Speculation on where oil prices are going continues to run all over the board with some analysts predicting prices as high as $100 per barrel and others predicting a fall-back to the $30 per barrel range. (Asia One: Time to seek alternatives to oil). All this really tells us is that none of the experts really have a feel for where the market is headed.
One thing they all seem to agree on is that corporations are not likely to invest heavily in either improving fuel efficiencies or seeking alternatives to petroleum fuels until they have a better understanding of where prices are headed. Neither of those positions makes any sense at all to me, especially the latter. Regardless of the direction oil prices are headed - and there's no reason to believe they're going anyplace but up - there is a clear and immediate need to seek alternative fuel sources.
There are several avenues open for companies that are pursuing fuel alternatives. The most popular seem to be compressed natural gas, liquid petroleum gas, a hybrid LNG and coal mixture, ethanol, diesel made from coconut and palm oil, and hydrogen fuel cells. Of this entire list, the only one that makes any sense at all to me are hydrogen fuel cells. The first set is still heavily dependent on petroleum based fuels as the base for any synthetics. That doesn't solve the problem, it only prolongs it. Ethanol and synthetic diesel suffer from the same problem. They require on agriculture to generate fuel, thus creating a weather-based uncertainty in the fuel market and also creating direct competition between food based agricultural needs and energy based agricultural needs. That's not a solution, it simply creates a new set of problems.
Of the supplied list of prime research targets, only hydrogen fuel cells makes much sense at all. Hydrogen is the most abundant element in the universe, and can be separated from a wide variety of compounds here on Earth. It makes sense to explore any technology that utilizes hydrogen as an energy source. To this end, President Bush allocated $1.2 billion to his Hydrogen Fuel Cell Initiative. Given the amount of money we're allocating to other research efforts, this number seems dreadfully low, however. If we can commit $104 billion to NASA to put men back on the moon, I'm sure we can find more than $1.2 billion to fund alternate energy sources!
The bottom line seems to be that the energy consortium does not yet perceive either oil supply or energy costs to be a crisis. Only then will they truly seek alternative fuel sources. That is the way of American business. Long term planning rarely extends beyond the next fiscal year and companies are loath to invest money in projects that are not needed immediately. There's no indication that the energy industry feels immediate pressure to pursue alternate sources. To say the least, they are both short-sighted and misguided.
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