Cheap oil fallout

I filled up my car for just under $3 a US gallon yesterday and got a short-lived sugar high, followed by the predictable crash. Gasoline in the US retails for about half what it should counting its climate effects and the taxes it should carry for road use, so this is overall, and importantly, a Bad Thing, as is anything that makes fossil fuels cheaper rather than more expensive.

Of course $55 oil is a very big deal in an world addicted to petroleum in other ways, like selling it, as the Russians and Venezuelans will tell you. Oil companies, of course, are scrambling. BP, trying to stop the bleeding across its operations, is also pulling the plug on its cellulosic biofuels projects. I am quite ambivalent about this last development. On the one hand, the BP-funded Energy Biosciences Institute here at Cal has done a lot of good science and people I like and respect have worked there for several years, mostly trying to make liquid fuels out of whole plants. They are going to be seriously dinged by BP’s pullback.

On the other hand, I am broadly skeptical of liquid biofuels generally, and especially of trying to make them out of whole plants, and I think BPs retreat signals twilight for the latter enterprise.  Getting the lignin off the cellulose, and then breaking the cellulose down into something a yeast will eat, has been very refractory. If you have a big pile of biomass in one place to use for energy, why take a bunch of thermodynamic hits doing chemistry on it to make liquid fuel?  Just throw it in a boiler in place of any fossil fuel (especially coal), burn it directly, and make electricity.

A cautionary example, and a special case, is ethanol from sugarcane, especially in Brazil, where they have spent many years getting really good at it.  This is a C4 grass, the most efficient solar collecting kind of plant, grown where there’s lots of sun and (except this year) water, that only has to be planted every six years or so, and makes sugar that can be fermented directly, so no enzymes to dismantle starch.  Because the whole plant stem has to be hauled to the refinery to be squeezed, the fibrous residue is burned as fuel to run the plant and make electricity to put back in the grid. (If the Brazilian grid were less green–they have a lot of hydro–it would be better.)  Like any crop-based biofuel, it displaces food production and winds up pushing agriculture into forest land, with a big carbon discharge from land clearing.  This is about as good as whole-plant liquid fuel can get, and it’s still only about a third less carbon-intensive than gasoline; it will be very hard for cellulosic liquid fuels to come close, especially at tolerable cost.

Author: Michael O'Hare

Professor of Public Policy at the Goldman School of Public Policy, University of California, Berkeley, Michael O'Hare was raised in New York City and trained at Harvard as an architect and structural engineer. Diverted from an honest career designing buildings by the offer of a job in which he could think about anything he wanted to and spend his time with very smart and curious young people, he fell among economists and such like, and continues to benefit from their generosity with on-the-job social science training. He has followed the process and principles of design into "nonphysical environments" such as production processes in organizations, regulation, and information management and published a variety of research in environmental policy, government policy towards the arts, and management, with special interests in energy, facility siting, information and perceptions in public choice and work environments, and policy design. His current research is focused on transportation biofuels and their effects on global land use, food security, and international trade; regulatory policy in the face of scientific uncertainty; and, after a three-decade hiatus, on NIMBY conflicts afflicting high speed rail right-of-way and nuclear waste disposal sites. He is also a regular writer on pedagogy, especially teaching in professional education, and co-edited the "Curriculum and Case Notes" section of the Journal of Policy Analysis and Management. Between faculty appointments at the MIT Department of Urban Studies and Planning and the John F. Kennedy School of Government at Harvard, he was director of policy analysis at the Massachusetts Executive Office of Environmental Affairs. He has had visiting appointments at Università Bocconi in Milan and the National University of Singapore and teaches regularly in the Goldman School's executive (mid-career) programs. At GSPP, O'Hare has taught a studio course in Program and Policy Design, Arts and Cultural Policy, Public Management, the pedagogy course for graduate student instructors, Quantitative Methods, Environmental Policy, and the introduction to public policy for its undergraduate minor, which he supervises. Generally, he considers himself the school's resident expert in any subject in which there is no such thing as real expertise (a recent project concerned the governance and design of California county fairs), but is secure in the distinction of being the only faculty member with a metal lathe in his basement and a 4×5 Ebony view camera. At the moment, he would rather be making something with his hands than writing this blurb.

6 thoughts on “Cheap oil fallout”

  1. Human well being is (should be) our top priority. What's not clear, though, is how high an interest rate is justifiable when borrowing from the loan shark who inevitably collects, with full interest and penalties, from our children.

  2. If human well being is your priority, you have to consider human well being not just right now but in the future.

    1. A good portion the human population doesn't have the luxury of worrying about the future. Their survival for another day, week, year is their immediate concern.

      Their energy consumption may not be much greater than the calories they consume. While our, here in the US, energy consumption is, on average, about equal to the calories consumed by a hundred people.

      The only way third world populations can increase their well being is through the increased use of fossil fuels. Are we going to tell them that they have to stay in their mud huts burning cow crap?

  3. Burning stuff is a step backwards. Of course in instances like planes where they can’t carry the batteries there is still a use. Solar power is now about as cheap as any other fuel and it will only get cheaper.

  4. Had to laugh at the "moral" case for fossil fuel: there will be no climate change, fossil fuels have no negative consequences like global warming, black lung or asthma, and it going to be ALL GOOD, as long as we do not let fossil fuel corporations be charged the true price for their products or face the evils of competition. A moral cartel? And here was I thinking capitalism & free market = morality.

    Now, even the free marketeers really want market failure of the fossil fuel economy, in effect a massive subsidy – it's the moral thing to do. Isn't that what loony liberals wanted too?

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