Too Late For OPEC & Conventional Oil.

The quadrupling of conventional oil prices in late 1973 forced consumers to resort to technology and the cost of producing such oil in non-OPEC areas was reduced considerably. The rise in conventional oil since late 2002 has accelerated the pace of technological advances for alternative fuels. In some parts of the world, it is already too late for conventional oil. Soon it will become too late in other parts of the world, as demand for a wide array of alternative fuels is rising.

The shift to alternatives is becoming more ingrained in the American electric power grid and in middle-class homes as technologies improve. Toyota has predicted the sale of 100,000 of its Prius hybrid cars in the US next year. Even solar panels and windmills are showing up in more suburban neighbourhoods and other unexpected places. The following are some examples:

Gasoline marketers in Denver, Seattle, and other cities are blending ethanol into their gasoline. This is not for environmental reasons, but because now it is cheaper than some conventional oil-based additives.

A Louisiana entrepreneur wants to put windmills atop old conventional oil and gas rigs in the Gulf of Mexico and send the power ashore.

For the first time across the US, Home Depot will be selling solar devices alongside its plumb bobs and Behr paint.

Although alternative fuels still make up a small fraction of US energy supplies, they are growing at the rate of 30% per annum compared with 4% for conventional oil and 6% for natural gas.

New projects depending on alternative fuels are especially popular among American states with governors opening up new wind farms and farm-belt ethanol refineries. The cost of many of the alternative fuels is approaching that of oil and natural gas.

The new competitiveness, combined with congressional renewal of a key tax credit, has occasioned the signing of contracts to build everything from new wind farms in Iowa to solar farms on top of FedEx terminals.

George Sterzinger, executive director of the Renewable Energy Policy Project in Washington, was on Oct. 22 quoted by the Christian Science Monitor (CSM) as saying: "This is a period of high fossil-fuel costs and low-interest rates, which gives renewable energy an advantage unlike it's had over the last 20 to 25 years. With aggressive development and a reduction in the amount of LNG either through taxes or portfolio standards, by 2020 renewable power could easily be 15 percent of the electric energy produced".

However, the US will lag behind Europe, which has plans to produce 10% of its power from alternative sources by 2010 and 20% by 2020. Denmark, which sits on the windy North Sea, leads the world with 20% of its electricity currently coming from wind farms. In 2005, that will increase to almost 30%. If prices of conventional crude oil remain high through 2005 and 2006, the percentage points for the growth of wind energy supply will be higher.

Both Germany and Japan are taking much of the world's supply of solar panels. Japan's solar use is growing three times as fast as that of the US and Germany's twice as fast. The CSM quoted Mike Eckhart, president of the American Council on Renewable Energy in Washington, as saying: "In Germany, they are literally paving farmlands, blocks of land as large as 10 city blocks, with solar panels".

Demand for solar panels in the US is strong. Rhone Resch, executive director of the Solar Energy Industries Association, estimates individuals who want to buy solar panels might have to wait as long as three months to get them.

Canadians are taking notice of the potential for wind power. For instance, earlier in October, Hydro-Quebec, the giant utility in Canada, announced plans to buy up to 1,000 MW of electricity - enough to heat 200,000 homes - from eight windmill projects in the province. Hydro-power will balance the wind-produced electricity, which is not constant, once projects are on stream between 2006 and 2012.

Some of the shift from conventional to alternative sources of energy has been the immediate result of the volatility of oil and gas prices since late 2002. Steve Zwolinski, chief executive officer of GE Energy's wind energy division in the US says: "What's changed is energy security and fossil fuel volatility". However, he adds: "This is not just a knee-jerk reaction to a short-term price change, but it's people looking at energy reserves and environmental balance and the need for emerging economies to supply their growing cities".

Oil companies in the US are using ethanol to raise gasoline supplies. Today, ethanol, which uses 12% of America's corn crop, is blended in 30% of the US' fuel. Demand for ethanol is so robust that 12 new plants are under construction and many more are searching for financing to join the 83 plants already in operation. Robert Dinneen, president of the Renewable Fuels Association in Washington, was quoted by the CSM as saying: "It's not just a Midwest fuel anymore". In New York State, terminals are blending at a 10% level, double what is required for environmental standards. Dinneen explained: "The reason is it is more cost effective than other petroleum enhancers".

FedEx has recently announced it would add solar cells to its Oakland Airport facility. It expects the cells to provide 80% of its peak load requirements, says Ryan Furby, a company spokesman. FedEx has also rolled out more hybrid vehicles that use a combination of diesel engines and lithium batteries, increasing fuel efficiency by 50% and reducing greenhouse gas emissions.

The US Postal Service has announced that it would add solar panels to one of its facilities in Sacramento, California. The state company will combine the solar panels with an energy-management programme which includes new lighting and improved compressors for its heating and cooling system. "They will lower their power consumption by 33%", says Jim Davis, president of Chevron Energy Solutions, which has the contract to work with the postal service. Chevron will work with the postal service on seven more facilities in Northern California. Eventually, the programme will be implemented across the entire USPS system, says Davis.

Some consumers, who have been reluctant to shift to renewables, are now doing so as well. Green Mountain Energy, which offers consumers the opportunity to shift to non-petroleum fuels, always thought its product would appeal to environmentalists. "Now", the CSM reported, "the company says it's soccer moms who are buying their product". The CSM quoted Tim Smith, a vice president of the Austin, Texas, green-energy company, as saying: "They want a safer future for their kids and kind of view it as a way to do their part".