Saturday, June 21, 2008

Alternative Fuel Watch

There has been a lot of debate recently about whether we should allow more territory offshore and in places like Anwar to be developed for oil drilling. In the heat of the debate, the facts often get lost. Here's a little reality.

There are some promising alternatives to crude on the horizon. However, their short-term potential has been largely over-blown. Sapphire Energy, founded just a year ago, has developed an algae that can produce 91 octane gasoline that can be used in existing infrastructure, doesn't use farmland or feedstocks and is carbon neutral. Problem solved right? Not exactly. The company hopes to be producing 10,000 barrels a day by 2011. A nice start, but hardly enough to offset the 3 million barrels a day we currently consume. Honda has announced production of their first commercially available fuel cell vehicle. They hope to sell around 200 of them in 2009. Again, a nice start, but...

Point being, we can probably replace crude oil within my lifetime, but crude will still be our main source of energy for quite a while. Drilling for more makes sense. Opponents to more drilling argue that it will take 5 to 10 years for new fields to come on line. That was true 5-10 years ago. I think we should get started. Another argument is that it will harm the fragile arctic environment. The acreage under consideration amounts to something the size of a postage stamp on a football field when you compare it to the total size of the wildlife preserve, and the caribou in Alaska really don't seem to mind, in fact they gather near the pipeline because it's nice and warm. Another protest is that the oil companies aren't developing on their currently leased land, they should be forced to do that first. The fact is that they aren't developing those areas because they have determined there's not enough potential there. To develop a field you have to convince investors to put up their cash. How's that call going to go? "We're pretty sure there's no oil here, but we want to drill anyway. How many shares can I put you down for?" The only reason their holding those leases is in the hopes that they can exchange them for more promising territory.

Conservation has been touted as the real answer. Efficiency is great, but the expectation that it will lead to less net energy consumption is just foolish. Just as time saving devices like the micro-wave and the vacuum cleaner did not lead to more free time, more energy efficient devices will not lead to less consumption. We'll find somewhere else to use it. If it takes less energy to heat your house, you'll heat your garage and your shed too. If it costs less to light up you home, you'll light up your back yard.

The real answer to not enough energy is more energy. We can develop ingenious new ways of producing more than we have ever imagined, but we're not there yet. Get out of the market's way and let it go to work.

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