PAST AND FUTURE OF THE PETROLEUM PROBLEM: THE INCREASING NEED TO DEVELOP ALTERNATIVE TRANSPORTATION FUELS

An examination of the interactions of petroleum supply and demand patterns suggests that the depletion of U.S. oil reserves and the increasing importance of oil consumption in U.S. transportation are causes for greater attention to the development of alternative (nonpetroleum-based) transportation fuels. Absent such development, the historical lessons presented in this paper suggest that another period of rising oil prices, erratic oil market behavior, and subsequent economic difficulty is probable within the next two decades. Methanol is argued to be the most likely and most desirable substitute transportation fuel because it can be produced more economically and used more efficiently than gasoline when derived from the rapidly expanding worldwide supplies of natural gas.