A Free Market For Fuel

Tuesday, November 26, 2013

Fuel is not sold in a free market. In the last hundred years, the oil industry has shut down, smeared, discredited, and blocked competing fuels. Right now, methanol could be sold for half the price of gasoline. But because of a pointless EPA regulation, it’s not sold as a fuel in the United States. Normal gasoline-only cars can efficiently burn methanol, which can be made inexpensively from three resources America has in abundance: coal, natural gas, and municipal waste (among many other resources).

Ethanol is another example. Oil companies have blocked ethanol from being sold at most gas stations. Petroleum interests have also been trying to discredit ethanol as a fuel for literally a hundred years.

Petroleum has a monopoly, and OPEC has been exploiting it. OPEC was created to raise world oil prices, which they’ve successfully done since 1973. The OPEC nations produce 40 percent of the world’s annual oil supply, which is enough of a percentage that they can (and they do) regularly decide to lower their production to raise the world price of oil.

OPEC is an illegal price-fixing cartel, and if they were operating within our borders, they would be prosecuted for it. What they are doing is also illegal internationally, but nobody is likely to prosecute them because OPEC could, and probably would, retaliate by stopping their production, which would cause a worldwide depression.

Free trade and the economy as we know it completely depend on transporting goods from place to place. When the price of transportation fuel rises, the price of everything rises. Every time oil prices have spiked since World War II, we’ve had a recession in America.

It is our complete reliance on oil that creates our economic vulnerability. What can we do about it?

The solution to a monopoly is competition.

But how can we create free trade in the fuel market when the problem is outside our borders? The Open Fuel Standard is the solution. The bill now in Congress says half the cars sold in America must allow fuel competition — if the car can burn gasoline, it must also be able to burn gasoline, ethanol and methanol in any proportion. This is technically simple and surprisingly inexpensive to do. Ethanol and methanol burn in similar ways, and they work very well in ordinary gasoline-only engines. The main thing automakers would need to do is install the flex fuel software in the onboard computer.

This small change brings into being real fuel competition. Drivers filling their tanks could choose on the spot which fuel they want to buy that day. So those fuels would have to compete with each other on price. And if there was an oil price spike, it would hardly make a dent in our economy. People would simply buy one of the other available fuels.

Methanol and ethanol can both be made right here in America, producing American jobs and pouring money into the American economy. Please help us make this a reality. Sign up for our free email updates at openfuelstandard.org and participate. The bill subsidizes nothing and costs taxpayers nothing, but a freer fuel market means the consumer wins.

Author: Adam Khan, the co-founder of OpenFuelStandard.org and co-author of the book, Fill Your Tank With Freedom. 

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The Only Country in the World With True Fuel Competition

Sunday, November 24, 2013

I met a businessman from Brazil the other day. For years I've been reading about what Brazil has accomplished, but this is the first time I've met someone from Brazil and could talk to them about it. "Yes," he said, "we have the choice of ethanol and gasoline at every filling station in the country. Yes, almost all the cars on the road are flex fuel vehicles."

What struck me most was his nonchalance, especially as contrasted with my obvious envy. He lives in a country where a liquid fuel is in constant competition with gasoline. Brazil has done something amazing. And they are the only country on earth doing it. Their economy is thriving. They recently passed Britain to become the sixth largest economy in the world (behind the U.S., China, Japan, Germany, and France). They won the bid to host the 2016 Summer Olympics. They've arrived on the world stage as a major economic power.

When I commented on his lack of excitement about his country's fuel competition, my new Brazilian friend said, "Well, this all started way back in the 1980s." It is no big deal to him that every time he fills his tank, he chooses what he wants to put in it. It's been that way for a long time. He said sometimes ethanol is a better deal and sometimes gasoline is. But, he said (not yet realizing I know a lot about this topic) "you can't go as many miles on a gallon of ethanol as you can on a gallon of gasoline. We just do a quick calculation, multiplying by point seven. So if the price of ethanol is 70 percent of the price of gasoline or lower, most people buy ethanol. If it's above that, we buy gasoline."

On sale in Brazil are 80 different flex fuel vehicle models, made by 12 major automakers, and four flex fuel motorcycle models. The automakers are GM, Ford, Volkswagen, Honda, Nissan, Toyota, Peugeot, Renault, Mitsubishi, Citro├źn, Fiat, and Kia Motors.

In Brazil, the gasoline is E20 or E25. That is, their gasoline is 20 to 25 percent ethanol. And the ethanol for sale at the pump is 100 percent ethanol (rather than E85, as it is in the U.S.). Pure ethanol is very popular in Brazil — 65 percent of the people with flex fuel vehicles regularly use ethanol.

Although Brazil made ethanol available for ethanol-only cars at every filling station starting back in the 1980s, flex fuel cars didn't come onto the Brazilian auto market until 2003. The next year, 22 percent of new car sales were FFVs. It climbed until by 2009, 94 percent of new car sales were FFVs. Not many people choose to not have any choice in fuels.

We could do in America what they've done in Brazil. In fact, we could go one better. We could add methanol. The mechanical tweaks necessary to enable a gasoline-only engine to also burn methanol and ethanol are almost nil. Then we would have three good fuels all competing with each other for our fuel dollars. What do you think that might do for our economy?

Author: Adam Khan, the co-founder of OpenFuelStandard.org and co-author of the book, Fill Your Tank With Freedom. 

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Is Corn Ethanol Production Bad For The Environment?

Friday, November 22, 2013

Have you seen any recent articles about how "devastating" corn ethanol is to the environment? Setting aside the fact that corn was only the beginning and given what Joule Energy is doing, corn isn't the best thing to make ethanol from anyway (because its yield is so low compared to other feedstocks), it's still true that corn ethanol is being demonized unfairly. The following was published by the Renewable Fuels Association, who obviously have an ax to grind, but the points they make are accurate and should be included in our national conversation about fuel. Here's what they wrote:

The Associated Press has just published a new account of the effects of corn production and ethanol on the environment. The piece is appearing in newspapers across the country starting this week.

The AP calls it "investigative reporting." We call it salacious and unbalanced.

RFA staff spoke with the story's lead reporter numerous times, providing indisputable facts, peer-reviewed studies, and government data documenting ethanol's positive impacts. Instead, the writer chose to use disproven myths, skewed data, and outright fabrications to suggest biofuels and the Renewable Fuel Standard haven't lived up to their promise.

Here are just a few of the "facts" the AP got wrong or chose to ignore:
  • There is no evidence farmers are "plowing into pristine prairies." No new grassland has been converted to cropland since 2005, and most is protected under "sodbuster" and "swampbuster" provisions of the 2008 Farm Bill.
  • In the same vein, the AP claims to have used "government satellite data" to determine that "1.2 million acres of virgin land" have been converted to corn since 2006. But the AP has so far refused to release this "data."
  • No one is "filling in wetlands," as the article claims. Enrollment in the Wetland Reserve Program hit a record high of 2.65 million acres in 2012.
  • The article uses Wayne County, Iowa as a "case study" of corn's out-of-control growth. But corn acreage in that county went down in 2012 and was 34% lower than at its peak in 1986.
  • The article criticizes the rising use of corn for fuel instead of animal feed. But this ignores that for every bushel of corn that goes into producing ethanol, 17 pounds of livestock feed is returned to market. Because of this, on a net basis, livestock feed production still accounts for 50% of the corn supply, with ethanol only consuming 26%.

There's more. They've put together a PDF fact sheet covering some of the biggest flaws in the AP report: Myths Versus Facts.

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Ethanol For $1 a Gallon Using Unfarmable Land and Undrinkable Water

Tuesday, November 19, 2013

Corn can produce 350-400 gallons of ethanol per acre per year. Cellulosic fuels such as grass and wood chips can produce 2,000 to 3,000 gallons of ethanol per acre per year, but so far, not cheaply enough to compete with gasoline.

But Algenol, a company in Florida, has successfully achieved 9,000 gallons of ethanol per acre per year using algae grown in salt water at one dollar a gallon! Another company, Joule Energy, is producing 15,000 gallons of ethanol per acre per year at $1.23 per gallon using undrinkable water! And they are confident they will eventually be able to achieve 25,000 gallons of ethanol per acre per year!

How are they able to achieve this? They genetically modified algae to produce ethanol. Let me be clear: These companies are not harvesting the algae and then fermenting it. The algae itself excretes ethanol continuously, which is why the yields are so remarkable the production is continuous year round. Corn is a crop grown and harvested only once a year.

The algae are grown inside tubes, so evaporation is minimal. It can be done in on harsh desert land in fact that might be the best place to do it since there is so much sunlight.

To accelerate the algae's growth, waste CO2 is pumped into it, turning a burdensome waste into a valuable resource.

What Joule Energy is doing is so remarkable, they won a very prestigious award this year by Bloomberg New Energy Finance. They said, "Every year, the Bloomberg New Energy Finance Pioneers program identifies 10 companies from around the world that are changing the energy landscape as we know it. An independent panel of industry experts from banking, academia, corporations, utilities and technology providers choose the honourees by assessing them against three criteria: potential to scale, innovation and momentum." In April, 2013, Joule was given this award.

Joule has also genetically modified algae to make diesel fuel and jet fuel.

More information: 
Algenol web site
Joule Energy website
Article about Joule Energy's funding
Joule Plant Overview video

Video interviewing CEO of Joule

Author: Adam Khan, the co-founder of OpenFuelStandard.org and co-author of the book, Fill Your Tank With Freedom.  

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A New Fuel Paradigm For America

Monday, November 11, 2013

The Institute for the Analysis of Global Security has released an important 52-page PDF document entitled, Fuel Choice For American Prosperity. The following is an excerpt from the introduction by the co-founders of the United States Energy Security Council, Robert C. McFarlane and R. James Woolsey:

Oil’s strategic importance stems from its virtual monopoly as a transportation fuel. Today, 97 percent of transportation fuel is petroleum based. During the past four decades since the Arab Oil Embargo the policy consensus has been that if we only increased our domestic production of oil and/or learned how to use less of it we would be energy secure. We have done both: America’s domestic crude production is at its highest since 1992 and our vehicles are more fuel efficient than ever. As a result America’s oil import dependency has dropped from 60 percent in 2005 to 36 percent today, and it may drop further still. But none of this seems to have affected the global price of crude or the price of gasoline Americans pay at the pump. On the contrary, while our import dependency slumped our foreign oil expenditures nearly doubled, the share of oil imports in the overall trade deficit grew from one third to nearly a half and American motorists pay in real terms more for fuel than ever before. Clearly something is wrong with the paradigm.

What is needed is a competitive transportation fuel market in which a variety of energy commodities can vie with petroleum for market share. As long as the vehicles rolling onto our roads can essentially run on nothing but oil based fuels, and consumers are thus thwarted from making an on-the-fly choice among different fuels, America will remain susceptible to oil price hikes emanating from the Middle East to the detriment of our economy and national security — no matter how little oil we import from that region.

Competition is a bedrock of our American way of life. It’s time to introduce it into our fuel market.

The paper examines the goal we've been pursuing since the first oil embargo, which could be summarized as: "Reduce foreign oil, especially oil from the Middle East." We have made great strides in accomplishing this goal but it has failed to give us "energy independence" because it was the wrong goal to begin with. The paper offers a revolutionary way to look at this issue: The problem with oil is not where it's from, it's the petroleum monopoly, which gives oil a strategic status it doesn't deserve (especially given the already-existing fuels that could successfully compete with petroleum if given a chance). The paper offers many practical recommendations to solve the real problem and create true energy security for America.

Read or download the document here: Fuel Choice For American Prosperity.

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The Gift of Life

Sunday, November 10, 2013

The American military protects oil shipping lanes, protects many oil-producing countries, and fights to defend the U.S. and its allies from terrorist groups funded by oil money (source). Why? Because oil has a monopoly on transportation fuel, so it is vital to America's interests.

But fuel competition would change that. And it would put fewer servicemen and servicewomen in harm's way. It's something to think about on Veteran's Day.

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Gasoline's Greater Range

Saturday, November 9, 2013

Some people have argued against flex fuel cars or the Open Fuel Standard because methanol and ethanol don't give cars enough range. In the same sized fuel tank, a full tank of gasoline would travel more miles than a full tank of methanol or ethanol.

There are two answers to this. One is that the range difference isn't as great as you'd think — especially if the car is optimized for alcohol fuels. Most of the comparison between gasoline and alcohol uses BTUs (British Thermal Units), which is a measure of heat. Gasoline produces more heat when it burns. But heat is not what creates forward motion. Gasoline produces more heat, but some of its energy is expended in producing heat, and that energy is wasted. More of alcohol's energy is used to power the car and less of it is wasted on creating heat.

Also, alcohol fuels become more efficient at higher compression. So the difference in miles per gallon between gasoline and alcohol will be smaller with a higher compression engine. Engineers are already in the process of perfecting a variable-compression engine.

The second answer is that if it is a flex fuel car, it doesn't matter that alcohol doesn't have as much range as gasoline because if you are going on a long trip or want more range, you can just buy gasoline. The car can burn gasoline too. That's the whole point. You will have a choice. If you want to burn nothing but gasoline, no matter how expensive it gets, you will be able to. Flex fuel technology doesn't reduce a car's ability to burn gasoline. That's why so many people own flex fuel vehicles now without even knowing it: Because they've been burning gasoline in their cars and it burns gasoline just as well as a gasoline-only car.

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Zero Tolerance For Monopolies?

Tuesday, November 5, 2013

11/01/2013 - Carl Pope, former executive director of the Sierra Club, now senior adviser to Securing America's Energy Future wrote the following op-ed for the Mercury News:

Forty years ago, the Saudi Oil Ministry informed the Secretary of Defense that it would no longer supply fuel to the U.S. 6th Fleet. The OPEC oil embargo had begun. For the next five years, the U.S. made serious efforts to escape monopoly dependence on oil. Then, with the decline in oil prices, we fell asleep.

Even when prices began to rise to the stratosphere in 2004, America kept on snoozing. Whenever voices from the military, who bear the heaviest burden, urge us to end oil's stranglehold on our transportation system, the oil cartel and industry concoct a new theory to put us to back to sleep.

This time, the sedative is the promise that huge, exciting, Saudi-sized oil production in the U.S. will achieve "energy independence."

Increased U.S. oil production, combined with more efficient autos pouring into the marketplace powered by the Obama fuel-efficiency regulations and a revived U.S. auto industry, are indeed lowering the volume of oil that the U.S. imports. But world oil prices have risen so much that the dollars and jobs we export to pay for imported oil are greater than ever. We'll add another $4 trillion to our national debt from importing oil over the next 20 years.

As long as the United States uses almost 20 million barrels of oil each day, increasing our domestic production by fracking a million or two barrels a day — which are the projections — still leaves us importing more oil than we did when the first embargo hit, at a much higher price. And new U.S. oil costs more than $90 a barrel to find and produce, so it only comes to market if oil continues to be unaffordable.

Every American recession over the past several decades has been preceded by, or was concurrent with, an oil price spike. The U.S. economy is tied to the highly unpredictable, cartel-influenced global oil market, which manipulates supply and prices. As long as oil is the lifeblood of the U.S. economy, wherever a specific barrel comes from, our military will be forced to bear the burden of guarding against a supply disruption anywhere in the globe. Oil dependence, at times, requires us to accommodate hostile governments or alter our pursuit of key national security objectives.

We don't tolerate such monopolies elsewhere. We source electricity from hydro, gas, coal, nuclear and now wind, geothermal and solar. If wheat gets too pricey, we buy rice or corn; chicken can replace beef. It's folly that nothing is set up to replace oil in our cars, planes or trucks when there are lots of perfectly good energy sources that could cost less than $100 per barrel.

Whenever oil prices spike, we crowd our underinvested transit systems; let's build them out. Natural gas could power trucks for a fraction of the cost per mile of diesel; electric cars free drivers from the volatile oil market. We just need to make these alternatives the norm.

It's not that oil is imported that is crippling us, or even that it is expensive. It is the fact that it has a monopoly — one our environment, our security and our economy can no longer afford.

After 35 years, it's time for the U.S. to wake up.

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Why Conservatives Love the Open Fuel Standard Bill

Friday, November 1, 2013

The Open Fuel Standard bill creates a free market instead of what we have now: Oil’s virtual monopoly of transportation fuel. Oil is in the same position AT&T was in prior to 1984: Because of the way things are structured, oil has a monopoly. Gasoline-only cars can efficiently burn methanol and ethanol as well as gasoline. Flex fuel technology is inexpensive and mature. When AT&T’s monopoly was broken and competition was introduced, the cost of long distance calls dropped in the span of three years from $3.00 a minute to 30 cents a minute, and now it is more like 3 cents a minute. Why? Competition. The Open Fuel Standard would do the same for fuel — our economy’s most important commodity.

The Open Fuel Standard bill would also create greater national security for the United States. The threat of Islamic fundamentalism is growing around the world because of money from oil. OPEC nations keep raising the world price of oil and using that money to fund Hezbollah, the OIC, the Muslim Brotherhood, the Muslim Students Association, the Taliban, etc. — these are all funded by OPEC oil money. Fundamentalist Wahhabis from Saudi Arabia are also using their oil profits to buy and build madrassas and mosques all over the world to spread their message of hatred of non-Muslims. The only reason they’re making so much money is that the world is stuck on a one-fuel standard. The economy requires transportation fuel and petroleum is the only one most of the world uses, even though methanol and ethanol also burn efficiently in the same engines and are half the cost per mile. The Open Fuel Standard would change all this. Fuel prices would drop and OPEC’s decades-long tradition of bleeding the West of its money would stop.

Find out what you can do to help get this bill passed: First Things First.

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