Impact of Mexico Pipeline Terrorism on Energy and Cleantech Sectors

The news report of multiple terrorist attacks on Mexico's oil and natural gas infrastructure today should be watched as a possible precursor to increased terrorist activities on global fossil fuel energy infrastructure.

Mexico produces more than 4 percent (3.7 million barrels per day in 2006) of the world's oil supply, and any actions there could either be part of a larger global effort to disrupt world markets, or it could prompt copycat actions. Either way, oil prices in particular might reach record levels this week.

In early 2006 a terrorist attack on Saudi Arabia's Abquiq oil processing facility was thwarted, preventing the disruption of the 5-7 million barrels a day that is processed at that single location--equal to about 7 percent of the world's daily use.

Hopefully, the Mexico incident, which is the second series of actions by a small terrorist group since July, has occurred in isolation. Mexico's attacks have been also on smaller pipelines that aren't likely by themselves to impact world prices.

But oil infrastructure security risks, whether natural or man-made, and energy price instability will continue to drive interest and applications for alternatives. If such risks play out in the near future to a greater degree, look for an even greater surge of interest in non-fossil fuels such as renewable energy that is distributed and thus far less subject to terrorism, and in alternative fuels produced domestically.

Such growth will continue to capitalize on government or utility-backed contracts that can amortize over a set period the higher upfront costs of renewable technologies and alternative fuel vehicles as a hedge against wildly fluctuating fossil fuel prices.

Comments

[TheSUBWAY.com]

We found an interesting article about the problems with Ethanol on ConsumerReports.org:

http://blogs.consumerreports.org/cars/2008/03/ethanol-e85.html

"But there are some problems with increasing ethanol blends. Ethanol contains less energy than gasoline, so increasing the amount of ethanol in gasoline will likely result in lower fuel economy. Increasing standard fuel blends from zero to 10 percent ethanol, as is happening today, has little or no impact on fuel economy. In tests, the differences occur within the margin of error, about 0.5 percent. Further increasing ethanol levels to 20 percent reduces fuel economy between 1 and 3 percent, according to testing by the DOE and General Motors. Evaluations are underway to determine if E20 will burn effectively in today's engines without impacting reliability and longevity, and also assessing potential impact on fuel economy."

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