Petroleum is a finite resource and is predicted to be uneconomical to produce at some point during this century. "Hubbert's Peak" predicts the pattern by which oil production will peak. The theory predicts that the maximum point of production (known as the Hubbert Peak) tends to coincide with the midpoint of depletion of the resource under consideration. In the case of oil, this means that when we reach the Hubbert Peak, we will have used half of all the recoverable oil. The result is on the upslope of the curve oil production quickly rises and on the downside oil production quickly falls. This was the theory used in 1956 by Dr. Hubbert to predict U.S. peak oil production in 1970. Experts debate when world oil production will peak. Recent estimates from the U.S. Department of Energy, Energy Information Administration project world peak oil production to occur around 2044¹ not including the large oil reserves in tar sands and bituminous heavy oil deposits. Others sources claim, in light of recent high oil prices and decreased oil production, we have already reached "Hubbert's Peak".

Fossil Fuels and Pollution in the Transportation Sector

In spite of environmental controls in recent decades, fossil fuels continue to produce harmful emissions when combusted -- with the majority of petroleum-based (CO₂) emissions coming from the transportation sector. Air pollution from automobiles comes from:

• Carbon monoxide which is a colorless, odorless, deadly gas. It reduces the flow of oxygen in the bloodstream and can impair mental functions and visual perception.
• Hydrocarbons which form ozone at low levels, which can cause eye irritation, coughing, wheezing, and shortness of breath and can lead to permanent lung damage.
• Nitrogen oxides (NOx), which contributes to the formation of ozone and contribute to the formation of acid rain and to water quality problems.

Biofuels

Biofuels produce small net amounts of harmful emissions, and are available as an immediate alternative to petroleum-based fuels. Shifting from petroleum based to biobased fuels has the potential to reduce air pollutants, especially carbon monoxide. The main biofuels available in the U.S. transportation sector are ethanol and biodiesel. In 2004 alternative fuels accounted for 1.2 percent (2,111 thousand gasoline-equivalent gallons) of the total market for transportation fuels (177,562 thousand gasoline-equivalent gallons).⁴ Although relatively small, biofuels consumption has increased rapidly in recent years. In 1994, biofuels consumption stood at 846 thousand gasoline-equivalent gallons or 0.6 percent of the transportation (140,719 thousand gasoline-equivalent gallons) fuels market.⁵ Fueling stations which provide biobased fuels are incressing due to public education and awarenes. Federal and state incentives also encourage the use of alternative fuel or flex-fuel cars.

Ethanol - A common misconception is that existing cars cannot run on ethanol without engine modifications. This is incorrect and in fact today, all manufacturers approve the use of 10 percent ethanol blends, and some even recommend ethanol use for environmental reasons.⁶ Most often ethanol is blended with gasoline to improve the octane rating and clean burning qualities of these fuels. Some vehicles cannot perform on pure biofuels or high-blended biofuels -- these fuels require engine modifications or specially designated flexible fuel engines by the auto manufacturer.

For example, the ethanol blend, E-85, which is 85 percent ethanol and 15 percent petroleum, requires a specially designed engine. The fuel is blended at the 85 percent rate to meet the federal requirements of "clean fuels". Clean fuels are defined as any fuel of which at least 85 percent of the volume consists of ethanol, natural gas, compressed natural gas, liquefied natural gas, liquefied petroleum gas, or hydrogen and any mixture of diesel fuel and biodiesel containing at least 20 percent biodiesel.⁷

There has been debate whether automotive use of biofuels is effective and safer for the environment. Arguments against biofuels claim a negative net energy balance for ethanol (i.e. that it takes more energy to produce ethanol than is provided by the fuel.) In the case of corn ethanol, there are numerous studies that prove the net energy balance is positive. A 1995 study by the USDA showed that corn ethanol is energy efficient as indicated by an energy ratio of 1.24, that is, there is a 24-percent energy gain for every Btu (British thermal unit)dedicated to producing ethanol⁸ A different joint study by the U.S. Department of Agriculture and the Center for Transportation Research at Argonne National Laboratory shows that for every Btu dedicated to producing ethanol there is a 34 percent energy gain.⁹ Yet another study shows that ethanol has a 125 percent positive energy balance, compared to 85 percent for gasoline.¹⁰ The most recent study, released in July 2005 by the Center for Transportation Research, Argonne National Laboratory, compares the net energy balance of corn ethanol to petroleum. The report states that ethanol requires 0.74 Btu of input compared to 1.23 Btu of input for petroleum to produce the same output of energy.¹¹

Cost remains a barrier to more widespread use of ethanol. At $2.11/gallon, the spot price of ethanol (four-week national average, December 2005) is significantly higher than the spot price of unleaded regular gasoline at $1.65/gallon.¹² Although ethanol provides the added bonus of high octane properties, lower emissions, and is a domestically produced fuel, additional technical breakthroughs are needed for more widespread use.

Biodiesel - Biodiesel is a safe non-toxic alternative fuel which is superior to petroleum-based diesel fuel according to most diesel engine mechanics. According to the U.S. EPA, biodiesel is less toxic than table salt and more biodegradable than sugar. It has none of the toxic or environmental hazards of fossil diesel fuel. Biodiesel operates in conventional combustion-ignition engines, from light to heavy-duty, just like petroleum-based diesel. No engine modifications are required, and biodiesel maintains the payload capacity and range of diesel.¹³ The most common blend for biodiesel, B-20, is 20 percent biodiesel and 80 percent petroleum diesel. This is the minimum blend to qualify as a "clean fuel" as per the U.S. federal regulations.

The wholesale rack price of pure biodiesel (SME Biodiesel Supplier Gross Prices B100) was $3.08/gallon on January 6, 2006 -- significantly higher than the $1.79/gallon price for petroleum diesel (spot on-road diesel values in the Gulf Coast). However, the biodiesel blend (Midwest B20 rack average price) is more competitively priced at $1.92/gallon.¹⁴ With the added bonus of biodiesel's engine cleaning properties and lower air pollution emissions it is indeed quite competitively priced.

Barriers for Biofuels

If biofuels are cleaner burning, contain sufficient energy content and can be burned by existing vehicles why are they not more widely used? Some of the barriers have already been mentioned, for instance the cost of converting engines to use some types of biofuels and public misconceptions about biofuels. Another major barrier is the lack of infrastructure to produce and distribute biofuels. Most biofuel production is in the Midwest, far away from urban centers and existing transportation fuels pipelines. Institutional, technical, and logistical issues with utilizing the existing petroleum infrastructure need to be overcome. Finally, further research and development is needed to bring down the cost of converting biomass into biofuels as well as funding is required for public awareness campaigns and incentives for industry and consumers to use biofuels.

¹Guy Caruso. "When will World Oil Production Decrease?" EIA. June 13, 2005. Website visited January 6, 2006.http://www.eia.doe.gov/neic/speeches/Caruso061305.pdf
²Environmental Health Center. "What You Can do About Car Emissions." Website visited January 5, 2006.http://www.nsc.org/ehc/mobile/mse_fs.htm
³EPA. Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2003. Table ES-3: CO2 Emissions from Fossil Fuel Combustion by End-Use Sector (Tg CO2 Eq.).http://yosemite.epa.gov/OAR/globalwarming.nsf/UniqueKeyLookup/RAMR69V528/$File/05executivesummary.pdf
⁴Sources: 1993-2002 Oxygenate Consumption: Energy Information Administration, Petroleum Supply Monthly. 1993-2004 Traditional Fuel Consumption: Energy Information Administration, Petroleum Supply Annual, Volume 1 (June 2000). Highway use of gasoline was estimated as 97.1 percent of consumption, based on data in the Transportation Energy Data Book: Edition 16, prepared by Oak Ridge National Laboratory for the U.S. Department of Energy (July 1996). Diesel consumption was adjusted for highway use by multiplying by .568 derived from Energy Information Administration, Fuel Oil and Kerosene Sales 1999. 2002-2004 Oxygenate and Traditional Fuel Consumption: Energy Information Administration, Short Term Energy Outlook, September 2002. Alternative Fuel Consumption: Science Applications International Corporation 1992-1995, "Alternative Transportation Fuels and Vehicles Data Development." unpublished final report prepared for the Energy Information Administration (McLean, VA, July 1996) and Energy Information Administration, Office of Coal, Nuclear, Electric and Alternate Fuels for 1996-2004.http://www.eia.doe.gov/cneaf/alternate/page/datatables/aft1-13_03.html
⁵RFA. Ethanol. Historic U.S. Fuel Production 1994. http://www.ethanolrfa.org/industry/statistics/#A. EIA. 1994 Motor Gasoline. Table 5.11 Petroleum Products Supplied by Type, 1949-2004, http://www.eia.doe.gov/emeu/aer/petro.html
⁶Manitoba Energy, Science and Technology. Energy Development Initiative. "Homegrown Energy: Developing Manitoba's Ethanol Industry". Website visited January 5, 2006. http://www.ethanol-gec.org/corn_eth.htm
⁷RFA. E-85. Website Visited January 5, 2006.http://journeytoforever.org/ethanol_energy.html
⁸James A. Duffield, Michael S. Grabowski, Housein Shapouri. "Estimating the Net Energy Balance of Corn Ethanol". United States Department of Agriculture. Agricultural Economic Report Number 721. July 1995http://www.ethanol.org/information/ethanol_information.htm
⁹"Is Ethanol Energy Efficient?" Journey to Forever. Website visited January 5, 2006. http://journeytoforever.org/ethanol_energy.html
¹⁰American Coalition for Ethanol (ACE): see "Energy / Trade Benefits. http://www.ethanol.org/Information/ethanol_information.htm, cited from "Is Ethanol Energy Efficient?" Journey to Forever. Website visited January 5, 2006. http://journeytoforever.org/ethanol_energy.html
¹¹ Michael Wang. Updated Energy and Greenhouse Gas Emissions Results of Fuel Ethanol. Center for Transportation Research. Energy Systems Division. Argonne National Laboratory. September 2005. website visited January 5, 2006. http://www.transportation.anl.gov/pdfs/TA/354.pdf
¹²OPIS. Fuel Ethanol and Biodiesel Report. January 8, 2006. Volume 3. Issue 2. Page 1.
¹³Pacific Biodiesel. Website visited January 5, 2006. http://www.biodiesel.com/why_biodiesel.htm
¹⁴OPIS. Fuel Ethanol and Biodiesel Report. January 8, 2006. Volume 3. Issue 2. Page 1.