There is much discussion lately (July-2008) of alternative energy solutions to the high price of gasoline and diesel. I post comments from time to time on Townhall.com, as Energyguy, on these issues.
This blog posting is an attempt to bring to one place the things I know as fact, and the references to support them.
First, we are not running out of oil. Never have, never will. We have run out of cheap oil. There is plenty of oil, but the cost to extract it could be more than our current price of $130 per barrel. As just a few examples, Brazil just discovered a large oil field in deep water. ExxonMobil is developing a large oil field off Sakhalin Island north of Japan. The deep water in the Gulf of Mexico has fairly large fields.
Second, we will always need oil, just not for transportation. A significant part of the oil we refine today goes to non-transportation purposes, including home heating oil, lubricants (crankcase oil in the car), asphalt, and petrochemical feedstocks. Even if every transportation use was converted to another fuel, the need for those just listed will not disappear.
Third, we do not need new refineries, or more refineries in the U.S. My statement goes against some fairly heavy hitters, to use a baseball term. But I stand by my assertion. Our demand for gasoline is decreasing. Here is why.
The U.S. has enjoyed a prolonged period of heavy, large vehicles with poor gas economy. That is changing with gasoline at $4 per gallon (higher in CA and a few other states). Smaller cars, hybrid cars, plug-in hybrid cars, and all-electric vehicles, plus CNG vehicles are reducing the demand for gasoline.
Also, demand is dropping due to consumers changing how they drive. People are driving slower, for one thing. As I drive across Los Angeles, California on weekends when the freeways are fairly uncrowded, many cars are driving no more than 60 or 65 miles per hour. I know, because they are not passing me and I drive 60 or 65.
I believe people are also turning off the engine at red lights rather than letting it idle and waste gas. It takes far less gas to restart than to idle for more than about 5 seconds, especially on a modern, fuel-injected hot engine.
I see people coasting into stop signs and red lights. I don't see people pealing out, or screeching the tires by gunning the engine. I also see more people at the air station in filling stations, putting air in the tires. Finally, the people I talk to have cleaned out the car and the trunk, removing any extra weight.
The evidence for using less fuel can be found each Wednesday morning on the website www.eia.doe.gov, then look for the petroleum summary report. That report compares each week's demand to the same period last year. Each week for the past several months, the demand is less than last year. This trend will continue.
Diesel cars are making a comeback. As some may know, sale of new diesel cars were not allowed for the past few years because the air pollution laws were too strict. But the geeks and engineers prevailed, and VW has the first diesel-powered car that meets the emissions rules in all 50 states. Their car is the Jetta TDI. It also gets around 40 miles to the gallon.
In the face of all this, we see no new refineries being built, but a few are being expanded. The list of expansions includes BP at Whiting, Illinois, Motiva in Port Arthur, Texas, and Marathon in Detroit, Michigan. Other refineries have major projects underway including Chevron at Richmond, California, and Alon in Los Angeles, California.
In fact, Shell just cancelled a new refinery that was to be located in Sarnia, Ontario (Canada). Their reasons for cancelling included soaring construction costs, and demand uncertainty. That last is oil-speak for "we don't think there will be the demand for our products in 5 or 6 years when we finally get this thing built."
Furthermore, some refineries are cutting back production even though the summer driving season is not yet over. Total in Port Arthur, Texas, shut down several process units for a few weeks this summer, stating weak demand for gasoline. This is virtually unprecedented.
Finally, the technology to convert a standard car to a plug-in hybrid has arrived. An article on finance.yahoo.com gave the particulars. These after-market conversion systems replace the rear wheels with electric wheel-motors that also serve as generators when braking. An appropriate battery is installed, and a sophisticated computer control system to govern the system. These are not cheap, costing around $9000 installed. But, they pay for themselves in less fuel in just a few years. Also, they increase the value of the vehicle at trade-in or when sold. This is important, because many big SUVs have zero trade-in value at the moment.
For all the above reasons, it is clear that the U.S. will soon be an exporting country, selling gasoline and diesel fuel to India and China. Our gasoline demand will likely be cut by at least a third, probably half, within three years.
Now, to the alternatives. T. Boone Pickens, A Great American, is pushing for more windmills and solar power to generate electricity from wind and solar. He then wants to divert natural gas from power plants and use the natural gas as CNG for vehicles. This is a great plan, and we have been doing each part of it for years in California. As evidence, the mass transit bus system in Los Angeles and surrounding cities are almost entirely fueled by CNG. There are also fleets of city vehicles running on CNG. CNG fueling stations are in several locations. California also has two major wind-generation areas, one in the north at Altamont Pass near San Francisco, and one in the south along the highway leading from Los Angeles to Palm Springs. There are literally hundreds, perhaps thousands of windmills on those hills.
Some doubters claim that the Pickens Plan is a get-rich quick scheme for Pickens, and places a burden on taxpayers because the government builds the power transmission lines. Big deal.
Some claim that wind power is too unreliable, and we have to run fossil-fueled power plants in stand-by mode to take over the task when the wind fails. That argument does not seem to have effect in California, where we have the second-most wind generation in the U.S., second only to Texas.
Others argue that solar power is too unreliable because of clouds and day/night cycles. There is some truth to that for PV, photo-voltaic, solar power. But for the far more economic CSP, concentrating solar power, operation 24/7 is not only possible it is a reality. There is a large CSP plant operating in Phoenix, Arizona with hot oil storage, generating power 24/7.
Another alternative with great characteristics is wave-power in the oceans. That technology has advanced so that multiple systems using different ideas are practical. One design uses a submerged buoy where the top of the buoy is just below the wave troughs. As a wave passes over the buoy, the buoy is depressed by the added weight of the water above. When the trough passes, the buoy rises a bit. This oscillation generates power.
Another design uses articulated slender floats, with internal pistons to compress a fluid and turn a hydraulic turbine. It works.
The waves in the Pacific are large and almost constant, especially from the Canadian border down to northern California. Anyone can check the wave action on NOAA's website, which is updated each day. As I write this, the forecast off Oregon's coast is for 10 foot waves, combined wind and swell. These are small waves for that area.
An excellent source for news on alternative energy and renewable energy is www.eere.energy.gov. They send out a weekly email to anyone, free for the asking.
One last observation regarding drilling in ANWR and the OCS, offshore continental shelf. Neither option should be ignored, but economics will dictate whether the oil is drilled. Given our declining demand for gasoline and diesel, as discussed above, we are already using less imported oil. And, we are importing less today, every day, not having to wait however long it may take to drill for the oil, build the pipelines, and bring the oil to refineries. Oil companies are shrewd operators, and cannot afford many economic failures.