What Hope For Alternative Fuels?

“Oil is like a wild animal. Whoever captures it, has it”
Jean Paul Getty

First came the credit crunch which squeezed new investment from Environment Industries; following that Oil prices have been pushed sky high – quoted prices of $200 a barrel for future delivery: it looks now like we are moving into territory not seen since the mid 70s; a time of strikes and devaluation.

The 1970s, apart from being my childhood, saw a previously unimaginable wage-price spiral. Inflation expectations bid up pay raises; prices increased and the problem rolled back on itself. Remind you of something? The price of oil was high then and given that global monetary policy has been rudely, some say savagely, awakened from a decade of economic euphoria, the credit crunch has people worried.

But what of Bio-fuels, Ethanol, Hydrogen power; could they not save us. The problem with Oil is not its rarity – that argument should arrive in another fifty years – it is its relative scarcity in the short term. The problem is that the oil underground need to be brought to the surface, refined and then distributed; often oil is bought and paid for years in advance. The Arabs cannot just 'turn on the taps' like the simplistic notion Gordon Brown has.

Oil's new inflationary price seems to have been exacerbated as an indirect effect of the credit crunch. Speculators have pounced like greedy hording cats cutting the supply chain - raising prices of commodities generally (even bread has risen).
Oil for two years time is quoted at $200 dollars a barrel but for sixteen years time it is still only at $130.

this short-term inflationary position means than any investors banking on a quick return for an alternative fuel will largely be throwing their money away unless the need for alternative fuel is driven by political measures. In ten years time the fuel shortfall will have been made up. Ultimately there is still another fifty years of oil left at the same levels we are pumping today even accounting for a meteoric rise that will occur when the Chinese become mobile.

For investment this means that the US with a major reliance on large vehicles is in a worse position than Europe; I foresee a major rethink on design automobile policy taking shape USA side. The USA laughed at the Fiat 500 and the Mini but I am wondering whether the last laugh will come from Europe when Fat Hank tries to squeeze in behind the wheel. The USA is much more at risk from fuel shortage than the rest of the world.

Bio-fuels cannot replace oil immediately. The problem with Bio-fuels are they are essentially solar power in another form; yes, you can produce diesel from chip oil but you would have to be as fat as a dozen Florida grandmothers to keep up the supply.
Ethanol is a disaster; it not only needs vast acres of rain-forest to be cleared for the sugar-cane but also requires almost as much power for distillation as it produces. this power can be produced by Nuclear Power, wind power or any of the other alternatives – but if so why not produce Hydrogen instead?
The most widely available alternative fuel is LPG which although cleaner and cheaper is unlikely to withstand a huge leap in demand. Certainly in the short term an increase in supply is doubtful.

So what are the options?

In the short term we may have to learn to be more efficient in our behaviour rather than apply our engineering to different fuel. Telematics and GPS may make our journeys shorter – except that most journeys are repeated and therefore well known. To save we will have to reorganise and encourage people to take one not multiple shopping trips – can’t wait to tell my mother – or pay the price. In the USA market forces have already forced a rethink and the number of miles driven has fallen radically last month.

In the medium term there are vehicles on the drawing-board which will be more efficient and it is in efficiency and not alternative fuels that we must put our hope – until the vast quantities of cash that have been squandered by hedge-funds into buying barrels of oil and putting the price up have been withdrawn. Perhaps this cash pot snatched from the housing market can be re-invested in something more worthwhile than Oil like fusion power, wind power, wave power or in fact anything that would have the side effect of benefiting future society. I have no political views on Nuclear Power being too young for politically correct CND and yet old enough to study science - my personal view is that nuclear fusion (not to be confused with fission) should be invested in.

In the long term our children and grandchildren must do what we have failed to do and be both efficient and find alternative fuels for our vehicles - it is time for us to think about this too. this oil price increase is an early warning of more to come.

Meanwhile my childrens' childhood-memories of oil prices rising scarily will be just like mine were; how the clock-of-generations' turns...