WHAT WILL BE THE ENERGY OF THE FUTURE?
_________________________________________________________________ What will be the energy of the future? There are actually a number of candidates. Since we are concerned here with energy investments, we need to know not only something about the oil industry as it exists today, but what will likely happen in the energy arena over the next few years. _________________________________________________________________
First, here are some energy and investing links to explore:
Investopedia Oil Industry
ENERGY FORECASTHere is a peek at the possibilities and probabilities for our energy future. Author's note: I don't claim to be able to predict the future. I have, however, had a 35 year career as an engineer and manager. And I have spent the last few years researching our energy situation. Still, when you make investment decisions give this forecast about the same weight you would a weather forecast looking several weeks ahead. Shown below are my conclusions to date. Before your invest, do more of your own research. _________________________________________________________________
OIL COMPANIES WILL PROBABLY LIVE ON If we are actually running out of oil, the switch from oil to alternative energy sources will take years. It will be more of an evolution than a revolution. When the automobile replaced the horse as the primary means of transportation, the process took decades. Rather than disappearing, blacksmith shops evolved into auto repair shops, commercial stables evolved into service stations, carriage builders became auto body builders, and so on. As alternative energy sources increase, oil companies will not die. The ones that recognize that they are in the energy business, not just the oil business, will prosper. In fact, companies like British Petroleum and Royal Dutch Shell are already investing heavily in alternative fuel research. _________________________________________________________________
ENERGY EVOLUTION The plug-in hybrid car is the first practical step away from conventional, gasoline powered automobiles in almost one hundred years. This technology combines a conventional internal combustion engine with an electric motor and a storage battery pack. If all goes well, in 2010 General Motors and Toyota will begin production of plug-in hybrid cars that are capable of driving about 40 miles on electricity. These cars will only consume gasoline if they are driven more than 40 miles and not plugged in for a recharge. Because 80% of the driving done in most industrialized nations is done with 20 miles of home, average drivers who buy plug-in hybrids will use 80% less gasoline. The plug-in hybrid is just one step away from the all electric automobile. _________________________________________________________________
NEW LIFE FOR THE OLDEST CARS New battery technologies may very soon make totally electric cars practical. The cars will perform like cars today. They will be ‘refueled’ at a service station ‘pump’ in a fashion similar to the refueling pumps of today. But instead of putting gasoline into a tank, we’ll be putting a very quick charge into our batteries. Electric cars with storage batteries for energy supply have been in production for over a hundred years. They were outsold by internal combustion engine (ICE) powered cars only because a cheap fuel (gasoline) was found for the ICE and because, with technologies available at the time, the ICE delivered better power than the electric drive. Today’s battery powered cars are both powerful and extremely efficient. A typical family mini van could get a mileage equivalent of over 100 miles per gallon. To make things even more interesting, the electric infrastructure (our existing electrical power grid) is already in place. Battery technology has advanced to the point that the driving range of electric cars is easily comparable to gasoline powered cars. Future energy for cars may come from the roads they drive on. Electrical Induction technologies may soon create energized roadways that can accommodate all-electric vehicles that need only very small battery packs, or none at all. If you would like more information on electric cars, check out the Wikipedia Battery Electric Vehicle page. _________________________________________________________________
POWER-TRAIN CHOICES The next few decades will be a marketplace battle for power-train dominance. The battle will almost certainly be between liquid-fueled internal combustion engines, electric drives, and plug-in hybrid drives. The winner will be decided by which system provides the cheapest, safest, and most reliable power for transportation customers. It’s anybody’s guess which system will ultimately provide the future power for cars. It could happen that all will find market niches. One thing is certain, though. As one system improves, others will battle to be even better. _________________________________________________________________
HYDROGEN HARDSHIPS What will be the energy source of the future? Probably not hydrogen. For all the talk about a hydrogen future, it continues to be problematic. Hydrogen is not actually an energy source. It’s an energy carrier. Though it is a fuel, it has to be manufactured. Electricity is also an energy carrier and hydrogen’s main competitor. Hydrogen technologies promise a pollution free future. But electric drives now coming into the marketplace already do that; and they do it simpler, cheaper, and more efficiently than hydrogen systems. Hydrogen is more expensive to produce than other energy carriers. Hydrogen is more expensive to transport than other energy carriers. Hydrogen will require its own infrastructure that will cost billions to install. The hydrogen fuel cell continues to be expensive and require highly purified hydrogen as a fuel. The excitement about fuel cells that can utilize gasoline is dampened by the fact that the carbon components of gasoline are wasted to the atmosphere in the form of heat and carbon dioxide. And we already have an energy conversion system that can utilize gasoline, the internal combustion engine. Safety issues of hydrogen have been addressed, but it still faces a public hesitant to pay for a technology and fuel system that is considered scary at best. Hydrogen is a good example of the high financial risk associated with energy development. Though billions have been poured into its research and development, expect hydrogen fuel and fuel cell technologies to have a very tough time in the marketplace. _________________________________________________________________
ETHANOL’S EXIT
Due to a number of problems, Ethanol as a transportation fuel is only a stopgap, partial and temporary relief from oil import woes. It can damage components on existing autos unless they are adapted to burn it. Ethanol is corrosive and can’t be transported in current pipelines. It also contains only 78% of the energy value of gasoline. Fuel economy drops significantly when ethanol or E85 ethanol mix is burned. Butanol is far more likely to replace gasoline in the long term than ethanol. Butanol is also an alcohol but has several advantages over ethanol. Butanol has a high energy content comparable to gasoline, it can be shipped in existing infrastructure, and it can be mixed in any proportion in any gasoline powered car on the road today. Butanol can also be fermented in a manner similar to ethanol. So far, it takes longer and is a more expensive process than ethanol production. But production techniques are advancing rapidly. But where do we get the crops to make either Ethanol or Butanol? Corn uses far too much land to sustain large fuel production volumes. Switchgrass uses less land but still uses a lot. The ‘food or fuel’ problem is real; there is only so much land, only a fraction of which is tillable. And as populations continue to grow, more land is needed for food production, not fuel. For more information link to Disadvantages of Biomass - Part I . _________________________________________________________________ _________________________________________________________________
ALTERNATIVE ALTERNATIVES? No hydrogen and no ethanol? Just what will be the energy source of the future? Are there any alternatives to conventional fossil fuels or agricultural ethanol/butanol? In addition to electricity, which we discussed above, there are presently five major contenders to both ethanol/butanol and conventional oil based fossil fuels. And as you will see, there may be a huge wild card play left for oil.
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SCUM SUCCESS Research into production of both gasoline and diesel fuel from algae (pond scum) is progressing at breakneck speed. Algae can grow a barrel of fuel many times faster than either corn or grass. That means that alga ‘farms’ will require only a fraction of the land of grass or corn crops. For more information link to Disadvantages of Biomass - Part II . On a speculative note let’s consider one more possibility. Since algae are grown in ponds, they can also be grown in off shore floating tanks that use no crop land at all. That one simple change in production method would end the ‘food or fuel’ debate permanently. _________________________________________________________________
GASOLINE FROM METHANE Gasoline and diesel fuel can also be refined from natural gas, methane. But we in America are already importing methane. Does that mean that we would have to increase methane imports to fuel our cars? Not at all. Two little known natural gas sources, stranded gas deposits and gas hydrates, combined with the right technologies will soon make these incredibly plentiful resources available. They are discussed in detail on our Stranded Natural Gas Reserves and Gas Hydrate Reserves pages. _________________________________________________________________
SOME ALTERNATIVES ARE ALSO FOSSIL FUELS
Coal can be used to produce gasoline and diesel fuel, and geologists believe that the U.S. has supplies that will last for several centuries.
Canadian Oil Sands projects are already producing gasoline and diesel fuel. The vast Oil Shale deposits in the U.S. West rival the entire Middle East oil reserves. Shale will take more technology to bring into economical, environmentally friendly production, but these supplies alone could feed the entire U.S. oil demand for decades. Finally, the origin of so-called fossil fuels is still open to debate. Many geologists believe that oil is a true ‘fossil’ fuel that formed from decaying plant and animal life. But other geologists have mounting evidence that suggests that oil may be a natural mineral product that formed when our planet formed, and continues to form deep in the Earth. According to this school of thought, all we need do is drill deeper to uncover what they believe is literally an ocean of oil more vast than anyone could imagine. Should we find that ocean of oil deep in the Earth, expect oil to become so cheap that virtually no other liquid energy form can compete. We could be looking at gasoline pump prices in the U.S. of less than $1.00 a gallon in today’s Dollars. If it happens. For more information, see the Fossil Fuel Oil page. _________________________________________________________________
WHAT DOES IT ALL MEAN? There is a lot of risk associated with energy development. As an energy investor you need to use a lot of caution when making your investment decisions. And you should invest only amounts you can afford to lose. For the next few years, and maybe for the next few decades, the energy investing arena will be, to say the least, interesting. It will be full of opportunities, and opportunities gone awry. _________________________________________________________________ _________________________________________________________________
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