent on fossil fuels than we are in the U.S. But because of the fossil fuel usage habits of the U.S., enabled by a long history of cheap fossil fuels, the world will approach peak oil much more quickly. I see high carbon taxes as a way of slowing down that approach and subsequent decline.

Furthermore, I don’t believe Bryce is consistent on this issue. At one point in the book, he writes “Motorists respond to high fuel prices”, and then he gives examples of how sales of fuel efficient vehicles have taken off as fuel prices crept higher. Isn’t this something we should have been encouraging all along with higher fuel prices? He reiterates this in a section on Brazil, when he points out that Brazil imposes much higher fuel taxes, and this helps explain why their per capita usage is so low. If Brazil can deal with higher fuel taxes, I expect that we can as well in the U.S.

Concluding, I highly recommend this book. It is the best overall book on the reality of the energy situation in the U.S. that I have read in a long time. In fact, specific to that topic, it is probably the best book I have ever read. There are some minor errors (e.g., Saudi’s claimed oil production capacity was reported as their oil production), and even after reading the book I still feel the attraction of energy independence. But I didn’t find a whole lot to quibble with as I read the book.

March 3, 2008 Posted by | book review, energy independence, Robert Bryce | 76 Comments

Book Review: Gusher of Lies

Gusher of Lies by Robert Bryce

I have been a fan of Robert Bryce’s writing for a long time. His style is witty and entertaining, and he is a debunker-extraordinaire. His newest book, Gusher of Lies: The Dangerous Delusions of Energy Independence,is a must-read for anyone interested in energy issues. Concerning the topic of energy and the many myths associated with energy issues, this is a debunker’s bible.

If you aren’t familiar with Bryce, he is the Managing Editor of Energy Tribune, a cornucopia of energy news and analyses (and a regular stop for me), as well as the author of several other books topical to energy. For more, here is his biography from Amazon:

About the Author

Robert Bryce is one of America’s foremost energy journalists. He is currently the managing editor of Energy Tribune and a contributing writer for the Texas Observer. The author of Pipe Dreams: Greed, Ego, and the Death of Enron,and Cronies: Oil, The Bushes, and the Rise of Texas, America’s Superstate,he lives in Austin with his wife, Lorin, their three children, and a hyperactive bird dog named Biscuit.

In the book, Bryce takes on many of the myths that are ingrained in the collective psyche of politicians and the general public. He explains why we are so attracted to the idea of energy independence, but then spends the bulk of the book arguing that the idea of energy independence is delusional. He targets the delusions of both Democrats and Republicans, suggesting that neither major party is serious about addressing America’s energy needs. As Bryce states (and this would be a good description of my own position): “I am neither Democrat nor Republican. I am a charter member of the Disgusted Party.”

Thoroughly researched, with hundreds of references, the book is full of thought provoking and interesting facts. One of the most interesting bits to me was a table showing just how dependent the U.S. is on a wide range of strategic materials. We are at the 100% dependence level on quite a few of them. But the book’s real strength lies in the myth-busting. The book debunks such energy independence myths as: 1). We can farm our way to energy independence; 2). We could abandon the Persian Gulf if we achieved energy independence; 3). Energy independence would reduce the flow of money to terrorists. For a flavor of Bryce’s writing – including some of the themes he tackles in the book, see his Washington Post editorial:

5 Myths About Breaking Our Foreign Oil Habit

In this editorial, Bryce writes:

With oil prices still flirting with $100 a barrel, everyone is talking about the need for “energy independence.” Late last year, President Bush signed the Energy Independence and Security Act of 2007; Sen. John McCain has declared, “We need energy independence”; and Sen. Barack Obama has called for “serious leadership to get us started down the path of energy independence.”

This may all be good politics. But the idea that the United States, the world’s single largest energy consumer, can be independent of the $5 trillion-per-year energy business — the world’s single biggest industry — is ludicrous on its face. The push for energy independence is based on a series of false premises. Here are a few of the most pernicious ones…

While you will often find yourself nodding in agreement while reading the book (or thinking “I did not know that”), there will be things in the book you disagree with – and perhaps sharply. You may raise your eyebrows at Bryce’s assertion that energy independence is not desirable. I read that, and I thought “Not achievable any time soon? Sure. But not desirable?” Some won’t like his take on Peak Oil. Some will feel that some of his writing on terrorism is a digression. I disagree with him on the subject of carbon taxes (more on that below). And corn ethanol supporters will need to round up an army of lobbyists to address his chapter on ethanol.

The ethanol chapter alone is greatness. [Full Disclosure: Bryce referenced me a number of times in the book, but especially in the ethanol chapter. You could thus argue that I have a conflict of interest in this book review – if that makes you happy ;)]. Bryce goes further than I ever have by tying all of the arguments up in one neat package. He covers the subject from angles I have barely touched upon. I can probably now retire from ethanol debunking, because after reading the ethanol chapter I thought “There’s nothing left to debunk.” (In fact, progress on the ethanol FAQ I have been working on ground to a halt after I read Bryce’s ethanol chapter. He covered everything I covered, and more.)

This is not a Peak Oil book. Peak Oil is covered over just a few pages, and the subject is treated agnostically – or maybe even slightly atheistically. The Oil Drum does get a mention in this section, as well as peakoil.com and hubbertpeak.com. But if you are expecting a long discussion of peak oil, that’s not what this book is about.

There was a time when I couldn’t see an iota of difference between Bryce’s positions on various energy topics and my own. It seemed we agreed on everything – right down to small details. However, Bryce gradually abandoned his position that we needed higher carbon taxes, and this is an issue upon which we now clearly diverge. And it took me a while to really pin down why we now disagree on this issue.

I am looking at the issue of carbon taxes through Peak Oil lenses. I see carbon taxes as a way individuals and individual countries can ramp down their energy usage so they are less impacted by supply shocks. I think Bryce is less concerned about these sorts of supply shocks, and is looking more at policies that will increase energy supplies, rather than those that reduce demand. This became clear to me when reading his chapter on energy efficiency. Bryce also feels like it will be impossible to make the tax revenue neutral such that it isn’t regressive. He feels like the U.S. will be putting ourselves at a competitive disadvantage to the rest of the world if we pass higher carbon taxes.

However, to that I say that Europe already has very high carbon taxes, and I don’t believe it is a coincidence that they drive much more fuel efficient cars, don’t have a lot of suburban sprawl, have excellent public transportation, have about half the per capita energy consumption of the average American, and yet still enjoy a very high standard of living. They are more insulated from price shocks than we are, because they are less dependent on fossil fuels than we are in the U.S. But because of the fossil fuel usage habits of the U.S., enabled by a long history of cheap fossil fuels, the world will approach peak oil much more quickly. I see high carbon taxes as a way of slowing down that approach and subsequent decline.

Furthermore, I don’t believe Bryce is consistent on this issue. At one point in the book, he writes “Motorists respond to high fuel prices”, and then he gives examples of how sales of fuel efficient vehicles have taken off as fuel prices crept higher. Isn’t this something we should have been encouraging all along with higher fuel prices? He reiterates this in a section on Brazil, when he points out that Brazil imposes much higher fuel taxes, and this helps explain why their per capita usage is so low. If Brazil can deal with higher fuel taxes, I expect that we can as well in the U.S.

Concluding, I highly recommend this book. It is the best overall book on the reality of the energy situation in the U.S. that I have read in a long time. In fact, specific to that topic, it is probably the best book I have ever read. There are some minor errors (e.g., Saudi’s claimed oil production capacity was reported as their oil production), and even after reading the book I still feel the attraction of energy independence. But I didn’t find a whole lot to quibble with as I read the book.

March 3, 2008 Posted by | book review, energy independence, Robert Bryce | 41 Comments

Book Review: Gusher of Lies

Gusher of Lies by Robert Bryce

I have been a fan of Robert Bryce’s writing for a long time. His style is witty and entertaining, and he is a debunker-extraordinaire. His newest book, Gusher of Lies: The Dangerous Delusions of Energy Independence,is a must-read for anyone interested in energy issues. Concerning the topic of energy and the many myths associated with energy issues, this is a debunker’s bible.

If you aren’t familiar with Bryce, he is the Managing Editor of Energy Tribune, a cornucopia of energy news and analyses (and a regular stop for me), as well as the author of several other books topical to energy. For more, here is his biography from Amazon:

About the Author

Robert Bryce is one of America’s foremost energy journalists. He is currently the managing editor of Energy Tribune and a contributing writer for the Texas Observer. The author of Pipe Dreams: Greed, Ego, and the Death of Enron,and Cronies: Oil, The Bushes, and the Rise of Texas, America’s Superstate,he lives in Austin with his wife, Lorin, their three children, and a hyperactive bird dog named Biscuit.

In the book, Bryce takes on many of the myths that are ingrained in the collective psyche of politicians and the general public. He explains why we are so attracted to the idea of energy independence, but then spends the bulk of the book arguing that the idea of energy independence is delusional. He targets the delusions of both Democrats and Republicans, suggesting that neither major party is serious about addressing America’s energy needs. As Bryce states (and this would be a good description of my own position): “I am neither Democrat nor Republican. I am a charter member of the Disgusted Party.”

Thoroughly researched, with hundreds of references, the book is full of thought provoking and interesting facts. One of the most interesting bits to me was a table showing just how dependent the U.S. is on a wide range of strategic materials. We are at the 100% dependence level on quite a few of them. But the book’s real strength lies in the myth-busting. The book debunks such energy independence myths as: 1). We can farm our way to energy independence; 2). We could abandon the Persian Gulf if we achieved energy independence; 3). Energy independence would reduce the flow of money to terrorists. For a flavor of Bryce’s writing – including some of the themes he tackles in the book, see his Washington Post editorial:

5 Myths About Breaking Our Foreign Oil Habit

In this editorial, Bryce writes:

With oil prices still flirting with $100 a barrel, everyone is talking about the need for “energy independence.” Late last year, President Bush signed the Energy Independence and Security Act of 2007; Sen. John McCain has declared, “We need energy independence”; and Sen. Barack Obama has called for “serious leadership to get us started down the path of energy independence.”

This may all be good politics. But the idea that the United States, the world’s single largest energy consumer, can be independent of the $5 trillion-per-year energy business — the world’s single biggest industry — is ludicrous on its face. The push for energy independence is based on a series of false premises. Here are a few of the most pernicious ones…

While you will often find yourself nodding in agreement while reading the book (or thinking “I did not know that”), there will be things in the book you disagree with – and perhaps sharply. You may raise your eyebrows at Bryce’s assertion that energy independence is not desirable. I read that, and I thought “Not achievable any time soon? Sure. But not desirable?” Some won’t like his take on Peak Oil. Some will feel that some of his writing on terrorism is a digression. I disagree with him on the subject of carbon taxes (more on that below). And corn ethanol supporters will need to round up an army of lobbyists to address his chapter on ethanol.

The ethanol chapter alone is greatness. [Full Disclosure: Bryce referenced me a number of times in the book, but especially in the ethanol chapter. You could thus argue that I have a conflict of interest in this book review – if that makes you happy ;)]. Bryce goes further than I ever have by tying all of the arguments up in one neat package. He covers the subject from angles I have barely touched upon. I can probably now retire from ethanol debunking, because after reading the ethanol chapter I thought “There’s nothing left to debunk.” (In fact, progress on the ethanol FAQ I have been working on ground to a halt after I read Bryce’s ethanol chapter. He covered everything I covered, and more.)

This is not a Peak Oil book. Peak Oil is covered over just a few pages, and the subject is treated agnostically – or maybe even slightly atheistically. The Oil Drum does get a mention in this section, as well as peakoil.com and hubbertpeak.com. But if you are expecting a long discussion of peak oil, that’s not what this book is about.

There was a time when I couldn’t see an iota of difference between Bryce’s positions on various energy topics and my own. It seemed we agreed on everything – right down to small details. However, Bryce gradually abandoned his position that we needed higher carbon taxes, and this is an issue upon which we now clearly diverge. And it took me a while to really pin down why we now disagree on this issue.

I am looking at the issue of carbon taxes through Peak Oil lenses. I see carbon taxes as a way individuals and individual countries can ramp down their energy usage so they are less impacted by supply shocks. I think Bryce is less concerned about these sorts of supply shocks, and is looking more at policies that will increase energy supplies, rather than those that reduce demand. This became clear to me when reading his chapter on energy efficiency. Bryce also feels like it will be impossible to make the tax revenue neutral such that it isn’t regressive. He feels like the U.S. will be putting ourselves at a competitive disadvantage to the rest of the world if we pass higher carbon taxes.

However, to that I say that Europe already has very high carbon taxes, and I don’t believe it is a coincidence that they drive much more fuel efficient cars, don’t have a lot of suburban sprawl, have excellent public transportation, have about half the per capita energy consumption of the average American, and yet still enjoy a very high standard of living. They are more insulated from price shocks than we are, because they are less dependent on fossil fuels than we are in the U.S. But because of the fossil fuel usage habits of the U.S., enabled by a long history of cheap fossil fuels, the world will approach peak oil much more quickly. I see high carbon taxes as a way of slowing down that approach and subsequent decline.

Furthermore, I don’t believe Bryce is consistent on this issue. At one point in the book, he writes “Motorists respond to high fuel prices”, and then he gives examples of how sales of fuel efficient vehicles have taken off as fuel prices crept higher. Isn’t this something we should have been encouraging all along with higher fuel prices? He reiterates this in a section on Brazil, when he points out that Brazil imposes much higher fuel taxes, and this helps explain why their per capita usage is so low. If Brazil can deal with higher fuel taxes, I expect that we can as well in the U.S.

Concluding, I highly recommend this book. It is the best overall book on the reality of the energy situation in the U.S. that I have read in a long time. In fact, specific to that topic, it is probably the best book I have ever read. There are some minor errors (e.g., Saudi’s claimed oil production capacity was reported as their oil production), and even after reading the book I still feel the attraction of energy independence. But I didn’t find a whole lot to quibble with as I read the book.

March 3, 2008 Posted by | book review, energy independence, Robert Bryce | 294 Comments

Critiquing Robert Zubrin on Energy

A couple of weeks ago, I said that I would be working on several posts. One of them, a book review for Robert Bryce’s new book, Gusher of Lies, is finished but I won’t post it until the book is officially released on March 10th. Beyond that, I was going to write a post on refinery economics, which I have yet to do, and a post critiquing Robert Zubrin. So here’s the post on Zubrin.

I haven’t read Zubrin’s energy book – Energy Victory– so this critique is based mainly on a very long article that he wrote about his ideas. A bit of trivia that I have mentioned before, many may know that Zubrin is a passionate advocate for Mars exploration, and has come up with some novel ideas for speeding up progress there. I am also a Mars buff, and Zubrin and I have corresponded over the types of fuels that could be synthesized from native Martian materials, because at that time I was doing some related work. But that is history, so let the critique (debunking?) commence.

I have been asked about the feasibility of what Zubrin is proposing. Zubrin gets some credit in my book for understanding the flaws in the hydrogen economy. So, what does he propose instead, and does it have similar flaws?

There is a very extensive article, based on his book, at The New Atlantis:

Achieving Energy Victory

Let’s cover some of the key points:

The world economy currently runs on oil, a resource controlled by our enemies. This threatens to leave us prostrate. It must change—and it can change, quickly.

Saudi Arabia is the primary global financier of the Islamist terror cult. Until the Saudis started racking up billions in inflated oil revenues in the 1970s, the Wahhabi movement was regarded by Muslims the world over as little more than primitive insanity. Without rivers of treasure to feed its roots, this horrific movement could neither grow nor thrive.

This is just the sort of thing Robert Bryce tackles in his newest book. He argues that almost all of the claims in the previous paragraphs are myths. The one sentence there that I think all three Robert’s – Zubrin, Bryce, and myself would agree on is that the world economy runs on oil.

Much of the first section of the essay is a rant aimed at OPEC, Saudi Arabia, and Islam. I won’t address that, other than to say that a good portion of it uses unfortunate stereotypes, and it contains a number of inaccuracies. Zubrin also offers opinions on many issues that he would have a hard time supporting if pressed. But there is one comment that I want to address before I get to his solutions section:

Fortunately, however, the claim that the world is running out of oil has no foundation whatsoever. Such claims have been made repeatedly in the past, and all have proven false. For example, as Learsy notes in Over a Barrel……

First of all, instant credibility point deduction for citing Learsy. The guy is a loon, and I have mentioned him just briefly here once before. Furthermore, the claim that “the world is running out of oil” is a strawman. Everyone knows – right down to your most hard core doomer, that there is an enormous quantity of oil left. The problem is getting it out quickly enough to meet demand – either because supply isn’t growing as quickly as is demand, or supply is actually falling due to an eventual peak in world oil production. Zubrin does a great job of demolishing this strawman, but let’s not pretend it was anything else.

Now, on to the main course. Zubrin first tackles the topics of conservation and CAFE standards:

When the subject of fighting OPEC comes up, the foremost proposal generally advanced is conservation. Since OPEC is taxing us by selling us oil, the thinking goes, we should simply use less. It sounds very sensible—but it is completely unworkable. It needs to be discredited because it proposes a strategy that guarantees defeat.

There are essentially just three ways to convince people to conserve: economic incentives, moral persuasion, or governmental action. None will succeed in this instance.

The most powerful persuader of the three is economics. Yet that is impractical here, because the objective is to reduce OPEC’s profits. If the oil price is allowed to soar high enough to induce conservation, OPEC wins big.

And if you think that was a flippant dismissal on the economics issue, try this one:

That leaves the possibility of government mandates. These can certainly have some effect within the territorial jurisdiction of the United States—but the demand for oil is a global issue. No practicable U.S. government conservation initiative could lead to domestic consumption reductions large enough to influence the global oil price.

One wonders then why countries with high gas taxes have much lower per capita energy consumption than the U.S. What Zubrin wants is an easy solution that requires no sacrifice, and yet reduces our dependence on oil. That would be great, and after dismissing CAFE (which I actually have a problem with as well, but for different reasons) he outlines his solutions. After mentioning America’s reserves of coal and natural gas, as well as our potential for producing biomass, he writes:

None of these fuels is on an equal footing with oil because none of them is currently used to produce liquid fuel for transportation. But what if we could convert them into usable liquid fuel?

In point of fact, we can. No new Manhattan Project will be required to discover how. The chemical knowledge required to do it is quite well established, being hundreds, and in some cases thousands, of years old. All we need to do is make alcohol.

At that point, he steps out onto shaky economic ground:

That said, the food crops used as a basis for ethanol production through this technique have significant commercial value, and that puts a floor under the production cost of fermentation-based ethanol. For sugar, that cost is about $1 per gallon, while for corn it is around $1.50 per gallon (without any subsidy). Ethanol has about two-thirds the energy value per gallon as gasoline, so these prices correspond to gasoline sold at $1.50 and $2.25 per gallon, respectively (before taxes—most gasoline sold in the United States is taxed about $0.50 per gallon). These gasoline prices, in turn, correspond to oil priced at $36 and $54 per barrel. So long as oil is pegged above this level (as it currently is), crop-fermentation ethanol can beat the price of gasoline.

That paragraph is full of problems. First, I fail to see his point about a floor under production costs for ethanol. Right now, that floor for corn is up around the $2/gal mark, which means the cost is already above his “floor.” Second, he doesn’t speak at all to the energy inputs (which mean that corn ethanol is also very sensitive to fossil fuel prices) nor does he attempt to quantify how much oil this would actually displace. He might find that some of the other options he so casually dismissed above have much greater potential for reducing our oil usage than does this one. At least he does admit that cellulosic ethanol is not there yet, although he classifies the chance of success as “highly probable.”

But from there, he does move into somewhat more fertile ground:

Fortunately, however, there are simpler techniques to make usable alcohol fuel out of biomass, and much else. This brings us to methanol, the simplest liquid fuel molecule known to chemistry. Commonly called “wood alcohol” because it can be readily produced from wood, it can also be manufactured out of virtually any kind of organic material, including every kind of biomass (whether edible or not), as well as coal, natural gas, human and animal metabolic wastes, and municipal trash. Since its potential sources are so vast, varied, and cheap, methanol promises to be an inexpensive fuel. In fact, it already is: during the summer of 2007, the wholesale price of methanol, manufactured and sold without a subsidy, was $0.93 per gallon. Methanol has about 54 percent the energy density of gasoline, so this price is the equivalent of gasoline selling for $1.70 per gallon (before taxes).

One thing to note is that the price he quotes for methanol is based on methanol produced from natural gas – not from biomass. His quote above is like suggesting that cellulosic ethanol promises to be competitive, and then quoting corn ethanol production costs for support. I don’t know the economics of the production of methanol from wood (although they are higher than methanol from natural gas), but it would be interesting to look into them. A quick search came up with a paper presented at an alternative energy conference in 1985. On comparing methanol from wood to ethanol from corn, the author said that no plants to produce methanol from wood have been built. I don’t know if that is still the case.

However, I will say that I agree with him in general on his methanol points. Methanol is relatively cheap and easy to produce, and can be produced from a wide variety of starting materials. Most of those starting materials don’t pose a food versus fuel debate.

Zubrin starts the last section by going into some history of methanol-fueled vehicles. He then makes the case for flex fuel vehicles (FFVs) that can run on a methanol blend. He wrote:

The cars worked well. As the CEC’s Tom MacDonald reported in a summary paper on the program published in 2000, the over 14,000 methanol/gasoline FFVs demonstrated “seamless vehicle operation on methanol, gasoline, and all combination of these fuels.” He also noted that FFV engines were as durable as standard gas engines and that there were incremental improvements in emissions fuel efficiency.

However, he then notes that interest in methanol FFVs declined:

But beyond the CEC’s successful pilot program, there has been very little interest in FFVs. The farm lobby has pushed for them as a means to expand ethanol sales, which is why, for the past decade or so, FFVs have been designed primarily for ethanol use. All told, some six million FFVs have been produced to date in America—a number that sounds impressive, and that indeed is quintuple the number of gas/electric hybrid cars in the United States today, but is still dwarfed by the total U.S. fleet of about 230 million cars now on the road.

Unless an ethanol FFV can also burn methanol, it seems like Zubrin’s first challenge is getting some interest in building the vehicles. As he notes, we make fairly cheap methanol today, albeit out of natural gas. I don’t know if methanol can be added in small quantities to your typical car, but if so then Zubrin can skip the FFV challenge and go straight to getting it into the fuel supply.

Zubrin closes with a call for action:

In a game of chess, the struggle ends not with the taking of the enemy king, but with his entrapment. If we could engineer a liberation from oil, the enemy would be rendered helpless, and one way or another, the oil-for-terror game will be finished.

Call it checkmate. Call it victory.

It might be fun to watch him and Bryce debate that “oil-for-terror” angle.

Overall, Zubrin is not completely in left field. He strays out there now and then, but his methanol argument is OK. I don’t consider him at all a crackpot (although that Learsy reference raised one eyebrow). What I don’t know – and have never attempted to determine – is how much methanol we could realistically produce from sustainable biomass. If the answer to that comes in too low, it’s really a moot argument. In that case we are again left with methanol potentially contributing as one of a wide variety of solutions – none of which can shoulder the majority of the load. This is actually what I think we would find with methanol – that it could not displace substantial amounts of oil. But then again, that’s just a hunch.

February 17, 2008 Posted by | energy independence, Mars, Robert Bryce, Robert Zubrin | 28 Comments

Critiquing Robert Zubrin on Energy

A couple of weeks ago, I said that I would be working on several posts. One of them, a book review for Robert Bryce’s new book, Gusher of Lies, is finished but I won’t post it until the book is officially released on March 10th. Beyond that, I was going to write a post on refinery economics, which I have yet to do, and a post critiquing Robert Zubrin. So here’s the post on Zubrin.

I haven’t read Zubrin’s energy book – Energy Victory– so this critique is based mainly on a very long article that he wrote about his ideas. A bit of trivia that I have mentioned before, many may know that Zubrin is a passionate advocate for Mars exploration, and has come up with some novel ideas for speeding up progress there. I am also a Mars buff, and Zubrin and I have corresponded over the types of fuels that could be synthesized from native Martian materials, because at that time I was doing some related work. But that is history, so let the critique (debunking?) commence.

I have been asked about the feasibility of what Zubrin is proposing. Zubrin gets some credit in my book for understanding the flaws in the hydrogen economy. So, what does he propose instead, and does it have similar flaws?

There is a very extensive article, based on his book, at The New Atlantis:

Achieving Energy Victory

Let’s cover some of the key points:

The world economy currently runs on oil, a resource controlled by our enemies. This threatens to leave us prostrate. It must change—and it can change, quickly.

Saudi Arabia is the primary global financier of the Islamist terror cult. Until the Saudis started racking up billions in inflated oil revenues in the 1970s, the Wahhabi movement was regarded by Muslims the world over as little more than primitive insanity. Without rivers of treasure to feed its roots, this horrific movement could neither grow nor thrive.

This is just the sort of thing Robert Bryce tackles in his newest book. He argues that almost all of the claims in the previous paragraphs are myths. The one sentence there that I think all three Robert’s – Zubrin, Bryce, and myself would agree on is that the world economy runs on oil.

Much of the first section of the essay is a rant aimed at OPEC, Saudi Arabia, and Islam. I won’t address that, other than to say that a good portion of it uses unfortunate stereotypes, and it contains a number of inaccuracies. Zubrin also offers opinions on many issues that he would have a hard time supporting if pressed. But there is one comment that I want to address before I get to his solutions section:

Fortunately, however, the claim that the world is running out of oil has no foundation whatsoever. Such claims have been made repeatedly in the past, and all have proven false. For example, as Learsy notes in Over a Barrel……

First of all, instant credibility point deduction for citing Learsy. The guy is a loon, and I have mentioned him just briefly here once before. Furthermore, the claim that “the world is running out of oil” is a strawman. Everyone knows – right down to your most hard core doomer, that there is an enormous quantity of oil left. The problem is getting it out quickly enough to meet demand – either because supply isn’t growing as quickly as is demand, or supply is actually falling due to an eventual peak in world oil production. Zubrin does a great job of demolishing this strawman, but let’s not pretend it was anything else.

Now, on to the main course. Zubrin first tackles the topics of conservation and CAFE standards:

When the subject of fighting OPEC comes up, the foremost proposal generally advanced is conservation. Since OPEC is taxing us by selling us oil, the thinking goes, we should simply use less. It sounds very sensible—but it is completely unworkable. It needs to be discredited because it proposes a strategy that guarantees defeat.

There are essentially just three ways to convince people to conserve: economic incentives, moral persuasion, or governmental action. None will succeed in this instance.

The most powerful persuader of the three is economics. Yet that is impractical here, because the objective is to reduce OPEC’s profits. If the oil price is allowed to soar high enough to induce conservation, OPEC wins big.

And if you think that was a flippant dismissal on the economics issue, try this one:

That leaves the possibility of government mandates. These can certainly have some effect within the territorial jurisdiction of the United States—but the demand for oil is a global issue. No practicable U.S. government conservation initiative could lead to domestic consumption reductions large enough to influence the global oil price.

One wonders then why countries with high gas taxes have much lower per capita energy consumption than the U.S. What Zubrin wants is an easy solution that requires no sacrifice, and yet reduces our dependence on oil. That would be great, and after dismissing CAFE (which I actually have a problem with as well, but for different reasons) he outlines his solutions. After mentioning America’s reserves of coal and natural gas, as well as our potential for producing biomass, he writes:

None of these fuels is on an equal footing with oil because none of them is currently used to produce liquid fuel for transportation. But what if we could convert them into usable liquid fuel?

In point of fact, we can. No new Manhattan Project will be required to discover how. The chemical knowledge required to do it is quite well established, being hundreds, and in some cases thousands, of years old. All we need to do is make alcohol.

At that point, he steps out onto shaky economic ground:

That said, the food crops used as a basis for ethanol production through this technique have significant commercial value, and that puts a floor under the production cost of fermentation-based ethanol. For sugar, that cost is about $1 per gallon, while for corn it is around $1.50 per gallon (without any subsidy). Ethanol has about two-thirds the energy value per gallon as gasoline, so these prices correspond to gasoline sold at $1.50 and $2.25 per gallon, respectively (before taxes—most gasoline sold in the United States is taxed about $0.50 per gallon). These gasoline prices, in turn, correspond to oil priced at $36 and $54 per barrel. So long as oil is pegged above this level (as it currently is), crop-fermentation ethanol can beat the price of gasoline.

That paragraph is full of problems. First, I fail to see his point about a floor under production costs for ethanol. Right now, that floor for corn is up around the $2/gal mark, which means the cost is already above his “floor.” Second, he doesn’t speak at all to the energy inputs (which mean that corn ethanol is also very sensitive to fossil fuel prices) nor does he attempt to quantify how much oil this would actually displace. He might find that some of the other options he so casually dismissed above have much greater potential for reducing our oil usage than does this one. At least he does admit that cellulosic ethanol is not there yet, although he classifies the chance of success as “highly probable.”

But from there, he does move into somewhat more fertile ground:

Fortunately, however, there are simpler techniques to make usable alcohol fuel out of biomass, and much else. This brings us to methanol, the simplest liquid fuel molecule known to chemistry. Commonly called “wood alcohol” because it can be readily produced from wood, it can also be manufactured out of virtually any kind of organic material, including every kind of biomass (whether edible or not), as well as coal, natural gas, human and animal metabolic wastes, and municipal trash. Since its potential sources are so vast, varied, and cheap, methanol promises to be an inexpensive fuel. In fact, it already is: during the summer of 2007, the wholesale price of methanol, manufactured and sold without a subsidy, was $0.93 per gallon. Methanol has about 54 percent the energy density of gasoline, so this price is the equivalent of gasoline selling for $1.70 per gallon (before taxes).

One thing to note is that the price he quotes for methanol is based on methanol produced from natural gas – not from biomass. His quote above is like suggesting that cellulosic ethanol promises to be competitive, and then quoting corn ethanol production costs for support. I don’t know the economics of the production of methanol from wood (although they are higher than methanol from natural gas), but it would be interesting to look into them. A quick search came up with a paper presented at an alternative energy conference in 1985. On comparing methanol from wood to ethanol from corn, the author said that no plants to produce methanol from wood have been built. I don’t know if that is still the case.

However, I will say that I agree with him in general on his methanol points. Methanol is relatively cheap and easy to produce, and can be produced from a wide variety of starting materials. Most of those starting materials don’t pose a food versus fuel debate.

Zubrin starts the last section by going into some history of methanol-fueled vehicles. He then makes the case for flex fuel vehicles (FFVs) that can run on a methanol blend. He wrote:

The cars worked well. As the CEC’s Tom MacDonald reported in a summary paper on the program published in 2000, the over 14,000 methanol/gasoline FFVs demonstrated “seamless vehicle operation on methanol, gasoline, and all combination of these fuels.” He also noted that FFV engines were as durable as standard gas engines and that there were incremental improvements in emissions fuel efficiency.

However, he then notes that interest in methanol FFVs declined:

But beyond the CEC’s successful pilot program, there has been very little interest in FFVs. The farm lobby has pushed for them as a means to expand ethanol sales, which is why, for the past decade or so, FFVs have been designed primarily for ethanol use. All told, some six million FFVs have been produced to date in America—a number that sounds impressive, and that indeed is quintuple the number of gas/electric hybrid cars in the United States today, but is still dwarfed by the total U.S. fleet of about 230 million cars now on the road.

Unless an ethanol FFV can also burn methanol, it seems like Zubrin’s first challenge is getting some interest in building the vehicles. As he notes, we make fairly cheap methanol today, albeit out of natural gas. I don’t know if methanol can be added in small quantities to your typical car, but if so then Zubrin can skip the FFV challenge and go straight to getting it into the fuel supply.

Zubrin closes with a call for action:

In a game of chess, the struggle ends not with the taking of the enemy king, but with his entrapment. If we could engineer a liberation from oil, the enemy would be rendered helpless, and one way or another, the oil-for-terror game will be finished.

Call it checkmate. Call it victory.

It might be fun to watch him and Bryce debate that “oil-for-terror” angle.

Overall, Zubrin is not completely in left field. He strays out there now and then, but his methanol argument is OK. I don’t consider him at all a crackpot (although that Learsy reference raised one eyebrow). What I don’t know – and have never attempted to determine – is how much methanol we could realistically produce from sustainable biomass. If the answer to that comes in too low, it’s really a moot argument. In that case we are again left with methanol potentially contributing as one of a wide variety of solutions – none of which can shoulder the majority of the load. This is actually what I think we would find with methanol – that it could not displace substantial amounts of oil. But then again, that’s just a hunch.

February 17, 2008 Posted by | energy independence, Mars, Robert Bryce, Robert Zubrin | 307 Comments