Its April 1. We’re the fools.

KC Star Midwest Voices April 1, 2011

by Robert Anderson

Over the last two months we’ve seen turmoil erupt in several Mideast autocratic regimes: Algeria, Egypt, Yemen, Bahrain and Syria. But where has NATO and the Obama administration chosen to intercede? Why the big oil exporter, Libya, of course. We’ve got no apparent problems in sub-Saharan Africa or a nuclear North Korea, but if there’s a oil producer with disgruntled masses, its ‘green means go’ on no fly zones and cruise missile attacks. Just like in Iraq, where we moved in and immediately started building a $1 billion Baghdad fortress embassy, permanent airstrips and military bases, oil is fueling the western interventions.

We probably don’t need bases in Libya, due to an already extensive network of ‘em in the Mediterranean, but we sure as heck need that oil!

Let’s revisit six weeks ago when the Libyan disruptions started. U.S. oil futures markets were hovering around $95/ barrel.

The Saudi/U.S. PR machines shifted into action. The contention was made that OPEC has 4.65 million barrels a day of spare capacity. The Saudis were supposed to have over 90% of this.

‘Don’t worry. Be happy! The Saudis have it covered. There’s no such thing as geologic depletion in Saudi Arabia. They have more than 4 million barrels a day of spare capacity. All they probably need to do is flip some oil spigot switch. We really don’t know how it works there.’

‘But didn’t they tell us this in 2008 when oil prices zoomed up past $140 / barrel? They said they had lots of spare capacity but additional output failed to flow. In fact, Saudi oil output actually dropped by 1 million barrels a day from 2004 to 2008. That was a big cause of the price escalation.’

‘No, don’t look back to that. The Saudis are our allies. Even our own U.S. Department of Energy EIA (Energy Information Administration) has confirmed this Saudi spare capacity figure.’

‘But where does the EIA get this info?’

‘The Saudis tell ‘em’

‘But surely there’s some type of external independent verification. Journalist check this out, right?

‘Nope. The Saudis are a closed society. They don’t like Westerners snooping around. They’re our allies. We believe ‘em.’

‘So here we are 6 weeks later with North Sea Brent prices over $117 / barrel. The Libyan situation has spiraled down into a stalemate. We’ve lost 1 million barrels a /day of sweet crude capacity from there. It’s a good thing the Saudis have cranked up their output and delivered some of this +4 million barrels/ day of spare capacity, right?’

‘Well not exactly. Its actually about like what happened in 2008. March OPEC figures are out. The Saudis have  increased output by about 300,000 bls / day since Feburary. They’re up to 9 million! They can still take it up past 12! But unfortunately, their internal consumption is way up so their net exports have actually dropped since the start of the year. But the good news is they’re making a ton of money. With these oil prices over $100/ barrel OPEC will make over $1 trillion dollars of annual revenues this year. That’s going to be a record- even higher than their 2008! Wow, they sure like post-peak oil economics! The Saudis will have plenty of money now to take capacity up to 15 or 20 million barrels a day! There’s no such thing as geologic depletion. There aren’t any limits to economic growth. The economists have told us these high prices are going to bring on more energy supply! Keep driving those SUVs, Americans! And keep shipping your military might and societal wealth over to us. There’s no such thing as peak oil. Global oil reserves are extensive. The major oil companies and the Saudis have you covered.

‘Its April Fools Day today, isn’t it?’



With our current approach, oil won’t end well.


Special to The Star

Published as a Guest Op/Ed piece March 19, 2011

Doesn’t it feel like something’s seriously amiss in terms of oil supply, oil economics and our economy?

Even before the Mideast turmoil last month, futures crept past $100 a barrel, so uncomfortably familiar to 2008. It was another crude oil run-up into triple digits. Inflation ripples hit gasoline, food, almost everything.

It really mucked up our spending, from mortgages to credit card debt. Pretty soon we were in a full blown financial crisis. Three short years later, it’s déjà vu all over again. Oil prices are headed up and there don’t seem to be viable solutions. What gives?

Conventional economics dictate high prices should curtail demand and bring on more oil supply. But unfortunately, we haven’t seen either. Although developed world economies sputter, global oil consumption is trying to climb. But it can’t.

Even with record high oil prices, global output has plateaued at 84-86 million barrels a day since 2005. Despite talk of excessive speculation, major oil shenanigans and Mideast flux, the main reason we are on the verge of a problematic oil crunch is the world’s major oil fields are starting to deplete. The average giant oil field — one producing over 500,000 barrels a day, those providing 25 percent of our global supply — is 55 years old.

Sure we’ve seen new oil plays developed. West Africa has been especially prolific. The former Soviet republics are pumping oil to the west. And right here in the continental U.S. the Bakken play in North Dakota has been the biggest oil development since the giant field of Prudhoe Bay was discovered in 1968. Bakken is an oil shale deposit with 3 – 4 billion barrels of proven oil reserves. This newly used fracking technology will also spawn other high reserve, low output plays in the U.S. and elsewhere.

Each year, oil finds have gotten more complex, deeper and much smaller. To supply a voracious global consumption, it takes big wells.

With a few exceptions, we haven’t discovered giant new oil fields anywhere in the world since the 1960s. Most domestic oil plays, like Bakken, have an average well size of less than 3,000 barrels a day. Collectively, Bakken might (optimistically!) do 1.5 million barrels a day by 2020.

Yet, global oil depletion rates from the old giant oil fields will probably mean a drop of 4 million barrels a day each year, according to petroleum geologists (Don’t ask the economists!). Will there be enough fresh oil to offset these giant field depletion rates? The unequivocal answer is no. No way. We are now up against the oil supply wall. Next comes the ugly drop.

Giant oil field development generally takes six to eight years from discovery to production. So we pretty much know what’s in the new oil field pipeline between now and the end of this decade. The same goes for any alternative energy with petroleum-type scalable potential is at least a decade off. Do the math: It’s not going to add up.

Can we muddle through? The idea is that the crunch will hit and we’ll be forced to adapt. Everything will pan out. But I’m not so sure.

We aren’t ever going to run out of oil. But for the first time in more than 100 years we can no longer grow oil supplies. Maybe economists don’t think this is a big deal or believe the “invisible hand” of economics will seamlessly move us to some post-petroleum solution. I no longer buy into this faulty doctrine. Keynesian economics can create dollars and liquidity, but it cannot create oil or BTUs of energy.

When oil depletion really starts to bite, the economy stutters. If we can’t grow the economy, we can’t service all this excessive societal debt. Our wealth transfers to very unsavory regimes will grow. The propensity for oil wars escalates.

We’re going to find out the hard way that economics should be subordinated to energy. It’s not the other way around.

Economists project continued oil supply growth that ain't gonna happen!

Read more:

Robert Anderson of Mission is a Kansas City-based independent oil market analyst. He can be reached at or by mail at Midwest Voices/Editorial Page, The Kansas City Star, 1729 Grand Blvd., Kansas City, MO 64108.

A dirty little oil market secret

Published Feb 25 2011 by Midwestern Voices forum, Kansas City Star, and The Energy Bulletin Archived Feb 28 2011
by Robert Anderson

Oil markets are settling down this morning as analysts report Saudi Arabia has boosted their oil output to over 9 million barrels / day.

Holy smokes. Are we gullible!

Have the Saudis really boosted oil output?

Fresh Saudi oil output or are they just tapping storage?

In spite of this short term respite, it’s becoming increasing evident; we are in one heck of an oil related economy crunching quagmire. Oil prices are moving to catastrophic levels and there doesn’t seem to be much we can really do about it. Contrary to what’s been foretold by economists, new energy supplies aren’t gushing into these higher oil prices. Nor is it really curtailing the global demand.

So how did we get into this crucial societal dry hole?

I’ll contend we’ve been led astray by a false faith in economics, a misunderstanding of basic geologic depletion and an intentional false yarn spun about prolific oil supplies.

Although most think oil producers withhold supplies to evoke higher prices, it might well be that oil producers- including Saudi Arabia- are currently producing flat out. There’s just no more there! This is exactly the definition of ‘peak oil’. With the world’s voracious consumption of +87 million barrels / day, we are now up against the limits to growth. Oil production might not ever be able to expand from here. It’s either a downhill slide, or it soon shall be. Sure there will be new oil fields brought on line but this fresh output won’t even counter the current depletion rates of existing aging fields. After all, the average age of the world’s giant oil fields (+500,000 barrels/ day) is 55 years! We aren’t out of oil, but we are out of the capacity to produce more.

How did we miscalculate so badly on something so crucial?

One of the main reasons was oil producers wildly exaggerated their reserves and future oil production potential. If Americans could be led to believe that the world is capable of producing 120 to 130 million barrels a day, as was projected on many former reports, there would be no need for oil conservation policy. In fact we’ve seen wildly overstated oil production projections from our own U.S. government Department of Energy EIA (Energy Information Agency) for years.

Americans we’re encouraged to buy and drive bigger more-profitable-to-produce vehicles. Prudent mass transit projects were depicted as silly. The drive-more, consume-more American dream was actively promoted.

BIG OIL’s escapades shouldn’t surprise us. But why did the U.S. media and even our Department of Energy EIA play right along with this dangerous & indubitable charade?

It’s the same reason they went along with deregulating financial derivatives, Triple AAA ratings on junk paper or the Enron debacle. Big bonus pool money is now running the show. And in this case, its BIG OIL – both the western majors and foreign producers, especially Saudi Arabia. And just like the financial meltdown in late ’08, main street America is going to bear the brunt of this ‘miscalculation’. The corporate Fat Cats will reap the resultant unprecedented windfall$. But this will be much worse than the financial debacle of ’08 because these ill gotten gains will also be flowing overseas to the Mideast, Venezuela, Russia and a whole host of adversarial regimes.

If you don’t want to take my word on this, let’s go back to the important archived threads from my peak oil message board. Tom Whipple wrote a piece entitled The EIA. The Greatest Failure of Them All?

Who is Tom Whipple? Retired CIA analyst who spent his whole career studying energy matters. I love retired guys. They can be such straight shooters!

“The only bright spot in all this official nonsense is that it is so out of touch with reality it can’t go on for much longer. Some day in the next few years, it will become so obvious that projecting continually increasing oil and gas production and steady to lower prices is as unrealistic as the concept of “winning” in Iraq.”

Ok that was Dec of ’06. Guess what? That ugly day is now here!

And here’s another Dec of ’06 piece on the fallacy of our EIA from a French Professor of Astrophysics entitled Tracking the EIAShort Term Forecasts

It’s even got that snazzy graphic that shows how the EIA pumps out bogus projections that never really panned out. But they didn’t stop them from doing it again and again. And the media played right along, and still does.

Back then I added the following commentary:

*“Poster’s Note: The EIA oil and energy growth projects are finally being refuted by actual production stats. The conventional oil peak -or plateau- has arrived. This is it. The limits to growth.

The Mideast producers will increasingly recognize that, unlike the 80s, there isn’t much non-OPEC oil to develop and flow into the higher economics. We’re initially seeing it from Iran but others will follow. Why max out output for fiat currency to help theUS? But the US wont put up with any “anti-west” production curtailments. Soon the US (and China) will recognize the importance -but not the folly- of militarily securing the remaining prolific Mideast oilfields and the big 21st century oilwar has begun. Why do you think we are increasing troop levels in Iraq when +70% of Americans and Iraqis want US troops out?

Its important to recognize how these bogus EIA oil growth projections have contributed to this ensuing no-win oil war. The triad of the Saudis, major oil and the US gov have fostered the BS prolific oil reserve and growth projections that have precluded saner energy policy and adequate preparation. We’ll all now pay the price.”*

Now over 4 years later, the false assessments still flow. Its tough to refute the fact that decades of false optimism has now been undermined by actual production stat reality. So now the question becomes…

Why do we still believe them?

If you’re smart, you won’t!

Energy Bulletin Editorial Notes:

Robert Anderson has been publishing pieces in the “Midwestern Voices” discussion forum at the Kansas City Star.

He’s working towards a regular syndicated column about peak oil/ energy. Anderson’s background is in Big Oil. He was a Refinery Rep and a Midcontinent Marketing Manager for Koch Refining. He also ran an oil trading firm at the KC Board of Trade with 350 industry clients (mostly traders and oil executives).

-BA (no relation)

The Saudi oil shock is here part II

Midwest Voices contributing columnist: Robert Anderson

The mainstream media is missing it again. Everyone is touting Mideast unrest and export disruptions in Libya for this current oil spiral, that’s probably only begun its blast off mode. But as I pointed out in Saudi Oil Shock Part I, OPEC exports dropped 387,000 bls/day in December BEFOREAlgeria, Egypt or any of this Mideast unrest even started.Its 2008 all over again. But you’d think we would have learned something from this energy dry hole we’ve descended into. I’m reading press reports from nearly everywhere that reassures them public that OPEC has spare production capacity of ‘4.65 million barrels a day, or about triple Libya’s production.’ Over ninety percent of this is supposed to be in Saudi Arabia.Saudi Arabia is a closed society. No one audits or verifies thier claims. If you are an objective journalist you don’t get a visa to enter. If you speak out against that regime, it gets much worse.

What’s becoming increasingly apparent- not just through Wikileaks- but through actual oil production stats is the Saudis aren’t credible with their claims. Aren’t journalists supposed to verify such important contentions that are pivotal to the health of the entire western economy? Oh, that’s right. They can’t. Only the Saudis and ARAMCO (the Saudi national oil company) know. OK. If you can’t verify at least quit parroting the disinformation.

Its becoming increasingly evident that the Saudis can’t produce more. There’s no spare capacity. For decades, they’ve claimed they can produce 15 ,20, 25 million barrels/day. Our Department of Energy EIA division would always regurgitate these false claims. They’re totally bogus. We’ve been duped by Mideast oil producers and major oil. Can you believe it? You’d better. Too bad its too late to rectify.

To support this scary contention let’s go back to 2008, the last time oil prices moved up past $100 / barrel. We got the same false reassurances from the Saudis that there’s no problem and plenty of spare capacity. In truth, it was their 1 million barrel / day drop in exports 2005 – 2007 that helped spawn the crisis. Of course, our crisis is their windfall. And we now know via Wikileaks that a Saudi windfall is also a al-Qaeda and Taliban windfall.

Now that 2008 is behind us, lets go back and see what actually happened with Saudi output since its déjà vu all over again. Saudi Arabia oil output peaked in 2005, and although there’s been a few fits and starts, the trend is downward.

Saudi oil output and projections

And that Bloomberg report that came out Saturday which indicated Saudi December exports (not output) dropped down to 6 million bls / day lends loads of credibility to the future downslope projections on the chart above.

If you want to read more on the source of this chart, including peer review assessmernts of this dire Saudi oil depletion situation, here’s the link:

Saudi Arabia’s Crude Oil Production Peaked in 2005

Batten down the hatches. We’ve been duped. And the overstatement of oil production potential was willfull, deliberate and duplicitous.

Read more:

The Saudi oil shock is here!

Midwest Voices contributing columnist: Robert Anderson

As anticipated, oil prices are moving higher in early trading this Monday. The U.S. is getting somewhat of a reprieve because every crude in the world is trading over $100/barrel expect our futures market NYMEX WTI and some of our other domestic grades. Many U.S. crude economics haven’t breeched $90 yet. Our economy is just too sluggish and midcontinent WTI delivery point is oversupplied. But don’t get smug. Our crude day of reckoning is upon us.With these high prices, it’s a strong incentive to produce more oil, right? Wrong!Check out this Bloomberg story that came out Saturday:

OPEC Oil Exports Fall 2% as Saudi Shipments Decline

Take note that these are December production figures. So its from a time frame before this Mideast turmoil began.

“OPEC’s oil exports fell 2 percent in December from a month earlier as Saudi Arabia, the world’s largest exporter, reported a decrease of 4.9 percent. Total exports by the Organization of Petroleum Exporting Countries, excluding Algeria and theUnited Arab Emirates, fell by 387,000 barrels a day to 19.4 million barrels a day, the Joint Data Initiative website, which compiles data supplied by governments in an attempt to improve transparency, showed today. Saudi Arabia’s exports fell to 6.05 million barrels a day in December from 6.36 million in November even as Saudi production rose to a two-year high of 8.37 million barrels a day, JODI said.”

December is the start of the northern hemisphere winter and the strongest seasonal demand time frame for oil. So OPEC and the Saudis were dropping output in spite of a strong economic incentive to produce more.

One of 2 things are at play:

1) Matt Simmons, energy investment banker and author of Twilight in the Desert. The Coming Saudi Oil Shock and the World Economy, was right and geologic depletion is starting to bite hard in Saudi Arabia. They can’t pump more. Five giant Saudi oilfields account for over 90% of their output. Their average age is 55 years! Their last major oilfield discovery was 1989. According to Matt Simmons, ‘No one audits Saudi claims. We’re depending on an illusion.’ So with Saudi exports down to only 6 million barrels a day the prolific Saudi oil production potential is finally being disclosed as a fraud. We read it on Wikileaks. We’re seeing it now!

2) Saudi King Abdullah has been quoted as saying they aren’t going to max out oil output for the west. They are going to save some of this precious resource for future generations. Why max out output for a fiat currency to the detriment of reservoir longevity so Americans can drive their gashog SUVs?

With either case, we have an economy disrupting calamity on our oil soaked hands. Oil prices are headed higher. This economy can’t take it. Too bad we didn’t learn anything from the 1970s oil shocks. To bad we listened to those high falutin economists, oil execs and politicians who said we couldn’t afford prudent energy policy, and the free market would take care of things. Yeah, it will. It’ll take very good care of Mideast oil producers, al-qaeda, and major oil company bonus pools.

Read more:

The Dangerous Deficiency of Oil Economics ~Published as a Guest Op/Ed 6/10/08

Published as a guest editorial in the Kansas City Star by Robert Anderson~ June 10, 2008

With oil prices spiraling up into catastrophic levels, its time to come to terms on some dire oil market fundamentals.

Due mainly to excessive fuel consumption, we have grown past the ability of the system to supply us.

Peak oil is a pending reality. It’s not a contrived shortage or a conspiracy. We are going deeper for smaller oil deposits. We aren’t discovering giant new fields like we did back in the ’50s and ’60s. And many of those are now starting to deplete.

Our current system of economics won’t solve this problem. In spite of the sky high prices, oil demand isn’t dropping globally and production is flat to lower.

In fact, our faulty economic approach got us into this energy quagmire. We’ve always subordinated energy to economics when it should have been the other way around. These current lofty energy prices are telling us that our economics of plenty are now getting trumped by basic geologic depletion.

To an economist, future dollars are always worth less because you can invest dollars and earn interest. The same applies to oil property development where taxes, interest, and other overhead expenses are incurred. You don’t want expenses going out instead of oil income coming in. So the value of future oil production gets discounted over time. This applies to little stripper wells that dot Kansas or to huge offshore rigs. Consequently, economics dictate oil should be explored, developed, produced, monetized and consumed ASAP.

There’s no incentive to retain and conserve our valuable energy resources. In fact, via tax depletion allowances, we accelerated the draining of our oil into very cheap pre-peak economics. We’ll pay more from here on out because we paid too little in the past. Cheap oil and even cheaper future oil value projections facilitated too much consumption and depletion.

Contrary to conventional economics, post-peak oil production is actually worth vastly more than pre-peak output. But this core fundamental was not even on economists’ radar screens. To them, oil was no more important than any other economic input variable. Oil was incorrectly deemed expendable and replaceable. So we developed, pumped and consumed lots of oil at economics that were too cheap and didn’t account for the true future value or pollution costs.

U.S. oil production peaked, in 1970 at less than $4 per barrel. Using the same type of faulty economics, the U.K drained most of its North Sea supplies into sub-$20 per barrel economics. We both will now import oil at $130-plus. How prudent was this?

Our economic signals encouraged maximum oil output and consumption because economics dictated some other energy supply would flow into the inevitable higher prices. It hasn’t, and it might not.

The much-heralded invisible hand of free markets has delivered too-rapid energy resource depletion, sky-high peak energy prices, pollution, oil wars and huge wealth transfers to very unsavory regimes. Unfortunately, the imperative energy solution seems to be invisible, as well.

We are bumping up against the limits to growth. We need to start acting like it.

Oil Is Not Well~KCSTAR HotFuel Rebuttal Guest Editorial 8/30/06

Guest Editorial by Robert Anderson published August 30, 2006 in the KC Star

Instead of getting hot under the collar about the dubious issue of ‘hot fuel’, it’s imperative to focus and react to the more substantial dire fuel and energy issues at hand. This country shouldn’t and won’t retrofit all retail gasoline dispensers for temperature compensation to the fuel consumer detriment of the entire northern half of the country where fuel temps average less than 60 degrees. We’d be fiddling with a net fuel pittance while our Romanesque energy policy burns.

We’ve been lulled into energy policy complacency by a faith in free market economics while unfolding Mideast oil wars, basic geologic depletion and a dearth of recent substantial oil discoveries are signaling dire consequences on the societal track ahead. In the past our bountiful lifestyle has been predicated on cheap energy, which in turn has contributed to the unprecedented post-WWII economic growth. But there are too many indications that this is changing. If we can’t grow energy supplies, can we continue to grow the economy? In turn, can we service all this societal debt? Are we underestimating the propensity for oil wars as growing economies scramble for what’s left?

U.S. oil production peaked in 1971. At that point we had consumed roughly half of our multi-million year hydrocarbon legacy, and we’ve since done a fatuous job of depleting much of the rest. In spite of the incentive of high oil prices, no government policy or advanced technologies will stop this domestic oil production slide.

So we now import close to two thirds of our oil from: 1) Canada, 2) Mexico, 3) Saudi Arabia, 4) Venezuela, 5) Nigeria, 6) Iraq, 7) Angola, 8 ) Algeria, 9) Ecuador, & 10) Russia. With the exception of the first one, are any of these reassuring? A majority of Mexico’s oil has come from their offshore field Cantarell. It’s now depleting at double digit rates. Saudi Arabia is about tapped out according to energy investment banker Matt Simmons (his book Twilight in the Desert is highly recommended). Then we have Venezuela, Nigeria and Iraq. Need I say more? If this isn’t disconcerting enough, consider the booming populations of nearly all countries on our oil import list. We’ve all heard the term ‘peak oil’ but ‘net exports’ are an even graver oil market fundamental. Current statistics (not projections) indicate global oil exports are falling 3 to 4 times faster than oil production -down 1.3% since the start of the year.

So the next time you’re lamenting the high cost of gasoline while you are fueling your SUV with non-temperature corrected fuel, my advice is get ready for much worse.

Overdue For an Oil Change ~ KC Star Guest Editorial ~ November 26, 2001

by Robert Anderson Kansas City Star Published November 26, 2001 [With oil prices @$16.50/ barrel]

Although no one knows exactly when, there’s probably a disruptive energy crisis looming on our horizon. I realize our current languishing oil and gasoline prices belie this assessment, but that’s the crux of our problem. This cheap fuel doesn’t adequately reflect our vulnerability to Mideast disruptions or signal the coming slide of non-OPEC production due to basic geologic depletion fundamentals.

We found most of the easy, sizable deposits 30-plus years ago. From here on they get a lot harder, smaller and deeper. In fact, at some point in the not-too-distant future, we’ll expend as much energy exploring, producing refining and transporting oil as it yields. In the meantime, the world is consuming oil at four times the rate of new discoveries.

Fifty years after President Eisenhower limited Persian Gulf oil imports to avoid having our troops sent there, a succession of presidential administrations of both parties has risked our soldiers, our prosperity and our environment on the shaky foundation of a few oily gulf despots.

Failure to account for our military defense of the Persian Gulf in oil and gasoline prices prevents us from considering cost -effective safer and saner alternatives. Our failure to plug in the true environmental costs of excessive oil consumption binds us to this energy quagmire that cannot possibly end smoothly.

Accounting methods, futures markets, big oil lobbies and their legislation discount the future value of oil, and that encourages the maximum consumption of a limited precious resource. We are in dire need of just the opposite- financial incentives for conservation along with viable supply alternatives such as agriculturally produced biofuels.

Although the United States demonstrated we are not to be confronted on the battlefield, our past four economic slowdowns demonstrate how economically vulnerable we are to spiraling oil prices.

At some point, none of us should be surprised if there’s a terrorist shift to oil infrastructure targets. After all, the higher oil prices surge, the greater will be the wealth transfers from the West to the Muslim world. And don’t look for fresh U.S. or non-OPEC production to gush into the higher economics this time around. We’re spent.

Of all exploratory wells drilled since the oil industries inception, nearly three-quaters have been here in the United States. We’re nearly 30 years past our oil production peak. No domestic drilling program or sky-high oil economics will alter this dismal reality. Like the belated implementation of all the airport security, are we going to wait for a big calamity before we take action?

One need not look any further than across the Atlantic or back through history to see a tangible, safer and cleaner alternative to increasing slates of Mideast oil.

Europe is already moving aggresively toward biofuels. They have proposed European Union legislation that will require 2 percent of their fuel will be derived from agricultural sources by 2005. They’ll subsequently ratchet it up to more than 20 percent by 2020, which will drop their greenhouse gas output close to similar percentages.

Although Americans are familiar with ethanol as a gasoline additive, biodiesel provides an even more attractive renewable alternative in terms of production simplicity, pollution and net energy gain (energy gained after subtracting energy inputs).

Biodiesel is a domestically produced, nonpetroleum motor fuel derived from agricultural oilseed crops such as soybeans, sunflowers, hemp, canola or even used fryer grease, It can be blended with petroleum diesel in any percentage, without any changes of our fuel distribution system or diesel engine modifications. It has a higher cetane rating (similar to octanes in gasoline), is biodegradable, has better lubricating qualities and is much cleaner than regular diesel.

In fact, when Rudolf Diesel invented the internal-combustion engine that bears his name, he fueled his inital prototypes with straight peanut and other vegtable oils. He was quoted as predicting “plant oil” fuel would replace the burgeoning oil and kerosene market of the day.

I’m willing to bet that Mr Diesel will eventually be proved correct. He was just 100 years off on his timing. Let’s not wait for the inevitable oil market calamity to get rolling in this direction.

Robert Anderson is a former marketing manager for Wichita-based Koch Refining and a former owner and founder of Tradewind Petroleum Services. He currently is a Kansas City-based independent petroleum economist.