David Lifschultz carries his solution to the world’s oil problems in a beatenup briefcase. Literally.

“See – here,” Mr. Lifschultz, CEO of GenOil, said, bringing out a blue velvet box. “This is it.”

Inside the box, nestling on a cushion, were two vials.

One contained heavy crude oil with the sediments lodged at the bottom. Of the two varieties of crude oil that are lifted from the ground – at the rate of 82 million barrels a day – heavy crude is used for industrial purposes such as asphalt manufacturing and production of heating oil. Heavy crude is high in carbon.

“Now this is what our hydrogenation does,” Mr. Lifschultz, the scion of a family that once ran a trucking empire, said, pointing to the other vial. “GenOil’s process cracks the oil molecule of heavy oil and combines with carbon hydrogen in a unique hydro cracking process, which lightens the oil. By increasing the ratio of hydrogen to carbon, the oil is lightened.”

That lighter oil can be used for making gasoline, thereby driving down the price of gasoline – which has touched $3 a gallon in recent months. The process also increases the value of this “hydrogenated” oil by up to $20 a barrel after cost, Mr. Lifschultz said, meaning the average barrel of heavy crude, currently selling at $20 less than light crude, will attract the same price as that of light crude. (New York’s main contract, light sweet crude for delivery in January, lost 73 cents to close at $59.21 a barrel yesterday.)

Next month, Mr. Lifschultz’s company – whose market capitalization is $70 million and whose stock is sold over-the-counter – is scheduled to start producing 1,200 barrels a day of upgraded oil at Silver Eagle Refining in Salt Lake City. Also in the cards is production by Lukoil, the Russian energy giant.

Mr. Lifschultz explains what GenOil’s hydrogenated solution means to the world’s oil problem.

The problem is this: The 11 members of the Organization of Petroleum Exporting Countries account for 40% of all oil production, with Saudi Arabia producing 9 million barrels a day; the rest comes from non-OPEC countries such as America, Norway, Britain, Mexico, Canada, China, Malaysia, and India. Of the world’s daily production, 22 million barrels is in heavy oil.

The daily overall demand for both heavy and crude oil is also 82 million barrels, of which 16 million is for heavy crude. But the demand for light oil is rising on account of accelerating industrialization in developing countries like Brazil, China, and India.

This demand rises as the number of cars does. There are about 600 million cars and trucks in the world’s 191 countries. Of these, 200 million are in America, where the daily demand is for 20 million barrels – two-thirds of it for transportation.

By 2050, Mr. Lifschultz said, there will be 1.2 billion cars on the road, 600 million of them in China alone.

That means an additional 78 million barrels a day of light crude will need to be produced. At current production rates, that figure is well beyond the capacity of the oil-producing states, even though the world’s proven crude oil reserves are nearly 1 trillion barrels, some 261 billion barrels in Saudi Arabia alone.

“Now consider the costs of building new production facilities for increasing the extraction and processing of oil,” Mr. Lifschultz said. “They are prohibitive.”

By his reckoning, it would cost $120 billion to build a conventional plant that would process 2 million barrels a day. To build plants that would process the expected additional demand of 78 million barrels a day could cost $30 trillion.

“The heavy oil that is converted through GenOil’s low-cost process – about $6 million for 100,000 barrels – can be replaced by nuclear power or clean-burning coal, thereby providing a viable alternative to the West’s exposure to Middle East oil,” Mr. Lifschultz said. “It is practical and can be done right now. It does not need further research as fuel cells or solar energy, which are not competitive fuels for propelling cars.”