Are Alternatives to Fossil Fuels Really Viable?
Letter to the editor by Senator Richard G. Lugar
As submitted to the Wall Street Journal
February 13, 2006

Re: “Crude Awakening” op-ed by Peter Huber, Feb. 3, 2006

To the editor:

When Peter Huber wrote, “The question…[is]whether corn and wood will ever be as cheap and easy starting points as fossils,” he repeated a common fallacy. Oil is neither cheap nor easy. The price of gasoline does not reflect its true cost. Properly calculated, fossil fuels are far more expensive than they appear. At least three externalities must be added to gasoline’s current $2.50 a gallon price. The first is the military expenditures we pay to safeguard the Mideast oil fields. There is a wide range of estimates: one of the lower ones, by the conservative National Defense Council Foundation, puts the figure at $50 billion a year (not counting one-time expenses like wars).

The second external expense, far harder to calculate, is the damage to our national interests and our security by petro-states made rich by the world’s over-reliance on petroleum. Iraq was one such troublemaker, causing two costly wars. Iran and Venezuela are just two of the several governments currently engaging in anti-American behavior that is enabled by the more than $24 billion we paid for imported oil in November alone. The third externality is the pollution and greenhouse gases from burning fossil fuels.

This fully accounted real cost of oil is already much higher than that of home-grown cellulosic ethanol, which will soon be commercially competitive with $2.50 gas. Unlike oil or natural gas, it is renewable, burns cleanly and makes virtually no net contribution to global warming. Switching to an ethanol-based transportation system, by adapting new cars to run on an ethanol-gasoline blend with inexpensive, off-the-shelf flexible fuel technology and piggy-backing on the existing gas station network, would be both good policy and a great bargain for the American consumer.

Sincerely,
Richard G. Lugar
Chairman, Senate Foreign Relations Committee