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.