Like the Bad boy said: "It's the economy..."
Here is an article to fuel the debate the with.
Living Without Oil Mon Feb 10,12:00 AM ET
BY MARIANNE LAVELLE
Grant Goodman wanted to do his part to reduce U.S. dependence on foreign oil. So two years ago, the Phoenix concrete producer began using biodiesel--made from refined soybean oil--to fuel his fleet of 130 diesel-powered cement mixers and excavators. For his efforts, Goodman in 2001 won a local entrepreneur of the year award and plaudits from the Environmental Protection Agency (news - web sites). But protecting the Earth was not Goodman's only concern. "Let's start with national security--the billions and billions we waste dancing around the issue, protecting those pipelines, invading Iraq, doing whatever else we're doing in the Middle East. It all gets down to continuing the flow of oil to this country."
Goodman's stance hasn't been easy. Biodiesel fuel sold for 70 cents per gallon more than regular diesel fuel, giving competitors of his Rockland Materials a decided edge. "It cost me a few hundred grand," says Goodman. Those harsh economics forced him last year to resort to a petroleum mix including 40 percent or less of biodiesel. But don't count him out. He plans to build his own soybean oil re-finery this year to help him return to 100 percent biodiesel. Goodman has urged other local businesses to make the switch, but as long as petroleum is cheaper, he says, "I'm this guy screaming in the wind."
Sure, in theory, everyone agrees the nation should break its 20 million-barrel-a-day oil habit, 58 percent of it imported. Last week, President Bush (news - web sites) noted that "sometimes we import from countries that don't particularly like us. It jeopardizes our national security." Antiwar protesters, who argue that Iraq's massive oil reserves have made it a U.S. target, use sharper rhetoric. "No blood for oil!" they shouted at demonstrations at gasoline stations around the country last week. At the other end of the political spectrum, Martin Feldstein, who headed former President Reagan's panel of economic advisers, has argued that the United States should set a goal of complete oil independence by the year 2020. "Otherwise, we will continue to be hostage to the policies of the current and future rulers of Saudi Arabia, Iraq, Iran, and their neighbors." And indeed, the jitters of potential war in the Middle East and political upheaval in Venezuela, the nation's fourth-largest oil supplier, have pushed up the price of gasoline for eight consecutive weeks. If global events turn awry, an oil price shock could, as has happened repeatedly in the past, tip the struggling economy back into recession.
Within reach. But has anyone found a reasonable alternative to the black gold that fuels the U.S. economy? Some answers seem tantalizingly close, especially for transportation, which consumes the vast majority of our oil. Hundreds of truck fleets and bus systems already run on two diesel-fuel alternatives, biodiesel and natural gas. Meanwhile, biotechnology has made it possible to extract fuels from farm products like corn husks, long discarded as waste. And, of course, there are the many recent advances in the harnessing of energy from the world's most abundant element, hydrogen--the science for which Bush pledged $1.2 billion support in his State of the Union message.
But much more money and an even broader government commitment will be needed to reverse the current U.S. trajectory toward greater oil addiction. After all, largely because of the popularity of gas-guzzling sport utility vehicles, the average fuel economy of the 2003 fleet of cars sank 6 percent below the peak set 15 years ago. Critics say that until the new technology is ready to help the nation kick the oil habit, the Bush administration should focus on breaking the addiction step by step. Fuel-economy regulations, they argue, could force greater use of the breakthrough hybrid gas-electric engine and other lesser-known innovations that can squeeze more miles out of every gallon of gasoline.
Japan's government, for example, vows to put 10 million "ecofriendly" cars on its roads by 2010, a number it hopes will include not only 50,000 hydrogen fuel cell cars but also natural gas vehicles, electric autos, and hybrids. Japan's auto industry views that as an attainable goal, given the tax incentives and subsidies that support it. Stephen Tang, president of Millennium Cell, an Eatontown, N.J., firm that has developed a hydrogen fueling system, is hopeful that a similar commitment will catch fire here. "If we can get the oil man to say the word 'hydrogen,' that's significant progress," says Tang.
In his so-called FreedomFUEL initiative, the president zeroed in on what is unquestionably the most promising alternative fuel. Hydrogen is everywhere, and when used to power a special battery called a fuel cell, its only waste product is water. It's an alluring option, but slippery. Hydrogen is extremely difficult to harness, store, and distribute. And many people are most familiar with hydrogen for its darkest moment: the 1937 Hindenburg dirigible disaster. However, scientists reported in 1998 that the zeppelin's flammable coating, not its fuel, ignited this deadly blaze.
Lip service? All of the major oil firms have investments in hydrogen; in fact, BP's new motto is "Beyond Petroleum." But energy analyst Fadel Gheit of Fahnestock & Co. says the corporate commitment is "minuscule." The Royal Dutch/Shell Group's promised $1 billion for renewable energy over the next four years fades beside its $24.6 billion capital investment, mostly in oil and natural gas, in 2002 alone. "These companies don't want to be left out in the event that some of these ventures come to fruition," Gheit says, but "they're not holding their breath."
How soon will cars that run on hydrogen be on the market? "My answer has always been 'four years after we figure out how to have hydrogen at the corner gas station,' " says Thomas Moore, vice president of DaimlerChrysler's advanced car division. Perhaps scores of firms are working on solutions. DaimlerChrysler, which has earmarked $1.4 billion for fuel cell research from 2001 to 2004, has worked with Millennium Cell on a concept car, the Natrium, named after the Latin word for sodium. It is fueled with a water solution of the compound sodium borohydride, and a chemical reaction releases hydrogen as needed. Energy Conversion Devices, a Rochester Hills, Mich., company chaired by former General Motors CEO Robert Stempel and developer of the nickel metal hydride battery that now powers hybrid cars, has worked with ChevronTexaco to convert that same technology into a hydrogen storage and delivery system. A metal hydride element aboard the car would absorb hydrogen, like a sponge, then release it as needed into the fuel cell to power the vehicle.
Although President Bush called hydrogen a "pollution free" technology, that isn't necessarily the case. Extracting hydrogen from its most common source, water, requires electricity. Energy Secretary Spencer Abraham (news - web sites) says that electricity could come from coal, a domestic but dirty source, or from nuclear energy, an option whose expansion the U.S. public has not welcomed. Hydrogen also can be gleaned from gasoline, an idea that has garnered notable support from Big Oil. Environmentalists want to see large amounts of new wind and solar power deployed to help generate the fuel, and the Bush plan would put most funding toward that goal. But wind power, although competitive and growing at a rate of 28 percent last year, still accounts for less than 1 percent of U.S. electricity. Expensive solar's footprint is even smaller. Until renewable energy is more widespread, many suspect that hydrogen will be manufactured out of a clean, though not ideal, alternative fuel, natural gas.
That's the hope of H2Gen of Alexandria, Va., which plans to roll out its first on-site hydrogen generation stations using natural gas later this year. The company hopes to silence critics who say distributing hydrogen would be prohibitively expensive, requiring either tanker trucks of liquid hydrogen or construction of a new nationwide pipeline system. H2Gen's idea is to hook its 6-by-7-foot fueling stations to existing natural gas lines and, through an on-site chemical process, extract hydrogen at a cost competitive with that of gasoline. "We see ourselves as a transition to the renewable hydrogen future," when there's enough wind and solar energy to produce hydrogen from water, says Sandy Thomas, company president.
When consumers begin to see hydrogen cars in showrooms, which General Motors Vice President Larry Burns thinks will be by 2015, they may not be recognizable. GM's version, the Hy-wire, has no hood, steering wheel, or pedals. The driver uses handgrips to steer, accelerate, and brake while looking out through a floor-to-ceiling windshield. "We think we can truly reinvent the automobile and the industry around the fuel cell and make good money doing that," says Burns.
High stakes. But with terrorism a national concern, many observers see 12 years as too long to wait for the country to wean itself from Middle East oil. Given the high stakes, is any alternative ready now? U.S. farms and fields have yielded some homegrown energy choices, like biodiesel, natural gas, and ethanol, but it has been hard for them to challenge the entrenched oil industry with its relatively low prices and robust infrastructure. Biodiesel would seem to have the inside track; it can be pumped into nearly any diesel engine tank with no modification. In fact, Rudolph Diesel used peanut oil to power the engine he debuted at the 1900 World's Fair. Biodiesel can be made from any fat or vegetable oil--even used and purified kitchen grease--although it is usually made from the nation's second-biggest crop, soybeans. Environmental benefits are impressive; 100 percent biodiesel eliminates sulfur emissions and cuts particulate matter and some other pollutants by about 50 percent.
Oddly, U.S. government policies have served as both boon and restraint to biodiesel. The 1992 Energy Policy Act, which encourages a percentage of federal and state government vehicles to run on alternative fuels, was amended in 1998 to give credit for biodiesel use. Sales have exploded 30-fold since 1999 to 15 million gallons. But to get credit, the federal government requires only that the fleets run on a mix of 20 percent biodiesel, 80 percent petroleum. With biodiesel as much as double the cost, and taxed at the same rate as petroleum diesel, governments seldom buy more than the 20 percent mix.
Naturally, this practice reduces environmental benefits. Biodiesel also increases emissions of one smog-producing pollutant, nitrogen oxide, or NOx. Although technical solutions, such as adjusting engine timing, appear to be available, some environmentalists remain lukewarm. Daniel Becker, head of the Sierra Club (news - web sites)'s energy program, says the "french fry grease hustlers" are not competing with petroleum at all but are vying for market share against an alternative fuel his organization prefers: natural gas.
Gassing up. Big-city residents have seen natural gas buses popping up in their mass transit systems. City governments have found they can move closer to meeting tough new federal antismog standards by converting some of their fleet to CNG, or compressed natural gas. Natural gas is not environmentally benign; it emits greenhouse gases, and exploration and drilling often prove controversial. But CNG engines emit virtually no particulate matter, toxic chemicals, or sulfur and 50 percent less NOx. What's more, 85 percent of natural gas consumed in the United States is produced domestically; nearly all the rest is from Canada. The 130,000 CNG vehicles on U.S. roads last year displaced 124 million gallons of gasoline, and the sector is growing 10 percent a year. Natural gas passenger cars and pickup trucks are now available.
However, cost and inconvenience can be stumbling blocks. The suggested starting price of a Honda Civic GX natural gas car is $20,510, nearly 60 percent more than a gasoline-run sedan and $1,000 more than Honda's hybrid gas-electric Civic. The price tag of the heavy-duty CNG engines is still $20,000 to $50,000 more than that of a traditional diesel engine. Finding a fueling station that pumps out the pressurized gas can be a challenge. When Washington, D.C.'s transit agency, Metro, decided last year to add 250 new CNG buses to its fleet, opponents complained the agency could buy twice as many diesel buses for the $105 million tab of the vehicles and their fueling station. But advocates noted that over time, Metro would save money on fuel. Natural gas is the only oil alternative that has been selling for less than gasoline; the discount last fall was about 25 percent. Also, tax incentives from the federal government and some states help offset capital costs. New solutions also are on the horizon for the fueling problem. FuelMaker, a Canadian company in which Honda has a 20 percent stake, plans this year to begin sales of its "Phill" appliance, which will allow drivers to fill up from natural gas lines at home; expected price: about $1,000.
Second chance. After the 1970s oil crises, policymakers turned to what seemed at the time to have the most potential: ethanol. Corn alcohol hasn't exactly lived up to its promise. The 2.13 billion gallons of ethanol produced last year, up 20 percent from the previous year, still amounted to less than 2.6 percent of U.S. oil imports. More accurately called an additive than a replacement fuel, ethanol is typically mixed with 90 percent petroleum; an oxygenate, it boosts combustion and reduces tailpipe emissions.
But ethanol's green image has faded of late. Diesel tractors plant, fertilize, and harvest the corn used to make ethanol, and substantial coal-fired electricity is used to process the grain. Cornell University scientist David Pimentel, author of a study showing ethanol consumes more energy than it produces, calls it "unsustainable, subsidized food burning." Federal and state governments spend about $1 billion a year to support ethanol, most of which goes to agribusiness giants like Archer Daniels Midland, which owns 35 percent of the market.
But the ethanol industry could be transformed by biotechnology. Researchers can now unlock the sugars found in tough agricultural waste products--corn husks, rice hulls, saw grass, and wood chips--which can then be fermented into an alcohol that can fuel vehicles. This so-called cellulosic, or biomass, ethanol would require less energy to produce and could be manufactured from material that is now burned or buried. Getting biomass ethanol from the laboratory to the highway has been slow. BC International of Dedham, Mass., which plans to build a plant in Louisiana to convert sugar cane waste into fuel, is having a hard time getting $90 million to build the refinery. "It's a combination of the economy and the fact that it's the first of its kind," says Vice President John Doyle. "Bankers and investors love to say, 'Where is one of these running?' "
The Department of Energy (news - web sites) has supported biomass ethanol research and development, announcing $75 million in grants in December. Recipients include Cargill Dow and DuPont, which have successfully used biotech to convert corn into packaging materials, plastics, and synthetic fibers like those now made from petroleum. "The government has a role in helping to defray some of the risk" if the nation wants faster development of cellulosic ethanol, says Pat Gruber, vice president of Cargill Dow. "Many plants never work or take years to work. It's a scary thing from an investment standpoint," says Gruber. But the Bush administration's new budget would reduce biomass ethanol funding, leaving the private sector to lead future development.
Until true oil replacements can make a dent in the market, many argue that the government should focus on reducing consumption by requiring automakers to build more fuel-efficient cars. The Sierra Club calculates that if the vehicle fuel economy average of 20.8 mpg were raised to 40 mpg, it would save upwards of 3 million barrels of oil a day. "The technology is out there, but the government needs to give the automakers a very clear signal," says David Friedman of the Union of Concerned Scientists. Still, carmakers say that consumers don't want the smaller cars that higher standards would entail. And at an Alliance to Save Energy conclave last fall, Karen Knutson, a top aide to Vice President Cheney, cited studies showing that smaller cars are more hazardous: "Every mile per gallon saved kills lives," she said, eliciting hissing from the audience. Fuel-efficiency advocates say carmakers would not have to downsize but could install new technologies that could make even SUVs, which have their own safety concerns, more efficient. Greater savings can be reached if more manufacturers produced, and more consumers drove, the hybrid gasoline-electric engines pioneered by Honda and Toyota.
High hopes. The hybrid's popularity, coupled with mounting criticism of the SUV's gas-guzzling tendency, is forcing the market to respond (box, Page 36). But GM's Burns says that consumers will not pay additional costs that are inevitable with high-efficiency vehicles unless they get greater performance and better value. "Just having a strong preference for fuel economy--we don't think that's going to happen at $1.50 a gallon," says Burns. He may have a point. Statistics show that as fuel economy has grown, the number of miles that Americans drive each year has risen.
That's why many economists say the more efficient way to help Americans give up oil would be to do what the Europeans do--tax gasoline more heavily. "Some would argue that the price of oil ought to include some of the cost of the defense establishment, since we seem periodically to have to send the military over to defend oil producers," says oil economist Philip Verleger of the Council on Foreign Relations. It's an idea, however, that has been a nonstarter among antitax Republicans and populist Democrats alike, since it would hit low-income and rural Americans the hardest. Some creative solutions have been suggested, including an offsetting cut in Social Security (news - web sites) taxes for working Americans and an elaborate system of vouchers. But Verleger believes the U.S. government passed up its one chance to enact such a tax. "If George Bush had pointed to the wreck of the World Trade Center, and said, 'We must correct this problem,' and the only way is by raising the cost of gasoline on a phased-in basis, it would have worked," he says. "It was the golden opportunity missed."
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