Fuel Freedom: Ending oil addiction

Ending Oil Addiction

Fuel Freedom Foundation, September 2011

“Genie, for my third and final wish, I want to own all the gold in the world! ...”

$7T

World Gold

Money and Power:How much is too

much?What? …

… That’s it?

$7T

World Gold


much? Yes, it is only 7 trillion dollars. You should have asked for all the money in all the banks in the world. .

$7T

World Gold


much? Yes, it is only 7 trillion dollars. You should have asked for all the money in all the banks in the world. .

$14T

All Bank Deposits

$7T

World Gold


much?

$14T

All Bank Deposits

That still does not seem like much. How about owning the shares of all the public companies?

$7T

World Gold


much?

$14T

All Bank Deposits

That still does not seem like much. How about owning the shares of all the public companies?

$58T

Global Market Cap of Listed

Co.

$7T

World Gold


much?

$14T

All Bank Deposits

$58T


Co.

You know what’s funny? If you really want to own something, you should have chosen to be the owner of all the debt from every government in the world. (Although I am not sure what it would really be worth…)

$7T

World Gold


much?

$14T

All Bank Deposits

$58T


Co.

$102T

World Gov. Debt

$7T

World Gold


much?

$14T

All Bank Deposits

$58T


Co.

$102T

World Gov. Debt

Genie, Is that the most anyone can

own?

$7T

World Gold


much?

$14T

All Bank Deposits

$58T


Co.

$102T

World Gov. Debt

Not even close. There is one thing that is worth more than all

the financial instruments in the world. WORLD OIL

RESERVES!

$7T

World Gold


much?

$14T

All Bank Deposits

$58T


Co.

$102T

World Gov. Debt

$102T

World Oil Reserves

$132,000,000,000,000

$7T

World Gold


much?

$14T

All Bank Deposits

$58T


Co.

$102T

World Gov. Debt

$102T

World Oil Reserves

$132,000,000,000,000

Oh My...

The sober realization…

There simply isn’t enough money in the world to buy all the oil.

Which means that…Oil is ALREADY too expensive and is literally bankrupting us

How did we get to this point?

Strategic Commodity: What’s in your wallet?

Petroleum has a monopoly on transportation fuel

Transportation is the driver of world commerce

World commerce is the driver of the global economy

Conclusion: Petroleum has a monopoly on the global economy

When you have a monopoly on the global economy you can name your price!

US Energy Primer

Everything you need to know about US energy use at a glance…

US Energy Flow – Cost, Sources and Use, 2010

Cost 70%

21%

4%

4%

Natural GasCost: ~$150B

Coal: ~$30BRenewables & Nuclear ~$30B

Imported Petroleum

Cost: ~$300B

BiofuelsCost:~$5B

Domestic Petroleum

Cost: ~$200BTransportationCost: $370B

IndustrialCost: $165B

Residential & Commercial

$80B

Electric PowerCost: $101B

Cost52%

23%

11%

14%

Supply Sources Demand Sectors

Data from the Dept. of Energy

Transportation is our most fuel

intensive sector with 52% of the

cost


Cost 70%

21%

4%

4%



Imported Petroleum

Cost: ~$300B

BiofuelsCost:~$5B

Domestic Petroleum




$80B


Cost52%

23%

11%

14%



Oil is used mostly for transportation. Only 1% is used to

generate electricity.

1%

72%

94%

3%

1% 3%


Cost 70%

21%

4%

4%



Imported Petroleum

Cost: ~$300B

BiofuelsCost:~$5B

Domestic Petroleum




$80B


Cost52%

23%

11%

14%



1%

72%

94%

3%

1% 3%

Transportation uses oil almost

exclusively!


Cost 70%

21%

4%

4%



Imported Petroleum

Cost: ~$300B

BiofuelsCost:~$5B

Domestic Petroleum




$80B


Cost52%

23%

11%

14%



1%

72%

94%

3%

1% 3%

48%

33%

Coal, nuclear and renewables, a mere 8% of our

national fuel budget, generate

81% of our electricity.


Cost 70%

21%

4%

4%



Imported Petroleum

Cost: ~$300B

BiofuelsCost:~$5B

Domestic Petroleum




$80B


Cost52%

23%

11%

14%



1%

72%

94%

3%

1% 3%

48%

33%

In other words, our energy problem is petroleum-for-

transportation, NOT coal-for-electricity

What should we do?

On the red corner we have the “Drill Baby Drill” and nuclear energy

On the blue corner we have the global warming with solar and wind

Who is right?

Future oil price: How fast can the Drill Baby Drill?

New mass urbanization in China is driving oil demand at a breakneck pace

But new oil is harder to find, takes longer to develop and requires a lot more capital

Even with the current record level of domestic drilling oil is still too expensiveDrilling is like trying to outrun a

bullet train with a bicycleIt buys us time but it is NOT the

solution!

Not really… There may be a 1,000 years of oil

supply at $1,000 a barrel

The question is how much oil is there

at $50 a barrel ? $50 a barrel is equal to gasoline at

$2.50 per gallon and to the current cost of gasoline alternatives

Peak oil: Are we running out of oil?

Global Warming: Choose Your Poison…

PETROLEUM Use: transportation Direct cost: ~$500

billion Greenhouse: #1 emitter Urban pollution: #1 Substitutions: cheap Production: 60% import Supply risk: high Out of control pricing:

This decade

COAL Use: electricity Direct cost: ~$30

billion Greenhouse : #2

emitter Urban pollution: >#2 Substitutions: expensive Production: 0% import Supply risk: very low

In 200 yearsWhy are we focusing so much

on coal?

Alternative Energy: Nuke’em, Nuke’em All!

Nuclear power generates clean electricity

It is a replacement for coal, not for oil Solar power generates clean

electricityIt is a replacement for coal, not

for oil Wind power generates clean

electricityIt is a replacement for coal, not

for oil

So why again are we focusing almost exclusively on coal?

Well then…

If the red corner doesn’t get it……and the blue corner doesn’t get it…

… What do we do?

We need to break oil’s monopoly on transportation…

Fuel Choice: Four Main Alternatives

Ethanol

Natural Gas

Electricity

Methanol

Algae

Algae

Biomass

Four Alternatives to Gasoline

All are domestically produced All generate American jobs All emit less greenhouse gases And… all are less expensive than gasoline

So how come the price signal fails to change the market?

Remember oil’s monopoly on transportation?

Turns out there is more than one monopoly…

Three Interconnected Monopolies

Petroleum Only Cars

Emissions Regulation

s

Gas Stations’Exclusive

Relationship with Big

Oil

Solution: Break the 3 monopolies

Open the Car

to Other Fuels

Fuel Supply Competitio

n

Simplify Emissions Regulatio

ns

Open the Car Platform to Fuel Competition

Require new cars to be GEM (Gasoline, Ethanol, Methanol) flexible fuel known as Open Fuel Standard

Continue the support structure for early adopters of plug-in hybrids and electric cars

Encourage fleets and long distance haulers to convert to Compressed Natural Gas or methanol

Remove regulatory barriers for increased fuel efficiency

Fuel Supply Competition

Require oil companies to buy all types of American fuels, rather than paying them to add ethanol

Use legal action to break the fuel supply collusion

√ Phase out tariff on imported ethanol

Remove regulatory barriers for a national methanol industry (from natural gas)

Break the Regulatory Gridlock

Update EPA regulations and vehicle warranty rules to allow Use of various fuel combinations and

CNG Use of aftermarket conversion kits Use of locally produced fuels Use of aftermarket fuel efficiency

accessories

Wait….

What about electric cars?

Electric Cars: The long road ahead

Electric cars are the long-term solution

Battery production ramp-up time can be as long as 20 years

What is the chance of major oil shocks within the next 20 years?

We need interim solutions in the form of alternative liquid fuels

But….

Don’t we run into the issue of food vs. fuel?

Food vs. Fuel: Where is the Correlation?

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Monthly ethanol production (1k bbls) (left axis) Crude Oil (petroleum) - Monthly PriceMaize (corn) - Monthly Price per ton

From 2005 to the middle of 2008 it

seemed that there was a correlation between ethanol

production and corn price


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All the while ethanol production

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However, this correlation was a mirage - once oil price collapsed so

did the price of corn


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A recent World Bank study showed that energy cost is the largest variable in

farming, therefore the price of food tends to

fluctuate with the price of oil

Remove barriers for competition! We are not advocating for ethanol or methanol We are not advocating for electric cars We are not advocating for CNG We know we need reliable domestic oil

production But… More than anything, we need to open the fuel

market to competition Competition will free the American innovative

spirit to find better, cheaper, less polluting solutions

It is the oil stupid!

Doing nothing could: Bring $200 oil and the specter of the Greater

Depression Trigger a global resource warfare

Reducing our oil burden by half while switching to American fuels would: Save the US consumers over $4 trillion a

decade Increase US global competitiveness Increase GDP growth by an extra 1% a year Free 15%-30% of the US defense budget

Join us in forming a national effort on the scale

of the anti-smoking and global warming campaigns

to End Oil Addiction

We are not ready to write America off !

Take the Pledge

“I pledge that my next car will be a Fuel Freedom Car

capable of running on something other than

petroleum”

FuelFreedom.org

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