Those billionaires like their alcohol

Vinod Khosla came to talk to us about his latest venture -- solving the energy crisis and getting the U.S. off of our addiction to fossil fuels.

He was introduced by Eric Schmidt, and Larry Page, with Sergey Brin in the back of the room. He and Richard Branson are both investing large amounts of money in similar projects. What these five billionaires are getting excited about is ethanol.

Moonshine in the tank. Flex Fuel Vehicles running on E85 (gasohol) or straight hooch.

There is a long history in the U.S. of subsidizing ethanol production from corn for use in vehicles. But corn is not the most efficient base to start from -- it takes one unit of energy to get 1.5 units back in the form of ethanol. But science is coming to the rescue, and new technologies are making ethanol far more efficiently, and from non-food sources, such as fast-growing switchgrass and miscanthus prairie grasses. These new technologies produce 8 times the energy they use as input.

Some of his talking points were:

• Many cars and trucks are already Flex Fuel powered, and will run on E85.
  
• Five million U.S. vehicles are already Flex Fuel vehicles.
  
• 70% of the vehicles in Brazil have ethanol in the tank.
  
• Brazil is saving $50 billion annually in oil import costs.
  
• Ethanol is already cheaper than gasoline, without subsidies, per mile driven.
  
• It costs $40 to make a car into a Flex Fuel vehicle.
  
• It would take between 55 million and 114 million acres to fuel America.
  
• The state of South Dakota could produce enough ethanol to be the third largest energy exporter after Saudi Arabia and Iran.
  
• Farmers can make more money growing ethanol feedstock biomass than corn and soybeans.
  
• Biofuels are carbon neutral.
  
• The technology in this area is developing rapidly.

So, why aren't all those 5 million Flex Fuel vehicles running on ethanol? Because the corner gas station doesn't have an E85 or ethanol pump. Khosla suggests that Walmart should set up such pumps at every store. After all, they want people to drive to Walmart, and the product is cheaper than gasoline, both per gallon and per mile. And it is environmentally friendly. And E85 gives cars more horsepower and longer range between fillups.

Khosla would like to see two main changes to legislation:

• Require 70% of new cars to be Flex Fuel. GM may do this even without regulations.
  
• Require E85 pumps at 10% of all gas stations.
  

A third legislative change is designed to thwart price manipulation by oil producing countries: if oil drops below $40 a barrel, the government should buy it and stockpile it for when the price goes up again. That would stabilize world prices, and prevent the oil producers from quashing ethanol economies by temporarily removing the incentives.

The economics say this will all happen in 30 years or less, all by itself. But Khosla thinks it can be done in 5 years by a concerted effort, and people will get rich doing it.

This is the cheapest way to get solar power into cars. We can get off the oil input habit, and become a net energy exporter. We have what it takes.