Kicking The Gasoline & Petro-Diesel Habit

Blaming The Speculators Is Simply Another Type Of Denial

July 30, 2008

By Charles Cresson Wood

In a widely distributed open letter to airline customers, the top management from twelve major American airlines recently claimed that “Our country is facing a possible sharp economic downturn because of skyrocketing oil and fuel prices.” This email went on to request that readers go to a web site (, which is intended to pressure the US Congress to act now to lower oil prices by restricting speculation in the market for oil. Readers are asked to sign up, to join the campaign, and supposedly this groundswell of public support will alleviate high oil prices. There are three major erroneous assumptions associated with this approach, and these will be discussed below. I’m surprised that the top management at these airlines is so out of touch with what’s really happening in the oil market, and I wonder who it is that is feeding these top managers such misguided advice. click here to read more

Avoiding Inflationary Pressures By Kicking The Petroleum Habit

July 30, 2008

By Charles Cresson Wood

A recent front page story in the Wall Street Journal* reported how Dow Chemical had raised prices on a wide variety of its products, some as much as 20%. Dow blames its soaring costs for energy, noting its oil and gas costs grew by 42% in a single year. Dow blasted Washington for policies that have led to higher energy costs. But the blame does not rest solely on the shoulders of government. Businesses and individuals have also been dragging their feet when it comes to transitioning to petroleum substitutes. With increasing demand and decreasing supply, the market price of petroleum is now signaling that it’s important that all these parties rapidly transition to alternatives. click here to read more

Asking The Right Business Questions About High Gas Prices

July 30, 2008

By Charles Cresson Wood

The notion of “peak oil” — which holds that the world’s production of oil is at it’s all-time high this year, or within a few years — has recently become credible in the business community. While most everybody will agree that petroleum is a depleting resource with a limited supply, the question many now wrestle with is: “How much more oil is there left in the ground?” Considerable debate wages about the real level of petroleum reserves, and how many more years it will last. click here to read more

Background On The Petroleum Situation

July 29, 2008

  • A large body of geological evidence indicates that worldwide petroleum production is now peaking, or will be peaking in a few years. Meanwhile the world’s demand for petroleum continues to grow at approximately 2% per year. In even the best of scenarios, the result will be significantly escalating prices and supply shortages. [Notes 1, 2 & 3]
  • Disputes about oil are now the cause of not only military skirmishes but resource wars. Assuring a continued supply of petroleum is essential to continuing business expansion, maintaining economic stability, and encouraging consumer consumption patterns. Businesses that can unhook their internal operations from the unstable and increasingly politicized petroleum supply situation, will markedly improve their ability to continue to provide products and services to their customers. [Notes 1, 4, 5 & 6]
  • Global warming is now generally acknowledged to be largely the result of burning fossil fuels such as petroleum. Burning fossil fuels for transportation purposes is estimated to contribute 26% of the worldwide carbon dioxide emissions. Recent research in the area of global warming indicates that the world has, at most, thirty years to get the gasoline out of cars, and to otherwise stop burning fossil fuels. [Notes 7, 8 & 9]
  • Exhaust from gasoline and petro-diesel engines is toxic and carcinogenic. The refinement process used to manufacture these fuels also involves the generation of toxic waste by-products, which themselves have been shown to be carcinogenic. The process of exploring for, and drilling for, oil causes serious environmental damage including poisoning local flora and fauna. The transportation of oil to refineries, often by tanker boat, and then from refineries to retail gasoline and petro-diesel stations, often by truck, is also dangerous. Spillage of these fuels can poison water, contaminate soil, and otherwise seriously damage the affected areas. [Notes 10, 11, 12, 13 & 14]
  • 40% of the world’s energy is currently provided by oil. In 2003, the world consumed over 80 million barrels per day of oil. The United States consumed almost 20 million of these barrels, and some two-thirds of that consumption was devoted to the transportation sector. Worldwide, according to an estimate by the Royal Swedish Academy Of Sciences, 57% of the world’s oil is used in the transportation sector. [Notes 15, 16, 17 & 18]
  • In the United States, there are 210 million automobiles and light trucks, including vans, pickups, and sport utility vehicles. The average age of US automobiles is nine years, and for US light trucks the average age is seven years. Under normal conditions, replacement of only one half of these vehicles would take 9-14 years. This replacement rate is way too slow to adjust to the new reality regarding petroleum. An emergency transition away from petroleum is now necessary. [Notes 15 & 19]
  • Kicking The Gasoline & Petro-Diesel Habit is a practical hands-on report that guides those managers leading an emergency transition away from petroleum. It prevents managers from having to research the alternatives to petroleum, and having to assess which of these technologies are practical. It also prevents managers from having to determine which of these alternative technologies can be supported by currently available products and services. Likewise, it prevents managers from having to brainstorm action steps about the best ways to immediately move away from petroleum. With this compendium of grounded management advice, managers can immediately get into action because the necessary background research has already been done for them. [Note 20]

    Notes: For additional information about the points made above, see the following references and links:

    [1] Klare, Michael T., Resource Wars: The New Landscape of Global Conflict, Henry Holt and Company, 2001

    [2] Heinberg, Richard, The Party’s Over Ð Oil, War And The Fate Of Industrial Societies, New Society Publishers, 2003

    [3] Simmons, Matthew R., Twilight In The Desert: The Coming Saudi Oil Shock And The World Economy, John Wiley & Sons, 2005

    [4] Klare, Michael T., Blood And Oil: The Dangers And Consequences Of America’s Growing Dependency On Imported Petroleum, Metropolitan Books, 2004

    [5] Diamond, Jared, Collapse: How Societies Choose To Fail Or Succeed, Penguin Group Publishers, 2005

    [6] Senator Lugar (US), “Energy Security IS National Security,” undated, but apparently written in 2006, posted at, accessed on 14 July 2007

    [7] Finley, Russ, “Biodiesel: it’s what you make it out of,” Grist: Environmental News & Commentary, 19 August 2005, posted at, accessed on 22 March 2007

    [8] Galbraith, James K., “Market Meltdown,” Mother Jones, July/August 2007, pp. 16-17

    [9] Fenderson, Adam, and Bart Anderson, “US Army: Peak Oil and the Army’s Future,” Energy Bulletin, 12 March 2006, posted at, accessed on 15 July 2007

    [10] Agarwal, Anil, “Engines of the Devil Ð Why Dieselisation of Private Automobile Fleet Should Be Banned Ð The Case of Delhi,” Center for Science and Environment, New Delhi, India, May 1999, posted at, accessed on 22 March 2007

    [11] Environmental Protection Agency (US), “EPA List of Hazardous Wastes from Non-Specific Sources,” undated, posted at, accessed on 22 March 2007

    [12] Environmental Protection Agency (US), “National Emission Standards for Hazardous Air Pollutants: Regulatory Impact Analysis,” 14 September 1989; posted at, accessed on 22 March 2007

    [13] Dabbs, W. Corbett, “Oil Production and Environmental Damage,” Oil Production Cases, TED Case Studies, Research Paper 15, December 1996, posted at, accessed on 22 March 2007

    [14] Patin, Stanislav (translated by Elena Cascio), “Accidents during the offshore oil and gas development,” a chapter appearing in Environmental Impact of the Offshore Oil and Gas Industry (a book), undated, posted at, accessed on 22 March 2007

    [15] Hirsch, Robert L., Peaking of World Oil Production – Impacts, Mitigation, & Risk Management, a report prepared for the National Energy Technology Laboratory of the US Department of Energy, February 2005

    [16] Mouawad, Jad, “Oil tanker shortages add to price squeeze,” 30 October 2004, International Herald Tribune, posted at, accessed on 17 July 2007

    [17] Simmons, Matthew R., “Energy In A Post-Peak World,” 25 April 2007, a presentation given at the National Association of Industrial Office Properties conference in Houston, Texas, posted at, accessed on 23 July 2007

    [18] Aleklett, Kjell, “Aleklett: Testimony On Peak Oil To US Congress,” reflecting testimony given 7 December 2005 to the Committee On Energy And Commerce, in a hearing entitled Understanding Peak Oil Theory in the US House Of Representatives; posted at, and accessed on 23 January 2007

    [19] Hirsch, Robert L., “The Inevitable Peaking Of World Oil Production,” appearing in The Atlantic Council Of The United States Bulletin, October 2005, Vol. XVI, No. 3, available online at, accessed on 23 January 2007

    [20] For further information on this topic, see Kicking The Gasoline & Petro-Diesel Habit: A Business Manager’s Blueprint For Action, by Charles Cresson Wood. This new research report is discussed at

  • Background On The Alternative Fuel Market

    July 29, 2008

    • The U.S. Department of Energy has identified bio-diesel is the fastest growing segment of the American alternative fuels market. Most of the U.S. market now involves liquid petroleum gas (LPG), with compressed natural gas (CNG), ethanol (E85), liquid natural gas (LNG), electricity, and hydrogen making up smaller segments of the current market, in that order of declining volume. [Notes 1 & 2]
    • Worldwide, non-petroleum energy used for transportation consists primarily of natural gas. One notable exception is Brazil, where ethanol derived from agricultural waste accounts for one fifth of the energy used in the transportation sector. Brazil’s extensive use of ethanol exists primarily because the government established many incentives in the 1970s to reduce its reliance on imported petroleum. [Note 3]
    • A survey conducted by Auto Trader magazine, discovered that 47% of U.K. car buyers are “ready to take the plunge” and purchase a more environmentally friendly vehicle. Some 60% of the 3,000 respondents indicated that they wanted more auto manufacturers to offer alternative fuel vehicles as an option. [Note 4]
    • Alternative fuel vehicles on the road in the U.S. in 2006 numbered 9 million. Sales of these vehicles are now at the rate of 1.4 million per year. There are now 46 models of alternative fuel vehicles including clean diesels, hybrids, and ethanol vehicles. Another 35 alternative fuel vehicles are now in development, according to a press release from the Alliance of Automobile Manufacturers. [Note 5]
    • According to Clean Edge, a Portland, Oregon-based research firm, the market for alternative fuels is growing by more than 30% annually. Clean Edge anticipates that the market for bio-fuels will increase more than 350% over the 2005-2015 time period. [Note 4]
    • U.S. President George W. Bush is calling for a nearly fivefold increase in America’s alternative fuel consumption by the year 2017. A U.S. government law called the Energy Conservation Reauthorization Act (amended and known as EPAct) now requires certain regulated fleets with over 50 vehicles, that are centrally fueled, and located in metropolitan areas, to buy alternative fuel vehicles. Likewise, according to Executive Order 13423, signed in 2007, U.S. government fleets must reduce their petroleum consumption by 2% per year relative to their FY 2005 consumption. This same order requires federal government agencies to increase their alternative fuel use by 10% per year relative to the previous year. [Notes 6 & 7]
    • The U.S. government has a wide variety of tax credits promoting the use of alternative fuels and more efficient vehicles. Credits are available for alternative fuel vehicles, low emission vehicles, and hybrid vehicles. Also available are excise tax credits for non-taxable uses of alternative fuels, as well as a fuel use credit for alternative fuels. Up to 30% of the cost of infrastructure supporting alternative fuels can also be deducted according to the Energy Policy Act of 2005. [Notes 7 & 8]
    • California’s government and its governor Arnold Schwarzenegger are also encouraging the development of an alternative fuels market. As a follow-up to its recent global warming legislation, California has adopted a State Alternative Fuels Plan (Assembly Bill 1007). This bill specifies market penetration goals for alternative fuels of 9% by 2012, 11% by 2017, and 26% by 2022. These targets will be encouraged through investment incentives and supportive regulations. [Note 9]
    • Likewise, the Pennsylvania government has recently been handing out $21 million in grants so as to promote the development of renewable energy technology. About half of this funding is going to local companies working on alternative fuels. Governor Ed Rendell seeks to establish an $850 million Energy Independence Fund that would create local expertise in this new clean technology market. [Note 10]
    • The European Union is now debating policies to promote the use of alternative fuels. The Commission on Alternative Fuels has set a target to replace 20% of petroleum-based fuel with alternative fuels by 2020. The objective of this proposed reduction is to improve the security fuel supplies as well as reduce greenhouse gas emissions. [Note 11]

      Notes: For further information about the above-mentioned topics, consult the following sources:

      [1] Momentum Biofuels, Inc., “Industry Overview,” 2006, posted at, accessed on 30 January 2008

      [2] U.S. Department of Energy, Alternative Fuels & Advanced Vehicles Data Center, “Data, Analysis & Trends,” updated 24 January 2008, posted at, accessed on 30 January 2008

      [3] U.S. Department of Energy, Energy Information Administration, “Transportation Energy Usage,” 6 April 1999, posted at, accessed on 30 January 2008

      [4] ConSenseUs: Energy For Transportation In The U.S., March 2006 news summary, posted at, accessed on 30 January 2008

      [5], “Alternative fuel vehicle sales growing,” 2007, posted at, accessed on 30 January 2008

      [6] Barta, Patrick, “Alternative-Fuels Push May Inspire Some Better Bets,” The Wall Street Journal, 29 January 2007, posted at, accessed on 30 January 2008

      [7] Harrow, Gerry, National Renewable Energy Laboratory, “Why the Time is Right to Deploy Alternative Fuels,” Tucson Leadership Forum, 14 September 2007 speech overheads, posted at, accessed on 30 January 2008

      [8] U.S. Department of Energy, Energy Efficiency and Renewable Energy, “United States (Federal) Incentives and Laws: Alternative Fuel Infrastructure Tax Credit,” undated,, accessed on 30 January 2008

      [9] Wilson Sonsini Goodrich & Rosati (a law firm), “California Takes Steps to Expand the Market Penetration of Alternative Fuels and Reduce Transportation Sector Greenhouse Gasses,” 14 November 2007, posted at, accessed on 30 January 2008

      [10] Ehrlich, David, “Pennsylvania hands out cash for alternative energy,” Cleantech, 16 October 2007, posted at, accessed on 30 January 2008

      [11] IMPCO Technologies, Inc., “IMPCO To Participate in European Union Commission Policy to Reduce 20% of Liquid Fuels with Alternative Fuels,” 7 February 2002, posted at, accessed on 30 January 2008

      [12] For further information on this topic, see Kicking The Gasoline & Petro-Diesel Habit: A Business Manager’s Blueprint For Action, by Charles Cresson Wood. This new research report is discussed at