PrintFebruary 6, 2011
Energy Dollars and Sense
One of the most pressing problems for businesses, individuals and families is the cost of energy. Americans are paying too much for the energy needed to run factories and offices, for motor fuel, and for home heating oil.
Aside from taxes on petroleum products and despite OPEC's schemes, petroleum prices are largely demand driven. Demand for petroleum-based energy is increasing world-wide.
Compounding the problem of increasing world demand are the unrest and uncertainty in the Middle East and a hostile Venezuelan government. America and the world are approaching a perfect energy storm. The price of Brent Crude recently passed $100 per barrel for the first time in two years.
The United States Congress is solely responsible for America's energy crisis and the high costs of fuel. While restricting access to American sources of petroleum for years, Congress has been throwing billions of American tax dollars at alternatives to petroleum. Following decades of "investment," alternatives still supply less than 4% of our energy needs. Continual increases in world demand for energy alone guarantees that alternatives will remain a minor part of energy supplies for very long time.
Congress understands that the best way to lower energy costs is to increase the available supply of energy sources. What Congress doesn't grasp is the true relative practicality of available sources. The alternate and new sources of energy that politicians favor are too costly, too inefficient or too far in the future to have a meaningful impact on today's requirements.
Based on their support for and repeated approval of subsidies, a majority in Congress would have us believe that we don't have to find and burn far more of our own oil and coal or build nuclear plants. Congress subsidizes corn ethanol despite the market shortcomings and environmental issues with ethanol. Not only do ethanol and other subsidized alternatives have uncertain futures, they have limited impact on our fuel needs. In fact, alternatives haven't even been useful for frightening world petroleum producers into increasing production and lowering prices in the short term. Even Al Gore doesn't like corn ethanol any longer.
Case closed? Not so fast.
Politicians and special interests tell us that a newer, increasingly fashionable ethanol scheme, biomass technology, shows promise. Biofuel would be created by using bacteria to break down non-food sources of organic material to make cellulosic ethanol. The material sources would include organic waste products like switch grasses, sawdust, agricultural by-products such as corn husks and stalks, leaves, seaweed and landscape waste, among other materials.
America is biomass rich. Farmers and the lumber industry generate tremendous amounts of cellulose-rich waste. America has lots of prairie on which to grow grass and plenty of ocean off three continental coasts, plus the waters around Alaska and Hawaii. Advocates of cellulosic ethanol tell us that, by transforming and refining waste, seaweed and grass, renewable biomass can replace crude oil.
Biomass has some serious problems to overcome. Significantly, it takes nearly one and a half times the volume of cellulosic ethanol to produce the same amount of energy as gasoline.
The Department of Energy reports that it takes a dry ton of biomass to produce as little as eighty, possibly up to one hundred gallons of cellulosic ethanol. America uses more than 400 million gallons of gasoline a day. US and world-wide demand is increasing.
Given biofuel's energy-content disadvantage, if we wished to produce just half of our current gasoline energy needs, diesel-fueled trucks would have to move 2.5 to 4 million tons of biomass from thousands of sourcing sites over millions of square miles to ethanol plants daily. Those trucks will significantly add to the demand for refined fuel simply in order to deliver the raw materials needed to refine a fuel inferior to petroleum. And converting and refining biomass will consume even more energy. Due to its water content, ethanol cannot be transported in a pipeline. Once refined, more than 200 million gallons of ethanol would then have to be transported by diesel-fueled tank trucks or rail cars to blending stations every day.
There are technical challenges as well. There is currently no known cost-effective, mass-producible enzyme capable of breaking down fibrous materials having complex cellulose molecules. Scientists and engineers may solve the problem, but there remain serious environmental concerns with the micro-organisms: If a cheap enzyme becomes available, imagine the damage billions of people in the world's population, including some very irresponsible governments, could do to the globe's forests, fields and oceans.
The reality is that, compared to national fuel demands, alternate fuels are negligible additions to the energy supply. Alternate energy sources are distractions irresponsibly promoted by politicians of both parties to make us think that they're doing something - and to raise campaign funds. Politicians are doing something, but, so far, little of it is useful to or practical for consumers. Generous energy-sector companies and special interests receiving taxpayer-funded subsidies approve of Congress's political solutions and reward members with campaign cash. Alternate energy special interests need high petroleum prices. They know that, if petroleum prices were to fall, alternate sources of energy would be even less competitive and the subsidies they depend upon far more difficult to justify.
One thing is certain: If automobiles could run on hot air, there wouldn't be a gas station within a hundred miles of Washington, DC.
The incentive to find a legitimate alternative to petroleum exists - the profit motive. The inventor(s) of a fuel that economically matches or outperforms petroleum products will become unimaginably wealthy. If the profit motive can't drive a technology, having the government throw billions of additional dollars at grant-driven researchers and marginally relevant alternatives already living off American taxpayers won't do much for our energy independence.
Rather than subsidies, establishing incentives for businesses and individuals to develop smart solutions to our energy needs is reasonable - perhaps an energy X Prize. As in any market, we would all benefit if there were a lot of energy providers and products competing with oil.
If Congress were to stop picking energy winners and losers and, instead, unleash the brains and determination of American entrepreneurs, our energy problems could be solved. An energy sector unhindered by government regulation and political obstacles to nuclear-power, oil exploration and petroleum refining has the best chance to solve our fuel-scarcity problems in the shorter term as well as the environmental concerns that are so often used to prevent development..
The availability of practical energy sources is not only an imperative for a healthy economy, energy availability is a matter of national security and defense.
Jerry Shenk is co-editor of the Rebuilding America, Federalist Papers 2 website©. Email: jshenk2010@gmail.com
