NEVER have we needed a coherent national policy for the development of alternative fuels more than now. Sadly, the United States is no closer today to having such a policy than it was at the beginning of the 20th Century. We are all paying a price for that failure.
Crude oil prices continue to edge closer to $60 a barrel, and diesel prices could reach $3 a gallon before the end of the year. Trucking companies are struggling to keep up with the rapid rise in fuel costs, and many report being unable to pass along the full amount of the recent increases to their customers. Owner-operators appear to be suffering even more than the fleets.
Sooner or later this will impact US economic growth. Ironically, the strong US economy is one of the factors driving up petroleum prices. In fact, the United States consumes a quarter of the world's petroleum output. We're not going to be alone in that distinction for much longer, though. Petroleum industry analysts say that China's thirst for oil will match ours within a decade.
All of this brings us back to the need for alternative fuel sources that would relieve demand for the petroleum-based products. The trucking industry needs a reliable fuel supply that is less susceptible to the market swings related to crude oil, most of which the United States must import.
Alternative truck fuels have been available for decades, and the raw feedstocks for these products are right here at home. Price has been, and continues to be, the main drawback.
During World War II, Germany launched a massive synthetic fuels program using technology developed during the 1920s as part of a collaborative effort by I G Farben and Standard Oil of New Jersey. The hydrogenation process under high pressure along with a catalyst produced high-grade automobile and aviation fuel. At the time, synthetic fuel cost 10 times as much as gasoline made from crude oil.
Today, things are much different. The days of cheap gasoline and diesel made from crude oil are long gone. Additionally, alternative fuels technology is more advanced, and a wide variety of feedstocks can be used.
A growing number of US companies are producing biodiesel from renewable feedstocks, including soybean oil and recycled fryer oils from fast food restaurants. Annual US production of biodiesel is around 25 million gallons and could reach 100 million gallons in the next three years, according to a report from the Agricultural Marketing Resource Center at Iowa State University.
Price remains a drawback, but the situation is improving. The price of biodiesel currently stands at about $2.75 in the areas where it is readily available. That's down from $3.50 to $4 a gallon just a few years ago.
Other diesel alternatives are being developed from coal, a resource that is available in vast quantities in the United States. The latest coal-to-liquids project is being launched in Wyoming's Powder River Basin using technology belonging to Rentech Inc. It is estimated that the project will use 2.5 million tons of coal a year for every 10,000-barrels-per-day fuels production.
The largest alternative fuels endeavor is outside the United States, though, and it could eclipse everything we are doing here. Worse still, it could leave us as tied to imported alternative fuels as we are to imported crude oil.
A front-page story in the February 15 Wall Street Journal described a massive natural-gas-to-liquids (GTL) project that is underway in the small Persian Gulf nation of Qatar. At least $20 billion is being invested in the plant complex, which will turn natural gas into a clear liquid with the high efficiency of diesel but none of the sooty pollutants. Partners in the project include Exxon Mobil Corp, Royal Dutch/Shell Group, and Chevron Texaco Corp.
The first GTL diesel from Qatar will hit the market in late 2005. By 2010, Qatar and its partners plan to produce up to 750,000 barrels of GTL diesel a day, about 6% of current global consumption.
Alternative fuels development is not a partisan political issue. The legislative and executive branches of our federal government must do everything they can to ensure that the United States takes a leadership role in the development of alternative fuels. The future of the trucking industry, and the US economy as a whole, depends on it.