Culture Change Media International Editor
Washington, DC - September 16, 2004

Focus: Global Fuel and Vehicle Policies - 
Near term Solutions for Long Term Issues

“The biggest new source of oil may indeed be conservation.”

Hart Energy Publishing activities of the Hart Downstream Energy Services, today one of the most important information gathering organizations for the oil and automotive industries, were started in Washington D.C. by Frederick L. Potter in 1981 as Information Resources Inc. (IRI).  Fred, who worked with the Office of Alcohol Fuels of the US Department of Energy, understood that the inclusion of non-petroleum fuels in the fuel mix is dependent on acceptance by the oil and automotive industries.  Today Hart is providing the industry with a large variety of expensive specialized newsletters on such subjects as “World Fuels Today,,”Global Refining & Fuels Report,” “Renewable Fuels News,” “Octane Week,” “Diesel Fuel News,” “Gas Processors Report,” “LNG wire,” and an online “U.S. Government Affairs Service.”  Hart’s International Fuel Quality Centers are located in Houston, Washington DC, Brussels, Belgium for Europe and Singapore for Asia.  These centers provide information  -  policy and technology  -  about the inclusion of biofuels, such as ethanol and biodiesel, as part of the fuel mix.

Hart is also running a series of Fuel Conferences in places like Prague, Rio de Janeiro, Tokyo etc.  To these conferences come representatives from various interest groups, even though they are basically viewed as petroleum industry conferences.  Government policy makers are among the participants and are obviously among the speakers.  Many industry representatives come to these meetings specifically to hear what these office-holders have to say.  At the Washington conference one such presenter was U.S. Secretary of Commerce, Mr. Donald L. Evans.  He is a former businessman in the energy industry and is a close member of President Bush’s team in charge of many issues including trade, energy policy and even leads the United States negotiating team within the context of the UN Framework Convention on Climate Change (UNFCCC), i.e., the issues of the Kyoto Protocol.  He is the adviser to the Bush Administration on Energy and Economic Policy.

Mr. Evans looked at the packed room and said that the energy business has good people; he spent most of his career in the oil business and he misses them; he is happy to be now again among the industry representatives.  It pains him that the public views in negative eyes the industry and its income gains.  He expects the energy bill to pass after the November elections.  It has now 58 votes in the Senate but 60 are needed to prevent filibuster; the quirk is that a majority is not good enough.  He enlarged on the stock-market dependence on the price of oil and the price of oil being dependent on bringing the oil out of Saudi Arabia.

When questions were asked from the floor, Mr. Evans was reminded that he was also in charge of negotiations on climate change and the Kyoto Protocol.  Even though the Kyoto Protocol will not be ratified by the U.S. Senate, nevertheless much is being done overseas on reducing emissions by changing dependence on oil now.  Also, the biggest new source of oil may indeed be conservation  -  does he think that the United States does enough in those areas?  Mr. Evans chose not to answer most of these topics, but kept saying that conservation was in the energy bill.  When he was told that this was not the case, he said the energy bill as originally introduced in 2001.  That part was particularly funny as he did in effect refer back to the original Vice President Cheney meetings with the oil industry before suggesting an energy bill.  At coffee brake it seemed clear that the performance by the Administration’s representative lost some votes.

The above became obvious when before the session titled “US Energy Policy Preview - Considerations for Future U.S. Energy Policy,” the five people at the podium, including an oil company VP, a stuffer for the Ranking Member of the Senate Energy and Natural Resources Committee, and the person in charge of Energy Information Agency of the US Department of Energy, decided to take a poll in the room.  The questions were (A). Should the present Energy bill be passed?, (B). Should the present Energy Bill be voted down?, (C). Should the Energy Bill be passed after amendments without going here into what amendments?, (D). There is no need of an Energy Bill.  To my surprise - D got hardly any takers, A and B had equal votes, but C was the clear winner.  So, even in this room with mainly people from the industry present  -  there was a clear rejection of the Bush Administration’s so called Energy Bill  -  perhaps 20% were ready to accept the present bill.

Further, in the session on “Global Energy Markets - the Well-to Market” conundrum, there was a great panel including a spokesman from the Venezuela Embassy, a hydrocarbons consultant, and the Director of the Cox School of Management, Maguire Energy Institute at the Southern Methodist University.  An interesting question “Will the lights go out?”  Then, actually sustainable development was defined as “not to compromise the future generations”. The interesting observation was made that Russia is increasing oil production  -  not Saudi Arabia.  Eventually Mr. Joe Colluci, former head of fuels at General Motors Company, remarked that data presented by the Venezuelan came from the US Department of Energy but they were different from the data presented by Mr. Evans.  Mr. Darrell Ragnow, VP of Invensys, the consultant on the panel, said that there must be a movement away from the SUVs and he also put the finger on the reluctance to reinvest by the oil companies.

Another interesting session revolved around the subject of the legislation calling for the removal of sulfur from diesel fuel.  Here again the subject of biodiesel that has no sulfur, mixed in with the petroleum based diesel, could help in addressing this need  -  albeit, the eventual reduction to 15ppm, down from 500ppm, means a very high new technological advance, but, nevertheless, the biodiesel could be of help.  The removal of sulfur will be done with traps attached to the exhaust pipes of trucks and heavy vehicles.  Further, a spokesperson for the truck rental business spoke up as being afraid of renters abusing the technology and creating big losses for the truck owners.Further, on the fuel demand side, was the session on the “Evolution of Automotive Technology - The Next Wave.”  Mr. Mark Chernoby, VP Advance Vehicle Engineering, DaimlerChrysler, made the interesting observation that we are now at the same spot as in 1910.  At that time there were steam engines, electrically run engines, the gasoline internal combustion engine, and a scenario of all of the above.  Now we have electric vehicles, hybrid powertrains, fuel cells, internal combustion engines, diesel engines, and a scenario of all of the above.  Mr. Chernoby said that the gasoline internal combustion engine won out in 1910 and all other methods lost out and vanished.  He went on then to find some future niche for various vehicles, so this time there may be a multi system solution.  Neighborhood electric vehicles will find a place as appropriate in local transportation.  DaimlerChrysler will have 100 fuel cell vehicles on the road in 2004/2005 including a hydrogen refueling station in Ann Arbor, Michigan, the Jeep Liberty that runs on diesel and is in high demand in Europe that prefers diesel engines to gasoline engines, and someday the U.S. Administration’s proclaimed Freedom Car that will run on hydrogen.

Eventually, the speaker had to be reminded that the internal combustion engine was not put on the market by Henry Ford as a gasoline fueled engine, but as an ethanol fueled engine.  This may be only a seemingly slight correction, but it covers over the implication that it all started with oil.  The truth is rather that the petroleum was put on the market as a source of light in kerosene lamps, and gasoline use for powering engines was only an afterthought  -  the cheap, and originally unwanted, gasoline driving out the farm/locally produced alcohol.  So, who knows, by rethinking the biofuels we may indeed grudgingly move away, at least partly, but even further away, from the dependence on oil.  This statement is clear to the organizers of this World Fuels Conference, from the Hart’s International Fuels Quality Centers, via the already successful use of ethanol for octane in the USA, ethanol as a fuel in Brazil, and biodiesel in the European Union.

To be successful indeed, in the creation of an energy policy, clearly, one starts with energy saving methods of conservation and less energy intensive systems, i.e., the elimination of unreasonable use of SUVs.  Then one figures out what type of energy to be used by what sector of the economy  -  this may allow a higher portion of liquids or gases for transportation fuels.  Further, when it makes sense to rely on electricity for transportation, some of this electricity will be from renewable sources rather then from burning fossil fuels.  Economic conditions will make all of these changes possible.

(This article was first posted on CultureChange.org)