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Arctic Leaf

Pete Seeger And Building Consensus For Transitional Fuels

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I have a love for folk music. I recently heard the cantor sing “Where have all the Flowers Gone?” at a service for the Jewish High Holidays. It brought back a lot of memories concerning the ‘60s: a period of hope, achievement and tragedy in America.

Excuse me if I take one line from the song by Pete Seeger, perhaps out of context, to explore the current intellectual and real politic difficulties we have in weaning the nation off of oil. Remember the continuous refrain in every stanza concerning the human costs of war, “Oh, when will [we] ever learn?”

I think we should ask the Seeger question now, in addition to thinking about war, about the issues involved in America’s transportation sector’s continued dependence on oil and the nation’s inability to come up with a coherent transition to a renewable fuel.

Look, I hope that we can make the switch from fossil fuels to renewable fuels as soon as federal policy, technology, design and costs make the renewables and cars competitive for most folks. The sooner the better! But even when the market penetration of non-fossil-fuel powered vehicles is double, triple or quadruple what it is now, the percentage of such cars on the road will be infinitesimal compared to the cars fueled by gasoline — a derivative of oil. Think about it! 254 million vehicles exist in America. Fewer than 100,000 renewable fuel powered cars, primarily electric and electric hybrids, were sold in 2013. Given the average life span of cars, it will take a long, long time before the fleet is predominantly gasoline free. Given these facts, establishing a national strategy that, through research and development, makes renewable fuel-powered vehicles cost efficient and marketable to most Americans as soon as possible, and that, simultaneously, encourages the use of transitional fuels in flex-fuel vehicles, while far from perfect, makes common sense. The dual-linked approach is better for the economy, the environment, the consumer and the country’s security. (Ain’t going to have go to war no more…or at least less war based on oil needs.)

What is it that makes many America’s leaders in the public, nonprofit and private sector unable to act even semi-rationally concerning alternative fuels? Sure, Washington is dysfunctional and partisanship as well as special interests have prevented the development of consensus around fuel policy, but to some extent, we as citizens have not become “energized” to advocate for change. Push alternative fuels, including those derived from renewables, and the oil industry demurs with shrill “earth is flat” type lobbyists; advocate for flex-fuel automobiles, and you get both the oil industry and some in the auto industry leveraging their often negative weight in Congress and in state capitals. Try building strong bipartisan coalitions around development of choice at the pump and you are seen as a dreamer, and subject to the often challengeable absolute wisdoms shouted by different interest groups and their leaders.

Sit back and take it all in! The dialogue, or what purports to be the dialogue, concerning fuel choice often reminds me, at least, of the religious arguments about whose God is better. I don’t think anyone has recently had a direct line to God! The tolls are too expensive. Federal regulations in light of separation of church and state prevent it. Similarly, I do not know any respected analyst who finds complete truth in his or her numbers supporting one fuel over another. We hope for perfectibility, not perfection, in analytical theology.

But repeating the dysfunctional “woe is us” analysis over and over again becomes boring and seems to be an excuse for political inertia or failed leadership in all sectors — public, private and nonprofit. Paraphrasing the Pogo comic strip, we have met the enemy and he is us.

So, “when will we ever learn?” that making love is better than making war with respect to building an agreement on alternative fuel strategies? The oil industry, according to recent analyses, has reason to want to think about the future before it continuously tries to restrain our choices at the pump. Prices per barrel may soon reach the level where drilling for tight oil may be too expensive and alternative fuels may be worthy of investment. (Nothing like the profit motive to bring folks to the table!) The auto industry recently has been increasing production of flex-fuel vehicles and CAFE standards, combined with a successful push for open fuel standards and lower cost fuels, could induce even higher production levels of flex-fuel vehicles. Many environmental groups, some of whom already support a dual strategy leading to expanded transitional fuel choices and support for a faster path to renewables, seem willing to discuss a road less traveled, that is, continued use of fossil-based transitional fuels until renewables are ready for prime time. Maybe all we need now is a leader or leaders supported by informed constituencies who will bring relevant groups and individuals together around a consensus building learning table.

Thank you, Pete Seeger!

Arctic Leaf

API and ethanol — A musical match made from memory

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Every time I get depressed about the world — and there is plenty to get depressed about — API (American Petroleum Institute) issues a silly press release that, in its confusing presentation and content, brings back a romantic song from my past. Because of API, over the last few years I have been reunited with Berlin, Gershwin and Bernstein, etc.

API has done it again. Its press release accusing the EPA and the administration of playing politics with RFS guidelines concerning ethanol, a release published even before the EPA has released its amended proposals, is nothing short of clairvoyant. I knew API had strange powers and was funded by the oil industry that, itself, has often been accused of confusing magic with facts.

API’s most recent press release brought joy to my heart. Without recognizing that I was doing so, while trying to sleep, I started to remember, paraphrase and sing a memorable tune from a top-ten best song list, published in the early sixties, “What kind of fool am I” (Leslie Bricusse et al.) to hope for wisdom from API. It has often run counter to facts and analysis concerning the benefits and costs of alcohol fuels and instead reflected the organization’s support from its patron oil company, Medicis.

API now contends that EPA is about to increase the renewable fuel targets for ethanol. Wow, a revolution! Call out the National Guard! To API, EPA’s action, if it occurs, would defy market place experience. E15 and E85 is not selling well. Oh, E15 and assumedly E85 is harmful to car engines. EPA’s assumed new rules would result in wasted resources and skew the market away from their favorite American-made product, gasoline (over 30 percent of which is not made in the U.S., but is imported). Not only would America be ruined but Adam Smith would turn over in his grave. Previous API releases indicate, in rather shrill tones, that ethanol is harmful to marriages, causes cigarette smoking and sexual dysfunction (just kidding).

It’s hard to respond to API’s release (or releases). Yes, the market for E15 and E85 has been relatively slow to develop, but API’s funders — oil companies — have been a, if not the, key factor causing the gap between demand and expectations. Not only has the industry tried to kill the chicken, it has also tried to kill the egg. Let me count the ways (sorry, Elizabeth Barrett Browning):

1. Oil company franchise agreements rarely allow the franchise to locate an E85 pump in their stations. If they do, many times, it must be situated apart from the other pumps in the side of the station. At the present time, there are only 3,354 E85 stations in the nation. So much for the supply side.

2. Oil companies have not been fans of open fuel legislation. They have used their lobbyists and their own political power to help kill it every time it comes up in the Congress. So much for their collective belief in consumer choice.

3. Until recently, the carmakers in Detroit — historically, the allies of the oil industry — have been slow to respond to consumer and policymaker interest in flex-fuel cars — cars that can use more than gasoline and the conversion of existing cars to FFV status. While Detroit is now producing more flex-fuel vehicles every year, the oil industry still remains a backbencher and a naysayer with respect to producing or supporting alternative fuels and conversion options, new or old. So much for competition.

4. API’s research concerning the impact of ethanol on vehicle engines, funded, again, mostly by the oil industry, has not qualified it for applause and extended readership regarding methodology or content. Its relatively recent analysis of E15 was panned, justifiably, by the EPA and other researchers because of insufficient sample numbers and lack of relevant sample characteristics. But it apparently did what it was supposed to do: put fear in the minds of drivers concerning ethanol use. So much for independent and thorough research.

5. API seems to suggest that the RINS subsidy built in to the RFS is anti-market and anti-God and country. Maybe we should look at all subsidies granted fuels by the U.S. government and complete something like zero-based budgeting process to see which ones fit the public interest and which ones primarily line the pockets of the receivers. Government help, whether direct or indirect, whether visible or imputed, should be premised on articulated and transparent public objectives and should not substitute for private sector resources which would be available without subsidy. In this context, the range of oil subsidies, now on the books, clearly needs review and justification. They far outweigh the dollars that assist newer ethanol companies. Given resource constraints, perhaps we should put oil and ethanol support on a transparent evaluation table, and, after a fair debate, allow the public to decide. Et tu, oil companies and API!

API is an easy target. They shouldn’t be. With uncertainty concerning demand and price of oil and its derivative gasoline, I would think its bosses from the oil industry would put them to work reviewing the nation’s future menu of fuels and possible partnerships with alternative fuel companies and advocates. Apart from possible pro-forma benefits, many Americans who view the oil industry and its representatives through negative filters might begin to change their mind and see the industry as increasingly pro-choice, better on the environment, pro-consumer and pro-security. Hope springs eternal. The oil industry, up to now, has been living in a fool’s paradise for a long time — cheap oil, high demand and income growth. It’s the American way. But, given a changing economy, tight oil and relatively slow and uneven U.S. and global growth, continued reliance on an old oil industry monopolistic model will cause nightmares for wise men and women. API, what’s my next song? How about “I Can Dream Can’t I” or “High Hopes!”?

Arctic Leaf

Ruminations on oil donations, foreign nations and replacement fuels

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The “Old Gray Lady,” The New York Times, did it again….its recent article indicating the extent of government funds from foreign countries supporting so-called independent think tanks and universities in the U.S. was enlightening and was also clearly in the public interest. Most of us policy wonks suspected or knew what the Times indicated on September 7. “More than a dozen prominent Washington research groups have received tens of millions of dollars from foreign governments in recent years while pushing United States government officials to adopt policies that often reflect the donors’ priorities…” The money is transforming the once-staid, think-tank world into a muscular arm of foreign government’s lobbying in Washington. And it has set off troubling questions about intellectual freedom — some scholars say they have been pressured to reach conclusions friendly to the government that is financing the research.” In this context, NATO, European, Middle East and Asian nations (e.g., Norway, Germany, Qatar, Saudi Arabia, United Arab Emirates, Japan, etc.) have been visible funders according to the Times and other media..

Before readers become holier than thou about the perception of perversion in foreign governments that link their support to what they want done regarding research and lobbying (implicit, if not explicit), they should know that the grant system in the U.S., in general, is not free of, at times, donor efforts to influence and/or sometimes pressure, whether it involves foreign governments, all levels of government in the U.S, business or foundation grants. Both have been and will remain the way of doing business.

I suspect attempts to influence or pressure research institutions or scholars are sometimes worse in social science research than in the sciences or engineering, where data, analysis and results can often claim at least some visible and quantifiable correlation or causation relationships. A donor’s ideological commitments also may predetermine and lessen the need for donors to try to negotiate the outcomes of grants or gifts. Not many liberal academics will apply for research money from the Koch Family Foundations, not many conservatives will likely go to the George Soros Open Society Foundations (OSF) for money.

Life is complicated for donors and recipients. Free speech and the free flow of ideas are embedded in the U.S. creed and the nation’s constitution. Truth in advertising in research grants and their products, a mythological spin-off, is often muted by the overwhelming influence and importance of money and the need for it, in light of fund shortages. However, the American public, for the most part, cannot easily separate the respected status of the Brookings Institution, the University of California, the Center For Global Development, the Center for Strategic and International Studies, etc. from their willingness to accept what seem clearly donor advocacy grants and subsequently to participate in what appears, to many, to be advocacy research and lobbying. The involved leaders, not always the researchers, of recipient institutions will deny the fact that research money sometimes comes with a price concerning legal, moral and often spoken words in grantor testimonials or contracts concerning obligations to search for the truth and increase wisdom concerning policy and program options.

Oil and oil-related companies and Middle Eastern nations seem now to be among the biggest givers and perhaps receive the biggest “take back” benefits. They fund schools and centers as well as analyses in and at major universities and independent think tanks, both within and outside universities. They have also funded “independent” scholars, chairs and specific RFPs (Request for Proposals) describing general and sometimes relatively specific areas of energy or transportation and fuel-related research. Significant oil and foreign money for policy-related research is also funded through third-party groups, which often mask the source of donations. Donors, understandably, expect benefits from supported research — at least consistency with and, in some cases, advocacy for their economic, social welfare and environmental objectives.

Perhaps one of the more egregious relationships concerning policy or program research involved the Coordinating Research Council (CRC), generally a mouthpiece of and also funded by the oil and automotive industry. Its relatively recent study debunking of E15 reflected the views of their sponsors — again the oil and auto industries. It indicated that E15 significantly harmed engines of many vehicle classes. The study was legitimately criticized by the EPA and others concerning methodology and content. Indeed, it and its implications concerning use of E15, was refuted in part or whole by the EPA’s more extensive analyses, by the National Renewable Energy Laboratory (NREL) and by other respected groups and individuals, some even associated with the auto industry. CRC’s efforts stimulated analyses and similar findings by groups like AAA— again based on even weaker methodology and unknown funding (likely mostly membership dues). Critics have pointed to AAA’s tenuous policy links to members and its long-time support by and of the auto and oil industries. Remember, more cars result in more gasoline use and increased ownership secures more AAA memberships.

Forget the legitimacy or illegitimacy of the proponents and critics of research concerning E15, or for that matter E85. At most times, policy choices and behavior are not based on perfection concerning data and analysis.

What concerns me the most is the predominance of oil and its friends’ money and the lack of transparency concerning funding sources and grant and gift requirements or constraints — both informal and formal.

Like the Times, I am also concerned about the dividing line between education and lobbying concerning grants and gifts provided by oil companies and, foreign nations. Lobbyists are required to register as such. Most think tanks and universities do not see themselves as lobbyists and do not register.

Industry, some foundation and even government-supported research grants sometime come with strings attached. Even if they didn’t, the results of paid research into complex issues are generally not conclusive and can be helpful in stimulating dialogue, if it’s matched by research initiatives funded by donors with different perceptions. Bad, or mediocre research funded by advocates, like speech, shouldn’t be countered by censorship, but by efforts to execute better research and by initiatives to provide to policymakers and the public with countervailing views and analysis to generate dialogue and debate.

I am not a purist. There is no chance in hell that the basic system of what I call advocacy grants and gifts now in existence will end. But public policymakers should insist on transparency as to funding sources and research methodology. Key advocacy studies likely to affect public sentiment and decision maker views concerning replacement fuels and gasoline should be granted, at least some form of even informal refereed reviews. If I could figure out an easy way to do it, I would define alternatives that would provide some reasonable equivalency concerning research funding. They would assure Americans that all key replacement fuel options are examined fully and are compared to gasoline. The research on replacement fuels should not be submerged by foreign nation or internal U.S. oil interest funding. But I don’t get paid enough nor am I smart enough to think this one through, at least until the next column. Maybe you can help me? Paraphrasing my favorite oil scholar, Socrates, unexamined studies funded without independent review, only by the oil industry or its Middle East friends and colleagues, are often not worth having or debating. Peace.

Arctic Leaf

With Nearly 3.5 Million Barrels of Oil Per Day Offline, Why Aren’t Oil Prices Surging?

Source: http://www.fool.com/investing/general/2014/08/24/with-nearly-35-million-barrels-of-oil-per-day-offl.aspx
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Since 2009, oil prices have enjoyed a prolonged period of remarkable stability characterized by annualized volatility significantly below its long-term average. And though volatility has ticked up markedly in recent months due to the escalating conflicts in Russia and Iraq, oil prices haven’t risen much above $115 a barrel and have actually declined sharply in recent weeks.

Arctic Leaf

Innovation in oil & gas — it ain’t over yet

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To read the newspapers these days, you’d think that all the innovation in energy is involved in bringing down the cost of solar panels or building even bigger blades for windmills. But innovation still continues apace in oil and gas, both in pulling them out of the ground and in finding new ways to use them.

“We haven’t been giving the big oil companies enough credit,” said Dominic Basulto in The Washington Post. “ Sure, we may see their print ads or watch as they tout their accomplishments on TV, but deep down, many of us believe that the brightest minds have moved on to something new in energy innovation. But that’s not true.”

That’s important because if we’re going to use our abundant natural gas supplies to wean ourselves off of foreign oil, we’re going to have to be sure the current superabundance of natural gas isn’t just a flash in the pan. Moreover, we’re going to need innovation in making the transition to methane-based liquid alcohol fuels easier as well.

As most people have heard by now, even our best technologies can’t extract more than about 10-20% out of an oil or gas reservoir from the earth. Simply doubling that rate would give us access to huge, new quantities of domestic fuels.

There’s also a concern that fracking wells will have a much shorter lifespan than traditional gas and oil wells. Then there’s all that natural gas being flared off in the Bakken. Ending that conspicuous form of waste will require some new technology.

All these problems are being tackled through innovation, however, and that’s what Basulto is talking about.

Although everybody knows about fracking — the technology of forcing sand and water into the rock to break it up — few realize that the real novelty that makes up the current upturn in production possible is horizontal drilling, which allows access to entire geological strata without making the territory look like a pincushion.

“Today, drilling rigs are so good that they can punch holes in the earth that are two miles deep, turn the drill bit 90 degrees, drill another two miles horizontally, and arrive within a few inches of the target,” said Robert Bryce, author of “Smaller, Faster, Lighter, Denser, Cheaper,” a book about innovation in the energy industry. But horizontal drilling hasn’t stood still. ExxonMobil has developed an “extended reach” technology that can push outward several miles further deep in the earth. “Extended reach reduces our environmental footprint and in offshore applications will limit our presence in the marine environment,” says the company’s website. It may have been developments like this that prompted President Obama to give a green light to exploration off the Atlantic Coast from Delaware to Florida last month.

The same innovations are occurring with natural gas fracking. Innovators have made an improvement called “sleeve technology” that surrounds the drill bit and allows highly accurate placement of stimulation treatments. The result is that wells can be drilled twice as fast as a few years ago, at a lower cost. With increased precision in both drilling and fracturing, wells are being made more productive as well. Erika Johnsen on Hot Air said, “Data from the Energy Information Administration’s Drilling and Production Report shows that a Marcellus Shale well completed by a rig in April 2014 can be expected to yield over 6 million cubic feet of natural gas per day (Mcf/d) more than a well completed by that rig in that formation in 2007.” That’s a huge improvement in the space of seven short years.

All this is good news for the effort of substituting natural gas-based ethanol or methanol for foreign oil in our cars. After all, one of the fundamental considerations is that there will be enough natural gas around to keep the price reasonable. With so many competing proposals for employing natural gas — electrical generation, the industrial revival, LNG exports, etc. — it’s crucial that we keep expanding production.

So it’s encouraging to hear the news from Clean Energy Fuels, T. Boone Pickens’ baby, which has been building a “CNG Highway” across the country to service long-haul tractor-trailers. CEF has just completed the first leg of this nationwide network, connecting Los Angeles and Houston.

But much of the nation still lies outside the reach of natural gas pipelines and CEF is figuring out a way to serve them, as well. Last month the company opened a filling station in Pembroke, New Hampshire that will be served by a “virtual pipeline” of high-tech tractor-trailers making round-the-clock deliveries. This will allow the station to pump 10 million gasoline-gallon-equivalents (GGE), twice the volume of CEF’s largest existing station. More important, it will open up large areas of the country that have not had access to CNG. This natural gas-based substitute will sell for 30% less than gasoline.

Technology never stands still. Sometimes it forces us to give up things that have become familiar or even seemingly permanent. But as Robert Bryce said, the new technology is usually “faster, smaller, lighter, denser and cheaper.” And in the case of methane-based liquid fuels, it will mean freeing ourselves from foreign oil as well.

Arctic Leaf

Garage filling stations — are we getting close?

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One of the greatest appeals of switching to an alternative-fuel vehicle — electric, compressed natural gas or hydrogen — is saving money and freeing yourself from the clutches of foreign oil. But another is being able to supply your own fuel from a garage filling station where you may even be able to generate some of it yourself.

All this takes on a certain air of necessity when you realize that most of the infrastructure for recharging or refilling is not yet in place. In many cases, the garage may be the best option right now. So let’s run down some of the different options available and see how they stack up as being economical and practical.

Let’s start with the easiest one — electric cars. There are three types of chargers available to owners of a Prius, Leaf or Chevy Volt. The first is a Level 1 “trickle” charger, which is just a basic 120-volt line that plugs into any three-pronged outlet. This is the standard plug-in for all EVs. The problem is the amount of time it takes for a complete charge. For the Leaf, it takes close to 21 hours, which means that you can’t even do it overnight. For hybrids there’s some leeway since you can always revert to the gas motor and do some brake recharging as well. But if you’re planning to rely completely on a home outlet, you’d better have a second car.

More favorable is a Level 2 240-volt circuit. If you have an electric clothes dryer in your house, you’re already equipped. If you don’t have a 240-volt system at home, installation is easy enough. It will require a 40-amp circuit breaker, which may need a permit from the local building department, but the job is simple enough. Recharging time will be cut to less than eight hours, enough for an overnight. Plugincars.com puts the price at $600 -$700, although vendors such as ClipperCreek lists some for less.

If you really want to go really high-tech, you can move up to a Level 3 480-volt power supply that can give you an 80 percent charge in half an hour. The whole package costs $30,000, but with federal tax breaks and some help from the car companies, you can get it down to $10,000. Nissan offers a unit for $9,900. You could probably recoup some of the costs by recharging EVs for your neighbors, but you might need a zoning variance.

So how about compressed natural gas? What are the options there?

The Honda Civic is the only CNG passenger vehicle being sold in the United States. (Most of the progress has been with delivery trucks and long-haul trailers.) There are currently 1,000 CNG filling stations across the country, but half of them belong to companies that are using them for their fleets. Only about 500 are available to the public. So, unless you’re traveling along an Interstate and can make it to one of Clean Energy Fuels’ new truck stops, you’re going to have a hard time.

Refilling at home, however, isn’t all that impractical. More than half the residences in the country are equipped with natural gas for home heating, cooking or hot water. The trick is to get a device that can compress this household gas to be used in your car.

Honda originally offered a home refueling kit, the Phill, which costs $4,500 and could do a refill overnight. Honda stopped making the offer after 2012; however, due to concerns about the widely varying quality of non-commercial gas and the possibility of home devices allowing moisture to collect in the fuel system. For those willing to take the chance, the Phill is still available from its manufacturer, BRC FuelMaker. The question is, “Why is it so expensive when the same pump would cost 10% if it filled air bottles?” There is a regulatory review needed to reduce the cost.

Seeking to promote the technology, the Department of Energy (DoE) handed out grants a few years ago to encourage companies to develop affordable home systems. Now one of them may have come through. The Eaton Corporation of Cleveland, already prominent in the field of electrical charging stations, announced in 2012 that it plans to market a CNG home refueling device by 2015. “The system will use liquid to act as a piston in compressing the gas,” says Chris Roche, vice president at Eaton’s Innovation Center. “We have also developed an innovative heat exchange technology that will improve efficiency and cut costs dramatically.” Eaton is aiming at production costs of $500, which means the device could sell for less than $1,000. GoNatural, a Salt Lake City company, has also promised to have a product available by 2015. “It could be a game changer,” said New York Times reporter Paul Stenquist, in profiling CNG home compressors last October.

So, what about hydrogen? Is there anything available there? Hydrogen is very difficult to deal with. It is the smallest atom and will leak through just about anything. It’s hard to store and transport and must be kept under high pressure.

The upside, however, is the possibility of generating your own hydrogen, particularly from renewable resources. This can be done with simple electrolysis of water, which only requires an electric current. If you can generate that current with wind or solar energy, then you are essentially powering your car for free.

Making it happen is probably a long way off, although people are working on it. HyperSolar, Inc., a Santa Barbara company, has announced “proof of concept” of a method for generating solar hydrogen. “Using our self-contained particle in a low cost plastic bag, we have successfully demonstrated our ability to mimic photosynthesis to produce renewable hydrogen from virtually any source of water using the power of the Sun,” said CEO Tim Young while making the announcement. Horizon Fuel Cells, a Singapore company, released a “desktop” hydrogen generator in 2010 that generates hydrogen through electrolysis from any power source. It sells for $250 on Amazon. Although the company is targeting much smaller fuel-cell devices, it could eventually scale up to handle quantities needed to run a hydrogen fuel cell car

Altogether for cutting loose from the local gas station, electric vehicles are the best bet for now. But natural gas in its many forms — including methanol — are moving up and renewable hydrogen may be on the horizon. With home-generating devices proliferating, it is not hard to see all this eventually making a dent in our consumption of fossil fuels.

Arctic Leaf

USA, USA, USA…The search for competitive fuel choices

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“USA, USA, USA, USA.” No, I didn’t just come from watching the U.S. playing in the 2014 FIFA World Cup. But after reading the glowing, cheerleading, overly enthusiastic, often-nationalistic media accounts of the U.S. overtaking the Saudis in oil production, the win-lose aspects of the soccer chant somehow became embedded in my persona (like counting sheep or gas pumps at night when I can’t sleep). We beat the Saudis at their own game — oil. We’re number one…wow! Next, will we emulate the Saudis and place onerous and discriminatory restrictions on women drivers and, unlike the Saudis, argue that it’s a conservation measure? Of course not! We don’t have to be number one in everything. But oil does make strange bedfellows, and equally strange behavior, as well as policies.

Unfortunately, most of the media stories avoid analysis of what the new oil prominence of the U.S. means to the nation and world. Yes, increased production likely means less dependence on the Middle East, particularly Saudi oil. Indeed, we now import about 33% of oil needs, the lowest percentage in years.

But oil independence remains a myth. Oil interests are pushing for a reduction of regulations concerning exports of U.S. crude oil and have always exported considerable refined oil products allowed by the law. Their motives, despite frequent public comments to the contrary, are generally to sell to the price, which means to the buyer who offers the most return. He, she or it frequently is a global purchaser. Independence is a slogan that often blurs motive and reflects good politics but bad substance and contrary to reality.

The U.S., as the most powerful western nation, irrespective of any mathematical domestic surplus, will continue to extend its role as defender of the global supply chain from the Middle East or elsewhere. While we may be less dependent on foreign oil, U.S. leaders have, in the past, and likely will in the future, use a combination of diplomacy and military threats and action to defend and sustain the flow of foreign oil to allies or assumed allies. In this context, the role we play in the world extends our dependency. Unfortunately, wars will be fought and U.S. soldiers will die because of this felt dependency.

Most of the “USA, USA, USA” chants in the media coverage of our new oil prowess, implicitly neglects the difficult juxtaposition between increased oil production and supplies and higher gas prices. Less dependence hasn’t brought the reduction, or even stabilization, of gas prices promised by the oil industry. Gasoline in California is now generally well over $4 a gallon for regular, and averages over $3.60 a gallon across the nation. Why? We have a surplus, don’t we? Oil companies want to export more, and it appears that they will be able to do just that, soon. As Dr. Pangloss asked in “Candide,” is this the “best of all possible worlds” (let me add, for the U.S.)?

Clearly, the cost of oil at the pump is not strongly linked (at the present time) to the amount of U.S. oil that shows up on EIA calculations and projections. Both price and supply are going up simultaneously. Yes, there is uncertainty, given events in the Middle East and yes, uneven growth around the world has increased demand in some areas and suppressed it in others. The link between high prices and the Middle East is difficult to measure precisely. Consumer costs per gallon are likely affected more by investors, as well as speculation on Wall Street, than the actual numbers concerning increased production of U.S. oil.

So, apart from prayer and penitence, what can we do to get a better deal for consumers, and to prevent gasoline from becoming a negative factor concerning U.S. GDP growth and the environment? How can we help assure that being number one means robust economic growth, more income in the wallets of Americans (particularly low-income Americans), increased security and fewer dirty emissions?

These are not easy questions, and they do not lend themselves to simple ideological responses. Clearly, as renewable fuels and vehicles that meet the incomes and desires of most Americans become available, both will play a vital role in America’s future. But reliance on coal-fired utilities for power in some areas of the nation, battery costs, mileage limitations from single battery charges, and lack of infrastructure impede their ability to have a significant positive impact at the present. The market for renewable fuels and vehicles is relatively small and will remain so until technological advances catch up with potential demand.

Where is the Greek philosopher Diogenes when we need him? We have a path in front of us that would buy time toward a better American future, one that could offer competition to gasoline — competition that would be good for the economy, the consumer and the environment. Increased availability of replacement fuels, particularly natural gas-based ethanol, combined with large-scale conversion of older cars to flex-fuel vehicles (FFVs) and increased production of new FFVs by Detroit, would give gasoline a run for the money, if gas-only stations become fuel stations and provide consumers with a choice. According to the Renewable Fuels Association, less than one percent of all gas stations in the U.S. that are branded by the big oil companies offer E15 or E85.

I remain an optimist that more freedom will reign soon at the pump. The noted people’s philosopher, Charles M. Schulz, creator of “Peanuts” comic strips, lessened my fears about the future when he said, “Stop worrying about the world ending today. It’s already tomorrow in Australia.” USA, USA, USA. Fuel choice, fuel choice, fuel choice!

Arctic Leaf

Resources for the future and an alternative vehicle and fuel pathway

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I have been a fan of Resources for the Future (RFF) since my early days in Washington many years ago. While the organization’s reports won’t keep you awake at night nor can they easily convert into a Bollywood movie, they generally provide sound nonpartisan analyses of resource and environmental issues. In this context, the Fuel Freedom Foundation (FFF) retained RFF to independently study the potential economic, environmental and national security gains from replacing a portion of domestic gasoline use in the light-duty fleet with various natural gas-based fuels such as ethanol or methanol.

The request reflected the relatively large price differential between the growing supply of natural gas and gasoline and FFF’s assumption that natural gas-based fuels (ethanol and methanol) could not only offer the U.S. security benefits, they would be cheaper and cleaner than gasoline. If FFF’s assumption was right, public and private sector strategies to encourage the conversion of older vehicles to FFVs and to increase the production of new FFV vehicles in Detroit would seemingly be in order. Similarly, finding financially feasible ways to produce, develop, distribute and successfully market natural gas-based alcohol fuels would appear quite sound.

RFF’s study was completed last September and is available online.

I have read the document many times. It is compelling because it honestly portrays gaps in information and uncertainties concerning public policy and regulation, technology, geography, price trends, competition, and availability as well as access to natural gas-based fuel. Indeed, embedded in the report is the fact that policymaking in public, nonprofit or private sectors or predictions concerning consumer behavior is never perfect. As complexity increases, decisions often require reliance on perfectibility over time, rather than perfection in the present time.

Apart from RFF’s marshalling of available, relevant data and its related analysis, the study’s conclusions are supportive of leadership groups and leaders who seek an “alternative path” in support of the use of natural gas-based fuels and the conversion of older cars to flex-fuel vehicles.

What RFF concluded is that the only replacement fuel currently available to the more than ten million FFV E85-capable vehicles “does not have a cost advantage at the pump over conventional gasoline.” But assuming companies like Coskata, Inc. and Celanese are able to deliver on their financial modeling, live tests and price predictions concerning the production and distribution of natural gas-based ethanol, owners of FFVs, including owners of new and older converted vehicles could see cost benefits near $1 per GGE (gasoline gallon equivalent) in the very near future.

This is no small benefit. It will be particularly important to low and moderate-income folks, permitting them more choices when it comes to jobs, housing and other basic needs. It will also reduce the strain caused by reduced economic and income growth on middle class households. RFF also indicates, with somewhat less certainty as to how much, that there will likely be environmental benefits.

Making this new replacement fuel path viable will require the EPA to lower the costs of certification of kits that help convert older cars to FFVs, and to sanction relatively simple software adjustments, particularly for newer FFVs and their twins (not the human kind but automobiles whose engines reflect FFF characteristics. This path will also need the EPA and advocates of natural gas-based ethanol to work together to develop a vehicle-testing procedure for older cars that is both cost efficient, sound and hopefully, relatively quickly. Finally, it will necessitate a fuel market that reduces, if not eliminates, the almost monopolistic conditions generally imposed by oil companies and often supported, at least implicitly, by government policies and regulations.

Consumers, clearly, would benefit from more competition at the pump and from more pumps devoted to replacement fuels. Auguste Comte, the great 19th century philosopher and founder of positivism, never saw a gasoline station, but his simple motto, “Love as a principle [need for increased natural gas-based flex fuels and need for flex-fuel cars], the order as a foundation [development of policies and infrastructure for natural gas-based fuels and increased FFVs] and progress as a goal [extend consumer choice]” nicely frames RFF’s narrative. In turn, RFF’s study, while recognizing the value of renewable fuels, supports an alternative, natural gas-based replacement fuel as well as a vehicular pathway to help achieve national, regional and local economic, social welfare and environmental benefits. It’s near July Fourth. Let’s move toward freer increased choices among fuels and increased vehicular capacity to use them.

Arctic Leaf

A return to making love, not war – Iraq and replacement fuels

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Early on I wrote a column about an unanticipated Thanksgiving dinner conversation with a special operations soldier who had served in Iraq. His comment, in response to a question I asked about whether he and his buddies knew why they were sent to Iraq, was brief and blunt: “oil and U.S. security.” He would have none of what he thought was b.s. about “freedom and democracy” or “weapons of mass destruction.” Before I asked the question I actually already knew what his answer would be, but a glass of wine, a wonderful piece of turkey and good company suggested that my inquiry would lead to an opening for a longer repartee on the Middle East and U.S. policy. It did, and again oil and oil politics were the dominant theme.

I suspect that many of the writers of today’s headlines and op-ed articles anticipated Republican Eric Cantor would win. They are now arguing, in sometimes misleading reference terms concerning democracy, inter-sectarian harmony and morality, for a more aggressive U.S. policy toward the invasion by Sunni radicals of parts of what once on a map called the nation of Iraq.

But the real issue for many “experts,” I again suspect, is oil — a fear, whether factual or not, that if Iraq collapses, the world oil supply (already close to equilibrium concerning demand and supply) will relatively quickly reflect shortages and much higher prices per barrel of oil ($150 a barrel) and oil’s product, gasoline ($5 and more).

Should we be sending kids to fight for our apparent God-given right to Middle Eastern oil? Although I think a lot about the ethics of public decision making, I am not an ethicist. But as long as there are alternatives to supply, my hard-nosed policy advice would be against war or the steps that might lead to war. Iraq has not been the noble state that welcomed America in to rescue it ostensibly from Saddam Hussein. Its form of democracy has been limited, corrupt and sectarian.

What should our calculations be, concerning alternative supplies of oil? First, we ought to really think through whether a full or partial shutdown of Iraqi oil wells will mean a damn. Iraq alone supplies a small share of U.S. oil imports. Most of the often-shrill economic coverage of the radical Sunni invasion and its potential impact on U.S. oil seems to relate more to perceptions, not empirical evidence, about shortages and prices. Commentators “perceive” what the oil markets might or will do — really what oil speculators and investors will or will not do — based on what is currently happening in Iraq, not on facts on the ground. Neil Cavuto of Fox Business said, “Oil is a commodity, a global commodity, and like any stock in almost any market, it often trades on issues having little to do with basic fundamentals, and more to do with simple fear.”

Assuming, however, there is a real worldwide shortage of oil as a result of a closure of Iraqi wells, or that fear drives the prices up so much that there is a strain to the economy, the Saudis, probably, among all the OPEC nations, are the only ones with sufficient oil in the ground to make an immediate difference concerning supply. But will they? They have shown some flexibility in the past to U.S. petitioning. They have also, at times, despite their security relationship to the U.S., turned us down. This time around the Saudis could well be more than a bit sensitive, particularly if it looks like the radical Sunnis might win. The Kingdom is vulnerable with respect to a radical brand of Sunniism. I bet they also fear a potential Shiite effort to push the radicals back, particularly one led by Iran. Life is never simple for the House of Saud.

Okay, where are we? Oil is sold in an international marketplace. No matter which side you are on regarding the Keystone XL pipeline, if approved and completed, it will not have a major impact on U.S. gas supply or prices. Ask your friendly oil refinery or oil company executive where he or she believes Keystone-supplied oil will be going. Most of the assumed supply will be traded internationally for the highest global price. The predicted increased supply of U.S.-produced gasoline will probably help diminish price increases slightly, but don’t make a bet on how much. Today, a price of a gallon of regular unleaded gasoline is well over $4 in California and U.S. production is at a very high level.

What would likely help keep gasoline prices from spiking significantly and, at the same time, lessen the amplitude of the cycles is a commitment to competition in the fuel marketplace. Let Adam Smith reign! Allow safe, cheaper, environmentally better replacement fuels, particularly natural gas-based ethanol (and someday soon, methanol) to compete with gasoline. Encourage the conversion of older vehicles to flex-fuel vehicles! Push for renewable fuels and related vehicles that appeal to a larger market than at present, given costs and design constraints! Reduce our dependence on imported oil! Make love, not war! Drive (excuse the pun) for strategic solutions!