The Redhunter

First up is Robert Zubrin. From his article "Breaking OPEC's Grip"

Consider the following: In 1972, the U.S. paid out $4 billion for oil imports, an amount equal to 1.2 percent of our defense budget at that time. In 2006, we paid $260 billion -- about half of what we paid for national defense. Over the same period, Saudi oil revenues have grown in direct parallel: from $2.7 billion in 1972 to $200 billion in 2006 -- which will likely exceed $300 billion this year. Much of that money is being used to fund an international network of front organizations and Wahhabist madrassas devoted to spreading terrorist ideology. Meanwhile, Iran is using its share of the take to fund its nuclear bomb program, as well as terrorist groups like Hezbollah.

If something isn't done to break the Organization of Petroleum Exporting Countries (OPEC) -- the cartel that dominates and manipulates the global oil market -- the situation is likely to get much worse....

However, there is now a way to break OPEC, a surprisingly simple one. What is needed is for Congress to pass a law requiring that all new cars sold (not just made, but sold) in the U.S. be flex-fueled -- that is, be able to run on any combination of gasoline or alcohol fuels. Such cars already exist -- two dozen different models of flex-fuel vehicles (FFVs) are being produced by Detroit's Big Three this year -- and they only cost about $100 more than identical models that can run on gasoline only. (The switch to FFV requires only two minor upgrades: in the materials used in the fuel line and in the software controlling the electronic fuel injector.)

FFVs currently command only about 3 percent of the new-car market. After all, there is little upside for consumers to own one, with alcohol-fuel pumps being nearly as rare as unicorns. Little wonder: Why should gas-station owners dedicate one of their pumps to alcohol fuels (like E85 -- a mix of 85-percent ethanol and 15-percent gasoline -- or M50 -- a mix of half methanol and half gasoline) when only a tiny percentage of cars can use them? But, within three years of the enactment of an FFV mandate, there would be 50 million cars on American roads capable of running on high-alcohol fuels. Under those conditions, fuel pumps dispensing E85 and M50 would be everywhere -- creating, for the first time, an effectively open market in vehicle fuels, and competition for OPEC oil.
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By mandating that all new cars sold in the U.S. have flex-fuel capacity, we would induce all foreign automakers who want access to the American car market to switch their lines to flex fuel as well, effectively making flex fuel the international standard. In addition to the 50 million FFVs we'd see in the U.S. in three years, there would be hundreds of millions more worldwide that could be powered by any number of alternative fuels derived from numerous sources around the globe, forcing gasoline to compete everywhere. This would effectively break the vertical monopoly that the oil cartel currently holds on the world's fuel supply, constraining prices to the $50-per-barrel range (where alcohol fuels become competitive).

Such a development would also create a market that would mobilize tens of billions of dollars of private investment into techniques for the production of cellulosic ethanol and other advanced alcohol fuels. Those investments will further reduce the price of alcohol fuels and will radically expand America's and our allies' potential resource base (although methanol already can be produced from any kind of biomass, without exception, as well as coal, natural gas, and urban trash).

After last month's post on Zubrin's idea, commenter jason wrote that a similar program had been tried in Brazil and was in his opinion successful:

The last time I heard people get excited over flex-fuel vehicles was when a group of my friends returned from Brazil. They were impressed with the flex fuel system system in Brazil, most cars were flex fuel and both types of fuel were readily available. The story of how this 'emerging market' country is quickly on the way to energy independence is worth further research. After a little online searching, I was amazed to find that this change in Brazil was started in earnest after the 1970 oil crisis. The Brazilian government poured money into research and development.

---Researchers "developed alloys to protect the internal parts of gasoline-powered engines and fuel tanks from corrosion by ethanol. At the program's peak in 1986-89, 90% of all new vehicles sold in the domestic market were ethanol-fueled.

...Today, Brazil is the second biggest producer of ethanol in the world (20 billion liters) after the United States (24 billion liters). Close to 80% of this is for the domestic market - the fuel used in 45% of Brazilian vehicles is ethanol.---

With Brazil's booming economy, Ford has decided to gain some of the market and has unveiled a flex fuel car in Brazil.

Sure, Brazil has a natural advantage because they grow so much sugar cane. But the story of their path to energy independence is a good rebuttal to those who say there are too many obstacles (it rusts gas tanks, etc) in having the government actively encourage this conversion. Look what government intervention has done for Brazil, imagine if we had 45% of fuel in our cars from ethanol. Would our president still be holding hands with the Sauds?

All very fascinating and exciting. But are these advantages all they're pumped up to be? Henry Payne thinks not. In a post on National Review's Planet Gore blog, he writes that

Brazil, in fact, has followed just the path Zubrin subscribes. But it took that country -- led by a military dictatorship -- much more than just a flex-fuel mandate to get it to an energy market where home-grown ethanol is currently 40 percent of its transportation fuel.

Heavily dependent on OPEC oil, Brazil embarked on a national plan of oil independence during the last oil price panic in the 1970s. Dubbed "Proalcool," the central government nationalized its largest energy company to goose ethanol production, massively subsidized sugar ethanol, mandated the production of ethanol cars, and mandated at least a 25 percent mix of ethanol in gasoline. In effect, government took over its domestic energy sector in the name of national security.

A one would expect from government decrees, there were unintended consequences. Inflation soared thanks to government spending and an agricultural economy now skewed towards fuel -- not food -- production. Brazil suffered widespread environmental degradation with the rush to convert cropland to fuel, and ultimately -- with the collapse of oil prices a mere decade later -- the program failed because ethanol is fundamentally an uncompetitive fuel source relative to oil.

Why? Because ethanol -- whether corn, sugar, or cellulosic (the current U.S. fad) -- contains just 70 percent of the energy content of a gallon of gasoline -- a fact Zubrin blithely ignores. A recent EPA test of 31 flex-fuel cars (FFVs) found they averaged 26 percent fewer miles per gallon when filled with E85 ethanol. For example, the fuel economy of a gas-powered Chevy Tahoe SUV (17 mpg) plunged to 13 mpg on ethanol. Methanol (another so-called alcohol fuel) is even worse, with just 60 percent of gasoline's energy content.

With the rise of democracy in Brazil in the 1990s, much of Brazils' ethanol program was dismantled and pure E100 ethanol use evaporated. But the mandated 25 percent (E25) ethanol mix in gas remained. So as oil prices rose again this decade, the temptation to utilize Brazil's unique sugar resource (the most efficient crop for ethanol) returned and the government has once again intervened in the name of energy independence.

Let me state right here that I am not wedded to "flex fuels" or any other alternative fuel. My goal is to reduce our petroleum consumption because we have to stop funding those who want to destroy us. I'll consider any method that works towards that goal.

So what of it? Zubrin's idea is certainly intriguing. Payne, however, makes some good points that cannot be ignored. Further, I haven't read Zubrin's entire book (and don't have time to) so must recognize that he can't make all his arguments in a short article. Further, I have to think that current ethanol and methanol production techniques can be very much improved if we put our minds to it. I understand how growing corn for ethanol inflates food prices. But as the article commenter jason linked to shows, the Brazilians get a lot of their ethanol from sugarcane and even straw. From what I can tell these fuels can be processed from any number of biological sources, so surely again if we put our minds to it we can vastly improve upon the current process.

The bottom line though is that I really don't have the expertise to say who is right.

I've debated all this with conservatives on a few websites, and I get three lines of objections. One is the "free market" objection. They say that the free market will resolve all of our difficulties if only we'd reduce government regulation. The model they have in mind is Reagan's deregulation of Carter's energy schemes. While I am certainly sympathetic to this line of reasoning, I think it faulty for two reasons. One, the free market hasn't done us any good in this area so far, and two the only way it would produce alternative sources of energy is if prices got higher; usually just the opposite of what consumers want.

The other argument I run into is the "personal freedom" argument. My libertarian side is sympathetic to this as well. I don't like the government telling me what size house I can live in or what size car I can drive either. And this is where I think flex fuels look good; unlike CAFE standards it does not mandate what size car you drive, only what type engine it should have.

The third is a combination of increasing production by opening up ANWR and increasing our refining capacity. Unfortunately, from what I can tell but a bit of google research ANWR would supply maybe 5% or less of our daily consumption. This will have a negligible effect. Increasing refining capacity might be a good thing but I've not seen numbers that convince me that this either would have much effect.

Whether flex fuels are the solution or not, we've got to find some way of reducing our dependence on foreign sources of energy.