Peak Oil
Peak Oil is a proven theory that stipulates that oil (a finite resource) will have a beginning, middle and end of production cycle vis-à-vis extraction/depletion processes. Its first proponent was Shell Oil geologist M. King Hubbert who mathematically modeled existing production in the United States the results of which are graphically represented by a bell curve.

Remarkably, Hubbert predicted in 1956 that U.S. peak oil production was set to occur within a 5-year window 1965 -1970.  Ridiculed by his peers at the time, Hubbert would of course be proven correct as American oil production peaked in 1971.  Due to the rear-view mirror effect of the Peak Oil phenomenon, however, peak was not actually recognized by the industry until 1980.

Thus, from 1971 onwards, no matter how many wells were drilled, no matter how much money was allocated for exploration or what new technologies were utilized, the United States oil industry would never produce more oil than it had prior to peak.  Not even the massive oil discoveries found in Alaska’s North Slope or the Gulf of Mexico could offset peak decline.

In lay terms, the United States of America has been slowly running out of oil for the last 36 years, hence the necessity for increased oil imports from foreign sources which now approximate 60-70% of total oil used in the U.S. today.  

Global Peak Oil
M. King Hubbert did in fact apply his theory to global oil production - predicting that the world would reach peak production at the dawn of the second millennium.  The oil crises of the late 70s/80s, however, prompted dramatic improvements in conservation practices, energy efficiency and increased oil exploration, thus Hubbert’s prediction was offset.

The question though, is offset by how many years?

In 2006, 54 of 63 oil exporting nations reached peak production and entered a permanent state of decline, leaving the bulk of world’s oil supply in the Middle East.  To the chagrin of many oil analysts, double digit rates of decline are being observed where it is least expected e.g. the North Sea.  Even the largest most productive fields in the world such as Burgan in Kuwait and Cantarell in Mexico are not immune and rumors abound as to whether or not Ghawar, Saudi Arabia's king of kings (with a water cut of some 9.5MM bbl/day) has or is, on the verge terminal peak decline.   

OPEC meanwhile is beset with 2 very fundamental truths that do not bode well for Peak Oil naysayers. The first, is the 300 billion magic barrels of oil created by OPEC members in the late 80s as a pretext for export a location quotas. The second, is the open admission in 2006 that the organization no longer has the capability to increase production to keep up with demand.

Globally, oil production has stagnated at 85MM bbl/day despite expectations by CERA, EIA and IEA, that both OPEC and non-OPEC production will somehow meet future demand in the neighborhood of 120MM bbl/day by 2025. To put this into perspective, said organizations pressume that a minimum of 3 new KSAs worth of oil will not only be found, but that each will be producing upwards of 10 MM bbl/day in less than 20 years time!

Compounding matters further of course, is the fact that the best oil, the light sweet crudes; the easiest and least expensive oil to find, produce and refine are essentially the low-hanging fruit that has already been picked.  As global peak progresses, remaining oil deposits will be of inferior quality i.e. sour or heavy variants that are costly to discover and produce in increasingly desolate and unstable locales.

MTBE
Since the late 70’s, MTBE has been both the legislated and preferred oxygenate of choice for today’s transportation fuels due primarily to MTBE’s blending properties.  In 1999, however, the EPA’s Blue Ribbon Panel on Oxygenates in Gasoline concluded that MTBE was a ground and surface water contaminate; the use of which should be reduced substantially if not eliminated altogether.  Today, 17 states have effectively banned the use of MTBE as a motor fuel oxygenate and replaced it with ethanol.

RFSP
The Renewable Fuel Standard Program -incorporated under the U.S. Energy Policy Act (2005) requires a substantial increase in the volume of renewable fuel usage.  Beginning with 4.0 Billion gallons for calendar year 2006, the RFS Program mandates an increase of renewable fuel usage to 7.5 Billion gallons by 2012.  It is a foregone conclusion that the ethanol industry will be called upon to meet if not exceed these goals.

Security
Dependence on imported oil is a key component of a nation’s overall energy security.    Increased demand and dwindling domestic supply necessitates a steady stream of imported or ‘foreign’ oil from net oil exporting countries. As more and more net oil exporting nations enter terminal decline, a growing concern amongst those tasked with securing the energy supply of a net oil importing nation e.g. the US, China, UK, Japan, Korea, Germany, is just how much oil is available for net export and of what quality is it going to be?   

Environment
Unlike petroleum-based fuels, biofuels are made from an unlimited renewable resource base which makes them one of the cleanest ways to mitigate carbon dioxide, carbon monoxide, particulate and other green house gas emissions associated with global transportation. 

Ethanol contains 35% oxygen by volume, is biodegradable, non-toxic and carbon neutral, however, the true ethanol superstar would be that which is made from renewable and renewable waste resources. Ethanol derived in said fashion holds the potential of dramatic environmental benefits on order of magnitude greater than any other biofuel production path save perhaps biodiesel made from algae.

The Canadian government estimates that, “If 35 percent of gasoline in Canada contained ten percent ethanol, GHG emissions would be reduced by 1.8 megatonnes per year (1.8 million tonnes), which is the equivalent of removing more than 400,000 vehicles from the road.”

The American Lung Association of Metropolitan Chicago credits ethanol-blended reformulated gasoline with reducing smog-forming emissions by 25% since 1990.

Links

Greenfuels.org
Nrel.gov
Ethanolproducer.com
Ethanolmarket.com
Ethanol-gec.gov
ethanol.org
nrdc.org
e85fuel.com
energy.gov
eia.doe.gov
fuelethanolworkshop.com
nrcan-rncan.gc.ca