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Wired: Why $5 Gas Is Good for America
Nov 29, 2005 (From the CalCars-News archive)
This posting originally appeared at CalCars-News, our newsletter of breaking CalCars and plug-in hybrid news. View the original posting here.
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Long story, better to read in print (on newsstands now) because of many graphics and sidebars. Before the entire main story we've started with sidebars about ethanol and PHEVs (the author assigns PHEVs to technologies that won't be competitive until we have $70+/barrel oil)

Here's what author says about PHEVS in the main story: And some seemingly distant options are right under our noses; consider the plug-in version of the hybrid car.

Sidebar: Grid electrons propelling cars for short trips­wired/­archive/­13.12/­70up.html PLUG-IN HYBRIDS
Tank up in your garage - 64 cents' worth of kilowatts will take you as far as a gallon of regular. Too bad the batteries in today's hybrids won't go more than a few miles. Extend the range to 30 miles (cost per vehicle: $10,000) and add the ability to suck power from the grid, and you have a dual-fuel vehicle that kisses gasoline good-bye for short trips. The electrons can come from dirty coal, clean solar, or anything in between. Fuel cost: $120/b.o.e.* (including battery) Environmental friendliness: 3.5 of 5 Technological maturity: 4.0 of 5­wired/­archive/­13.12/­ethanol.html
Fill 'Er Up With Frankenfuel
Drilldown: Ethanol
By Spencer Reiss

J. Craig Venter is stuck in lunch-hour traffic among the endless office parks of Rockville, Maryland. We're sitting in his Toyota Highlander hybrid, a vehicle he finds satisfactory - for now. "I wanted a fuel cell car that could run on biohydrogen," he says. "Unfortunately, they're not available. Not yet, anyway."

Venter isn't one to wait. After all, this is the guy who shocked the scientific world by sequencing the human genome years ahead of what anyone else thought possible. Then he set sail in the Sorcerer II, his 92-foot research vessel, to create a library of the DNA he found floating in the ocean. Last June, he launched Synthetic Genomics, a private company that gives an entrepreneurial push to his Rockville-based Institute for Genomic Research. Running on $31 million from private investors, the new shop has the kind of business plan only Venter could propose - make micro-organisms from scratch to solve world-threatening problems. First up: Clean energy.

"Breeding and selection can take you only so far," he says. "Look at what's going on with this planet - we need to do some accelerated evolution."

His initial target is biofuel, particularly ethanol, a mainstay alternative fuel. Today the alcohol is made by fermenting sugarcane or corn. Venter and others, however, are focusing on material that's low in sugar but rich in cellulose: corn husks, straw, and other waste that farmers and the rest of the agricultural industry discard by the ton. Enzymes transform the cellulose to sugar so it can be converted to alcohol, but the enzymes available today are secreted by microorganisms that thrive only under strictly controlled conditions. That makes them expensive. Moreover, they don't convert cellulose to sugar very efficiently. So Venter and his team of researchers - 29 and counting - are combing their database for DNA sequences that can make a hardier bug which produces a more capable enzyme.

A straw-munching bug customized for maximum efficiency would eliminate the ethanol industry's long-standing problem: high costs. A Canadian company called Iogen is building the first commercial ethanol-from-cellulose factory with a production price equivalent to oil at $67 a barrel. Venter thinks he can cut costs by a third or more. And he has another way to win: the prospect of GMO cellulose containing more energy than conventional crops.

"Today's plants are optimized to make food for humans, not fuel for cars," he says. "There are literally millions of better ways out there, hidden in genetic code and in our understanding of how the code controls cell metabolism. Our job is to find them."

Venter isn't placing all his bets on ethanol. On the third floor of Synthetic Genomics' headquarters, flasks of green goo - cyanobacteria - are arrayed under sunlamps. Photosynthesis, it turns out, produces not only oxygen but traces of hydrogen.

The Sorcerer's voyage uncovered thousands of unique gene families that metabolize light, Venter says, any one of which might hold the key to something as startling as giant pools of algae pumping out hydrogen under the desert sun.

"Plants are the original hybrids," he explains. "They run on sunlight during the day and burn carbohydrates at night. And there are millions of them out there that we've just started to find." The right bacterium could give Venter the information he needs to build an organism that produces unlimited quantities of clean, renewable fuel - and to turn his Highlander into the automobile he really wants.

The original gasoline alternative (and a common additive) is produced by fermenting and then distilling corn or sugar. But even billion-dollar subsidies and other inducements haven't made ethanol competitive with gasoline. Research - most notably in genomics - now focuses on making it from less costly waste cellulose. Corn stalks and husks provide a ready supply, but novel crops like switchgrass might be more efficient.

Current cost: $60-75/b.o.e.*
Environmental friendliness: 2 of 5
Technological maturity: 3 of 5
Carbon emissions: 3 of 5

Potential oil killer: No
US reserves: Renewable
Global reserves: Renewable
Global production 2004: 256 million b.o.e.­wired/­archive/­13.12/­gas.html

Why $5 Gas Is Good for America The skyrocketing cost of oil is sending pump prices soaring. But it's also subsidizing research into new technologies that can change the energy game. By Spencer ReissPage 1 of 1

At the climax of his book Twilight in the Desert, Houston investment banker and energy guru Matthew Simmons describes a visit to the world's most powerful oil company, Saudi Aramco, in Dhahran. Simmons listens in horror as a senior manager reveals the kingdom's darkest secret. The old ways no longer suffice. To keep their aging wells productive, the Saudis now rely upon one information age prop after another: advanced analysis of rock cores, 3-D seismic imagery, software for diagnosing underground oil flows - all integrated using something called fuzzy logic. Fuzzy logic? The Aramco man tries to explain the science of complex systems and partial information, but Simmons hears only tidings of a bleak future. Obviously, the end of energy as we know it is nigh.

Well, blow us down - algorithms in the oil patch! What next? Hydrogen-spewing superbugs? In a word, yes. And that's just the beginning.

Simmons' techno-cluelessness would be funny - calling Jed Clampett with his 12-gauge! - if he weren't the spearhead of a whole hand-wringing school of petro-pessimism. The oil fields are running dry, the gas gauge is on empty, the American way of life is doomed - these ideas bob like plastic shark fins on the storm surge of current oil prices. But the history of energy innovation suggests something very different - and a lot less dire.

Yes, a few billion newly motorized citizens of BRIC - that's economist-speak for Brazil, Russia, India, and China - have turned up unexpectedly at the filling station, pushing prices sharply north. And yes, the oil world has lately endured more than its usual share of ugly headlines: insurgency in Iraq, unrest in Venezuela, mayhem in the Gulf of Mexico. And, OK, all those air-conditioned Cadillac Escalades are thirsty beasts. A million extra barrels a day burned here, a million fewer pumped there, a little geopolitical instability, and suddenly the price of the stuff that makes the wheels go around is flirting with historic peaks.

All of which would be seriously alarming but for one happy fact: We've never had more options for keeping those wheels turning. Aramco's fuzzy logic is just one of a multitude of new tools and fuels - some proven, some in the works, and some wildly speculative. The main thing standing between those possibilities and your gas tank is cheap crude oil that costs Aramco barely $3 a barrel to bring to the surface.

So rising oil prices are more than just an irritant or even an ominous nick out of the GDP. They're an invitation to corn and coal and hydrogen. For anyone with a fresh idea, expensive oil is as good as a subsidy - with no political strings attached. Indeed, every extra penny you pay at the pump is an incentive for some aspiring energy mogul to find another fuel.

For the better part of a century, cheap oil has fatally undercut all comers, not to mention smothered high-minded campaigns for conservation, increased efficiency, and energy independence. But growing demand is outrunning the oil industry's carefully computed supply curves, bidding up long-term expectations for the price of energy. The long term may not mean a lot when you're standing at the pump, but the oil industry lives in a world where big projects take a decade to build and the checks that pay for them have eight or nine zeroes. Crude hit $70 a barrel last August, but oil companies have learned the hard way how quickly prices can crash. They adjust their expectations accordingly - downward.

For years, the industry's long-term benchmark was $20 a barrel in today's dollars; to get a green light, new investments needed to be profitable at that level. Now the industry is counting on prices to settle near $30. Some aggressive CEOs believe they'll stay as high as $40.

The changing outlook opens horizons - for conventional drilling, sure, but also for alternatives. Some new technologies merely produce more crude. But others tap energy supplies that have nothing to do with black pools under the Middle East.

Big Oil is already reaping the benefits of innovations developed in the 1990s, when long-term forecasts still pegged oil at $20 a barrel. Take digital oil fields - sensor-laden pumping operations under remote control - and ultradeep offshore platforms that drill beneath miles of water and rock to get at previously inaccessible deposits. But with the high end of long-term expectations hitting $40, novel energy sources are becoming attractive. Natural gas that used to be burned as an unwanted oil-field byproduct is being compressed into liquid fuel, and gooey tar sands are being shoveled out of the Canadian countryside to extract the embedded petroleum.

Push the long-term price forecast above $40, and more exotic possibilities come into play. Remember Jimmy Carter's synfuel program, which aimed to turn huge US coal reserves into gasoline? Three billion dollars in federal research money is now committed to making it happen. Corn, sugar, and soybean farmers hope rising prices can do what billions in subsidies and tax-funded research couldn't: make ethanol and biodiesel cost-effective. Smarter money is betting that using plant waste will prove more economical. These technologies join compressed natural gas, already widely used where it's worth spending extra money for cleaner exhaust.

Sustained crude prices above $60 would make feasible technologies that today seem too expensive or entirely speculative. It's hard to see demand for oil surviving long at such a cost. But given a push now, some nascent technologies - hydrogen, most obviously, but also hydrocarbons locked away in methane hydrates - could become viable at the end of a long road. Technology breakthroughs are the key here: For instance, Shell has found a better way to extract oil from shale, reviving a long-abandoned resource. And some seemingly distant options are right under our noses; consider the plug-in version of the hybrid car.

The cost of developing entirely new energy supplies is daunting, but the money is available - and we're not talking about the $14.5 billion porkfest served up by Washington's recent energy bill. The global oil industry will rake in three quarters of a trillion dollars this year. And when that kind of money is up for grabs, investors are never far away.

But it's not just energy producers and their shareholders who should be smiling about today's high prices. Conservation your thing? Savor the long faces worn these days by Hummer salespeople. Eager for energy independence? There won't be any wars for oil in Colorado shale country. Praying for reductions in atmospheric carbon? Synthetic diesel made from natural gas would be a step in the right direction.

True, fuzzy logic can't refill spent oil wells. But neither are digital oil fields and coal-to-liquid processing some last, forlorn rest stop on the highway back to the Stone Age. It was James Watt's steam engine that chained sailing ships to their berths - not lack of wind. Petroleum sent coal and horse power packing, even though mountains of coal waited to be mined and plenty of stallions remained in the barn. The oil shocks of the '70s gave a boost to funny little cars from Japan, and mid-20th-century American industrialism never recovered.

Could a similar fate await Aramco's finest? It's not written in stone that humanity has to propel itself with petroleum alone. Happy as the oil kings may be to sell today's $60 barrels, they're playing with fire. Simmons himself inadvertently makes that point when he frets that Aramco depends on technologies "unheard of a decade ago." That's the whole point of innovation: There's no telling where the next game-changing energy resource will come from. But motivating tens of thousands of scientists and engineers to look for it increases the odds of finding the path to a happier, maybe even cleaner, planet.

So what's a price-shocked, carbon-afflicted highway jockey to do? Keep driving. In fact, drive more. The longer gas stays expensive, the higher the chance we'll see alternatives. Put that pedal to the metal. And smile when you see a big black $3 or $4 out in front at the gas pump. Those innovators need all the encouragement they can get. Shale oil, uranium, sunlight - there's enough energy out there for a dozen planets. Where we'll all park is another matter.

Contributing editor Spencer Reiss (spencer@...) wrote about solar energy in issue 13.07.­wired/­archive/­13.12/­energy.html As Prices Rise, Technologies Emerge Page 1 of 1

Energy innovations that once seemed off-the-charts expensive are becoming potentially profitable alternatives. The reason: rising long-term oil prices, which make these methods more cost-effective by comparison. As prices push through each range, novel ideas - some proven, some speculative
- get a closer look.

Long-term price per barrel: $20-$30
Energy Sources Unleashed:
Ultradeep offshore Wells
Futuristic gear for tapping formerly inaccessible deposits

Gas to Liquid Natural gas converted into diesel fuel

Tar sands A sludgy mélange of petroleum and gravel

Digital oil fields Networked drilling rigs and remote-controlled wells

Long-term price per barrel: $30-$70
Energy Sources Unleashed:
Natural Gas
Conventional compressed methane - clean, efficient, and explosive

Coal to Liquid An abundant energy resource transformed into diesel

Biodiesel Vegetable oil pressed from soybeans and palm

Ethanol Gasoline-compatible alcohol fermented from corn, sugar, and cellulose

Long-term price per barrel: $70 & up
Energy Sources Unleashed:
Methane hydrates
A crystalline amalgam of methane and frozen water

Hydrogen The most common element in the universe, and a superclean energy source

Plug-in Hybrids Grid electrons propelling cars for short trips

Environmental friendliness:

Technological maturity:

Oil shale High-grade petroleum melted out of sedimentary rock

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