Optimistic about Oil

Instapundit quotes James Woolsey (formerly of the CIA) in a Wall Street Journal editorial:

Bet on major progress toward independence, spurred by market forces and a portfolio of rapidly developing oil-replacing technologies.

The editorial goes on to note:

Ethanol's appeal rose a few years ago when it became clear that genetically modified biocatalysts could break down the cellulose in biomass and thus enable ethanol's production from a wide range of plant life. This means that, compared with corn, little fossil fuel is needed during biomass cultivation and land use presents much less of a problem. Indeed two years ago the National Energy Policy Commission (NEPC), making reasonable assumptions about improved vehicle efficiency and biomass yields over the next 20 years, estimated that just 7% of U.S. farmland (the amount now in the Soil Bank) could produce enough biomass to provide half the fuel needed by U.S. passenger vehicles, and that production costs for cellulosic ethanol were headed downward toward around 70 cents per gallon. Further, conversion of only a portion of industrial, municipal and animal wastes--using thermal processes now coming into commercial operation--appears to be able to yield an additional several million barrels a day of diesel or, with some processes, methanol.

Granted, this may take 20 years (and possibly more), but in the meantime nuclear power plants are being built we're investigating shale oil and spending billions on oil sands, not to mention the billions going into solar and alternative energy research, it should be clear that there is no need for some of the hysterical headlines we've seen. Though I can't find the link for it now, I remember an article that suggested that by applying technology in oil sands in Canada, we could even double Saudi Arabia's proven reserves.

With long term prices for all commodity prices trending down, this bodes well for users. The possibilities for ethanol alone are breathtaking - over 40% of oil in the US is used for transportation today... not to mention the fact that the 30% efficiency of internal combustion engines has a lot of potential to improve.