Just read an article about fuel cells in Japanese home. Basically, natural gas comes in the normal distribution system for home heating/cooking use is passed through a reformer, producing Hydrogen and Carbon Monoxide. Hydrogen is feed into the fuel cell for electricity. Carbon Monoxide combines with Oxygen to form harmless Carbon dioxide. Heat generated in the process is used for heating water.

Such co-generation equipment should provide higher efficient from source to home, and reduce reliance on the power grid. 

The only catch is the catalyst used in the fuel cell is expensive and only has a very short life (3-5 years). Much need to be done here.

Have you heard of Oil Sand? It is a mixture of sand and clay with heavy crude oil, also called Bitumen. Alberta Canada has about 85% of the worldwide reserve. Companies are mining and processing the oil sand into crude oil. The reserve is vast. However, the it is also creating an ecological disaster, not to mention it is very inefficient.

It takes about 2 tons of oil sand to produce a barrel of crude oil. Huge open pit mines line the landscape with processing plant surrounding them. The process consumes large amount of natural gas to generate steam from water, which is used to wash the oil from the oil sand and caustic soda mixture. Toxic waste water from the processing is dumped into retention lakes that will kill just about any wildlife that come into contact with them.

Cost of mining and processing range from $30 to $50 a barrel. As long as crude oil cost over $65 a barrel, companies (Suncor, Syncrude, Petro Canada, Shell, Chevron among others) will continue to operate these mines and turn these area into ecological disaster zones.

The only way to bring down oil price is to reduce consumption and promote alternative power. Besides, burning fuel simply releases carbon that was trapped underground million of years ago into the atmosphere.

Wind power seems to be the front runner in large scale alternative energy. The gigantic wind turbines can eventually provide 10-20 percent of electricity U.S. need.

On the consumption side, the simplest and the most cost effective may actually be solar water heater. They are relatively inexpensive. Saving in electricity or natural gas will payback the investment in 3-4 years. Besides, it will truly reduce energy consumption and can be installed in most part of the country.