High Gas Prices Bring Opportunities for Alternative Fuel

TOM HUDSON: Tensions in Iran have U.S. consumers bracing themselves for the
prospect of $5 a gallon gasoline by as soon as this summer. But what
consumers see as a financial challenge, alternative energy producers and
their investors see as an opportunity. Diane Eastabrook is in Houston tonight where she has been talking to companies hoping to cash in on the global demand for fuel. Diane, how soon could we see some of these fuels come to market?

DIANE EASTABROOK, NIGHTLY BUSINESS REPORT CORRESPONDENT: Well, Tom,
wouldn’t it be nice if we could see them here this summer at the pump? But
I don’t think it going to happen that quickly. However some of these
companies think that they should be able to scale up fairly quickly.
One of the companies is Celanese (NYSE:CE), and Celanese (NYSE:CE)
makes ethanol out of any kind of carbon-based material like coal or natural
gas, whichever is more plentiful.

STEVE STERIN, PRES. & CEO, CELANESE: Today coal is plentiful in many
countries in Asia. Take China as an example. There’s plenty of coal in
China, but not very much oil. And they’re looking for ways to diversify
their energy source. So China could be a place where coal could be used.
The United States, we have a plentiful amount of natural gas, so
natural gas could be a consideration in the U.S.

EASTABROOK: And carbon-based materials aren’t the only option. In
fact, another company called Cool Planet Energy Systems is making fuel out
of plant waste like corn cobs. And that product can be blended with
gasoline or it can be used by itself.

MIKE ROCKE, VICE PRESIDENT, COOL PLANET ENERGY SYSTEMS: In a high-
compression engine, it would run great. On a standard car you’re wasting
some of the energy and some of the octane, but it will run fine today in an
existing automobile.

EASTABROOK: And other companies are using a combination of bio-
organisms and photosynthesis. And there’s actually a company here that
should very quickly be able to produce fuel out of natural gas, which is
very plentiful here in this country. Tom?

HUDSON: Diane, with all of these alternatives out there, biomass,
cellulosic ethanol, what about the old-fashioned corn-based ethanol that
held so much promise about four years ago?

EASTABROOK: Well, they are still producing a lot of ethanol in this
country. In fact, last year the ethanol industry produced about 13.2
billion gallons of ethanol made out of the corn. And of course you don’t
have to make ethanol out of just corn; you can make it out of sugar and a
lot of other things as well.

HUDSON: One of the things that has obviously helped out ethanol
through the years are federal subsidies. What about subsidies for some of
these other alternative sources?

EASTABROOK: Well, the companies that were here today said that they
would like subsidies but they certainly aren’t depending on subsidies. In
fact, a lot of these companies are getting private investors, and a lot of
the oil companies are investing in these companies too.

HUDSON: Trying to spread some of that risk around. How about the
cost, though, not only the cost to produce the energy, but what would
probably be the cost to consumers if it is — if it winds up in a pump like
the one you’re next to?

EASTABROOK: Well, some of this stuff is actually more economical to
make than regular corn-based ethanol. In fact, the it folks at Celanese
(NYSE:CE) said that last year when ethanol was selling for about $2.50 a
gallon, the product that they could make they could sell for about $1.85 a
gallon, so it is significantly less — some of it is significantly less.

HUDSON: Finally, Diane, what about the environmental costs? Not only
the carbon footprints but also the amount of energy these alternative
sources can provide?

EASTABROOK: Well, and that’s a toss-up, it just depends on what kind
of fuel you’re talking about. The ones that are made out of carbon-based
materials like coal and natural gas, those are a little bit more, shall we
say, maybe a little bit more dangerous to the environment than those that
are made out of, you know, plant and biomass.

HUDSON: Diane Eastabrook tonight at a place where lots of us have
been seeing sticker shock lately, at a fuel pump in downtown Houston.
Diane Eastabrook, thanks.

EASTABROOK: Thanks, Tom.


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