Are we ready for Ethanol in our petrol?

The price of oil rose to a record of more than $62 a barrel on Monday as news of King Fahd's death raised concern about Middle East instability.

On Tuesday, ABC radio reported that petrol prices in excess of $1.20/litre can be expected to remain with us for five to ten years. The real question is how high will fuel prices rise and when will it affect the way we move around.

The real nightmare for Australia is that crude oil production is falling rapidly: from 218 million barrels in 2000 to 130 million in 2004. Bass Strait is running out, and while new fields keep opening, they are much smaller. The industry warns that within another decade, we could be producing just 230,000 barrels a day while consuming more than a million.

If you visit the Oil Depletion website, you will be convinced that in our lifetime, there will be no oil left. The image link above will take you to a series of articles discussing life without oil.

As reserves dwindle, prices will inevitably go up. At some point, you will think twice before driving into Wangaratta, you will consider car pooling to get to work, and you will accept ethanol as an alternate fuel.

Ethanol, a biofuel, is derived from grain, sugar, and agricultural waste such as straw and grasses. In Brazil, it is compulsorily added to petol to stretch their resources. It is only a matter of time before Australia adopts the same policy.

Canadian Iogen Corp. has devised a way to use enzymes to produce cellulose ethanol from agricultural waste, such as straw. Conventional ethanol, widely used in the United States, is typically produced from corn or sugar cane. G-8 leaders' cars were fueled by cellulose ethanol at the Gleneagles, Scotland, summit held in July.

Proposed plants would process 700,000 tons of agricultural waste to produce approximately 200 million liters of ethanol. Iogen hopes that fuels from grasses and other agricultural by-products could eventually replace 30-50 percent of U.S. gasoline.

Many local farmers have been searching for a new crop to boost their income and the local economy. Maybe ethanol producing crops are the answer. It is certainly a ground floor opportunity to replace crops such as tobacco throughout the North East region.

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Associated article: Rising oil prices to hit rural businesses

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