Changes in the World Ahead -- Part III

By Pastor Jim Walters

Last week I tried to outline the challenges of the world's oil needs. Even though half of all the oil that God put into the earth is still in the ground (at least one trillion barrels), every single day we burn 83 million barrels of it, which means we'll need a replacement source of energy in about thirty years. Plus, because most of the remaining oil is in hard-to-get-at places (i.e., bottom of the ocean) and/or in the hands of people who don't like us, it's imperative that we develop alternative energy sources now.

Ever wonder why we use oil as a primary energy source? It was abundant, cheap, easy to find, dense, and portable. None of the conceivable replacements I'm going to tell you about have these attributes. None are as convenient as oil.

Take wind power, for example. Farmers have been using windmills for centuries. Now when I fly my plane over northeastern Colorado, or near Lamar, Colorado, I see hundreds of modern windmills cranking away. Wind power is almost as cheaply generated as coal power -- but not nearly as consistent. Some days the wind doesn't blow.

Solar power has huge potential -- the source is virtually unlimited. And it's safe. As Dr. John Turner of National Renewable Energy Laboratory used to say, "God knew what he was doing when he put the nuclear reactor 93 million miles from Earth." Decades ago, solar arrays on roofs just heated water,and they had little power. Today's solar arrays are "photo-voltaic" (light-to-electric) and they make electricity just like a generator.

Have you ever seen Lake Mead, in Nevada? It takes up a whole corner of the state, but its hydroelectric plant generates 80% of the power needed by Los Angeles. What if you took an area of the desert the size of that lake (there's a LOT of desert in Nevada) and covered that desert area in solar energy cells -- would it generate as much power as does Lake Mead? Fact: it would generate 30 times as much power as Lake Mead!! Solar works, and it works great, except at night or on cloudy days. Aye, there’s the rub – it doesn’t work unless the sun is out. Plus, it’s hard to store the power for later use. And lastly, both solar and wind produce electricity, but the need is for liquid fuel for cars.

Someday we’ll have hydrogen fuel-cell cars. A fuel cell produces electric current, like a battery, but you fill it up with liquid hydrogen, as if it were a tank. When the hydrogen is mixed with air, it bonds with the oxygen and creates a water molecule. This chemical reaction throws off a spare electron, which is gathered on to a wire mesh. When electrons run down a wire, we call that… electricity. Hydrogen fuel cells will be the energy of the 1,000 year millennium – they’re that good. But… they’re years away from being commercially viable replacements for oil and gas.

Probably you've heard it said, "there's more oil in Western Colorado than in Saudi Arabia." Actually, there's not. The stuff in the Piceance Basin may be called "oil shale," but it's neither oil nor shale. It's a hydrocarbon in the kerogen family, trapped in a rock formation called marburg. A slick marketer named it "oil shale" back in the 1930's, and many researchers have tried to figure out how to harvest the stuff and turn it into fuel, but no luck. Even Shell Oil's latest plan, called "in situ," doesn't appear to be practical on any large scale. In a recent Denver Post article, Shell admitted they are ten years away from commercial production -- and that's only if someone can find huge sources of water (on the Western Slope?) as well as building two more coal-fired power plants to generate the power required.

Canada has enormous quantities of bitumen, or "oil sands," in Alberta; but again, the challenges of (a) environmental concerns; (b) lack of available water in vast quantities; (c) lack of workers and housing for workers; (d) the need to inject hydrogen into the stuff to make it liquid, make the "oil sands" very unlikely to grow beyond a "niche" market.

Much is being said about Ethanol as a future energy source. Even now, every gallon of gas you pump contains 10% ethanol, and the new "flex fuel" cars will run on E85, which is 85% ethanol and 15% gasoline. But ethanol made from corn is terribly inefficient, requires vast amounts of water, and causes havoc in the global supply and demand of corn. Future ethanol will be "cellulosic," made from corn stalks, switch grass, even wood chips, and that would be a major player, but again, we're talking about a time frame way past my retirement... and way past the immediate need.

America does have a large supply of coal - a couple hundred years just in Wyoming alone. And it is possible to use coal-liquifacton processes to make diesel fuel from coal. A Denver-based company, Rentech, is doing just that, on a small scale, but they are struggling to find anyone to loan them $5 billion to build a full-size plant. You have to sell a lot of diesel fuel to pay back a $5 billion investment!! Again, not in my lifetime...

What about Hybrid cars -- don't they save us fuel? Oh yes, and if we had 100 million of them, it would help immensely. America has 230 million cars rolling down our roads today, and less than five million of them are high-mileage hybrids. Every freight train you see is a hybrid also (the diesel engines don’t turn the wheels – they power generators that connect to electric motors that turn the wheels). They do this because hybrid technology is way more efficient than automotive engines.

By now, you’re thinking, boy, Jim is pretty pessimistic about alternative energy sources. No, actually I’m optimistic about them over the long haul, but I’m discouraged at how slowly we are adapting to them, and how little we are spending on research for hydrogen fuel cells (about 1/700 of what we just spent on bank bailouts).

What I forecast is a “long and difficult transition” from oil to other sources. During this time we are going to see big nations like China and India (and the USA) competing to buy and import from the same sources (Canada, North Sea, Mexico, and OPEC) while those sources struggle to keep supplying oil as fast as it is in demand.

This very week, crude oil prices on the NYMEX futures market are “down” in relative terms, to around $72 a barrel. But wait – only four years ago this week, oil was trading at around $38 a barrel. It has doubled in four years, and for a brief time was DOUBLE today’s price. Yes, this was largely due to “speculation,” but it doesn’t take much speculation to realize, if demand keeps going up and up, at 1.5% per year, and alternatives are slow to come on line, while supplies are barely keeping pace year-on-year, we are going to see some serious crunches in the global market over the next ten years. And this crunch, my fiends, will be one of the biggest tension-makers in the changing world around us.