Oildummy.com

    Here in Iowa, ethanol was touted for a while as the fuel for America’s future. With the sheer quantity of corn production in the state, almost everybody was jumping on the ethanol bandwagon without giving it a second thought. Ethanol producing plants began popping up like weeds, with dozens more in the planning stage at any given time. Now, all of a sudden the building of new plants has slowed, and large investors are jumping ship on ethanol projects. A lot of downsides that the industry downplayed at first are now being brought to the limelight, and the future of ethanol is in question.

    Ethanol sounded like an all-around good deal for our country. What could be better than filling up with homegrown fuel that supports America’s economy? It would be good for our nation, and especially great for corn producing states like Iowa. One of the biggest hurdles, though, is the fact that our corn production is limited, and anybody that passed Econ 101 can explain what happens next. Demand for corn has already increased greatly already, and corn prices have skyrocketed over the last few years. While this has been good for corn growers, livestock producers are faced with higher costs in feeding their animals. As a consequence, the higher prices are finding their way to grocery stores, where dairy and meat products are becoming more costly. It has become apparent that as ethanol helps one area of the economy, it equally harms another. There’s no shortage of demand for our corn to feed the world, let alone fuel it too.

    On top of the shortage of crop to use in ethanol production, there is also questions of how energy positive ethanol is, if at all. Between the planting, fertilizing, harvesting, transporting, and production stages, a lot of fossil fuel is needed to bring ethanol to the market. Some critics of the industry propose that the process is actually energy negative, while those in the industry claim otherwise. One thing is for sure, though, is that ethanol is not as efficient as gasoline. A 2007 flex-fuel Chevrolet Monte Carlo is rated at 31 highway mpg running on gas vs. only 23 mpg on E85.

    These are two of the biggest problems facing ethanol right now. Throw in government subsidies, which are keeping it alive for now but might be around for much longer, and the industry has its work cut out for it. Of course, there are other inputs, such as switchgrass, that can be used. Perhaps some of these will help ethanol out in the future. For now it’s tough to see past ethanol’s downsides.

    There is an alternative to foreign oil that is located within the United State’s borders, yet not receiving much publicity right now.  This alternative is oil shale, carbonate rock that is rich in organic material and which can be processed to convert it to crude oil.  The richest oil shale formations in the United States are located in the area known as the Green River Formation in  Wyoming, Utah, and Colorado.  The United States Department of Energy estimates that there are about 1.8 trillion barrels of oil that are in potentially recoverable deposits,  enough oil to power our nation for centuries.  So why is this not garnering much in the way of national attention right now with  prices near $90 a barrel? 

    The answer resides in the fact that it is currently not even close to economically feasible to pursue this oil.  The production process to convert oil shale to usable crude is far more extensive than that of conventional crude.   Where conventional oil is drilled from the ground, oil shale must be strip minded rather than drilled, a process in which about 40% of the available energy is wasted.  Vast increases in the power supply in these states would be needed to drive production.  Oil shale is also very costly in terms of water, as multiple gallons of water would be needed for every one gallon of oil produced. 

    As if conventional oil isn’t harmful enough for our environment, the production of oil shale is estimated to release four times as many greenhouse gas pollutants than the former.  With the enormous amounts of inputs required to drive production, it’s easy to see why.  In this age of widespread concern over global warming and going green, oil shale is a step backward.  These three states would instantly go from some of the cleanest and most beautiful to one of our nation’s heaviest polluters, not even mentioning the loss and destruction of habit as well.

    These are the basic facts.  Yes, we need to break our foreign oil addiction, but oil shale is currently not the savior it is billed by some to be.  There are far too many economic consequences for it to be a viable problem-solver.  Barring any massive breakthroughs in production technology, oil shale will have a tough, tough time making it big.  Only time will tell how this will play out.  I’m sure we will hearing a lot more about this in the near future.

    The discussion about peak oil begins with the question of how much oil is left underground to be recovered. Only then can we make knowledgeable statements and predictions about the future for oil as a fuel to rely on. According to a 2000 study by the U.S. Geological Survey, there was approximately 3 trillion recoverable barrels of oil underground, of which we have used slightly under 1 trillion barrels already. So if that prediction is remotely accurate, we should have no problem getting the fuel we need for generations to come, right? Well, theoretically yes, but it’s not quite that simple.

    When debating peak oil, we need to not only consider the amount of oil left, but whether that oil can be found and produced to meet the world’s growing demand. If we can’t keep up with demand it doesn’t matter how many trillions of barrels there are. Naturally, the easiest to find oil is going to be found and produced first, leaving the remains in ever-remote and difficult spots to reach, such as deposits that are found in very deep water oceans. This oil is neither easy to find nor to produce. Only with recent advances in technology can we even get to this oil, and it is still not cheap to do so.

    We are going to need more and more breakthroughs in technology in order to get the oil we need at a price that allows for economic growth and stability. If it costs $120 a barrel to bring this remote oil to the market, it will have severe consequences on the world economy. It really is hard to say for sure how it will play out. With the world demand for oil expected to grow steadily and steadily, we are currently wagering huge amounts on the oil industry’s ability to deliver the goods. I, however, don’t think we should bank on a fuel that is becoming ever-more difficult to find and produce.

    The argument about whether or not we should drill in the Arctic National Wildlife Refuge (ANWR) is a long-debated one.  It is certain to heat up even more with oil prices hovering near record highs at $80 a barrel.  Considering how much oil we import every day, it makes sense  to try to extract as much as we can from domestic sources.   Putting the wildlife issue aside for a bit, does it even make sense to drill and invest in ANWR oil?  It depends on who you ask, but a lot of facts about the situation lead me to believe that it is not the course of action to take.

    If congress were to give the go-ahead to drill in ANWR today, it would be about 10 years before oil gets pumped out of the ground.  It would then be another 10-12 years before the production would be maximized.  According to a 2004 Energy Information Administration (EIA) report, the production would peak at about 876,000 barrels a day.  At the current consumption rate of over 20 million barrels per day,  it becomes clear that ANWR will only slightly lessen our dependence on foreign oil sources.  Banking on ANWR as a major source of energy for our future is an extremely naïve plan.

    Of course, there are people still fighting tough for opening the refuge to drilling.  They point to the fact that domestic production will continue to decline over the next few decades and how imports will increase.  They also point out that we will be relying on imports even more heavily if we do not open ANWR.  These are all true statements, but they need to look at it from a different perspective. 

    Maybe we should be concerned with actually using less of the stuff, instead of fighting over this field which will hardly do much to help the cause.  I could even see ANWR oil hurting us, as it would give our politicians some false solution to hang their hopes on.  We would see even less action on the conservation and alternative issues than we do now.  We should be creating real solutions, not temporary cover-ups.  Even a slight change in America’s wasteful habits will do much, much more than ANWR ever can for us.