1. Energy

Human activities are closely dependant on the usage of several forms and sources of energy used to perform work. From a physical perspective, energy is movement or the possibility of creating movement, which can be ordered (mechanical energy) or disordered (thermal energy). It exists in potential (stored) and kinetic (used) forms. Energy content is the available energy per unit of weight or volume for an energy source. Thus, the more energy consumed the greater the amount of work realized. There exist four types of physical work related to human activities [Chapman, 1989]:

• Modification of the environment. Includes making space suitable for human activities, like clearing land for agriculture, modifying the hydrography (irrigation), establishing distribution infrastructures, and constructing and conditioning (temperature and light) enclosed structures.
• Appropriation of resources. Involves the extraction of agricultural products from the biomass and raw materials (minerals, oil, lumber, etc.) for human needs. It also includes the disposal of wastes, which are in an advanced industrial society very work intensive to safely dispose.
• Processing resources. Modifies products from the biomass, raw materials and goods to manufacture according to economic needs. Over the last 200 years, work related to processing was considerably mechanized (e.g. robotized assembly lines).
• Transfer. Involves the movement of freight, people and information from one place to another. It aims to attenuate the spatial inequities in the location of resources by overcoming distance. The less energy costs per ton or passenger - kilometer, the less importance have transfers. Overcoming space in a global economy requires a substantial amount of work and thus energy.

Through the history of mankind's use of energy, the choice of an energy source depended on a number of utility factors which as time progresses involve a transition in energy systems from solid, liquid and eventually gas energy. Since the industrial revolution, many efforts have been made to have as much work as possible performed by machines, which considerably improved industrial productivity. At the beginning of the 21st century, the transition reached a stage where fossil fuels, notably petroleum, are dominant. Out of the world’s power consumption of about 15 terawatts a year, 86% is derived from fossil fuels.

A recent trend has also been a shift on the purpose of energy use. Work related to the transportation of goods, people and information has increased significantly, on par with the globalization of the economy. This implies a growing share of transportation in the total amount of energy spent for maintaining and improving the range and scope of human activities. Energy consumption has a strong correlation with the level of development. Among developed countries, transportation now accounts between 20 and 25% of all the energy being consumed.

2. Transportation and Energy Consumption

The relationship between transport and energy is a direct one, but subject to different interpretations since it concerns different transport modes, each having a specific performance  level. There is often a compromise between speed and energy consumption, related to the desired economic returns. Passengers and high value goods can be transported by  Economies of scale, mainly those achieved by maritime transportation are linked to low levels of energy consumption per unit of mass being transported, but at a low speed. Comparatively, air freight has high energy consumption levels, linked to high speed services. Many activities related to transportation consume energy:

• Vehicle operation. Mainly involves energy used to provide momentum to vehicles, namely as fuels, as well as for intermodal operations. The fuel markets for transportation activities is significant.
• Vehicle manufacture and maintenance. The energy spent for the manufacturing of vehicles, which is a direct function of their complexity and size.
• Infrastructure construction and maintenance. The establishment of transport infrastructures, including terminals, requires a substantial amount or energy. It has a direct relationship with vehicle operations since extensive networks are linked with large amounts of traffic.
• Energy generation. The process of generating and manufacturing energy also requires energy, so the more energy is used  by transport activities, the more energy most be spent supplying these activities.

A powerful trend that has emerged in the 1950s has been the growing share of transportation in the total oil consumption of developed countries. The transport sector accounts for more than 57% of all the oil used each year around the world. More specifically, petroleum products now account for more than 97% of the energy consumption by transportation modes. While the use of petroleum for other economic sectors, such as industrial and electricity generation, has remained relatively stable, the growth in oil demand is mainly attributed to the growth in transportation demand. Energy consumption has strong modal variations:

• Land transportation accounts for the great majority of energy consumption. Road transportation alone is consuming on average 85% of the total energy used by the transport sector in developed countries. This trend is not however uniform within the land transportation sector itself, as road transportation is almost the sole mode responsible for additional energy demands over the last 25 years.
• Maritime transportation. Even if maritime transportation accounts for about 70% of all the tons-kilometers carried globally as well as 96% of world trade its nature and its economies of scale makes it the most energy efficient mode. This mode utilizes about 3 to 5% of all the energy consumed by transport activities.
• Air transportation represents a completely different situation. While it accounts for about 5% of the energy consumed by transportation, it carries about 0.5% of all passenger-kilometers. Technological innovations, such as more efficient engines and better aerodynamics, have led to a continuous improvement of the energy efficiency of each new generation of aircrafts.

The private car has a poor energetic performance, although this performance has seen substantial improvements since the 1970s, mainly due to growing energy prices and regulations. Only 12% of the fuel used by a car actually provides momentum. Considering this performance, the level of car ownership is a direct indicator of energy consumption for the transport sector. The United States had one of the highest levels of car ownership in the world, 773 motor vehicles per 1,000 people in 1997. About 60% of all American households owned two or more cars, with 19% owning three or more. A more disturbing trend has been the massive diffusion of sport utility vehicles, major consumers of hydrocarbons, particularly in suburban areas. Fuel consumption is however impacted by diminishing returns, implying that higher levels of fuel efficiency involve declining marginal gains in fuel consumption.

3. Combustion of Hydrocarbons

Since almost all transportation modes depend on the internal combustion engine, it is worth investigating the chemical combustion principle of hydrocarbons. For the majority of internal combustion engines, gasoline (C₈H₁₈; four strokes Otto-cycle engines) serves as fuel, but other sources like methane (CH₄; gas turbines), diesel (mostly trucks) and kerosene (turbofans of jet planes) are used. In a complete and perfect combustion of gasoline the following chemical reaction is achieved:

• (2) C₈H₁₈ + (25) O₂ = (16) CO₂ + (18) H₂O + energy

Gasoline produces around 46,000 Btu per kilogram combusted, which requires from 16 to 24 kg of air. The energy released by combustion causes a rise in temperature of the products of combustion. Several factors and conditions influence the level of combustion in an internal combustion engine to provide momentum and keep efficient operating conditions. The temperature attained depends on the rate of release and dissipation of the energy and the quantity of combustion products. Air is the most available source of oxygen, but because air also contains vast quantities of nitrogen, nitrogen becomes the major constituent of the products of combustion. The rate of combustion may be increased by finely dividing the fuel to increase its surface area and hence its rate of reaction, and by mixing it with the air to provide the necessary amount of oxygen to the fuel.

If all internal combustion engines worked according to the above equation, emissions and thus local environmental impacts of transportation would be negligible (except for carbon dioxide emissions). The problem is that combustion in internal combustion engines is imperfect and incomplete for two reasons:

• First, the fuel and the oxider are not pure, causing an imperfect combustion. Although the refining process provides a "clean" fuel, gasoline is known to have impurities such as sulfur (0.1 to 5%), sometimes lead (anti-knock agent being phased out) and other hydrocarbons (like benzene and butadiene), while air is composed of 78% nitrogen and 21% oxygen. Thus, significant other chemical components are part of the combustion process.
• Second, in part because of the first reason and in part because of the technology of the engine, incomplete combustion emits other residuals. Combustion in an engine occurs at an average rate of 25 times per second, leaving limited time for a complete combustion process. Besides carbon dioxide and water, a typical internal combustion engine will produce carbon monoxide (CO), hydrocarbons (benzene, formaldehyde, butadiene and acetaldehyde), volatile organic compounds (VOC), sulfur dioxide (SO₂), particulates, and nitrogen oxides (NO_x). These combustion products are the main pollutants emitted in the environment by transportation.

In addition to the imperfect and incomplete combustion of hydrocarbons, three major factors influence the rate of combustion and thus emissions of pollutants: characteristics of vehicles, driving characteristics, and atmospheric conditions.

4. Transportation and Alternative Fuels

All other things being equal, the energy source with the lowest cost will always be sought. The dominance of petroleum fuels is a result of the relative simplicity with which they can be stored and efficiently used in the internal combustion engine vehicle. The transportation sector is heavily dependent on the use of petroleum fuels for obvious reasons. Other fossil fuels (natural gas, propane, and methanol) can be used as transportation fuels but require a more complicated storage system. The main issue concerning the large-scale uses of these alternative vehicle fuels is the large capital investments require in distribution facilities as compared with conventional fuels. Another issue is that in terms of energy density, these alternative fuels have lower efficiency than gasoline and thus require greater volume of on-board storage to cover the equivalent distance as a gasoline propelled vehicle. Alternative fuels in the form of non-crude oil resources are drawing considerable attention as a result of shrinking oil reserves, increasing petroleum costs and the need to reduce emissions of harmful pollutants:

• Biogas such as ethanol and biodiesel can be produced from the fermentation of energy crops (sugar cane, corn, cereals, etc). Their production however requires large harvesting areas that may compete with other types of land use and food production. Besides, it is estimated that one hectare of wheat produces less than 1,000 liters of transportation fuel per year which represents the amount of fuel consumed by one passenger car traveling 10,000 kilometers per year. This limit is related to the capacity of plants to absorb solar energy and transform it through photosynthesis. This low productivity of the biomass does not meet energy needs of the transportation sector and can simply be seen as a marginal palliative.
• Hydrogen is often mentioned as the energy source of the future. Hydrogen is produced by electrolysis of water, forming natural gas or oxidation and steam forming other fossil fuels (Khare and Sharma, 2003). Hydrogen fuel cells are two times more efficient than gasoline. But hydrogen suffers from several problems. A lot of energy is wasted in the production, transfer and storage of hydrogen. Hydrogen manufacturing requires electricity production. Hydrogen-powered vehicle requires 2-4 times more energy for operation than an electric car which does not make it cost-effective. Besides, hydrogen is highly inflammable and difficult to store.
• Electricity is being considered as an alternative to petroleum fuels as an energy source. The main barriers to the development electric cars are the lack of storage systems capable of providing driving ranges and speed comparable to those of conventional vehicles. An electric car has a maximum range of 100 kilometers and speed of less than 100 km/hr requiring 4-8 hours to recharge (Sperling, 2003). The recent development of hybrid vehicles (internal combustion engine and batteries) provides interesting opportunities combining the efficiency of electricity with long driving range.

The penetration of non fossil fuels in the transportation sector has serious limitations. As a result, the price of oil will certainly continue to increase as more expensive fuel-recovery technologies will have to be utilized with soaring demand for gasoline. But high oil prices are inflationary leading to recession in economic activity, the search for alternative sources of energy and a short term decline in the demand. Already, the peaking of conventional oil production is leading to the implementation of coal derived oil projects. Coal liquefaction technology allows the transformation of coal into refined oil after a series of processes in an environment of high temperature and high pressure. While the cost-effectiveness of this technique as yet to be demonstrated, coal liquefaction is an important measure in the implementation of transportation fuel strategies in coal-rich countries, such as China.

The costs of alternative energy sources to fossil fuels are higher in the transportation sector than in other types of economic activities. This suggests higher competitive advantages for the industrial, household, commercial, electricity and heat sectors to shift away from oil and to rely on solar, wind or hydro-power. Transportation fuels based on renewable energy sources might not be competitive with petroleum fuels unless future price increase is affected by different fuel taxes based on environmental impacts.

5. Transportation and Peak Oil

The extent to which conventional non-renewable fossil fuels will continue to be the primary resources for nearly all transportation fuels is subject to debate. Some studies estimate global resources for oil at about a trillion barrels. This represents 30 years of reserves at present rate of consumption. But the gap between demand and supply, once considerable, is narrowing, an effect compounded by the peaking off of global oil production. The steady surge in demand from China and India requires an additional output of 2-3 million barrels a day. This raises concern about the capacity of major oil producers to meet this rising world demand. The producers are not running out of oil, but the existing reservoirs may not be capable of producing on a daily basis the increasing volumes of oil that the world requires. Reservoirs do not exist as underground lakes from which oil can easily be extracted. There are geological limits to the output of existing fields. This suggests that an additional 4-5 million barrels a day need to be found to compensate for the declining production of existing fields. Reserves additions in Alaska, off-shore West Africa or the Caspian Sea basin are not enough to offset this growing demand (Mass, 2005). The current situation thus underlines forces that interact to create an environment involving higher oil prices; the supply appears to be unable to keep up with the demand. Peak oil is what it means, a physical inability to provide a higher level of oil supply. It must also been considered that rising oil prices are the outcome of the systematic debasement of most fiat currencies through the inflation of the money supply, this in addition to any physical shortages (the current environment appears to be compounding both). So, even if a resource such as petroleum could be supplied adequately, monetary policies followed by most central banks and governments guarantee higher energy prices.

Other studies argue that the history of the oil industry is marked by cycles of shortages and surplus (Johansson, 2003). The rising price of oil will render cost effective oil recovery in difficult areas or from lower quality sources. Deep water drilling or extraction from tar sands should increase the supply of oil that can be recovered and extracted from the surface. But there is a limit to the capacity of technological innovation to find and extract more oil around the world. Technological development does not keep pace with surging demand. The construction of drilling rigs, power plants, refineries and pipelines designed to increase oil exploitation is a complex, expensive and slow process. The main concern is the amount of oil that can be pumped to the surface on a daily basis, especially where major oil fields have reached peak capacity. Under such circumstances, oil prices are bound to raise in a substantial way, sending significant price signals to the transport market. How the transport system will respond and adapt to higher energy prices is obviously subject to much debate and interpretations. The following potential consequences can be noted:

• Road. As far as the automobile is concerned, higher oil prices could trigger changes in several phases. Initially, commuters would simply absorb the higher costs either by cutting on their discretionary spending and/or going further into debt. Depending on their level of productivity, many economies could show a remarkable resilience. The next phase would see changes in commuting patterns (e.g. carpooling), attempts to use public transit, a rapid adoption of vehicles with high gasoline efficiency (in the United States, this could mark the downfall of the SUV) and a search for alternatives (discussed above). The existing spatial structure could also start to show signs of stress as the unsustainability of car dependant areas become more apparent. As high commuting costs and the inflationary effects of high oil prices on the economy become apparent many would no longer be able to afford living in a suburban setting. Cities could start to implode. The trucking industry would behave in a similar way, first by lowering their profits and their operating expenses (e.g. scheduling, achieve FTL), but at some point, higher prices will be passed on to their customers.
• Rail. This mode is set to benefit substantially from higher energy prices as it is the most energy efficient land transportation mode. Rail is about three times more energy efficient than trucking. The level of substitution for passengers and freight remains uncertain and will depend on the current market share and level of service they offer. In North America, passenger rail has limited potential while in Europe and Pacific Asia passenger rail already assume a significant market share. For rail freight, North American freight distribution has an advantage since rail account for a dominant share of tons-km while this figure is less significant for other regions of the world, mainly due to the distances involved and the fragmentation of the system. In many cases, there could a pressure towards the electrification of strategic long distance corridors and the development of more efficient cargo handling facilities. Thus, growing energy prices are likely to affect long distance rail transportation differently depending on the geographical setting and the conditions of the existing system.
• Air. This mode could be significantly impaired, both for passengers and freight. Air transportation is a highly competitive industry and the profit margins tend to be low. Fuels account for about 15% of the operating expenses of an air carrier, but because most of the other costs are fixed any variations in energy prices is reflected directly on air fares. A long term increase in energy prices is likely to impact discretionary air travel (mainly tourism), but air freight, due to its high value, may be less impacted.
• Maritime. This mode is likely to be relatively unaffected as it is the most energy efficient, but fuel is an important component of a ship's operating costs. The response of maritime shippers over higher energy prices tends to be lowering speed, which may have impacts on port call scheduling. On the long run, higher energy prices may however indirectly impact maritime transportation by lowering demand for long distance cargo movements and incite port calls at ports having the most direct and efficient hinterland connections. In addition, this context may favor the development of short coastal and fluvial services where possible.

As the reality of peak oil steps in, the next stage is likely to be a growing level of unreliability in the supply system as shortages become more prevalent and common. At least, higher prices will trigger notable changes in usage, modes, networks and supply chain management. From a macro perspective, and since transportation is a very complex system, assessing the outcome of high energy prices remains hazardous. What appears very likely is a strong rationalization, a shift towards more energy efficient modes as well as a higher level of integration between modes to create multiplying effects in energy efficiency. As higher transport costs play in, namely for containers, many manufacturing activities will reconsider the locations of production facilities to sites closer to markets. While globalization was favored by cheap and efficient transport systems, the new relationships between transport and energy are likely to restructure the global structure of production and distribution.