Well, the annual State of the Union Address, mandated by the Constitution of the United States of America, has come and gone. The address was broad and covered topics ranging from security and the War on Terrorism, to the economy and the need for alternative fuels. President Bush even went as far as to call the American people out when stating, "America is addicted to oil, which is often imported from unstable parts of the world."
While the US economy is growing well, as highlighted in the address, we are in the middle of a great trade deficit. We are buying more foreign goods than we are selling domestic goods abroad. One of the greatest factors in international trade is our dependence on petroleum products. And although there is a heavy emphasis on oil imports from the Middle East, Canada is single largest supplier of oil to the United States, at 2.1 million barrels a day, followed by Mexico at 1.6 million barrels a day. Saudi Arabia is the third largest supplier at 1.5 million barrels a day. Of the top ten importers, only one other is from the Middle East, Iraq with over 500,000 barrels a day.
So what is the answer to our fueling problems? As with investing, I think the best answer is diversity. We need to have many answers to our energy needs. Among the best are resources that are clean, efficient, and heavy in supply. We can lower our usage of coal by deriving more of our energy from solar, hydroelectric, and nuclear power. What about oil? The most immediate answer is ethanol, and it can save us in multiple ways.
What is ethanol? Ethanol is alcohol derived from sugar through the process of fermentation. If you have ever consumed an alcoholic beverage, you have consumed ethanol. Currently, gasoline in the United States is comprised of 90% petroleum bases fuel and 10% ethanol. E85 is a blend of fuel that is 85% ethanol and 15% petroleum based fuel. It is 105 octane, burns cleaner than normal gasoline, and would be created domestically. Not all vehicles can use E85, however. Due to the nature of alcohol, it is corrosive and can damage your vehicle through prolonged use. For some years, automakers have produced flexible-fuel vehicles (FFVs) that are designed to burn E85 in a manner that is acceptable. They can also burn normal gasoline.
Ethanol, or cellulose ethanol, is easily derived from corn, corn-stalks, switchgrass, and nearly any agricultural waste. It is already being sold, in limited supply, throughout the country. Brazil has been using ethanol for years. Plus, our domestic automakers have been manufacturing these vehicles for some time, and are poised to take advantage of ethanol. This gives us a one up on foreign automakers, like Toyota, who do not see ethanol as viable in the US market.
Why stop with E85, though? We should make more FFVs, and we should have hybrid vehicles that are also FFVs! We should embrace biodiesel and E95, both are alternatives to diesel fuel.
This will reduce our trade deficit dramatically, clean our environment, and boost our local economies. Further, we will not be sending funds to unstable regions of the world that may be undermining our freedom and safety.