On March 31, speaking at Georgetown University, President Obama
said, “Now, in terms of new sources of energy, we have a few
different options. The first is natural gas. Recent innovations
have given us the opportunity to tap large reserves — perhaps a
century’s worth of reserves, a hundred years worth of reserves —
in the shale under our feet.”
Indeed, recent technological breakthroughs have opened up
recoverable reserves sufficient to supply America with natural gas
probably for closer to 200 years, even at increased use levels.
These breakthroughs create exciting new opportunities to reduce the
use of oil-based fuel for personal transportation, replacing it
with the now bountiful, American-produced natural gas instead. This
change would provide the added benefit of dramatically
reducing CO2 emissions.
The technology for using natural gas as a vehicle fuel is
already perfected. The energy contained in Nat Gas is more than
sufficient to power modern vehicles. The primary infrastructure to
deliver the supply to consumers already exists.
Countries the world over have already embarked on this
path. But you would be making a false presumption if you
believe that the Obama administration is actually developing an all
inclusive energy policy with natural gas as its
cornerstone.
There are good reasons for this conversion. Domestic oil
production had increased every year for the past 6 years, but that
stopped in April of last year. President Obama made claims of
increased domestic oil production in 2010, Yet, from April forward
domestic production declined because the President shut down
production in the Gulf, violated court orders to resume issuing
permits, and imposed undefined regulatory impediments on the
issuance of new drilling permits.
In fact, since April 20, 2010, and the Gulf oil spill,
domestic production has declined by more than 500,000 barrels per
day. This may not seem like much considering that we as a nation
consume more than 19 million barrels per day. But consider that a
reduction in worldwide supply of little more than 2 million barrels
per day in 2008 resulted in a wholesale price increase of almost
100%.
Until April 2010, our imports from the Middle East had
declined to less than 18% of total oil imports. Unlike 1973, until
April, we could lose access to Middle Eastern oil without having
our supply channels disrupted for more than a month or so. Today
with the reduction in supply and the stalled permitting process, we
are increasing our reliance on Middle Eastern imports. This affects
the cost at the pump and could negatively impact the United States
economy if Middle East supplies are disrupted.
While I am a firm believer in drilling domestic oil as
much and as rapidly as possible, this is only a small part of the
answer. In fact it truly isn’t the long-term answer. Trying to
drill our way out of the problem, while necessary for the short
term, won’t solve the long-term energy use issue.
Timing and cost are the real issues. Gone are the days of
pumping from the large underground reservoirs in places like
Pennsylvania, Texas, California, or Alaska. Recovering oil from the
Bakken fields requires deep horizontal drilling and fracking.
Offshore recovery requires setting up drill sites under vast
amounts of water. Recovering oil from the tar sands of Canada or
Colorado requires huge inputs of energy. All are very expensive
operations that push the cost of oil higher.
Short-sightedness and political expedience has left us
with inadequate infrastructure to pipe domestically produced oil
out of the fields. Pipelines from the Canadian and Colorado tar
sand fields and the Bakken fields don’t exist. Existing pipelines
from Oklahoma to the Gulf of Mexico refineries are full.
Also, oil must be refined for use as fuel. America has
prohibited the construction of new oil refineries since the mid
1970s. Even if we issue permits and begin pumping to capacity, our
ability to convert the increased domestic production into gasoline
or diesel fuel is minimal. We need updated infrastructure and
additional refineries to continue using oil as a transportation
fuel.
Trying to increase our supply with ethanol is also folly.
Corn, sugar, cellulosic, and grain-based ethanol is not
economically viable. The yield is minimal and the industry only
survives when receiving government subsidies. Mandating that a
significant percentage of the nation’s corn crop be diverted to the
production of ethanol is counterproductive and raises the price of
all corn crops. Algae-based bio fuels actually make sense due to
the yield, but have development problems that are as yet inhibiting
commercialization. Additionally, their chemical properties make
them more feasible as a jet fuel than an auto fuel.
Electric cars are at best a novelty. They have the dual
problem of limited range and long recharge times. Their use is very
limited and will not go mainstream unless and until there is a
paradigm shift in battery technology. Current technology, such as
Lithium Ion and Lithium polymer cells, do not provide sufficient
storage for the range requirements of most Americans and the four
plus hour average charge times further limit their acceptance. Even
if they become successful, deployment will still require huge
increases in grid-based electricity generation to charge the
batteries. Of our current crop of electric cars, Prius and Volt are
short range and still use gas as a primary fuel. Tesla and Fiskars
are an option, but not ready for the mainstream and much too
expensive. Electric cars are, in my estimation, 5 to 15 years away
from legitimacy.
THE ONLY LOGICAL ANSWER to bridge the conversion from oil
based fuels to paradigm alternatives lies in the conversion of
personal transportation to the use of natural gas. Consider the
following reasons:
• Daily demand for oil in the U.S. is between 19 and 20
million barrels per day. Of this demand, approximately 12 MM BPD of
oil is used to fuel our motor vehicles.
• Our current domestic oil production averages just under
9 million barrels per day.
• Even if we increase production to the highest levels
possible in the Bakken, Williston, Permian and Devonian as well as
open the ANWR and all other Alaskan sources to full capacity
drilling, we will only reach up to approximately 13 million barrels
per day.
• Even assuming we are able to physically recover this
much oil, we don’t have the infrastructure to move it to the
refineries and the refinery capacity to convert it to
fuel.
• By the time we are able to reach full production and
build the necessary infrastructure, demand will have increased to a
net neutral at best.
Now consider natural gas as a personal transportation
fuel:
• The technology exists and the ability to convert all
types of vehicles is very easily accomplished in only a few
hours.
• The Marcellus shale field holds enough proven
recoverable natural gas to fuel all of our transportation needs as
well domestic electrical generation needs for the next 200
years.
• The Devonian Shale in Louisiana holds at least as much
recoverable gas as the Marcellus.
• Natural gas burns in the form it is recovered so it
doesn’t require refinement.
• With proper filtration, natural gas can be used as it
comes out of the ground.
• The natural gas pipeline infrastructure already exists
under 70% of the roadways in America, so moving natural gas to
market is not a problem.
• Natural gas burns clean, emitting 30% less CO2 than oil
based fuels.
• The cost of natural gas is low so it won’t inhibit the
fragile U.S. economic recovery.
• Converting even 50% of our personal use vehicles to
natural gas can happen in the next 5 to 8 years and will easily
decrease our daily demand for oil by 6 million barrels per
day.
ONE WEEK AFTER Obama’s energy policy speech, a bi-partisan
group of more than 150 Members of Congress introduced HR.1835, with
Rep. John Sullivan (R-OK) as the primary sponsor. The NAT GAS Act
(New Alternative Transportation to Give Americans Solutions) Act,
is the culmination of efforts of T. Boone Pickens to promote his
“Pickens Plan” for changing the focus of American energy
consumption. The NAT GAS Act provides incentives for using natural
gas in vehicles, purchasing natural gas vehicles, installing
natural gas refueling stations, and producing natural gas vehicles
in America.
This legislation provides a policy blueprint to use
clean-burning natural gas in our large fleet vehicles. This is a
good first step, but it doesn’t go far enough. The real reductions
in oil consumption will be seen when we convert our private use
vehicles to natural gas. Even converting just 50% of these private
vehicles to natural gas will easily decrease our daily demand for
oil by 6 million barrels. That is sufficient to eliminate all of
our oil imports from the Middle East.
Shortly after Sullivan’s legislation was introduced,
the Environmental Protection Agency (EPA) announced amended
regulations that make it easier to convert cars and trucks to run
on natural gas. The amended regulations apply to clean alternative
fuel conversion manufacturers, thereby opening up new fuel supply
choices for consumers.
Sullivan’s bipartisan legislation is a tremendous move in
the direction of a sensible energy policy. But there is one notable
exception to the endorsement of this legislation and the EPA
provisions: the President and his “energy Czar.”
Yes, the same President who just gave a speech endorsing
the use of natural gas as a fuel is offering no endorsement of HR.
1835. If our President wants to actually develop a true energy
policy that decreases our reliance on imported oil, bridges the
time between today and the future development of alternative
transportation fuels, if the President truly wants to make a
difference, he should heartily endorse HR.1835. The President
should push the EPA to further eliminate its unwieldy regulations
inhibiting vehicle conversion to use natural gas as a
transportation fuel. Yet he offers no support for the
bill.
As I’ve maintained from the start of Obama’s presidency,
don’t listen to what he says, watch what he does.
