When it comes to the price of gas, Canadians just can’t win. For the last couple of days I’ve been paying over $1 litre for gas and in some ways that feels like Independence Day. I’m getting used to it. It might be breaking me but I’m getting used to it.
Still, it makes no sense. In a country like Canada where you have to drive somewhere to get anywhere, we have to do better. With Alberta having more oil reserves than Saudi Arabia, OK, maybe we don’t think of the tyranny of foreign oil like our American friends do. However, maybe we should be thinking about the tyranny of the oil companies. There has to be a better way for the ordinary consumer to stretch their energy dollar.
One of the best ways is driving a vehicle that goes a long way on a litre of gas. For instance I drive a Honda Civic, its great on gas, saving me money every time I fill up. However, thankfully the rest of the world doesn’t see it the way I do. For instance a friend of mine owns a Porsche. I’ve got another friend who owns a big minivan and another friend who owns a SUV. Those friends of mine are all vibrant interesting people who can afford to pay for the extra fuel those cars take. To them a car is more about personality than gas mileage. Sadly for me, it’s just the opposite. Getting from A to B in life is a necessary evil.
Lately, this whole question regarding energy prices has got a bit more interesting. As Canadians we’ve watched as the price of oil has gone up, up, up. Last January for instance oil was fluttering around $57/barrel. Now we are in the mid $90 range. However, gas prices didn’t spike like they did in 2006 because the loonie took off above par effectively tempering any price move upward.
The American greenback was one of the biggest reasons for this. While the loonie went up the American greenback went down, effectively making oil cheaper to anybody who didn’t have American dollars. That’s a good thing mostly, but there are some in the world economy who don’t like it. Countries with a lot of oil would make more money if the price of oil were based on a basket of currencies. Getting paid in devalued US dollars is affecting their purchasing power abroad.
Two of the biggest proponents of dropping the US dollar as oil’s benchmark are Venezuela and Iran. Venezuelan President Hugo Chavez and Iran’s President Mahmoud Ahmadninejad are trying to convince the OPEC cartel pegging a barrel of oil to a basket of currencies makes much more sense. That in a nutshell seems to add up but you can be sure kicking the Americans in the shins is part of this equation. You can bet with those two leaders doing things like that, the US will have its poster boys to woo Americans off the tyranny of foreign oil.
To achieve that goal, the Americans are subsidizing biofuel. Ethanol has got all the publicity, as corn was a feedstock ready to go. However, one biofuel you don’t hear much about is biodiesel. With North America dominated by a gasoline market, biodiesel has been a poor cousin ignored. However, in other parts of the world “diesel” dominates as a fuel source. Blending biodeisel into the mix will reduce dependence on oil and is good for the environment too.
For the uninitiated, biodeisel is a diesel fuel made from biological sources mostly vegetable oils. Soybean oil can be one feedstock along with canola, palm, sunflower and a host of other “oils.” You can even go down to your local McDonalds and process the used oil from the french fries into biodeisel. However, for it to be successful you need scale. That’s one reason why big biodeisel plants are in the works in Alberta, which will use canola for a feedstock and have a ready market
The problem is “biodeisel” is generally more expensive than petroleum diesel. So government often offers incentives to get production going. In the United States the blender’s credit is $1/US gallon effectively making biodeisel competitive in the greater diesel market. In Canada our federal government has mandated 2% biodeisel blended into all diesel fuel by 2012. So it’s on its way, 2012 just seems so far away.
There are other problems. Vegetable oils in cold weather cause problems with biodeisel. There can also be problems with some diesel engines if the biodeisel is “made in the backyard.” In other words, there are standards, which have to be maintained in order to bring biodeisel into the North American market in a very big way.
However, something tells me my buddy won’t be filling up his next Porsche with “biodeisel.” In fact depending on the crazy economics inherent with the biofuel craze, the rest of us might not either. However, demand for fuel globally keeps growing. At the end of the day, I’ll take all the new choices we can get. And if that renewable fuel cell finally hits the market, I’ll declare a real “independence day.”