Do We Need a Stopgap Fuel?

It’s becoming clear that energy and energy independence — you have to love that term — will be a major focus of the upcoming presidential election. While most of us are sick of the dog-and-pony shows and pundits of the past few weeks, we are also sick of the all too-easily dismissed ease of both parties’ energy policies.

Do we drill more? Do we import less? Do we use ethanol? Should all cars be flex-fuel?

There are two end goals, it seems: independence from foreign oil and eventually independence from non-renewable fuels.

I’m going to try and tackle just the first one today, and in doing so I think it might become clear that ethanol and natural gas are stopgap fuels that we just don’t need to become energy independent.

The reason I got to thinking about this was the upcoming Senate bill that would require every car to be flex-fuel — to the layman, that means capable of running on both gasoline and ethanol E85. It seems everyone is ethanol-crazy and doesn’t understand that there is very little infrastructure to support massive ethanol use nationwide; there are 1,500 E85 pumps in the U.S., versus 167,000 gas stations. Adding thousands of new pumps will be expensive. E85 is also less efficient, and while it emits less carbon monoxide and other toxins than gasoline, it produces more of other types of toxins. My thinking is we don’t even need it. My alternative? It’s not a new one: We go all-hybrid, and fast. And guess what? If we do, we don’t need to import any more oil from OPEC.   

Well, maybe we don’t go ALL hybrid, but we move the real average mpg close to 40 mpg instead of 35 mpg. That would double efficiency and cut demand for gas by 50%, thus cutting the need for oil by 50% (assuming that it’s a true relative relationship). 

I’ll get to how we do this in a second, but check out the numbers. According to the U.S. Office of Energy Statistics, the U.S. imported 401 million barrels of oil in June 2008, 182 million of which were from OPEC. That’s really who we don’t want to import from when we’re looking to be energy independent. I don’t think we’re too worried about Canada, Mexico, the U.K. and the rest of the non-Opec countries, except maybe Russia. Throw Russia’s imports into the OPEC number and you get a nice round 200 million barrels of oil imported from those nations, versus 200 million barrels of oil from the non-Opec ones. The U.S. in June 2008 produced 153 million barrels of oil on its own. 

So we don’t really need to reduce use by 50%, but let’s just say we did; then we’re doing even better. How do we do it? We don’t need E85 or biodiesel. We’d need more-efficient cars running on regular gasoline. I’m not a hybrid fanatic and would take a BMW M3 over a Toyota Prius any day, but if politicians want answers on how to go energy independent, this is it. And guess what? Consumer choice is going to matter most of all. 

Consumers will have to start buying hybrids, diesels and other cars that get 35 mpg or higher (and there aren’t many of those today) in large numbers over the next 10 years to achieve a 50% drop in gas consumption. Otherwise, by some numbers it’ll take until 2034 until we’re all-hybrid. 

We’ve already seen a rather significant 4.7% drop in travel just due to high gas prices reducing travel. We’ve also seen huge spikes in fuel-efficient car sales because of high gas prices. But can the government force everyone to buy in? Of course not. It can only incentivize it with tax credits, like it did for early hybrid-adopters. 

If those tax credits are extended and expanded and more hybrid models hit the market, like the new Honda Insight and its expected sub-$20,000 price tag, the tables could shift quickly. There are hybrid options for buyers of trucks and large SUVs that get 40% better mileage as of today, but they’re pricey. Besides sports cars, most segments already have hybrid alternatives. By 2010, the number of hybrid offerings will double from what we have today, including plug-in electric vehicles from GM and possibly Toyota. We expect more automakers will join in that trend. The cost of hybrid technology is falling, while the seamless nature of the hybrid vehicles themselves is improving.

We could actually see real-world fuel economy rise 50% by 2015 if buyers make this shift. We could say goodbye to OPEC and let China and India become its new top consumers. Let’s not get delusional; we’re still going to need oil for the foreseeable future, possibly the next century. The goal is to reduce overall demand and lower prices at the pump.   

So when we hear about making flex-fuel capability mandatory on all cars because it only costs $300 a car to do it — with no mention of the millions, if not billions, it would take to expand ethanol infrastructure — we don’t get it. Just like when we hear that natural gas — which needs to be drilled for just like oil and is used to heat homes — is a viable fuel for propulsion, we scratch our heads. Why split our focus on stopgap measures? If we’re all headed toward using alternative energy sources — wind, solar, thermal, wave — to produce electricity for electric cars and electric hybrid cars, than promoting another liquid fuel that is inefficient to produce and inefficient to burn makes little sense, especially if hydrogen is really the best long-term solution and we already need millions and billions for that infrastructure. 

I will say that if cellulosic ethanol or ethanol produced from algae or some other cutting-edge technology can hit mass production — and it might in the next 10 years — then flex-fuel should be more common. But we’ve been hearing about these techniques for years with no breakthroughs for real-world consumption. 

So what am I saying? Keep it simple. Plan for renewable energies to take over in the future, but focus on efficiency today. Then we could reach our lofty goals without going broke on stopgap measures.