Let's see if I've got this right. The price of gas has gone up in part because of the costs of ethanol. Feederal tax revenues are down due to agribusiness subsidies for ethanol. Food prices are up because of ethanol demand diverting corn and acreage. Beef is up for the same reasons. I'm not seeing the point.
Thursday, July 12, 2007
Ethanol Contagion
Let's see if I've got this right. The price of gas has gone up in part because of the costs of ethanol. Feederal tax revenues are down due to agribusiness subsidies for ethanol. Food prices are up because of ethanol demand diverting corn and acreage. Beef is up for the same reasons. I'm not seeing the point.
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33 comments:
MURST?
Corn is king!
Is the correct conclusion it's good to be the kingmaker (better if you are seen as doing something wholesome and natural and playing kingmaker on the side?).
Are you trying to get me out of the woodwork Rob?
There is a lot to this right now Rob, will post more at lunch.
ever look at an inflation-adjusted historical price chart for corn? I mean REALLY historical, like back to 1900 or so.
When corn was at ~$2 / bushel, it was at a 100 YEAR low on that chart. Yes, 100 year. Similar charts for Wheat, Soybeans, etc. have these were at multi-decade lows as well.
Want in on another dirty little secret? World food production has not meant world consumption for 6 of the last 7 years. Why? Well, see the preceding for clues.
So, after mothballing most of the agricultural capacity of this nation, we are finally starting to reap the whirlwind at the grocery store. Well, I'm sure we can import cheap food from China (the rat poison is included free of charge).
I'm not seeing the point either, Rob. I didn't see it last year, and I don't see it this year, and I have a sneaking suspicion that next year I'll be viewing the ethanol decision as akin to one of those religious mania things you read about when people crucify themselves on Good Friday and so forth.
In the annals of economic stupidity, I think this ethanol is going to end up with star billing. It's also absolutely hurting the US population in an extremely regressive way.
MOM,
Even the poor in Mexico are affected. The price of tortillas has quadrupled.
I'm not even sure that after counting petroleum based fertilizers if ethanol is energy positive.
Rob posts -- Ethanol Contagion
... so you're saying that Casey Serin has descended into alcoholism? ;-)
Can't resist poking fun at the baiting... hehe
Actually it was a play on "sub-prime contagion." The point being that the law of unintended consequences is in full force in many places.
The problem is people keep "entertaining" bad ideas. Alternative fuel has a place but it needs to begin around a conference room. They need to discuss their plans and decide not only what would work, but what do we have enough resources for.
There is a finite limit for food supply. While we can regrow the corn, we aren't putting ourselves in any better a place once we are on it. We will find our fuel prices goverened by drought, storms, bugs, food shortages, etc.
One hand washes the other...
I'm not sure these consequences were really all that unintended. Ethanol is basically a really bad vehicle to transfer money to corn farmers while allowing politicans to look like good hearty stock, anti-terrorist, and green at the same time. You can't create photo ops like that!
Well, just to play Devil's Advocate for a minute, the whole reasoning behind subsidies for alcohol fuels was to maintain infrastructure in the event of a shut-off of access to petroleum. From that perspective, a small subsidy for a small industry would make sense.
Worst case scenario, bin Laden opens his front door and finds a hundred million volunteers standing on his doorstep, and proceeds to overrun the Middle East and shuts off all oil production. Hypothetically, the U.S. would have a back-up system they could turn to in order to keep some of the military and a bare minimum of infrastructure moving.
The problem, of course, is that people got it into their head that ethanol is a fully viable replacement for oil now. The simple fact is that it's not energy-efficient, and it doesn't have the scale to replace oil, so it's neither viable nor a full replacement. If this is all about reducing oil consumption, there's a nice and easy solution to that--European-style gasoline taxes. Less oil consumption and a smaller Federal debt--win-win™!
The problem with punitive taxes is that at least in the case of Eurpoe they aren't working. POV market share continues to climb despite massive disincentives. http://www.publicpurpose.com/ut-intl-cityshare.htm
It's simple Rob:
Agri-business is huge. They donate large amounts of money to congress.
This article net energy yield (and it's references) seem to point to a consensus that corn ethanol produces about a third more energy than you put into it only if you include the production of CO2, distillers grain & so forth. The actual stand-alone ratio for ethanol is 1:1.
Ethanol is a good additive for octane & oxygenation (smog) purposes, it cannot ever provide enough energy to match imports.
Brazil makes ethanol from sugar cane, a more efficient and cheaper energy source. Maybe we should be importing energy from Brazil rather than misusing food resources.
Several fronts on the Ethanol problem.
*Using corn derived ethanol to reduce need for corn subsidies.
*Farming infrastructure cut back (can make more money by flipping houses/converting farmland to residences)
*Using ethanol to reduce consumption of foreign fuels.
*California requires oxygenated fuel, component that used to do that function was MTBE. Cure turned out to be worse than problem. (Go figure, a super solvent nasty? Dooh!) Ethanol is now used for oxygenating fuel in CA.
Now for public transport, proper public transport requires planning. Politicians can seem to plan for anything other than their next re-election.
Anyone care to wager who is going long in corn futures?
some research suggests ethanol is net-negative on energy production. al gore said recently that it takes the "second generation" of production techniques before we see useful returns. how unpleasant. i've heard ethanol cannot be transported by pipeline because it's too caustic, and so must be trucked. finally, ethanol causes asthma. my buddy was an energy beat reporter once. he explained that corn and farmers have political clout. that doesn't mean ethanol's a good idea.
GETTING OUT OF YOUR CAR AND BUYING LOCALLY IS A GOOD IDEA. if half the people obsessed with alternative fuels were equally obsessed with fuel use reduction, what a world we'd enjoy. THE BEST FUEL SOLUTION IS USE REDUCTION.
And we can't use Brazil's sugar as fuel because of trade barriers. RON PAUL WOULD CLEAN UP THIS COUNTRY AND SAVE THE PLANET. Brazil does eliminate rainforests to plant sugar, though. but energy-wise, SUGAR IS GREAT AND CORN IS CRAP.
Google around and you'll find that bio-butanol has about the same energy content as petrol, can be substituted drop for drop, doesn't corrode pipelines and extracts energy more efficiently than ethanol.
And it can be made from wheatgrass!
I'm with John. The best solution is use reduction, it's that simple. Get out of the car and buy locally, indeed. Consolidate trips, shop local, grow your own food, etc. If we went back even a few decades--to when families had one or at most two cars, when kids rode the bus to school, when people shopped at the local grocery store, when people took the train to work in the city--we'd be in much, much better shape.
In unrelated news, huge move up in the markets today, on overall negative news. I won't break out any Casey-isms, this is an old-fashioned mix of thin-volume manipulation and "irrational exuberance". Unfortunately, the markets picked a bad time to rally--they can ignore economic indicators (they've been doing that for years), but the earnings set to come out the next couple of weeks will be more difficult to ignore.
IMHO, nuclear energy is the answer. We need to start building new plants as quickly as possible. Not in my back yard? How about if you got free electricity if you live within something like 10 miles of the plant.
Ethanol is a bit like those silly scrap metal drives in WWII. It's essentially useless, but I guess it makes people feel better because they are 'doing something'.
It's *really* easy to waste money when it's not yours. And when you're rich enough not to be suffering at the misuse of funds.
Isn't there anything that can be done with koi & algae?
koi & algae
A lot of development needs to be done to make it real, but this is a correct "proportional" approach to multiple problems.
APS has a small pilot plant.
Flue gas goes in at 12.5% CO2 and comes out at about 3-4% CO2. Algae eats the CO2 and any koi that wander by, absorbs sunlight and then is harvested and processed into biodiesel.
The drawback of this technology is that it takes huge amounts of land (which need to be near the plant smokestack to keep costs down). A place that processes the algae into diesel needs to be nearby, but those are becoming fairly common.
Link, without the linky thingy.
http://www.aps.com/general_info/newsrelease/newsreleases/NewsRelease_358.html
Cellulose-based anything (ethanol, wtc.) is a load of vaporware.
Companies won't tell you how much it cost to produce the few thousand gallons they made in a lab, only that they expect costs to be competitive with corn-based ethanol sometime in the future.
I bet they ask for MORE subsidies than the corn-based ethanol producers!
Ethanol is a great oxygenator (given the alternatives), but is terrible as a fuel.
Now that we have low-sulfur diesel, I'm buying the biggest "heating oil" tank I legally can and filling it full of on-road diesel (stores for many years with treatment)
New clean, fuel efficient diesel cars are coming to the U.S. over the next 12-24 months.
A good discussion here, and thanks to everyone that has posted.
Rob wrote "I'm not even sure that after counting petroleum based fertilizers if ethanol is energy positive."
You know what, I live in GA. RURAL GA. Call me farmgirl. What makes me utterly doubt the calculations showing positive returns is that they use very high yields. Because this year more marginal land was planted in corn, the fuel expenditure and the chemicals expended (which require manufacture, transport and sometimes even petroleum-based additives) rises in proportion to the yield from this land. Worse yet, much of the land has been converted from crops it is more suited for, which would require less inputs.
I have been watching all this year as pesticides, fertilizers, and the like are one of the few categories that really has a strong positive in the industrial production reports. I bet this is actually very bad for the environment. I doubt very much it will change the carbon balance in the atmosphere an iota, and I'm completely sure that is causing more pollution.
Mind you, I probably owe a vote of thanks to environmentalist enthusiasts who just drove up the price of the farmland we own - but instead I'm cursing them, because I was raised to genuinely care about the environment.I don't feel good about what is happening here. It's bad both economically and environmentally.
Btw, I wrote my Congress Critters and yelped "NO!" about this exercise in slaphappy dogoodism before it passed. Obviously, I have no clout.
Liquefaction of coal is the way to go. We have A LOT more energy in the form of coal than Saudi Arabia has in oil. Liquefaction of coal would be cost competitive with gasoline at today's prices (though estimates vary widely). Using liquefied coal would help to rebalance our trade deficit and it would also cause the decay of Muslim oil tyrants. Win-win!
http://en.wikipedia.org/wiki/Synthetic_fuel
Fischer-Tropsch is closer to economic parity than in the past. One real benny is the ultra low sulfur, etc. Best use is aviation.
Germany used it during WWII because we blew the hell out of their oilfields, they had to make it no matter what the cost.
The synergy of co-generation & CO2 sequestration in algae growth will probably tip the economic balance.
Development of the process can continue only if the cost of crude oil remains at or above the present level. OPEC dropped oil prices dramatically after the early '70s shortages, killing off most all alternatives. Remember Lucy holding the football?. They'll do it again.
We need a pol with guts to set a floor on oil imports, reflecting something closer to the true value of crude oil (our Trust Fund).
Say we set a value of $100/barrel.
(Today's price + military cost + environmental cost). Any oil imported pays the difference straight to the national debt.
Investment in domestic production will not be at the mercy of low price imports. Dollar looks less like a peso. Cost of running the country goes down. Alternative fuels have a chance to take root and grow. Cost of fuel will increase, but remain below EU levels. Lower consumption will be encouraged. A major inflationary factor will be neutered. Arabs can eat sand or, alternatively, buy the corn we didn't waste as fuel.
How many wins is that?
The fallacy in the argument?
Politicians with guts & brains.
Interesting new post over at IAFF.
Casey and Mark settled, blog to be sold.
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