Unfortunately, however, EPA allowed this policy to expire in 2002, and on January 16, 2009, replaced it with a new policy, issued under the signature of assistant administrator Granta Nakayama, which explicitly allowed the EPA to impose massive fines for any vehicle alterations that had not been certified by EPA in advance, even if there were clear and compelling proof that no emissions increase had resulted from, or even been risked by, such changes. Thus, for example, the use of unapproved engine parts identical to the certified brands would still be considered an emissions violation (p. 13), even though it obviously entailed no increase in emissions, and in fact would subject the offender to triple fines (p. 17). “Even in absence of harm in the form of excess emissions, the gravity component of the penalty should reflect the seriousness of the violation in terms of its effect on the regulatory program,” Nakayama said (p.15).
So now, instead of just modifying each car and subjecting it to the same emissions testing faced by any other vehicle, a company wishing to offer conversions would have to have its technology certified by the EPA, in advance, for each make, year, and model it hoped to modify. Such a process would take many years and cost many millions of dollars, so much so as to effectively prevent any such initiative.
The economic damage being done by these regulations is enormous. As a result of improved technology, U.S. natural-gas production has recently been rising at a rate of 6 percent per year. Unfortunately, however, this cannot currently be marketed as liquid transportation fuel. And while the idea of using compressed natural gas directly as vehicle fuel has been the subject of much discussion, such conversions are very costly. This is why T. Boone Pickens and other advocates of such schemes are seeking federal subsidies of up to $11,500 per car, $64,000 per truck, and $100,000 per filling station — amounts that would add up to over a trillion dollars to convert half the American automobile fleet — which are clearly not in the cards. As a result, the price of natural gas has crashed to less than a quarter of what it was four years ago.
The natural-gas industry is screaming for new markets, and there are only two sectors where these can be found: transportation and power generation. These define two distinct policy options. The EPA could act to open the transportation-fuel market to vigorous competition from natural gas as well as coal, biomass, and trash, by legalizing methanol. This would force oil prices down, expand the economy, and create millions of jobs. Alternatively, the EPA could act to favor natural gas at the expense of coal by passing new regulations forcing coal-fired electric-power plants out of business. This would have the effect of driving electricity prices up while keeping oil’s monopoly on transportation fuel unchallenged. The net result would be to impose a massive, regressive, job-destroying electricity and fuel tax on the nation.
Unfortunately, the Obama administration has chosen the latter — a highly divisive and destructive course.
Can we really end our dangerous and costly dependence on foreign oil by legalizing methanol? The answer is unquestionably yes. The U.S. currently imports about 4.5 billion barrels of oil per year. At current prices of $90 a barrel, this works out to a cost of about $400 billion, equivalent to a loss of 4 million jobs at $100,000 per year each. If this were all to be replaced by methanol, about 166 billion gallons per year of methanol would be needed. If we were to make all of this from natural gas, we would need an additional 11.9 trillion cubic feet per year.
World natural-gas production stands at 120 trillion cubic feet per year, with the U.S. contributing about 29 trillion cubic feet of the total. At our current 6 percent per year rate of increase of natural-gas production, all of the necessary expanded natural-gas capacity could be developed from American sources inside of six years. If a significant fraction of the methanol were produced from coal, the target could be met even faster. The result would be the effective elimination of oil as a significant factor in our balance-of-trade deficit. Furthermore, by throwing the equivalent of 4.5 billion barrels of oil per year into the world market (which is now about 32 billion barrels per year) we would send the price of oil down to less than $50 per barrel, thereby causing the marginalization of the Islamist and other petroleum-financed tyrannies and setting off a worldwide economic boom driven by cheap oil.
We have here in North America all the resources needed to break the cartel-rigged restrictions on humanity’s liquid-fuel supply, and, by breaking them, to lead the world back to prosperity and on to freedom. The only thing in our way is an artificial policy wall that is stopping us from getting the fuel we can make ourselves into the market.