Thursday, October 20, 2005

Not Worried About Oil

For the past year my partner Erika has been driving a standard 2002 VW Golf on "biodiesel." It burns cleaner than gasoline (or diesel), emits fewer greenhouse gasses, and most importantly it does not come from the middle east, Venezuala, an alaskan wildlife refuge or offshore drilling rigs in California, Florida, and the Gulf. It comes from good old American soy beans.

Our government and media are doing a lousy job. We are constantly being scared by reports that oil reserves are running well behind consumption. This is an ECONOMIC problem, and NOT a science or natural resource problem. It is an economic problem for two reasons -- (a) we have an enormous infrastructure of gas burning products that would have to be converted to diesel and (b) the scale of production of biodiesel is, today, insufficient to get the some economies that gasoline production enjoys and thus the price per gallon of biodiesel is higher.

But during the recent price spike, the price of gasoline started to come close to the $3.50 per gallon price that we have been paying for biodiesel. And since most diesel engines get better gas mileage (20-40% according to Edmunds) than gasoline engines, the per mile price for most consumers would still be lower today.

So why all of the worry about the price of oil? With a concerted push by government and industry, we could start getting consumers and businesses to purchase diesel vehicles, and begin investing in biofuel manufacturing and distribution infrastructure. Over the next decade, as our national vehicle base naturally turns over, we would, as a nation, become increasingly less dependent upon foreign oil and eventually less dependent on oil altogether.

There are about 150 million passenger vehicles on the roads in North America today, and about 8 million new ones are purchased each year. This doesn't include figures for commercial vehicles which adds another 100 million vehicles, and another 6 million new vehicles purchased each year. Thus out of 250 million vehicles on the roads, we could be replacing 14 million, or 6% per year with biodiesel burning alternatives every year.

Gasoline accounts 2/3 of America's oil use according to the Department of Energy and represents 95% of our transportation energy use. For every 5 million biodiesel vehicles sold, we could reduce our dependence on oil for transportation by 2% and our overall dependence on oil by 1 1/3%. Add subsidies and incentive programs and the pace at which this conversion occurs could be significantly accelerated.

Biodiesel is no longer a strange topic to be left to hippies. It is a mainstream product, running in mainstream production vehicles. Adoption of biodiesel is an important step (although not the only one) in breaking the world's dependence on cheap oil to fuel our economies. I would rather see us burning hydrogen, but the technology and infrastructure for biodiesel is HERE TODAY.

My next car will be diesel. BIOdiesel.

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