Why the Gasoline Engine Isn't Going Away Any Time Soon

Blame it on technology, cost -- and the American way of life
By JOSEPH B. WHITE

An automotive revolution is coming -- but it's traveling in the slow lane.

High oil prices have accomplished what years of pleas from environmentalists and energy-security hawks could not: forcing the world's major auto makers to refocus their engineers and their capital on devising mass-market alternatives to century-old petroleum-fueled engine technology.

With all the glitzy ads, media chatter and Internet buzz about plug-in hybrids that draw power from the electric grid or cars fueled with hydrogen, it's easy to get lulled into thinking that gasoline stations soon will be as rare as drive-in theaters. The idea that auto makers can quickly execute a revolutionary transition from oil to electricity is now a touchstone for both major presidential candidates.

That's the dream. Now the reality: This revolution will take years to pull off -- and that's assuming it isn't derailed by a return to cheap oil. Anyone who goes to sleep today and wakes up in five years will find that most cars for sale in the U.S. will still run on regular gas -- with a few more than today taking diesel fuel. That will likely be the case even if the latter-day Rip Van Winkle sleeps until 2020.

Read the full article in the Wall Street Journal.

The Fuel of the Future

Validating Thomas Edison

At the turn of the last century, cars came in steam, electric, and gasoline versions. When Thomas Edison was asked which he favored, without hesitating, his reply was electric cars. They didn’t have the vibration, noise, and smell associated with gasoline cars or the long start up times and limited range of steam cars. Had someone listened to him at the time, we might not now be stuck with a 19th century technology that requires us to send huge amounts of money to countries whose chief exports are petroleum and terrorists.

In spite of huge vested interests in the status quo, it’s no longer a question of whether cars with combustion engines will end up in museums, but when. Ultimately, the demise of this technology will come down to economics and consumer satisfaction. The next generation of cars will cost less to drive, will require less maintenance, and won’t require the sacrifice of size or comfort.

The Contenders

If it were possible to harness all the hot air coming out of our politicians on this subject, we could probably power our cars indefinitely. However, until that day comes, the fuels being most widely considered are ethanol/biofuels, hydrogen, and electricity. There’s also a very interesting newcomer to this discussion, compressed natural gas (CNG).

The Bipartisan Choice

At present, subsidies for ethanol dwarf our spending on any other form of alternative fuel. This is the bipartisan choice, supported by both Democrats and Republicans. That alone should be a red flag.
Treating what is basically moonshine as the answer to our dependence on oil from the Middle East is as silly as it sounds. However, the politics behind this idea appear to be more than enough to trump common sense for the time being.

Farmers are the largest contributors to politicians in most states. While they’re generally found in more red states than blue states, they usually have sense enough to shower both parties with contributions and have bought broad support for ethanol subsidies as a result.

Meanwhile, the auto industry is desperately looking for another fuel to keep cars powered by the combustion engine alive because the parts and service business for the next generation of vehicles is likely to be a lot less lucrative. It doesn’t hurt that the auto industry is also one of the last bastions of union labor in the private sector or that Michigan is a swing state. As a result, both parties are inclined to make sure that what the auto industry wants, it gets. This brings to mind the saying “be careful what you wish for”.

Politics aside, ethanol is a train wreck. It costs more than gasoline to use because it reduces mileage. People don’t eat less just because their food is being turned into fuel so it drives up food prices by shrinking the supply of food while the population continues to grow. It requires a huge and very expensive infrastructure. Finally, it can never be produced in enough quantity to satisfy the demand for vehicle fuel in this country. It never has been, and never will be, a serious solution to our energy problem. All it shows is that government solutions to problems invariably involve the politically connected and waste huge amounts of taxpayer dollars.

Renewable, Plentiful & Sooooo Expensive

Hydrogen is the next candidate. It’s everywhere. It’s plentiful. It’s renewable. You can even make the stuff from water. When it comes to alternative fuels, it might also be the only idea that’s makes ethanol look good in comparison.

There is no pure hydrogen anywhere on this planet, so it requires energy to separate hydrogen molecules. Almost all the hydrogen today is produced from natural gas in a conversion process that requires more energy than it produces. By the time this process spits out hydrogen, about 60% of the original energy has been lost. It can also be made by electrolysis but the economics of getting hydrogen from water are even worse, so this accounts for only small percentage of the hydrogen available commercially.

I recently drove a Toyota powered by a fuel cell that ran on compressed hydrogen during hydrogen day at Exposition Park (Los Angeles) on 8/23/08. Acceleration was a bit sluggish, but the SUV was solid and quiet, had the usual amenities, had enough range to drive from Las Vegas to Los Angeles on a tank of compressed hydrogen, and had enough room for passengers and cargo.

The event was littered with auto company representatives that were pretty vague when it came to costs. I finally found a graduate student involved in hydrogen car research that had access to a hydrogen filling station at his university. According to him, the hydrogen equivalent of a gallon of gasoline costs $5 there and is heavily subsidized. The cost of the fuel cell to turn the hydrogen into electricity to power the car is still in six figures, but is expected to come down if this technology becomes more widely adopted.

To prove the point about this technology still having poor economics, Toyota recently announced plans to begin leasing hydrogen fuel cell vehicles in Japan that are very similar to the one I drove. The cost is $7,700 per month for a 30 month lease, which doesn’t include the cost of hydrogen.

Between the cost as well as nagging safety issues (hydrogen is 10 times more flammable than gasoline and 20 times more explosive) my guess is a better technology will cause the government grants keeping this technology alive to dry up well before the economics of hydrogen ever allow it to be widely adopted as a vehicle fuel. This is a technology in desperate need of a several major breakthroughs before it’s even close to becoming viable.

The Clean Fossil Fuel

It’s hard to see much sense in wasting 60% of the energy in natural gas to turn it into hydrogen which then requires a fuel cell that costs six figures to turn it into electricity, and then requires an electric drive to power the result. Why not just compress the natural gas (CNG), make a few modifications to the car so the combustion engine can burn it, and then save 40% on the cost of vehicle fuel? As CNG burns much cleaner than gasoline, this will also reduce emissions.

Since natural gas is a hydrocarbon that isn’t renewable, we still have the long term problem of finite supplies. In addition, natural gas produces less energy than a comparable amount of gasoline, so the range of CNG vehicles tends to be less and the storage tank tends to be bigger, which reduces the amount of space available for passengers and cargo. For reference, the only car available designed specifically to run on CNG is the Honda Civic GX. It has a price tag of $24,590 and a range of around 170 miles.

For alternatives to gasoline, building the necessary infrastructure is the biggest challenge and CNG is no exception. There are only about 1100 CNG filling stations in the U.S. and only about half are open to the public. This compares with around 170,000 gasoline stations in the U.S. and leaves us with a familiar Catch 22 when it comes to alternative fuels. The demand for CNG vehicles is limited by the low number of available refueling stations, but these stations may not be built until there are more CNG vehicles on the road.

However, when compared with ethanol and hydrogen, CNG looks like the pick of the litter. Because of this idea is finally starting to get some traction. Finite supplies mean this is more of a stopgap measure than a long term solution to our energy problems. However, the sources of supply are more stable (Canada, U.S. & Mexico) it is less expensive than gasoline, and existing vehicles can be adapted to use it as a fuel. Developing additional supplies will have to overcome the usual opposition from the environmental movement and it remains to be seen if CNG will still be competitive when the cost of building more infrastructure is added in and increasing demand bumps up against finite supplies.

The Combustion Engine Slayer

It has taken a century, but Thomas Edison’s favorite vehicle fuel is finally poised to begin the process of changing what we drive. Vehicles powered by electricity (EVs) are going to make the internal combustion engine look like a noisy, inefficient, heat-blasting, poison-spewing monster with too many moving parts in comparison.

Unlike combustion engines, electric drives are very efficient, have few moving parts, are very quiet, and can go a lot longer with less maintenance. This is not exactly good news for automakers that have built up a very lucrative parts and service business to support the combustion engine. Toyota in particular has been especially egregious in requiring its customers to have their cars serviced by a dealer every 5,000 miles and pay through the nose for the privilege. Their reaction to this revolution has been to drag their feet as long as possible when it comes to introducing a plug-in (PHEV) Prius and ignore EVs completely in the hope they’ll go away. For companies like General Motors that get it, Toyota’s uncharacteristic lack of vision gives GM an opportunity to recapture lost market share. It’s pretty safe to say that driving costs of a few pennies a mile coupled with extended service intervals and substantial savings on maintenance will make EVs and PHEVs a big hit with consumers.

For Thomas Edison’s vision to be fully realized, a nationwide network of charging stations will still have to be built. Electricity is already widely available, so the infrastructure problems for this technology appear to be less daunting. In addition, several companies have already developed lithium batteries that can fully recharge in the time it takes to fill a gas tank, which will minimize the inconvenience factor. The last nail in the coffin for combustion engines is another battery breakthrough that dramatically increases the range of electric vehicles. Recently, there has been a very promising discovery http://news-service.stanford.edu/news/2008/january9/nanowire-010908.html that may solve this problem. Whether this or something else overcomes the final hurdle, the chances are very high that EVs will eliminate the need for the internal combustion engine within a decade.

In the meantime, however, lithium battery technology will allow hybrids to take the next step by turning them into plug-in hybrids. This is now possible because batteries made of lithium are lighter and can store several times more electricity than batteries made of lead or nickel.

(Left) The Fisker Karma plug-in, available in 2009 for about $80k.





These add less weight to a vehicle and dramatically increase its range. If you look through the archives of, you’ll see a flood of recent announcements about lithium batteries for vehicles going into mass production along with almost daily announcements about new hybrid, PHEV, and EV introductions. This time, the genie is out of the bottle for good.

Initial lithium battery plug-ins will have a range of up to 50 miles on the batteries alone. While that may not sound like much, keep in mind that 80% of the people in this country drive 50 miles a day or less so this can eliminate most of the demand for gasoline and CNG could eliminate the rest. If your PHEV is charged at off peak hours when you’re asleep, the fuel cost will be a few pennies per mile.

Rethinking the AutomobiIe

With about three dozen EVs and PHEVs now on the drawing boards, in production, or for sale, a whole new generation of independent automakers is getting involved. Since most of them don’t come from Detroit, they don’t know that a car should be a boxy, rectangular thing with four wheels that’s made out of steel. New materials and new designs are going to create lighter, more aerodynamic vehicles that also help to increase the range of battery power. Electric drives will also allow designers to produce cars that destroy the stereotypes most people have about EV performance.

EVs allow an electric drive to be placed on each wheel, which is a far more efficient way of powering a car. If your stereotype of an EV is a pimped out golf cart for environmentalists, think again. Designers in Japan have already doubled the number of wheels to eight, attached an electric drive to each one, and created the Eliica (pictured above) with a top speed of 230 MPH. Here’s how it stacks up against a Porche.

(Left) The founders of Google have invested in the Aptera, now available in fully electric or plug-in versions for under $30K.

Designers are also going the opposite direction. Currently, there are several three wheel vehicles now in production or on the drawing boards. These have room for two, but qualify as motorcycles in most states including California which means that a lone driver has access to the carpool lane on the freeways. The leading company in this area appears to be Aptera.

For anyone getting a little bored with their automotive choices, the world is about to get a LOT more interesting.

Mixing Moonshine with Politics

Is ethanol the fuel of the future or another giveaway to farmers?

Although our economy has morphed into something that would make Adam Smith turn over in his grave, the U.S. still generally permits more old fashioned capitalism than the rest of the world. However, there is one glaring exception. This industry is protected from free market competition with subsidies and welfare payments that single mothers with too many children can only dream of. The undisputed kings of welfare in this country are big farmers and food processors, and they did it the old fashioned way. In many states, they’re the biggest contributors to politicians.

Food vs Fuel

Ethanol is a perfect example of how, once politicians begin writing checks to powerful constituencies, those checks tend to keep coming even when there’s no longer a need for them. Several years ago, price support programs for corn had encouraged excess production that resulted in a lot of corn sitting around in warehouses. World corn prices were in the toilet which left third world farmers at poverty levels and bitterly complaining about farm subsidies in the developed world that kept them poor.

When oil prices started to go up, it was only a matter of time before politicians noticed all that corn sitting around. Converting this to ethanol would make it look as though they were doing something about the energy problem, would get rid of those embarrassing corn surpluses that annoy the third world, and allow them to throw more taxpayer dollars at folks who already know how to play the game and would gladly return a sizeable portion in the form of bigger campaign contributions. It was a politician’s wet dream, which is why both parties supported it.

It apparently didn’t occur to Congress that people weren’t going to eat less simply because food was being turned into fuel. According to Wikipedia, biofuels consumed one third of America's corn harvest in 2007. Each time a large vehicle is filled with ethanol, enough corn to feed one person for a year goes into the tank. Fast forward to the present. With less food now available while the population increases, food prices have skyrocketed. Now, it isn’t corn filling up the storage facilities, its ethanol. As the poor have trouble feeding their families, riots over rising food prices have broken out in the third world.

However, our politicians know that buying the farm vote is what’s REALLY important, so the U.S. Energy Independence and Security Act of 2007 extended the 51 cent per gallon ethanol subsidy and required American fuel producers to use at least 36 billion gallons of biofuels (mostly ethanol) by 2022. This will represent roughly a five fold increase from the 7.23 million gallons expected to be produced in 2008.

Infrastructure Issues

According to the Renewable Fuels Association, there are currently 1,587 filling stations distributing ethanol, out of a total of about 170,000 in the U.S. Not surprisingly, most of these are located in the corn growing states in the Midwest. It’s safe to say this number has to expand a bit for ethanol to have any impact on our demand for gasoline.

Even though more ethanol plants are going to be built, getting it to consumers will take time and a big capital investment. One of ethanol’s problems is that it’s very corrosive when it comes into contact with anything containing iron. This is why cars have to be retrofitted before using it. However, the biggest problem comes in transportation. Not only does ethanol evaporate quickly, but its corrosiveness means it can’t be pumped through existing gasoline pipelines. As a result, it has to be shipped on trucks, trains, and barges in relatively small amounts to special storage facilities where it’s blended with gas.

Even if the necessary infrastructure gets built, there’s another small problem. According to Wikipedia, producing enough ethanol to replace current U.S. petroleum use alone would require about 75% of all the cultivated land on the face of the Earth. From this, it should be pretty obvious that ethanol never was, and never will be, a serious solution to our energy problem.

Brazil

Brazil is currently the world’s low cost producer of ethanol. It isn’t rocket science to figure out that, if there’s a correlation between sugar content and the resulting amount ethanol that’s produced, the best stuff to make it from is sugar cane or sugar beets. For comparison purposes, U.S. corn-derived ethanol costs 30% more because there’s an extra step in the process. Corn must first be converted into starch and then into sugar before being distilled into alcohol. This extra step also means that, at best, the production of corn ethanol produces only slightly more energy than it consumes.

Brazil would happily ship ethanol to the U.S. for less than it costs to make and distribute here, and the savings would give U.S. consumers more money to spend on other items. However, to eliminate this possibility, there’s currently an import duty of 54 cents per gallon on Brazilian ethanol. Apparently, finding another affordable fuel and helping the economy isn’t nearly as important as protecting U.S. farmers from competition.

Pricing & the Inconvenience Factor

The most common ethanol based fuel is known as E85, which is 85% ethanol and 15% gasoline. Several years ago, prices were all over the map. In states with an established infrastructure, it was generally priced at 40-50 cents per gallon less than gasoline. However, in states that had just begun to offer it, the cost of building the infrastructure resulted in E85 being priced as much as 50 cents per gallon MORE than gasoline.

However, it didn’t long for consumers to do the math, and that’s when things begun to go south. When compared with gasoline, E85 reduces mileage by around 30%, which made it a significantly more expensive fuel to use. If you’re an ethanol producer, you know you have a problem when even the Post Office can figure it out.

The additional problem is the inconvenience factor. A consumer that fills their car with gasoline every 7 days would have to fill up with ethanol every 5 days because of the reduced range from lower mileage. Over a year, that’s an extra 21 days that has to be spent looking for a gas station.

Brazil has recognized this and priced their ethanol for about 1/3 less than gasoline. At that kind of discount, many people there are willing to use it. For comparison purposes, ethanol prices in the U.S. in May 2008 averaged 17.2% less than gasoline , which still isn’t enough of a discount. For U.S. ethanol producers, the Catch 22 is that even with the subsidy, the economics of corn ethanol production may not allow them to make a profit if the discount reaches a level that might make consumers consider using it.

This has been confirmed by a recent article in Reuters . Corn at $8 per bushel has caused about a dozen ethanol plants in the U.S. to recently file for bankruptcy protection because of high feedstock costs and lousy profit margins. The affected plants are mostly small or mid-sized facilities and more are likely to announce bankruptcy soon. In addition, many ethanol plants are only operating at 50 percent capacity and previously-announced plants are being stalled or stopped completely.

Down a Rat Hole

Ethanol has been around a long time, and the powerful corn lobby seems to trot it out and then lobby for handouts every time the price of oil goes up. It was also touted as the fuel of the future and received significant subsidies during the last energy crisis in the 1980’s. At that time, the number of ethanol plants increased from less than 10 in 1980 to 163 in 1984. By the end of 1985, 89 of these plants had closed as the price of oil came back down. As Yogi Berra would say, what’s happening now is déjà vu, all over again.

However, current subsidies make the 1980’s pale in comparison. Federal subsidies for ethanol totaled about $6.8 billion taxpayer dollars in 2006 and will increase to about $8.7 billion a year in 2007. The biggest beneficiary, Archer Daniels Midland, has the capacity to produce 1.7 billion gallons. At 51 cents per gallon, that would amount to $867 million annually while Congress searches in vain for loopholes to plug.

However, it isn’t just the criminal waste of taxpayer dollars that’s infuriating. This is the equivalent of fiddling while Rome burns. Congress is subsidizing a fuel that can never solve our energy problem while gasoline prices soar. The private sector knows the fuel of the future is electricity, not ethanol, and there will be a flood of plug-in hybrids and fully electric vehicles introduced in the next few years. Once electricity replaces gasoline as a fuel, the resulting vehicles will go further with less maintenance and cost pennies per mile to drive. To make this a reality, better batteries and a nationwide network of charging stations are needed. Unfortunately, the resources that could make this happen sooner rather than later are being poured down a rat hole.