The oil barons (or energy companies, as they preferred to be called) are increasingly tying up with biofuel and chemical companies to diversify their sources. From BP to Chevron to Shell, investments in ethanol and biodiesel are opening the doors to their refineries to alternative fuels.
I spoke this week with Al Mannato, the American Petroleum Industry's Fuel Issues Manager about the new love for biofuels, and he surprised me with statements that made me believe Peak Oil isn't just some far off idea.
Mannato said more refineries will be expanded to be able to process fuel from agricultural products and animal waste, and confirmed that his companies recognize that they have a limited future.
"Our companies are in the business of supplying energy. We will need all energy sources that we can get... We see the writing on the wall... and will be investing in as many diverse resources as possible."
For months I've been trying to get reliable data on the net energy balance comparison between ethanol and gasoline. Mannato said ethanol returns 1.3 to 1.6 units of energy to a vehicle for each unit of energy invested (consistent with most other estimates), while gasoline returns 6.5 units of energy. So even with the cost of drilling, refining, and shipping crude oil, it's still a much better energy deal than domestically produced ethanol.
I have been wondering why gasoline costs so much more on the West Coast than diesel fuel. Mannato said that California's stringent emissions regulations require refineries to spend more to create the cleanest gas in the country, so that's why it's more. Diesel is cheaper and less energy intensive to produce, so if the Bush Administration wants to reduce oil dependency, the government should buy up lots of diesel cars and vans as well as giving a tax incentive to fuel efficient diesels, just like hybrids.
Finally in oil company news, ConocoPhillips' shareholders apparently could care less about the environment. Shareholders soundly defeated a measure to study the environmental impact of expanding drilling in Alaska (which they call the National Petroleum Reserve), and a measure to fund a study renewable energy and global warming was withdrawn. Thanks for caring. Not!
