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April 10, 2006
Is Ethanol the key to oil independence?
Today's NY Times had an article about Brazil's use of Ethanol to reduce their dependence on foreign oil. As one would expect it is mostly fawning praise of the benefits of such a program. They paint a picture of a eco-paradise where the sun makes sugar cane, and then the cane makes alcohol for auto fuel and and the waste is burned to power the production facility.
It has taken 30 years and serious government intervention to achieve "energy self-sufficient". But I'm not convinced this is real. Oil is at about $68 a barrel, so I should hope that Ethanol were somewhat competitive today. Because if not now, when?
Ethanol wholesale goes for about $2.49 per gallon. On the other hand, wholesale gas, even with oil at a historically high prices, costs only $2 per gallon. So if Oil is heading to $80 or $100 a barrel, maybe Ethanol makes a lot of sense. On the other hand, if oil ever goes back to $20 a barrel, or even $40, Brazil will have made a big investment in technology and infrastructure with little economic value.
And peak oil people to the contrary, there is reason to suspect that the long term price of oil is below $40 per barrel. With a Saudi Arabian sized tar sands in safe, advanced, and nearby Canada, it just doesn't seem much in the cards to have $60 oil as the long term price. At current prices(actually even at $35), Canada has oil reserves almost as large as the Saudis do.
It might not be popular to say it, but for America, across a larger percentage of likely oil price scenarios, money invested in cleaner and lower cost tar sand extraction technology would be better than investing that money in expanding ethanol production.
Posted by OneEyedMan at April 10, 2006 5:07 PM
Comments
Whenever I hear the Canadian Tar Sand argument brought up I always have a few questions.
1) If there is plentiful oil to be had in safe and freindly Canada, what the hell are we doing in the middle east?
2) The demand for oil, even with all of the energy conservation hemming and hawing that is going on, is going to go up, and continue to do so. Particularly as China and Indea start becoming more gas hungry.
3) The peak oil people probably have this one right. (I hate it when people misrepresent the peak oil folks as having claimed that we have run out of oil, that's not what they have ever said) They have just pointed out that we have already passed the point where extraction is going to get easier. From here on in it gets harder (which generally implies more exspencive, though our improving tech is helping a lot with that.)
I do agree with you that ethanol is not the way to go, but for very diffrent reasons. Plants are not quite the renewable resource that people seem to think they are, and the level of farming that would be required to prop up the whole system stands a solid chance of ruining the land itself.
Personally, I say we follow china's lead, and invest in third and fourth gen nuclear reactors. Safe, clean, and reasonably cheep. But that's just me.
Posted by: giblfiz ![[TypeKey Profile Page]](http://www.belligerati.net/nav-commenters.gif)
at April 11, 2006 4:16 PM
I wish nuclear power were in the cards, but I doubt it is going to much matter. Most oil is used for transportation. Until we gave a hydrogen based auto fleet, it won't matter how cheep nuclear generation is. And today, it is more expensive than oil or natural gas power generation.
You might be interested to know that the US generates 20% of its power with nukes
http://www.nei.org/doc.asp?catnum=2&catid=106
while China generates 3%
http://english.people.com.cn/200304/10/eng20030410_114884.shtml
Plentiful oil comes from Saudi Arabia instead of Canada because it is more than 10 times as expensive to get it out of Canada than Saudi Arabia.
With the average price of a barrel if oil only $17 for the last fifty years
http://www.wtrg.com/prices.htm
Oil Shale costs about
With oil shale about $10 a barrel to extract with recently developed technology, and adding in the cost of capital, transportation, prospecting, the risk that the price will decline, and massive initial investment required, oil shale has only recently become economical.
Posted by: TheOneEyedMan at April 11, 2006 10:52 PM
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