Great Scott! The Future of Alternative Fuels

The Daily Reckoning – Weekend Edition
September 23-24, 2006
Baltimore, Maryland
by Kate "Short Fuse" Incontrera

VIEWS FROM THE FUSE: GREAT SCOTT! THE FUTURE OF ALTERNATIVE FUELS

"Roads? Where we’re going, we won’t need roads." -Dr. Emmett Brown, Back to the Future, Part II

The year is 2015 – and all of the cars are zipping around in the air, Jetsons-style, due to a "hover conversion."

At least that’s how the 1989 film, Back to the Future, Part II envisioned our world would be nine years from now. And while flying De Lorean’s are most likely not in our near future, the race for car – or fuel – of the future is on.

As far as alternative fuels go, ethanol has been a kind of media darling in recent months, due to (among others) The Bush administration’s claim that it is much better for the environment – and easier on the wallet – than regular gasoline. Ethanol.org says that if you put a combination of gasoline and this "clean-burning, high octane, domestically produced fuel" in your vehicle, you will "decrease the fuel’s cost, increases the fuel’s octane rating and decrease gasoline’s harmful emissions."

Although it sounds like a no-brainer; lately, reports of this biofuel not being all it’s cracked up to be have been popping up with a greater frequency. For example, the October issue of Consumer Reports ran a cover story called "The Ethanol Myth," where they tested the 2007 Chevrolet Tahoe FFV – a flexible-fuel vehicle that can run on gasoline, or on E85, which is 85 percent ethanol and 15 percent gasoline.

In a nutshell, they found that while FFV’s emit less smog-causing pollutants than gasoline, the pros outweigh the cons. These vehicles provide few miles to the gallon, are not cheaper than regular gasoline, and it is quite hard to find ethanol outside the Midwest (for the article they actually blended their own E85.)

So, if the car of the future isn’t running on ethanol, what will fuel it?

GM seems to think they have found the answer, with the hydrogen fuel-cell car. "GM has reinvented the automobile," brags Larry Burns, vice president of R&D.

Burns is talking about the Chevy Sequel, a fuel cell powered car, which burns no gas and produces no harmful emissions. According to Fortune magazine, the biggest problem for fuel cell powered cars is how to store more hydrogen gas. "The Sequel can carry about 18 pounds of hydrogen, equivalent in power to 16 gallons of gas. That gives it a range of about 300 miles – on the low end compared with conventional cars."

Although the National Academy of Sciences believes the "hydrogen economy" is decades away, GM is much more optimistic, setting a deadline for 2010 by which to develop a "fuel-cell unit that is competitive in price and suitable for the mass market." By 2020, they estimate that 10 percent of the world’s 90 million new cars and trucks will be powered by fuel cells.

In the meantime, Outstanding Investment’s Justice Litle thinks a viable alternative fuel lies in "the humble old diesel engine."

People often equate diesel engines with the big rig, pollution nightmares that are tailing you on the freeway, but Litle promises those trucks are outdated and that new technology has made diesel engines cleaner than ever.

Diesel gets around 30 percent more miles to the gallon, and those concerned about global warming can rest easier at night – diesel emits up to 20 percent less carbon dioxide. And the use of diesel engines could help reduce the United States’ dependence on foreign oil, as you don’t need crude oil to make diesel fuel. It can be made from liquefied coal, plant matter, or even cooking oil.

"The technology that is winner is diesel engines, which already exist in Europe," said Earl Hesterberg, president and CEO of Group 1 Automotive Inc. "There’s also a different perception of emissions."

It looks like the diesel engine is coming out on top – at least until we start traveling via hoverboards, or in a flying De Lorean, whose flux capicator is powered by Mr. Fusion Home Energy Reactor.

Short Fuse
The Daily Reckoning

P.S. One of the big technologies of the future will be liquefied coal, whether the diesel engine wins over the public or not. While oil supplies run low, there is still enough coal to last for over 300 years – and new advances in this field have figured out how to clean up the pollution aspects of coal…and found a way to make it power your SUV. Coal is going to play a key role in our energy future. The safest way to profit is to own some coal and wait for the price to go up. It will.

— Daily Reckoning Book Of The Week —

Oil Addiction: The World in Peril
by Pierre Chomat

Western society has reached the "Age of Excess," which will last only as long as there is still fossil energy to fuel it. The Earth cannot keep up with Man’s demand for natural resources. Her hydrocarbon reserves are shrinking rapidly and by 2010, global production will begin to decrease, setting off a period of unprecedented planetary disorder and turmoil.

Today the United States must import most of the oil it needs from faraway countries. Therein lies a terrible paradox: the power of America is rooted in dependency! The free enterprise system that it is imposing on the rest of the world cannot solve this paradoxical situation; it will only amplify it and hasten destabilization.

It is high time to wonder whether we in the West, in our suicidal quest for energy, are not running the risk of losing control of the course of our history. The invasion of Iraq by the United States military, in lockstep with American corporations, is a distressing and reprehensible step in this direction.

THIS WEEK in THE DAILY RECKONING: Have you ever wondered what constitutes a financial disaster? Or how we get to the point in which a financial disaster becomes all consuming to the economy? Byron King looks to answer these questions in "The Nature of Disaster," below…

Hedge, I Win…Fails, You Lose  09/22/06
by Bill Bonner

"The hedge fund Amaranth Advisors managed to lose $6 billion in just a few days. We aren’t all that surprised. Hedge funds are notorious for sucking up investors’ money – and turning it into nothing. Read on…"

Peak Performer    09/21/06
by Justice Litle

"Demand for natural gas has been on the rise for a lot longer than you would think – and in the next few decades consumption of natural gas is expected to rise more than 20%."

Report from Romania    09/20/06
by Louis James

"Make no mistake; large, well-defined gold deposits like Rosia Montana are extremely rare and exactly the sort of thing resource-hungry major mining companies are likely to buy at a substantial premium."

The Nature of Disaster    09/19/06
by Byron King

"What constitutes a financial ‘disaster’? What causes these disasters? Below, Byron King reviews a book, History of Financial Disasters, which looks to answer those questions – and more. Read on…"

Let Them Eat Cake!    09/18/06
by The Mogambo Guru

"The poor, the unemployed, those on fixed incomes? The pain of inflation will rise over the coming years, worse every year, but hopefully it will one day stop getting worse and more painful, and so inflation now is okay."

FLOTSAM AND JETSAM: Wired News reports that architects at the University of Arizona and other schools are collaborating on designing buildings that change their shapes in response to weather conditions and usage patterns. Jonathan Kolber explores…

Mighty Morphing Power Buildings
by Jonathan Kolber

They call these buildings "responsive structures." The idea is that the building will optimize its shape in response to external conditions. It could shift external surfaces to capture or avoid sunlight, depending on the tradeoffs between internal temperature, energy consumption and solar panel efficiency. It could present a smaller, tighter surface in response to severe storms, for example by assuming an emergency configuration for greater resistance to high winds.

Even snow buildup could be addressed by shifting roof structures so the snow falls off as it accumulates. Internally, such a building could open up internal areas to accommodate a crowd or better circulate the air.

According to John Folan, assistant professor of architecture at the University of Arizona, "This is the wave of the future." The school’s Office for Robotic Architectural Media & the Bureau for Responsive Architecture is testing "building envelopes" using a system of rods and wires. These are controlled by pneumatic "muscles." The muscles constitute the framework of all the building’s walls.

Computer-controlled, intelligent robotic systems are being fused with these building envelopes to form light and very flexible structures that modify themselves without consuming a lot of energy.

Says Tristan d’Estree Sterk of the school, "They enable buildings to be conceived of as systems that change shape to improve the way people live."

The way buildings are lit, heated and cooled is closely tied to their shape. Taller buildings heat and cool very differently than short ones.

Sterk even believes that such buildings could eliminate the need for air conditioning by using shape to improve ventilation.

This is not just academic speculation. Sterk is developing some skyscrapers in Chicago based on these principles.

Chicago is known as the Windy City. The new design will allow wind to blow through the building rather than against it, thereby reducing harmful shaking and swaying. Further, it will swivel and twist gently in the wind, which will allow taller buildings than before.

Further, the Structural Systems and Control Laboratory at the University of California, San Diego is pioneering mathematics to model such buildings. As this work evolves, it will give architects powerful tools for testing the limits of construction.

According to Gian Carlo Magnoli, architectural researcher at MIT’s Kinetic Design Group, buildings should function like modern cars. They would therefore come with embedded safety and climate-control systems. "Sophisticated systems don’t allow any misuse of brakes, wheels or fuel, and air bags instantly appear to protect us in case of extreme events," he says. "Our house rarely does all of this for us – but we believe it could."

Where is this leading? I believe that within 20 years, all major construction projects will include these principles. Most of the buildings will make minor modifications to themselves on a continual basis, and these changes will either be unnoticeable or aesthetically pleasing.

However, some buildings will be designed to serve multipurpose functions. For example, consider a stadium. It’s wonderful for large sporting events, seminars and inspirational events. But the stadium often lies dormant at other times.

Why not design a stadium that can pop up reconfigurable dividers that allow it to be subdivided into classrooms or even office space during the day? That’s a lot of prime real estate that could suddenly appear.

Is building construction about to become a Transformational Technology hotbed? I’m counting on it.

Editor’s Note : Jonathan Kolber is the editor of Emerging Capital Report – a newsletter that uncovers companies with life-changing emerging technologies. We’re talking the kind that could revolutionize the world and your portfolio – at once. And Jonathan knows a thing or two about such technologies. In the 1980s, Jonathan was a top consultant to supercomputer companies. In 1996, he founded Hide & Seek Technologies Inc. – the company that pioneered limited-use, or "disposable," CDs and DVDs. Plus, he’s co-founded two technology companies… served as senior management for several others… and helped a handful of startups get off the ground.