Old Policies Make Shift From Foreign Oil Tough

The United States' growing dependence on foreign oil is widely recognized as the nation's Achilles heel, a disaster in the works. But sometimes it seems that every solution to that horrendous problem leads into a box canyon.

Alternative energy sources are too expensive, and often not cost effective. Some potential solutions are decades away. The nation has dug a very deep hole for itself, and the situation probably will get much grimmer before it gets better.

As physicist David Goodstein of the California Institute of Technology puts it, we may be heading towards "Oil War III."

Now, researchers at the University of Missouri in Columbia have identified a number of non-technical reasons why we can't seem to dig ourselves out of this grave. Instead of moving forward, we are kicking ourselves in the rear end with tax laws that were established a century ago, corporations that have billions invested in oil reserves and thus no incentive to look for alternatives, and a political system that seems paralyzed.

"What seemed like a good idea 100 years ago is not necessarily a good idea today in our global economy," says chemical engineer Galen Suppes.

Self-Inflicted Dependence

Suppes and Truman Storvick, professor emeritus at Missouri, told a recent meeting of the American Institute of Chemical Engineers that development of alternative fuels is being blocked by national policies and corporate commitments that tip the playing field in favor of foreign oil. In other words, we're doing it to ourselves.

For example, about half the cost of every gallon of synthetic oil produced in this country goes to federal and local taxes, Suppes says.

"But there's no U.S. taxes on foreign oil," he says. "You're taxing domestic production, but you're not taxing imports."

A tax on foreign oil is a tariff, a foul word in these days of free trade, but Suppes argues that all resources will have to be taxed the same if alternatives to foreign oil are to be commercially viable.

The knee-jerk reaction is usually a call for incentives, like those that now encourage the production of ethanol from corn, but that's the wrong solution, Suppes argues.

"You don't pick out technologies and give them incentives," he says. "What you do is you make it a fair playing field."

Incentives frequently lead to bad technology, because there's an economic reason for their development, and some argue that's exactly what has happened with ethanol. David Pimentel of Cornell University's College of Agriculture and Life Sciences has argued that ethanol is a lousy choice because it takes more energy to produce ethanol from corn than the ethanol ultimately yields.

It also takes a heck of a lot of corn to produce very much ethanol.

11 Acres = One Year’ s Fuel

Pimentel, who chaired a U.S. Department of Energy committee that looked into ethanol several years ago, says relying on corn for our future energy needs would devastate the nation's food production.

It takes 11 acres to grow enough corn to fuel one automobile with ethanol for 10,000 miles, or about a year's driving, Pimentel says. That's the amount of land needed to feed seven persons for the same period of time.

And if we decided to power all of our automobiles with ethanol, we would need to cover 97 percent of our land with corn, he adds. That's a lot of corn.

Still, some argue that there's no single solution, and ethanol could play a partial role. But at the moment, Suppes points out, it's economically viable only because the federal government subsidizes its production to the tune of about 50 cents per gallon. And then other governmental agencies tax it, once again tilting the playing field in favor of foreign oil, Suppes says.

In their report to the American Institute of Chemical Engineers, Suppes and Storvick pointed out that industry is also a major roadblock to finding alternatives to foreign oil. Alternatives are out there, they believe, but the companies that could bring them to market aren't all that interested.

"When I first got into this, my father-in-law goes, 'Well, if it's such a good idea, why aren't the oil companies doing it?'" Suppes says. "He's an educated man, so I looked into that.

"When an oil company has 10 years of reserves in the ground, it doesn't make any sense at all for them to spend billions of dollars today to produce [synthetic] oil they don't need," he says. "So they would be the last ones to invest in this."

Profit Patience

What is needed, Suppes argues, is the kind of alliance between government and industry that got the development of Canada's huge reserves of tar sands underway. Back in the 1970s, long-term investments were made without the expectation of immediate paybacks, he says.

Today, all these years later, Canada gets about one-third of its oil from the tar sands buried in northern Alberta, much of which comes to the United States. Had investors expected to get their money back quickly, as is the case in today's risky alternative energy market, that never would have happened, Suppes says.

That has led some experts to push for widespread development of the resource, which could make Alberta the Saudi Arabia of tar sands. But that's no painless solution.

Tar sands are essentially just what they sound like. A thick, sticky goo trapped in rock and sand below the ground. It takes strip mines to get at the goo, called bitumen, which must then be heated with steam and hot water, and then processed with caustic chemicals. It can be an environmental nightmare.

And all that takes a lot of energy, leaving the end product very close to being a net loser of energy, not a producer.

Meanwhile, the nation pins its hopes on hydrogen, which could also be a net energy loser, and some miraculous breakthrough that will make our transition simple. There are some technologies on the horizon that could improve the picture, notably a new process for making oil from garbage, but it remains to be seen whether any of them will work on the kind of scale needed to fuel this very hungry nation.

The most likely scenario is very little will be done. A lot of chatter, but not much action.

"I have a feeling the country is going to continue to pay a very high price before we finally figure it out," Suppes says. "I just hope the price isn't extremely high."

Lee Dye’s column appears weekly on ABCNEWS.com. A former science writer for the Los Angeles Times, he now lives in Juneau, Alaska.