The Biofuel Mandate - Offsetting 25-55% of the Oil We Use for Transportation

I haven't discussed biofuels yet, partially because I'm pretty clearly excited about electric and PHEV vehicles. But it would be a mistake to think that electric vehicles or plug-in hybrids are going to come in and gain the whole market right off the bat. Their introduction may certainly be encouraged by rising oil prices, but you could say the same thing about biofuels. So what about biofuels? What does the market look like?

Well, it looks pretty huge is what it looks like. This article discusses the pending legislation that would mandate the use of 36 billion gallons of ethanol motor fuel by 2022. 36 billion gallons at a few bucks a gallon could mean this is a $100 billion market. And since 21 billion of those gallons are supposed to come from advanced biofuels (e.g. switchgrass, cellulosic, and my favorite, algae) there's a very large market that's being invented right now. That's a space I'd bet on.

That article also claims that 36 billion gallons equals 15% of U.S. gasoline consumption. My calculations show that it's actually between 25% and 55%, depending on how many gallons you can get from a barrel of oil. I've seen 19.5 quoted a lot of places, which would mean that 36 B gallons a year replaces 5 million barrels of oil per day. Since we currently use 9.2 million barrels/day for vehicle transportation, that would mean we're replacing 55% of the oil we use for transportation.



But this article from the AP claims that our 9.2 million barrels of oil per day equals 388 million gallons. That's more like 42 gallons per barrel of oil, which means biofuels would replace 25% of the oil we use for transportation.



Either way, biofuels will be a big market, and will go a long way toward getting us off foreign oil. If electrics and PHEVs can meet them halfway, the future is looking good on the independence from foreign oil front, and pretty darn good on the greenhouse gas front.