Hydrogen makes an incredibly clean fuel. You burn it with oxygen and you get water – no carbon emissions there. It also happens to be the most abundant element in the universe. Super. Here on earth, though, practically every last red hot atom is locked up. We do have plenty of water here on terra firma that we could break up to get hydrogen and that is the plan. Take a little water, apply a little electricity and blammo; you’ve got hydrogen and oxygen. The catch is that you have to spend about twice as much energy to split water apart than you get out from recombining the hydrogen and oxygen. Where will that energy come from? If we use our current infrastructure, it will come from coal and natural gas. In this scenario, we have not only moved the emission of carbon dioxide from tailpipes to smokestacks but we’ve increased the amount we’re spewing. The upside is that it is easier to capture and deal with the carbon dioxide from big point sources like power plants than it is to capture it from several hundred million cars.

This isn’t to mention the difficulties of distribution and storage of hydrogen. Hydrogen is a tiny molecule that is very good at slipping through tiny cracks – think welds on tanks and connections in plumbing. Leaky pipes aren’t really a huge danger as hydrogen likes to float up and away, but losing gas from your parked car overnight could be annoying. Also, volume for volume, fuels liquid at normal temperatures have way more energy in them. A 16 gallon tank of highly compressed hydrogen wouldn’t even begin to get you as far as a 16 gallon tank of gasoline. Oh – and we have absolutely no large-scale distribution systems for hydrogen. Bummer. Let it go George.

How does ethanol stack up? In 2006, 1/5th of the 105 billion bushel U.S. corn crop – the third largest ever – went to making 5 billion gallons of ethanol. George W. wants to replace 15% of gasoline with ethanol by 2008. Meeting that goal will take 35 billion gallons of ethanol which will take 147 billion bushels of corn. Estimates indicate that it will take an additional 80 million acres of corn to do that. We also have to remember that corn has to feed us and our livestock. Already increased demand for corn has doubled prices from $2 a bushel to $4. The chicken industry has been saddled with $1.5 billion in extra feed costs. The cost to produce a bottle of soda has jumped $0.06. Ultimately, consumers eat the cost.

Ethanol also has its share of problems as a fuel. It carries less energy than gasoline meaning that you can’t go as far on equal amounts of each. It also attracts water like nobody’s business so every last steel component in fuel storage and transportation systems has to be replaced with stainless steel. Plants also don’t just grow and harvest themselves, either. The production of energy from plants – especially corn – takes energy, currently making the whole process nearly a wash. Fortunately, we are very close to being able to produce ethanol from cellulose. Instead of having to use the corn kernels, we could use the stalks. There are also very beneficial perennial prairie grasses that carry the most promise. They are native and actually improve the soil where they grow. But pushing corn as our main ethanol source is stupid and short-sighted, so stop it GW.

We’ve told people building new houses that they should consider ground-source. So far, they haven’t. They also have higher utility bills.

The heating/cooling capacity of our heat pump is 3 tons. This is pretty normal sizing for medium sized houses. 3 tons of heating works out to a rate of 36,000 BTU/hour. Natural gas is priced per thousand cubic feet (Mcf)*. At 80% efficiency, one Mcf of natural gas releases about 1.049 million BTUs when burned. This means that an equivalent amount of heating consumes 0.0342 Mcf per hour. According to DOE resources, in October 2006, residential natural gas prices were running about $12.74/Mcf. At that price, it would cost us $0.4372/hour to heat.

With the demand for heating at 5 hours a day during an cold month, that $0.1206 per hour difference could cost us an extra $14.95.

Anyway, back to contango. It isn’t, as my previous use would suggest, a verb. It is a term used to describe a situation in futures trading when the price for future delivery of a commodity is higher than the spot price. It is a normal condition arising from the fact that holding a non-perishable commodity generally costs something to the holder. That commodity you have to deliver in the future ties up storage space and the costs involved are figured into the futures contract. It is the price to pay for the guarantee that the commodity in question will be available when you need it without you having to store it. If, on the other hand, you can buy the commodity on the spot market and store it more cheaply than the party you’d be making a futures contract with… well, you do the math.

* Yes, I am well aware of the fact that abbreviating “thousand cubic feet” as Mcf is completely counterintuitive. It is, oddly enough, a Roman numerial type of deal with ‘M’ standing in for 1000. “Hundred cubic feet” is thus abbreviated Ccf. The same applies to BTUs: MBTU is actually 1000 BTUs. One million is, thusly, MMBTU. I don’t make this stuff up.