Energy's future: the world need never run out of energy. In fact, technology and private enterprise are poised to bring us an abundance of energy--if government will just get out of the way.

It's hard to escape the conclusion that America faces a new, and perhaps serious, energy crisis. Home heating costs have risen dramatically, the price of gasoline at the pump is rising rapidly, and the price of crude oil is on the increase. The rising cost of fuel will affect consumers of all goods, as the cost of bringing those goods to market will rise in concert with the rise in the cost of fuel.

At least for now, there does not appear to be any relief in sight, as demand for oil is expected to continue to grow. On March 11, the Paris-based International Energy Agency (IEA) announced its latest forecast for energy demand. The agency expects that global consumption of oil will climb this year to 84.3 million barrels per day, a 2.2 percent increase over the previous year.

Importantly, the world is not running out of oil. The current crisis stems not from the depletion of the Earth's oil resources, but from the inability of current infrastructure to support the increased demand. "The reality is that oil consumption has caught up with installed crude and refining capacity," the IEA said. "If supply continues to struggle to keep up, more policy attention may come to be directed at oil demand intensity in our economies and alternatives."

The IEA is partially correct: more effort is needed to develop energy technologies, whether that effort is within the fossil fuels industry or in advancements in alternative technologies. The answer, though, does not lie with "more policy attention" directed by governments at influencing market trends. In fact, government regulations are directly responsible for limiting our refinery capacity.

If left alone, the market demand for energy will spur competition to invest in new infrastructure and new technologies. The current energy environment, marked by strong demand, will result in increased spending on exploration for new energy t sources and on new energy technologies, r Similar "crises" in the past were alleviated through just this type of investment and innovation. If left unhampered by government, there is no telling what energy technologies will be achieved in the near future by innovators eager to supply the world's increasing appetite for energy.

Tales of Shortages Past

In many ways, the current energy environment bears similarities with an era that seems far removed from our current technological age. In the late Renaissance and early modern period, Europe underwent a technological revolution in energy and productivity.

The early modern Europe that emerged from the Renaissance is often thought of in one of two distinct ways. For some, it is the era of the Reformation, when much thought and vitality went into constructing the theologies and denominations of Protestantism. For others, it was the age of exploration, when adventurers followed the path blazed by Columbus into the deep recesses of the Atlantic and then Pacific Oceans. It was also an era of great commercial expansion, and this commercial expansion was driven by energy.

Prior to this period, the primary motive energy source in Europe was muscle power, either human or animal. For heating and cooking, wood played a primary role. Later, following the Renaissance, Europe's commercial success continued to expand, and with it population expanded. Growth was sustained by energy. At sea, naval technology was increasingly able to harness the power of the wind, allowing European nations to engage in ever more vigorous trade with distant lands.

Within Europe itself, forests provided plenty of wood for domestic energy needs. But demand eventually began to outstrip the ability of the existing infrastructure to bring energy to market, and costs rose. "The agrarian regime ... encountered inherent limits that it could not transcend without a fundamental transformation of its social metabolic basis," wrote German historian Rolf Peter Sieferle about energy availability in the 1700s. "These observations speak for the fact that in the 18th century the preindustrial ... system stood at a threshold impeding the growth of important physical parameters (population size, material flow). The energy potential of the given area was in a sense exhausted."

The preindustrial energy system was heavily dependent on wood. The rising demand for wood reduced the supply, causing prices to rise. "Pundits rang the alarm bells about the soaring cost of wood for heating and for the iron industry; the price of charcoal [made from wood] doubled in real terms between 1630 and 1700," writes business journalist Vijay V. Vaitheeswaran in his recent book Power to the People. The rise in prices spurred by the increased demand for energy led to the development of new and previously little-used energy sources. "Enticed by rising prices, entrepreneurs rose to the occasion," wrote Vaitheeswaran. "They found a way to bring to market a substance that had largely been overlooked until then: coal. That was a turning point in history, for without coal there would have been no industrial revolution."

The Rise of Industry

The industrial revolution may have seen the rise of all manner of innovation, but it was without doubt built on the back of King Coal, which replaced wood as the most dominant energy source. "Day by day it becomes more evident that the Coal we happily possess in excellent quality and abundance is the mainspring of modern material civilization," British economist William Stanley Jevons wrote in his book The Coal Question, published in 1865. "As the source of fire, it is the source at once of mechanical motion and of chemical change. Accordingly it is the chief agent in almost every improvement or discovery in the arts which the present age brings forth."

However, Jevons did not think that the rapid increase in coal production to support the "present age" was sustainable. He opined that England's rapacious appetite for energy would soon consume the nation's coal reserves. "I draw the conclusion that I think any one would draw, that we cannot long maintain our present rate of increase of consumption; that we can never advance to the higher amounts of consumption supposed." In the end, Jevons thought, England would run out of coal by 1900.

Jevons needn't have worried. As before, demand for energy made innovation worthwhile, and another form of fuel was brought to market. It was time to turn to crude oil.

This fuel had been known for centuries. The Romans burned it as a fumigant. In Borneo, it had been used for heat and light. But as the 20th century drew near, this fuel would become the lifeblood of the world's economy. Early wells were shallow, limited by insufficient drill technology. All that changed on January 10, 1901. Two brothers, Al and Curt Hammil, using a new rotary drill technology, bored through more than 1,000 feet of Texas soil on a small hill called Spindletop. Just when it seemed as if they should give up, the drill punctured a pressurized dome of fossil fuel. Methane gas came howling from the drill with a roar, followed by a geyser of oil.

There was more oil than anyone had ever imagined. Most wells of the day were shallow and produced from 50 to 100 barrels per day. Spindletop produced 100,000 barrels per day. A confluence of events was now occurring that would make oil the most important fuel in the world. The internal combustion engine would shortly be combined with a horseless carriage, and diesel and gasoline refined from crude oil would power the new transportation device. Coal had been used to power steam engines, but oil quickly became the fuel of choice for those too. "As oil prices fell, coal users began switching in droves to the more efficient oil," author Paul Roberts wrote in his recent book, The End of Oil. "Railroads converted their coal-fired locomotives to burn cheap Texas crude. Shipping companies, quickly recognizing that oil made their ships go faster--and also that it took up less storage room onboard than coal did --refitted cargo vessels to run on oil."

Since Spindletop, oil has been king. And, for a good part of the 20th century, the United States was both the top producer and consumer of oil. By 1946, however, the nation was actually consuming more oil than it produced, a condition that has persisted to the present. Since then, there has been an ever-present chorus of those claiming that the world is about to run out of oil.

"Ever since oil was first harvested in the 1800s, people have said we'd run out of the stuff," noted John Felmy, the chief economist at the American Petroleum Institute. These predictions have come to naught, says science journalist Kevin Kelleher. "In the 1880s a Standard Oil executive sold off shares in the company out of fear that its reserves were close to drying up," Kelleher wrote in the August 2004 issue of Popular Science. Similarly, in 1977, President Jimmy Carter warned that mankind "could use up all the proven reserves of oil in the entire world by the end of the next decade." That wasn't true then, and it isn't true now.

It is, of course, true that there is more demand for oil today from other quarters of the world than there was previously. Whereas North America and Europe had been far and away the major consumers of energy throughout most of the last century, now emerging industrialized economies in Asia, notably China, are competing for the resource. And yet, the world is not running out of oil. There is, in fact, quite a large amount of oil remaining.

In the U.S. alone in 2003, according to the U.S. Energy Information Agency, proved reserves (meaning oil that can be recovered from existing reservoirs under current operational and economic conditions) totaled some 21.8 billion barrels. Worldwide, in 2003 proved reserves totaled 1.15 trillion barrels, enough to last for 41 years, according to the giant oil firm British Petroleum (BP). "Despite those who say we are about to run out of oil and gas, the figures in the review confirm there is no shortage of reserves," said BP chief economist Peter Davies.

At the current rate of consumption, it appears that the world's proved reserves will be consumed in approximately 30 or 40 years. This, however, may not be likely. Proved reserves are only those reserves that are feasibly recoverable, both economically and technologically, at a given time. As technology improves and demand increases, it will become practical to recover more oil, increasing proved reserves. In fact, this has happened in the past, and proved reserves figures have gone up. The total amount of the resource available, though not necessarily accessible under current conditions, is vastly larger than proved reserves. According to the U.S. Energy Information Agency, "technically recoverable resources" of crude oil in the U.S. alone total 105.05 billion barrels--five times the "proved reserves" subset.

It is worth considering, in addition, that many domestic resources have been placed off-limits by government regulation. In fact, according to the EIA, 78.6 percent of technically recoverable resources are located on federal land. The Arctic National Wildlife Refuge (ANWR) is a case in point. The ANWR sits upon vast amounts of recoverable oil on a par with the current largest U.S. oil field at Prudhoe Bay. The oil could be recovered with negligible impact to the environment of the area, yet opening the ANWR to drilling continues to be resisted.

Similarly, much of the outer continental shelf off the nation's coasts has been made off-limits, despite the very real possibility that important energy resources may be located there. In addition, other deposits of oil and other substances in the contiguous states have been made off-limits by virtue of the fact that they are located on federal land. The energy future, in fact, would be very bright--if government would simply get out of the way and allow entrepreneurs to develop our known energy resources and discover new ones.

Old Fuels and New Tricks

Despite government interference, new technologies are constantly putting more oil within man's reach. Because it hasn't always been possible to recover all the oil from an oil field, some of the oil, sometimes large amounts, remained out of reach. "As recently as the 1970s," writes author Paul Roberts, "drillers were lucky to extract 30 percent of the oil from a field, while effectively leaving 70 percent in the ground as 'unrecoverable'." That may be changing. Studies have shown, for instance, that injecting carbon dioxide (C[O.sub.2]) into "depleted" oil fields allows for the recovery of additional oil, sometimes in substantial quantities.

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Other new techniques may also improve access to oil. New seismic survey techniques allow scientists to pinpoint oil reserves with greater accuracy; new deep sea drilling technologies are bringing offshore sources within reach, intelligent well systems are giving operators and engineers more finely tuned control of wells; even the drills themselves are improving. According to Popular Science, "Flexible, coiled-tube drills that carve out horizontal side paths are a marked improvement over conventional, rigid drills that move only straight down. Using such technology, companies hope to soon harvest 50 to 60 percent of oil from existing wells, up from today's 35 percent."

Even though technology will make it possible to continue to supply the world's oil needs, the increased demand for energy may make other fuels attractive. The United States sits atop an almost unimaginably vast store of relatively high quality coal. As an energy source, coal is supposed to be passe. Widely regarded as a dirty substance that kills miners and pollutes the air with choking soot and poisonous sulphur dioxide, it was supposed to have been relegated to the dustbin of history by cleaner burning oil and natural gas.

That coal is still vital is illustrated by the career of Corbin Robertson, Jr. Robertson's family turned oil into a billion dollar business with Quintana Petroleum. But the young Corbin gave it all up for coal. "I bet the ranch and all the cows on it," Robertson told Forbes magazine in 2003. "I even hocked the Tom O'Conner [oil] Field."

In part, the attraction of coal is its sheer quantity. According to the National Mining Association, in 2003 U.S. coal reserves stood at a staggering 496 billion tons. At present rates of consumption, these reserves will supply U.S. coal needs for more than 200 years. Coal is presently, and will continue to be, important to the U.S. energy supply. According to the Energy Information Agency, "Coal is projected to fuel roughly 50% of electricity generation through 2025." Even so, coal prices are expected to hold steady or even decline over the same period, making it an ever more attractive fuel option.

Innovation may make coal even more essential. Coal can be turned into a gas. Many years ago, this gas was used to provide fuel for gaslights. But now some generating stations are being built that use the gas to generate electricity. Integrated Gasification Combined Cycle (IGCC) power plants first turn coal into gas, then use the gas to power gas-fired turbines, making electricity. In the process, they produce C[O.sub.2] that could be used in efforts to recover oil from "depleted" wells. Moreover, the process of gasification produces hydrogen, itself an energy source with vast potential for the future. Finally, the procedure works with fuels other than coal. Under parts of Canada, for instance, are vast quantities of tar sands. The province of Alberta, for example, sits upon tar sands holding the equivalent of a trillion barrels of oil, fuel that can augment coal in IGCC plants. Another otherwise difficult to harness fuel, heavy oil (and there are large concentrations in South America), can also be used by the process. "A $1.2 billion IGCC plant in Italy, for example, turns sixteen million tons of heavy oil into 550 megawatts of electricity and several tons of hydrogen, which could be used to run fuel cell cars," writes journalist Paul Roberts.

Of Fuel Cells and Fission 

Fuel cell-powered cars may prove to be the most important technological innovation since the internal combustion engine. Currently, much of the oil recovered from the world's oil fields is refined into the fuels used by the internal combustion engines powering the world's fleet of cars and trucks. Naturally, the demand for oil for this purpose would be significantly diminished if fuel cell-powered vehicles live up to their promise. There are, however, difficulties to be overcome.

Fuel cells are deceptively simple. They work by combining hydrogen with oxygen to create water, producing electricity in the process. The only byproduct is water. Because the process is silent and results in electricity, automobile designers are presented with design possibilities never before attainable due to constraints imposed by the internal combustion engine and the gearing mechanisms needed to harness its power. Suddenly, completely silent automobiles featuring "fly-by-wire" controls become feasible.

The chief problem with fuel cells is the fuel. Hydrogen is difficult to store and not easily accessible at present. Though hydrogen is the most abundant element in the universe, it is almost invariably found in combination with other elements and must be freed for use. This itself takes energy. Fortunately, this can be overcome by coal-fired IGCC power plants. Still, the infrastructure needed to store and distribute the hydrogen will be needed. Another option will be to power fuel cells with more complex hydrocarbons, like methane, and reform them "onboard" for use in the fuel cell. This less efficient method may be an intermediate solution.

So are fuel cells just some futurist's pipe dream? Based on the fact that they are being employed commercially, the answer must be "no." General Motors, for instance, has entered into a deal with Dow Chemical to provide fuel cell technology to power a Dow plant. According to a GM overview of the plan, "The initial GM fuel cell will generate 75 kilowatts of power. This is enough electricity for fifty average homes. Dow and GM plan to ultimately install up to 400 fuel cells to generate 35 megawatts of electricity. That would be enough power for 25,000 average sized American homes."

Fuel cells aren't the only futuristic energy technology that will probably play a significant role in the near future. Another is a technology that has already been producing power for nearly 50 years but still seems futuristic nonetheless: nuclear energy. Prior to the nuclear age, splitting the atom was considered an impossibility. Albert Einstein, the famous physicist, argued, "There is not the slightest indication that [nuclear] energy will ever be obtainable. It would mean that the atom would have to be shattered at will." Work completed by Enrico Fermi and others, though, caused Einstein to change his mind.

Nuclear power, an American innovation, has been brought to a virtual standstill in this country, because of political, not technological, obstacles. Yet it is still a viable and important energy source. According to the federal Energy Information Agency, U.S. nuclear facilities had a record year in 2004. The EIA reported: "The U.S. nuclear industry generated 788,556 million kilowatt hours of electricity in 2004, a new U.S. (and international) record. Although no new U.S. nuclear power plants have come online since 1996, this is the industry's fifth annual record since 1998." There are currently 104 licensed nuclear power generating stations operating within the United States. The energy they produce accounts for about 20 percent of the nation's electricity and about 8 percent of the total energy we consume.

These figures could be higher, as evidenced by the fact that many other nations, taking full advantage of the technology the United States developed, are using nuclear technology to produce a much higher percentage of their electricity from nuclear power than we are. (See graph on page 11.)

Japan plans to increase its nuclear capacity so that 41 percent of its total energy needs can be met with atomic energy. What's more, despite setbacks, Japanese industry is committed to advancements in nuclear technology. Japan invested heavily in fast breeder technology, completing the "Monju" fast breeder reactor that would get dramatically more energy out of a given amount of uranium than a conventional nuclear power plant. The Monju reactor suffered a coolant leak and was shut down, but plans exist for bringing the facility back online soon.

Nuclear energy may even play a role in smaller-scale remote installations. The town of Galena, Alaska, suffers from an erratic energy supply and wants to install a small, Japanese-made nuclear reactor. The liquid-sodium cooled, Toshiba-built reactor would produce 10 megawatts of electricity and would run almost unattended and underground. It would not need to be refueled for 30 years. Whether in small-town Alaska or in the lower 48 states, nuclear power can provide a relatively inexpensive, clean, and nearly unlimited source of energy.

The Future Is Bright

The future is not limited to the fossil fuels and nuclear fission of the past century. Just as the last 1 O0 years have witnessed almost unimaginable advances in technology, the next 100 years will almost certainly be just as revolutionary. "[O]ver the next few decades, we are very likely to see all kinds of technological advances that have nothing to do with hydrocarbons, or solar, or wind, for that matter--advances that most of us, brought up in the age of oil, probably can't even imagine," writes journalist Paul Roberts in his book, The End of Oil.

In the fall of 1984, two chemists, Stanley Pons and Martin Fleischman, suspended a solid palladium electrode measuring one cubic centimeter in a beaker filled with a mixture of deuterium and lithium. Inserting another electrode, they passed a current through the mixture, forcing the deuterium into the palladium. One evening that winter (the exact date is unclear), the experiment appeared to have come to a violent end. To Pons it seemed as if there had been an explosion. The palladium block may have been vaporized. Or, parts of it, becoming superheated, melted through the beaker, the table on which the beaker sat, and, spilling onto the floor below, produced a hole four inches deep in the lab's concrete floor. Accounts of the accident differ, but it seemed as if something violently energetic might have occurred.

The chemists became convinced that they had achieved the impossible: a fusion reaction at room temperature. Fusion is the reaction that powers the sun and all other stars. If a fusion reaction occurred in the lab that night, as Pons and Fleischman suspected, it would mean a future of limitless, cheap energy. After a series of further experiments, the cold fusion duo went public March 23, 1989 to a chorus of worldwide acclaim and wonder.

In the end, attempts to duplicate the results proved fruitless. Cold fusion had not been achieved. Nevertheless, it is just this pioneering spirit that will likely usher in further advancements in energy technology. And fusion itself is not dead. Experiments with "hot" fusion, both in tokomak (magnetic) reactors and with inertial (laser powered) technologies, could still bring the power of the sun to Earth. But even the power of fusion would pale before the possibilities of another exotic, futuristic power: antimatter. The material that powers the fictional starship Enterprise on TV was actually first predicted based on work done in 1928 by physicist Paul Dirac. Though it has been the stuff of science fiction for years, antimatter really does exist.

Antimatter is, essentially, the same as regular matter. The only difference is that its charge is reversed. A normal, positively charged proton, for instance, finds its antimatter counterpart in a negatively charged antiproton. Similarly, the normal, negatively charged electron's antimatter counterpart is the positron. The existence of the positron was discovered in 1932.

Antimatter has immense potential for energy generation. Should a particle of antimatter encounter a particle of ordinary matter, the result is the complete annihilation of both particles and their complete conversion into energy. According to senior science writer Robert Roy Britt of Space.com, "A solar flare in July 2002 created about a pound of antimatter, or half a kilo, according to new NASA-led research. That's enough to power the United States for two days." So far, only small amounts of antimatter can be made in the lab using incredibly high-energy particle accelerators.

Still, there's no telling what these advances and others yet unimagined may bring. One thing is certain, though. The current energy crisis marked by the rapidly rising cost of petroleum will be like other such crises in the past. It will not be an indication that a resource is being depleted, because, like wood and coal of earlier days, oil continues to exist in abundance. The rising cost does mean, though, that vast opportunities exist for innovators and investors who seek to bring new technologies to market. The risks are high, but the rewards are great. If the past is a guide, the current, robust demand for energy will lead to a new age of energy innovation and abundance.