Wringing oil from sand illustrates how the auto industry must end its reliance on traditional fuel, says the Toyota exec who helped designed the Prius.

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Bill Reinert, who helped design Toyota’s Prius hybrid, hovers in a helicopter 1,000 feet over Fort McMurray, Alberta.

On this clear November morning, he’s craning for a look at one of the world’s largest petroleum reserves where there’s not an oil well in sight.

Instead, in a two-mile-wide pit below, trucks head to refineries with loads of sand weighing more than Boeing 747s. Yellow flames shoot skyward as 900-degree heat liquefies any embedded petroleum.

Floating scarecrows and propane-powered cannons do their best to chase migrating birds from lethal wastewater ponds.

Eventually, nuclear reactors may surround the crater 270 miles northeast of Edmonton, Alberta, delivering the power required to wring oil from sand.

“This is what the end of the age of oil means,” says Reinert, who plans the vehicles Toyota will make in a quarter century as national manager for advanced technology at the U.S. sales unit in Torrance, Calif. “The car-based culture, the business-as-usual of building cars and trucks, is going to change dramatically.”

Since Henry Ford introduced the moving assembly line in 1913, the world’s automakers have relied on a single source of power — the gasoline-dependent internal-combustion engine.

Today, rising oil prices and global warming are convulsing an industry addicted to cheap, abundant petroleum. Auto companies, already hurt in 2007 by the lowest U.S. demand in a decade, are struggling to perfect cars that run on ethanol, diesel, natural gas, hydrogen and household electricity.

They’re under the gun from more than a dozen other states to cut carbon exhaust by 2020 with vehicles that must get 44 miles per gallon (19 kilometers per liter) of gasoline, about double today’s average. On Dec. 19, President Bush signed a law that mandates fuel-efficiency of 35 mpg nationwide by that year.

Reinert says automakers are endangering themselves by basing sales and profits on the big, fast cars that many U.S. customers say they want in 2008.

In five years, as oil shortages and global warming intensify, car companies may be out of step with drivers’ demands for fuel-efficient vehicles. Even worse, degrading stretches of the planet like Fort McMurray will only delay — not prevent — the time when the world must function in a post-peak-petroleum economy.

Canada’s oil-sands region may eventually provide a quarter of U.S. crude-oil demand, now at 21.3 million barrels per day, Reinert says. “At that point, the environmental impacts are totally irreversible,” he says. “You turn this area into an ecological sacrifice zone.”

Toyota investors, whose shares tumbled 40 percent in the 12 months ended Jan. 22, say the company’s priority must be weathering a weak U.S. market, not chasing breakthroughs in green technology. Last year, U.S. sales declined 2.5 percent to 16.1 million vehicles industrywide.

“There’s cake, and there’s frosting,” says Jeffrey Scharf, president of Scharf Investments, based in Santa Cruz, Calif., a fund firm that owns Toyota stock among its $700 million in assets. “Hybrids are more into the area of frosting.”

Shareholder ambivalence about clean cars is only one hurdle to surviving the end of easy oil. Reinert, a former Navy submariner, says he lies awake at night wondering whether he’s making the right recommendations for the future of Toyota — and the planet.

His suggestions run from building lightweight compacts and plug-in hybrids to redesigning smog- and people-choked cities and populating them with electric-only cars.

Reinert says nobody can say for sure how the separate tailpipe emission, fuel economy and manufacturing regulations promulgated worldwide by multiple levels of government will affect the environment.

There’s no blueprint for the impact of increasingly scarce oil on a U.S. economy already laboring with a mortgage crisis and a dropping dollar.

Add industrialization in China and India, and the number of cars and trucks worldwide may double to 2.1 billion by 2030, according to the Paris-based International Energy Agency.

“We don’t have a past, a history or a database that allows us to explore the simultaneous impact of recessions, disruptions to the energy supply and climate change,” says Reinert, who spent six years in the 1980s maintaining solar- and wind-powered telephone towers in Colorado’s Rocky Mountains.

“We don’t have the legislative, regulatory, financial or product-planning tools.”

Toyota is making excuses for not moving faster on fuel efficiency, says Daniel Becker, a lawyer and former head of global-warming programs at the Sierra Club. Since Toyota’s 2003 hit with the second-generation Prius, which gets as much as 45 mpg in city driving, the company has slid backward, he says.

Toyota’s technical triumph with the Prius shows automakers can be a force in mitigating the environmental damage Reinert worries about. He says that’s only a start.

As threats from the end of easy oil multiply and global warming accelerates, the desecration at Fort McMurray may be a harbinger of what’s to come if automakers and politicians fail to act.

With reporting from Naoko Fujimura in Tokyo, Jeff Green in Detroit, and Ian McKinnon in Edmonton.

As gas prices have climbed over the years, the miles per gallon a vehicle gets has taken on increasing importance.