no crap—it's diesel!

As logistics and supply chain operations struggle with high fuel costs, the answer to our nation's oil woes may be brewing in a laboratory in California. A two-year-old biotech company, LS9 Inc. of San Francisco, has developed a genetically engineered microbe that excretes diesel. That microbe, a harmless form of altered E. coli bacteria, feeds on sugar from plant material, digests the sugar, and then produces diesel as a waste product. Although the company is focusing on diesel, LS9 has said the microbes could also be engineered to make gasoline or jet fuel.

Unlike some other synthetic fuels, microbe-made diesel can be produced without the use of corn or other edible plants from the nation's food supply. That's because these one-celled critters can use any type of agricultural product as feedstock, including waste like wheat straw and wood chips. As another plus, LS9 has reported that its diesel has 50 percent more energy content than ethanol, which means that a vehicle that gets 20 miles to a gallon of ethanol would get 30 miles from a gallon of the bacteria-produced fuel.

This so-called "biofuel" also has advantages over the petroleum that comes out of the ground. For starters, unlike fossil fuels, bacteria-produced diesel does not contain any carcinogens like benzene. It also has less sulfur than is found in a barrel of crude oil, and since the government has mandated that trucks use low-sulfur diesel to cut down on air pollution, that's another plus. In fact, this biofuel is virtually pump-ready, as it only needs a simple cleaning step to filter out impurities.

Although the company has shown that the bacteria can make diesel in a test tube, it has yet to begin mass production. At present, the company can make one barrel of diesel a week, using a 1,000-liter fermentation tank.

One barrel a week doesn't sound like much, but it's enough product for the biotech company to begin tests to see how this type of biofuel will work in a car or truck. "Now that we are able to produce a larger volume of product, the company will soon begin running burn tests in vehicles and ensure that the technology scales effectively," company spokesman Tim Gnatek told me. "This will hopefully lead to the start of a large-scale pilot plant by 2010, which will mark the beginning of commercial operations."

Even if the company meets its target of a commercial fermentation plant two years from now, it will likely be another decade before LS9 can make enough diesel to have a noticeable impact on the oil market. Yet this scientific breakthrough has the potential to help solve our supply dilemma by shaving millions of years from the normal process of turning plants into petroleum. And it has the potential to give America energy independence.

In short, microbe-made diesel represents a renewable resource—one with the same properties as the non-renewable commodity that's so essential to truck transportation. Although truck manufacturers are working on hybrid-electric vehicles, diesel remains the best way to power over-the-road rigs carrying 80,000-pound loads.

As good as this technology sounds, you're probably wondering whether the cost makes it practical. Here's the good news. LS9 has said that if Brazilian sugar cane is used as the feedstock, a barrel of organic diesel would probably cost $50 a barrel. At today's market price for oil, that's a bargain.