Wednesday, March 5, 2008

Energy Victory: Winning the War on Terror by Breaking Free of Oil

A little known section of the Energy Security Act of 2007 contained a provision that would require all vehicles sold (not made) within 5 years in the United States to be capable of running on alcohol based fuels (aka “flex fuel” capable) as well as gasoline. It costs, on average about $100 to make a car flex fuel capable. The most common flex fuel available today is ethanol or E85, but flex fuel cars can run on any alcohol based fuel such as methanol or butunol or even bio-butonol and of course gasoline.

This one provision would have had the effect of creating an international standard for flex fuel automobiles. In turn, it would have had a domino effect on the rest of the world forcing foreign automakers to equip their vehicles with flex fuel sensors (or walk away from the huge US market). With the minimal cost involved to make the conversion, they would have done so without hesitation. It is estimated that this would, within 3 years of enactment, resulted in 50 million flex fuel capable automobiles on the road in the US and millions worldwide; creating a huge market for alternative fuels based on ethanol (E85) and methanol (M85/M50). For the first time in history of mass transportation, gasoline would be forced to compete with alcohol based fuels.

This simple plan has been passionately outlined by Robert Zubrin in his recently released book entitled Energy Victory: Winning the War on Terror by Breaking Free of Oil. In it, he outlines in very simple and straightforward terms how the key to breaking free from our oil addiction lies not in conservation, but rather in substitution. He goes on to say “Indeed, where it takes a huge hike(in price) to reduce energy use, it only takes a small edge to cause a shift from one energy source to another. This is the key insight needed to beat OPEC: we need to switch the world to a different fuel.”

If we were to take the simple step advocated by Dr. Zubrin (and others), we would, for the first time in history, create a competitive market for fuel that would ultimately provide the elusive trump card needed to break the oil cartel’s vertical monopoly on oil prices. Oil is currently hovering around $100 per barrel. This creates a huge opportunity market for alternative sources of energy such as ethanol (ethanol, or E85 for short, is competitive with gasoline as long as oil is selling for $50 per barrel or more). However, since the number of flex fuel vehicles nationwide is only around 3% of all cars on the road, no compelling market exists for station owners to install the E85 pumps necessary to provide consumer choice and thus kick start this market. The Open Fuel Standard provision would have changed all that and we would see a national and international standard evolve without any further government intervention needed.

Let’s also seek to persuade our congressman and senators that it is in our interest to have fuel choice. Had the Open Fuel Standard mentioned above been enacted (and not removed at the last moment due to lobbying by Nissan corporation), we would be well on our way towards creating a global competitor to OPEC’s cartel and towards weaning ourselves of the shackles of our oil addiction. The corollary effect is that our domestic sources of biofuel (and the market that is created as more and more flex fuel automobiles hit the roads) help our local farmers and agricultural industry. And that’s something we can all get behind.

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