McFarlane: A Flex-Fuel Mandate Is Pro-Market

And up is down. we need less “policy” and more energy production.

Robert McFarlane writes in the Wall Street Journal:

… In recent years, we’ve discovered that we are blessed with truly unfathomable amounts of natural gas embedded in shale deposits—primarily located in Pennsylvania, New York, Texas and Oklahoma. Natural gas can be used in various forms to fuel vehicles. Compressed natural gas (CNG) is well-suited to drive long-haul and other fleet vehicles, although it’s quite expensive to adapt a truck or car to burn natural gas.

For light trucks or automobiles, a better approach lies in using natural gas to make the liquid-fuel methanol, a high-octane, clean and safe fuel (which race-car drivers love) whose spot price is roughly $1.10 a gallon. New cars and trucks can be adapted to burn methanol, ethanol, gasoline or any combination of the three for less than $100 per vehicle. The Methanol Institute, a private industry group, estimates that after compensating for methanol’s lower energy content and adding the cost of distribution, taxes and infrastructure, producers can deliver an amount of fuel equivalent to the energy in a gallon of gasoline for approximately $3.

But we must get busy, because we’re about to face additional upward pressure on the price of oil. Former Shell CEO John Hofmeister has predicted that the rapid run-up in demand for oil over the next two to three years—primarily in China and India, and by as much as 10 million barrels per day—may well outstrip supply and raise the price of oil to more than $200 a barrel. A gas price almost double what we’re paying now would constitute only a fraction of the impact on our economy. We will go back into recession and stay there for a long time…

Read the entire commentary.