Petrol will hit $2 a litre within two years

One of the world’s leading experts on alternative automotive energy believes the wholesale price of petrol will return to more than $US100 a barrel within two years – the last time it was that expensive, the retail cost came close to $2 per litre in Australia.

“Petroleum we believe is going to plateau around $US100 a barrel,” says Larry Burns, the head of General Motors Research & Development and Strategic Planning.

“There are some very fundamental things that indicate to us that the petroleum that’s coming on line in the world is becoming ever more expensive to gain access to.

“In addition to that we have the biggest countries in the world gearing up to introduce carbon taxes, so we are definitely going to see high petrol prices again soon … within the next two years at the latest.”

Burns has spent his 40-year career working on advanced technology since he joined the company as a graduate when he was 18.

He is regarded as the pre-eminent expert in his field and his life’s work has become of particular importance to GM and the auto industry in the past few years as car makers have realised they need to reduce their dependence on oil.

Two years ago Burns established a team within GM – the Global Energy Systems Intelligence Centre – whose sole purpose is to track the current and future price and availability of oil and “other energy supply chains”. Burns claims his eight-member outfit of experts plucked from various parts of the energy industry are the best in the business.

He says petroleum will become increasingly more expensive as oil companies drill deeper to retrieve lower quality crude – which, in turn, is more expensive to refine to today’s quality standards. “In other words, the oil companies will need to drill more crude at the same time as supply is drying up.”

But GM does not believe the internal combustion engine will ever die. Burns says the number of electric cars will grow significantly, and they are part of the solution, but they ultimately will not completely replace cars and trucks with internal combustion engines.

“We think the internal combustion engine is here to stay,” he says. “Motorists are going to be spoiled for choice between electric powered cars and cars powered by internal combustion engines, depending on which one best suits each application.

“There are more than 800 million cars and trucks around the world with internal combustion engines, so they’re not going anywhere,” he said, adding that trucks and other heavy machinery would likely run on bio-diesel rather than electricity.

“The trap we get into is we keep thinking ‘all or nothing’, but the future of the car is one with a choice of many types of alternatives to petrol,” he says.

GM is working with at least two companies that are developing new ways to create ethanol fuel that does not involve food crops. The use of grain-based ethanol, such as that derived from corn or sugar cane, has received criticism in recent years because there isn’t enough land in the world to feed its entire population as well as power all its cars.

One method transforms household waste into ethanol and is so effective Burns claims it could see an end to landfill. The other uses a special type of grass that requires little to no maintenance as it grows quickly and easily, even in adverse conditions. GM is so convinced about both systems that it has invested heavily in both companies working on them.

Burns says ethanol should be of particular interest to countries, such as Australia, that regularly experience water shortages. “It takes two or three gallons of water to make a gallon of gasoline, but using these processes it takes less than a gallon of water to make a gallon of ethanol.”

In Australia, most of our ethanol-blended fuel is currently derived from sugar cane waste, rather than crops grown specifically to be used as fuel. But, through Holden, GM is looking to assist with the introduction of an ethanol refinery in Australia that transforms waste into fuel.

Ethanol won’t become a magic solution, however, until cars are redesigned to get the most out of the fuel.

Burns admitted ethanol has about 50 per cent less energy than regular fuel, so you need to burn more of it to travel the same distance as a car powered by unleaded petrol.

“That’s ok though,” he says. “Cars will get bigger petrol tanks so motorists can travel the same distance between refills, and engineers are going to have to design cars with more efficient engines and use more lightweight materials.”

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The 2009 Detroit Motor Show