Legalize Methanol: It Would Boost Our Economy and Our National Security

Monday, August 20, 2012

By Robert Zubrin from National Review:

Last year, I conducted a highly publicized demonstration showing that ordinary American cars could readily be made to operate on methanol, achieving over 40 percent better fuel economy and much lower emissions than on gasoline. In that test, a 2007 Chevy Cobalt was shown to achieve 24.6 miles per gallon running on 100 percent methanol, with the only required physical alteration being the replacement of a non-methanol-compatible Viton fuel-pump seal with a 41-cent part made of methanol-compatible Buna-n. And methanol is now selling for just $1.32 per gallon, without any subsidy.

As methanol can be cheaply produced from natural gas, coal, biomass, or trash — all resources the United States holds in great abundance — this test showed that America could readily free itself from oil imports simply by passing the Open Fuel Standard (OFS) law requiring that all new cars sold in the U.S. be methanol-compatible flex-fuel vehicles. By forcing gasoline to compete at the pump with cheap methanol, such a measure would put a permanent constraint on the price of oil, thereby breaking the power of the Islamist-led OPEC cartel and protecting the nation from the economy-wrecking effects of petroleum price spikes, shown in the figure below.

Every oil-price hike over the past four decades was soon followed by a sharp rise in unemployment.

In response to my article, a number of readers wrote in posing the following questions: Given the ease of creating methanol compatibility, and the manifest financial advantages that would accrue to motorists who undertook such conversions, why is an Open Fuel Standard law necessary at all? Instead of seeking a new law that would require that all vehicles be flex-fuel, why wasn’t I simply moving to launch a business that would undertake such conversions, set up methanol pumps, and let the Invisible Hand accomplish the rest?

These are very good questions and deserve answers. To start with, I should point out that national defense is the first and foremost obligation of the federal government. Therefore, when the nation is being looted into depression by a foreign cartel whose members are using the funds to promote armed movements and develop weapons intended for our annihilation, forceful action by the government is entirely appropriate, and in fact could not be more urgent.

But, given the fact that neither Congress nor the administration has chosen to take such action to defend the nation’s vital interests, wouldn’t it still make sense to try an entrepreneurial solution? The opening of the fuel market to methanol through a bottom-up approach might take effect more slowly than the crisis truly demands, but still, wouldn’t some progress be better than none?

Indeed it would. So I decided to look into the possibility. Here is what I found: The technology required is in hand. The business plan is straightforward. The financial requirements, while significant, are manageable. But: The regulatory obstacles are a show-stopper. Put simply, given the spread between current natural-gas and coal prices on one hand, and petroleum prices on the other, the main thing protecting the oil cartel from killer competition from methanol is the EPA. It has done this through regulations that make it illegal to sell methanol in significant quantities as motor-vehicle fuel, and also through restrictions that enormously increase the expense of commercial modification of cars to optimize their performance with any alternative fuel (or with gasoline, for that matter).

First, the prohibition. According to the EPA (FRL-9620-5, published January 20, 2012), “Section 211(f)(1) of the Clean Air Act makes it unlawful for any manufacturer of any fuel or fuel additive to introduce into commerce, or to increase the concentration in use of, any fuel or fuel additive . . . which is not substantially similar to any fuel or fuel additive utilized in . . . 1975. . . . The current ‘substantially similar’ interpretive rule for unleaded gasoline allows oxygen content up to 2.7 weight [sic] for certain ethers and alcohols.”

Since methanol is 50 percent oxygen by weight, this rule limits the amount of methanol that it is legal to add to gasoline to just 5.4 percent — if we assume that there is no ethanol in the gasoline – and going down to zero if the ethanol content of the gasoline is 8.1 percent or greater. (E10 and E15, which are 3.3 percent and 5 percent oxygen by weight respectively, are legal for sale only because of a special waiver granted by the EPA. It is the general practice of the EPA to declare impractical arbitrary limits to commercial activity in many fields, and then grant waivers on a case-by-case basis to those who are willing to spend the time and money required to beg well. (I mention this not to take exception to the waivers — I believe that ethanol producers should be allowed to sell their product in any concentration to anyone willing to buy it — but to the process that requires enterprises to grovel for such special favors, and thus places commercial activity firmly under the thumb of bureaucratic caprice.)

It should be noted that the EPA’s banning of methanol is categorically absurd from the point of view of environmental protection. My results showing sharp reduction in air pollution when methanol is used in place of gasoline are not unique, and not new. In fact, the original sponsors of the development of first methanol and then flex-fuel cars in the 1980s were the California air-quality agencies, which understood the value of methanol as a means of reducing smog. Methanol combustion produces no particulates and much lower amounts of NOx and carbon monoxide (in my tests, running the car on M60 repeatedly produced zero CO) than gasoline. In addition, methanol contains none of the carcinogenic aromatic compounds that are found in gasoline and whose emissions thereby contribute to the nation’s health bill.

Concerns about potential methanol releases to the environment are quite nonsensical, inasmuch as windshield-wiper fluid is one-third methanol, and billions of gallons of it have been dumped directly into the environment (that’s where it goes after your wiper throws it off the windshield) for decades, without any impact whatsoever. So for an agency whose supposed purpose is to ensure air quality to employ the Clean Air Act to keep methanol out of the automotive-fuel market is simply madness.

In addition to virtually banning methanol outright, the EPA has created regulations to prevent cars from being modified by small businesses to optimize their performance, including through the use of methanol. Such activity can be construed under Section 203 (a) (3) of the Clean Air Act to be “tampering” with the car’s emissions-control system, and to be subject to very heavy fines.

Now, it is true that there have been some people in the EPA at various times in its history who have sought to prevent such an abuse of the Clean Air Act. So, for example, on June 25, 1974, Norman Shulter, the director of the Mobile Source Enforcement Division of the Office of Enforcement and General Counsel of the EPA, issued Mobile Source Enforcement Memorandum 1A, stating that

in general, it is clear that the EPA’s primary objective in enforcing the statutory prohibition on “tampering” must be to assure unimpaired emission control. . . . It is EPA’s policy to attempt to achieve this objective without imposing unnecessary restraints on commerce. . . . In the absence of proof that the use of unoriginal equipment parts will adversely affect emissions, constraining dealers to the use of only original equipment would constitute an unwarranted burden on commerce. . . . [Therefore,] unless and until otherwise stated, the Environmental Protection Agency will not regard the following acts, when performed by a dealer, to constitute violations of Section 203 (a) (3) of the Act: (a) Use of a nonoriginal equipment aftermarket part . . . as a replacement part . . . (b) Use of a nonoriginal equipment aftermarket part or system as an add-on, auxiliary, augmenting, or secondary part or system . . . (c) Adjustments or alterations of a particular part or system . . . if the dealer has a reasonable basis for knowing that such adjustment or alteration will not adversely affect emissions performance.

Refining this standard of “a reasonable basis” for modifying a vehicle to use an alternative fuel, Bruce Buckheit, director of the EPA Air Enforcement Division, issued, on September 4, 1997, an Addendum to Mobile Source Enforcement Memorandum 1A, which stated (Section C.3.b.3) that such conversions would be considered acceptable if, afterwards, the converted vehicle was tested for emissions with all the fuels it used and found not to exceed its baseline gasoline-emission levels.

Unfortunately, however, EPA allowed this policy to expire in 2002, and on January 16, 2009, replaced it with a new policy, issued under the signature of assistant administrator Granta Nakayama, which explicitly allowed the EPA to impose massive fines for any vehicle alterations that had not been certified by EPA in advance, even if there were clear and compelling proof that no emissions increase had resulted from, or even been risked by, such changes. Thus, for example, the use of unapproved engine parts identical to the certified brands would still be considered an emissions violation (p. 13), even though it obviously entailed no increase in emissions, and in fact would subject the offender to triple fines (p. 17). “Even in absence of harm in the form of excess emissions, the gravity component of the penalty should reflect the seriousness of the violation in terms of its effect on the regulatory program,” Nakayama said (p.15).

So now, instead of just modifying each car and subjecting it to the same emissions testing faced by any other vehicle, a company wishing to offer conversions would have to have its technology certified by the EPA, in advance, for each make, year, and model it hoped to modify. Such a process would take many years and cost many millions of dollars, so much so as to effectively prevent any such initiative.

The economic damage being done by these regulations is enormous. As a result of improved technology, U.S. natural-gas production has recently been rising at a rate of 6 percent per year. Unfortunately, however, this cannot currently be marketed as liquid transportation fuel. And while the idea of using compressed natural gas directly as vehicle fuel has been the subject of much discussion, such conversions are very costly. This is why T. Boone Pickens and other advocates of such schemes are seeking federal subsidies of up to $11,500 per car, $64,000 per truck, and $100,000 per filling station — amounts that would add up to over a trillion dollars to convert half the American automobile fleet — which are clearly not in the cards. As a result, the price of natural gas has crashed to less than a quarter of what it was four years ago.

The natural-gas industry is screaming for new markets, and there are only two sectors where these can be found: transportation and power generation. These define two distinct policy options. The EPA could act to open the transportation-fuel market to vigorous competition from natural gas as well as coal, biomass, and trash, by legalizing methanol. This would force oil prices down, expand the economy, and create millions of jobs. Alternatively, the EPA could act to favor natural gas at the expense of coal by passing new regulations forcing coal-fired electric-power plants out of business. This would have the effect of driving electricity prices up while keeping oil’s monopoly on transportation fuel unchallenged. The net result would be to impose a massive, regressive, job-destroying electricity and fuel tax on the nation.

Unfortunately, the Obama administration has chosen the latter — a highly divisive and destructive course.

Can we really end our dangerous and costly dependence on foreign oil by legalizing methanol? The answer is unquestionably yes. The U.S. currently imports about 4.5 billion barrels of oil per year. At current prices of $90 a barrel, this works out to a cost of about $400 billion, equivalent to a loss of 4 million jobs at $100,000 per year each. If this were all to be replaced by methanol, about 166 billion gallons per year of methanol would be needed. If we were to make all of this from natural gas, we would need an additional 11.9 trillion cubic feet per year.

World natural-gas production stands at 120 trillion cubic feet per year, with the U.S. contributing about 29 trillion cubic feet of the total. At our current 6 percent per year rate of increase of natural-gas production, all of the necessary expanded natural-gas capacity could be developed from American sources inside of six years. If a significant fraction of the methanol were produced from coal, the target could be met even faster. The result would be the effective elimination of oil as a significant factor in our balance-of-trade deficit. Furthermore, by throwing the equivalent of 4.5 billion barrels of oil per year into the world market (which is now about 32 billion barrels per year) we would send the price of oil down to less than $50 per barrel, thereby causing the marginalization of the Islamist and other petroleum-financed tyrannies and setting off a worldwide economic boom driven by cheap oil.

We have here in North America all the resources needed to break the cartel-rigged restrictions on humanity’s liquid-fuel supply, and, by breaking them, to lead the world back to prosperity and on to freedom. The only thing in our way is an artificial policy wall that is stopping us from getting the fuel we can make ourselves into the market.

Mr. Obama, tear down that wall.

— Robert Zubrin is president of Pioneer Astronautics, a senior fellow with the Center for Security Policy, and the author of Energy Victory. His newest book, Merchants of Despair: Radical Environmentalists, Criminal Pseudo-Scientists, and the Fatal Cult of Antihumanism, has just been published by Encounter Books.


Abe Shackleton August 24, 2012 at 3:38 PM  

David Ruggles added this comment:

RE: "Furthermore, by throwing the equivalent of 4.5 billion barrels of oil per year into the world market (which is now about 32 billion barrels per year) we would send the price of oil down to less than $50 per barrel, thereby causing the marginalization of the Islamist and other petroleum-financed tyrannies and setting off a worldwide economic boom driven by cheap oil."

This is all well and good exvept if you force the world market price of oil below $70./bbl you render high cost production such as fracking of oil shale and oil sands below their break even point, thereby shutting down that production and forcing the world market price back up.

How viable might be the Keystone pipeline if the world market price of oil is below the cost of production of the very oil it is slated to transport? What happens to the debt obligations of the pipeline owners? Just askin'.

Abe Shackleton August 26, 2012 at 10:30 PM  

Someone emailed this comment:

President Obama's move Wednesday to reject a permit to build the Keystone XL pipeline drew fire from supporters of the project, with a spokesman for House Speaker John Boehner telling CBS that the decision threatens to "destroy tens of thousands of American jobs."

Yet exactly how much work Keystone, a proposed 1,700-mile pipeline that would transport oil from Alberta, Canada, to the Texas Gulf Coast, would generate remains in dispute. Transcanada (TRP), the energy giant bidding to build the pipeline, projects the undertaking would create 20,000 jobs in the U.S., including 13,000 positions in construction and 7,000 in manufacturing.

That figure, based on a report by a consulting firm hired by Transcanada to assess the project's economic impact, has been widely cited by Keystone backers on Capitol Hill. Other estimates advanced by supporters of the pipeline have been even more optimistic, with the U.S. Chamber of Commerce claiming it could create 250,000 permanent U.S. jobs.

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