J. Bruce Innes, Peterson, Howell & Heather’s manager of communications and editor of PHH’s Energy Update, recently gave a presentation on alternate fuels to Johnson & Johnson companies’ fleet administrators. His comments give an overview of alternate fuels and their prospects for fleets.

I'd like to thank Johnson & Johnson for the invitation to speak today. It's really exciting for me because we do have a really important piece of news to announce. After many years of research in our own laboratories and with some help from some of our good chemical company clients, we've made a dramatic breakthrough in the field of energy research. The fruits of this research sit in front of you in an envelope marked DILLP. DILLP stands for Dr. Innes' Little Litre Pill. If you'll take a minute and extract your little litre pills ... Just one of these DILLP pills, dropped into a gas tank filled with ordinary tap water, is guaranteed to turn that tankful of water into the purest of gasoline, and it's even unleaded gasoline at that.

Now wouldn't it be wonderful if we could cure our energy problems with a little litre pill. After all, science has already done so much for us. And isn't that what we really expect? That somehow science will save us. That we can go on pretending the fuel shortage isn't real. That small cars are okay for now because we know in our hearts that pretty soon we can go back to our gas guzzling road dinosaurs?

Well, ladies and gentlemen, I'm afraid you'll get more energy by eating your pills than by dropping them in your gas tanks. And you'd better pay careful attention to just what does go into your gas tanks because "their ain't any more liquid gold in them thair hills."

Let's see the scene. Back in 1962, the United States imported about 2.3 million barrels represented 21-percent of all the oil consumed in the country each year. The total amount of oil imported has increased every year since then. In 1979, we imported 8.4 mb/day, almost half our total consumption. In 1979, 17-percent of our imported oil came from just one country, Saudi Arabia. Saudi Arabia holds between one-quarter and one-third of the world's total proven reserves. At this very moment, King Khalid lies critically ill. Although he exercised very little administrative power in Saudi Arabia, his death will cause a period of uncertainty, underlining the fragility of our Saudi connection. To the north of Saudi Arabia lies hostile Iraq. To the south, the warring Yemens. To the east, across the Persian Gulf, lies Iran and next door to Iran waits the Soviet bear. With one paw in Afghanistan and one in South Yemen, the oil-hungry Russians are poised to leap on the very energy heart of the West.

If nothing else, it makes POLITICAL sense to turn to supplies of energy that aren't so threatened. American sources of energy. But price also dictates that we look seriously at other forms of energy to heat our homes, to power our factories, and to run our cars.

So let's take a look at each possible alternative fuel and estimate it's usefulness to a fleet operation. And let's start with a framework for evaluating the appropriateness of alternative fuels. To be acceptable in a fleet environment an alternative fuel must meet the following criteria:

 

  • It must be readily available.
  • Its power output must be close to that of gasoline.
  • Its pump price must be close to that of gasoline.
  • We must be certain of the strategic certainty of its availability.
  • It must burn in existing engines without costly modifications.
  • It must be compatible with the existing fuel distribution chain.

Any alternative fuel must meet these six criteria in order to be useful to business drivers. Now, as we discuss each major fuel, see how each one stacks up.

ALCOHOL

The alternative fuel you're probably most familiar with is alcohol. One-hundred-percent alcohol is a perfectly adequate fuel for the internal combustion engine. Although gallon for gallon, alcohol's power output is below that of gasoline, it burns cleaner. Because it burns so clean, there's no need for expensive anti-pollution equipment. And, alcohol can be distilled from any vegetable matter containing good quantities of sugar.

In Brazil, where gasoline already contains 20-percent alcohol, the energy self-sufficiency laws require the manufacturers produce 250,000 cars per year designed and equipped to run on 100-percent alcohol. The manufacturers involved, General Motors, Ford, Volkswagen, and Fiat, are turning out such vehicles right now for the Brazilian market. None has plans to export these cars to the U.S. GM has even designed what it calls the first true multi-fuel engine for its Brazilian cars. The engines can run on gasoline, pure alcohol, or any blend of the two. Again, there are no plans to import the engine or build it domestically for the U.S. market. GM feels that offering its multi-fuel engine in the U.S. is impractical because the alcohol fuel distribution system in the U.S. is still in its infancy, and because there's not enough stateside production of ethanol to fill current demand, let alone the demand that would be generated by burning 100-percent alcohol.

GASOHOL

But alcohol is more than just a possible alternative fuel. It is also the "Hamburger Helper" of gasoline. When 10-percent ethanol is added to unleaded gasoline, the result is gasohol. Gasohol is a product whose time has come. Using it requires no modification to power plants or fuel tanks. You simply fill'er up and drive off. Many of the distilleries which produce ethanol are powered by petroleum, so there's been some esoteric argument among experts about whether gasohol is a net energy saver. But the new plants now under construction do not use petroleum to produce ethanol. These new distilleries will be more efficient, and as a result, gasohol will not just help extend existing supplies but also really save on imported oil. Using gasohol has the potential of saving us about $3 billion of our $76 billion annual imported oil bill. Using gasohol may also improve miles-per-gallon, although studies are inconclusive at this point. Some reports show an improvement of around five-percent, while others show no improvement.

Since gasohol is still 90-percent petroleum, it's a fuel extender rather than a true alternative source of energy. But how about a form of energy that doesn't depend on petroleum at all?

ELECTRICITY

Last fall, GM created a lot of excitement when it announced its breakthrough zinc-nickel oxide battery. But GM, though excited about the possibilities for a viable electric vehicle, says mass production must wait until the mid 80's. And when these vehicles do roll off the assembly line, plans call for two models - a van and a two-passenger town runabout. Why the long wait for electric vehicles?

First, the components need further refinement before mass production can begin. Second, plant capacity has to come on stream. Third, safety testing must be completed. And fourth, a whole new chassis and body, specifically engineered for electric power, must be designed, tested and produced. Turning out a radical new vehicle is a long involved process. It can't happen overnight.

When the electric car does come, GM expects it to have a 100-mile range on full charge with a top speed of 50-55 mph. A van or coupe with these limitations may have some fleet application (for example, in small urban territories). But it certainly won't displace the internal combustion engine as the workhouse of the fleet.

NATURAL GAS

Another fad fuel right now is natural gas. Why do I call it a fad fuel? As a fleet fuel, natural gas has severe drawbacks. Even though it is far less expensive than gasoline, its drawbacks prevent its wide-spread use. The cost of converting a passenger car to burn natural gas runs between $1,500 and $2,000 per vehicle. Then there's the additional cost of installing central storage tanks, compressors, and fillers to put the gas into the cars. In return, you get an average range of approximately 90 miles between fill-ups. Natural gas is practical only for fleets with a low radius mileage operating from a central point to which the vehicle must return overnight for refueling.

Right now natural gas is in plentiful supply, but that situation could easily change. Remember a few years ago, when there were moratoriums on new natural gas hookups? If a large number of commercial users (like utilities) switch from petroleum to natural gas, as the government has been urging, supplies could easily tighten once again.[PAGEBREAK]

In addition, the price of natural gas is being deregulated. Industry observers expect the cost of natural gas to draw even with that of gasoline over the next four or five years.

PROPANE

If natural gas isn't a practical fleet fuel, how about propane? Propane conversion costs are lower, about $1,200 per vehicle. Propane is in plentiful supply and costs less than gasoline, by about 35 cents per gallon. But propane has some of the same drawbacks as natural gas. First, it's common only in rural areas not served by natural gas pipelines. In urban centers, where most selling/servicing is done, propane is rare. Second, propane-equipped cars have the same range limitations as natural-gas equipped cars. Thus, the most effective fleet application for propane powered vehicles is in high density areas, where propane is least available. The extra weight of the typical 33 gallon propane tank - about 300 pounds - reduces mileage, as does propane's lower energy output which reduces engine horsepower by about 10-percent. In one real world test, miles per gallon dropped from 21.5 on gasoline to 16 on propane - a decrease of 26-percent in mpg. With gas at $1.20 per gallon and propane at 90 cents per gallon, fuel costs are almost exactly equal given the decrease in mpg. And finally, 70-percent of propane comes from natural gas - the two are supply dependent. If natural gas supplies tighten, so will propane supplies. The other 30-percent comes from refining petroleum.

DIESEL FUEL

We must also consider diesel fuel as an alternative fleet fuel. The traditional price spread between diesel fuel and gasoline has narrowed significantly, but there is still a six- or seven-cent difference in some areas. In addition, a diesel powerplant's mpg is about 25-percent better than a similar sized gasoline engine. If you converted your entire fleet to diesel power, you would cut your total fuel bill to about three-quarters of what you're paying now.

Nice in theory, but there are some problems. Diesel engines simply aren't available on the typical fleet car. Nor are they likely to be. The Federal government's clean air people can't seem to make up their mind whether we're going to have passenger diesel engines. Just last week, EPA liberalized the emission law for 1982 model diesel engines. No more than .6 grams of soot per mile. In 1985, that figure drops to .2 grams. Unfortunately, Oldsmobile's current diesel engine can't meet the 1982 standard; it emits about .84 grams. (For comparison, a gasoline engine typically emits one one-hundredth of that amount of soot.) Why the concern? Soot, when it comes out of the tailpipe, is coated with combustion by products that may be the cause of cancer or may cause respiratory problems. As engineers try to lower particulate emissions, NOx emissions increase. Therefore, despite its significant fuel savings, no manufacturer is willing to invest billions of dollars designing and producing engines that may not meet Federal emission standards.

GM has calculated that a product mix in 1985 of "mostly four-cylinder subcompacts" is required in order to meet its "85 CAFÉ target of 27.5 mpg and the possible 1995 standard of 40 mpg. GM wants to be able to continue producing large cars by equipping them with mpg diesel engines. But GM has said that if it cannot meet the EPA's soot standards it exceeds the NOx standard, then the six-passenger family car may become only a memory.

But let's not despair. Let's say that our auto wizards can make diesel engines clean enough to satisfy the EPA. We still must ask whether we'll have any diesel fuel to burn in them.

Several types of fuels are distilled from a typical barrel of crude oil and there is a critical overlap area. More gasoline or jet fuel means less diesel fuel. Conversely, more diesel fuel means less of something else.

In addition, No. 1 and 2 heating oil are almost completely interchangeable with No. 1 and 2 diesel fuel. Political realities are such that home heating oil supplies come first - no matter what. Late last summer, the government ordered the refiners to go into the current heating season with 240 million barrels of heating oil in storage. The result was a shortage of diesel fuel as refiners scrambled to meet their quotas. A glance at current supply inventories shows the effects of the government's policy. Note that distillates (heating oil and diesel fuel) have been above the normal range since late November. Of the total distillates in storage, my friends at the American Petroleum Institute tell me that 41-percent is diesel fuel.

Another factor affecting diesel fuel supplies is the changing composition of the typical barrel of crude oil. There is a drop of about 10-percent in the amount of distillate refineries can recover from Arabian light as opposed to Arabian heavy. Arabian heavy is becoming more and more common; thus, the average barrel contains less and less distillate, increasing the competition in the overlap area.

Even the EPA's drive for cleaner air affects diesel fuel availability. Refining unleaded as opposed to leaded gas drops the volume of gasoline per barrel by about four-percent. Either gasoline supplies drop four-percent, or we refine four-percent less of one of the overlap fuels like diesel fuel, or we import four-percent more oil to make up the shortfall.

Diesel engines and the fuel to burn in them are tempting short term solutions to our fleet energy problems. But there are so many availability, certification and supply questions that their widespread application in fleets is not a viable alternative.

ESOTERIC FUELS

There have been experiments with more esoteric fuels. South Africa finds sunflower oil can substitute for diesel fuel. Recently a man drove a Malibu wagon powered by wood-gas from Florida to Los Angeles. The wood-burner was carried on a little trailer behind his wagon. Experiments have been done with high BTU methane gas derived from garbage. And Consumers Solar Electric Power Corporation says it has a hydrogen-based liquid fuel that retails for about half the price of gasoline. Right now the fuel is being tested in some postal vehicles on the West Coast. But neither liquid hydrogen or any of the other fuels we've discussed appear to be practical right now in everyday fleet operations.

How do our alternative fuels stack up against the six criteria for success established earlier?

Of all the alternative fuels, none meets all six criteria. So, for all practical purposes, there are no alternative fleet fuels. We're stuck with the internal combustion engine. And we're stuck with what it will burn - gasoline. There are no magic pills on the market. You must make your fleet decisions against this background. You can't afford to chase the alternative fuel will-o-the-wisp.

Does that mean we give up? Not at all. Let's look at the problem from a different angle. Perhaps the practical short-term solution to our current problem is not a new superfuel or radical new technology to power our vehicles. Perhaps the solution is to increase our supply of gasoline. Sounds simple, but how can we do it?

We've looked at any way - mix something with gasoline so supplies go further. Ethanol works. So does methanol, but methanol tends to be more hydroscopic (settles out of the mixture in the presence of water) than ethanol, although Mobil has made a big break through in preventing separation reactions between the methane and any stray water that might get into the fuel mixture.

Another way to extend supplies is to get non-vehicle users to convert from petroleum to some other form of fuel. Utilities, for example, can generate electricity using natural gas or coal; they don't have to use petroleum fuel. As these large users shift away from petroleum, there's more gasoline available for users - like vehicle fleets -  that must use petroleum products.

We can do more with less. It's only common sense that as MPG's increase, gallons consumed go down provided total mileage stays constant. As we actively and purposefully speed up the adoption of more fuel-efficient vehicles in our fleets, we are helping the gasoline pie to last longer.

We can drive less. Every non-essential trip we cancel is one more essential trip we can take.

These conservation measures offer immediate relief to the gasoline crunch. They're a way to buy time. We can best use that time by undertaking a massive effort to unlock the tremendous energies stored on our domestic shale and coal reserves. By using existing technology all of the fuels obtained from crude oil can be obtained from oil shale (for about $1.50/gallon) or coal (for around $2.00/gallon). Such fuels are the so-called synthetic crudes.

There are problems, to be sure. The environmental impact of crushing shale is enormous. But new experiments with in-ground extraction - you set fire to the shale underground, let the heat melt the oil, and then pump out the oil - are promising. But we need more research and development in this area, more federal loan guarantees. We need to spend our billions here, not on tidal power and garbage, which are very long term solutions. In its massive evaluation of alternative fuels, General Motors Research Laboratories concluded that syncrudes from oil shale and coal are the most economical source of energy for the next 20 to 30 years because the technology already exists and the lead time and payback are shorter than for any other alternative fuel. Such liquids have one additional and very important advantage - you can burn them in your car's engine.

I don't want to belittle the incredible resourcefulness of American enterprise. Someday we will have cheap, abundant, non-polluting energy - wind power and fusion, tidal power and geothermal energy, biomass and solar cells. All will play their part. Our children will perhaps marvel that we could have achieved so much burning filthy petroleum, just as we marvel at what was done with a coal-based economy in the last century. But until that day comes - sometime in the 21st century - our personal and business mobility are tied to the internal combustion engine, and so we're stuck with fuels that powerplants can easily burn. Given our current distribution network, that means gasoline. And the fastest way to get more gas is first to conserve and then to produce syncrude from shale and/or coal. If you make your fleet decisions against this background, you can face the 1980's with confidence that you have made the only right and logical decisions.


 


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