Wednesday, February 04, 2009

Is America's Greatest Political Boondoggle Ending?

KANSAS CITY STAR -- Prospects for the ethanol business have gotten so bad that one Kansas-based producer has decided to stop making the fuel additive and will focus instead on making a profit. The problem for MGP Ingredients is that it's not entirely sure it will be able do that. Its problems have put the Atchison, Kan.-based company in default on its bank loans.

The company had suspended its production of the fuel-grade alcohol in November. This morning, it’s decided to pull the plug on ethanol permanently. MGP said it will devote its Pekin, Ill., plant to making food-grade alcohol.

MP: It looks like MGP's stock really started to tank around the same time last summer that oil and gas prices started to drop.

Flashback to the summer of 2007:

Ethanol is not just hype -- it's dangerous, delusional bullshit. Ethanol doesn't burn cleaner than gasoline, nor is it cheaper. Our current ethanol production represents only 3.5 percent of our gasoline consumption -- yet it consumes twenty percent of the entire U.S. corn crop, causing the price of corn to double in the last two years and raising the threat of hunger in the Third World.

So why bother? Because the whole point of corn ethanol is not to solve America's energy crisis, but to generate one of the great political boondoggles of our time. Corn is already the most subsidized crop in America, raking in a total of $51 billion in federal handouts between 1995 and 2005 -- twice as much as wheat subsidies and four times as much as soybeans. Ethanol itself is propped up by hefty subsidies, including a fifty-one-cent-per-gallon tax allowance for refiners. And a study by the International Institute for Sustainable Development found that ethanol subsidies amount to as much as $1.38 per gallon -- about half of ethanol's wholesale market price.

~RollingStone Magazine's August 9, 2007 article "
The Ethanol Scam: One of America's Biggest Political Boondoggles"

10 Comments:

At 2/04/2009 2:51 PM, Blogger fboness said...

Ethanol producer Renew Energy of Wisconsin filed for bankruptcy just one year after starting up.

http://www.chippewa.com/articles/2009/02/03/news/doc4987c291bde48836500718.txt

Wasted money all around.

 
At 2/04/2009 3:32 PM, Blogger Dave Narby said...

Besides which ethanol is *corrosive*. You can't use existing infrastructure to transport it.

Nor can you use it without blending in your vehicle, and I suspect extensive use of E85 will result in all aspects of your fuel delivery system failing prematurely.

The only real solution for biofuels at the moment is Butanol, and that was back when gas was at $4.00 a gallon.

 
At 2/04/2009 3:44 PM, Anonymous Anonymous said...

"Ethanol doesn't burn cleaner than gasoline"

I know I'm probably asking too much from a blog, but it would be nice if you could back up statements like the one above. I'm not disputing your comment, but it seems as if some folks have reason to believe otherwise. If the purpose of your blog is to convince readers, then it would be reasonable to give both points of view and then allow the reader to decide whether ethanol burns cleaner or not. I guess the "statement of fact" technique works for some readers, but not all.

 
At 2/04/2009 4:17 PM, Blogger NoWhining said...

"I know I'm probably asking too much from a blog, but it would be nice if you could back up statements like the one above."

He doesn't have to back it up. He didn't make it. If you want to source it, you should ask the author of the article who published it in the Rolling Stone edition from 8/2007. The host did his due diligence in that he cited and linked to the article. The rest...and I know that this is asking a lot from a blog reader...is up to you. Do some research of your own.

 
At 2/04/2009 6:04 PM, Anonymous Cromagnum said...

I remember reading in the 1980's about a guy who tried to get a bank loan for a small scale alchohol fuel production on his farm. He claimed it could be economical if he used or sold the alcohol, and then would use the leftover 'distiller's grain' to feed a fish farm. (High protein 26%+)He claimed fish have the best conversion rate of raw feed to meat, and have the highest wholesale $ per lb of processed meat. (I think the best use of ethanol is a nearby turbine power plant, that way the volume is used immediately, and no liquid shipping cost.)

I cannot find the original source, but here is similar
http://www.homestead.org/AltEnergy/MakingAlcoholFuel.htm

I would also note that the Ethanol building craze occurred at the same time that metal prices doubled, and distillers use tons of stainless steel. So capital costs increased for them, raw costs spiked because of speculation and producers were stuck with expensive and useless futures contracts, now there are no profits to be distilled.

A perfect storm. And (maybe) Big Oil gamed the system and won (Quo Bene?).

 
At 2/04/2009 10:12 PM, Blogger misterjosh said...

I think the best use of ethanol is inebriation. but that's just me.

 
At 2/04/2009 10:21 PM, Anonymous Ralph Short said...

I have to say I was never excited about Ethanol (which is alcohol) as a fuel for cars. One reason for this is that water is soluble in ethanol and therefore invisible unless continually tested. With gasoline or other stronger solvents the water molecules separate and are visible. From what I have heard this is what happens sometimes when you are filling up your car with gasoline and the tank it is being extracted from is almost empty, i.e. the moisture has settled or separated from the gasoline.

I learned this from printing and from learning to fly an airplane. One of the first things the flight instructor would tell you to do (before takeoff) was to sample the gasoline. If there was a bubble at the bottom it would tell you water had gotten into the gasoline.

I have no clue how you would detect it with an ethanol based fuel except to do gas chromatography.

 
At 2/04/2009 11:41 PM, Anonymous Cromagnum said...

Still waiting for the H2O powered fuel cell

Use quantumsphere catalyst technology to get the efficiency up.
http://www.qsinano.com/
http://www.qsinano.com/apps_fuelcell.php

Its not a perpetual motion machine, as you do 'consume' the water

That improvement would cell cars very quickly for the automakers (pun intended)

 
At 2/05/2009 2:15 AM, Blogger Ron Steenblik said...

Mark,

Yes, the smaller, more highly leveraged ethanol producers are hemorrhaging, but their plants are being snapped up by the big boys, like Poet. What we are witnessing is a long overdue correction in the market, to bring capacity more into line with demand.

You seem to have forgotten that there is a Renewable Fuel Standard -- a legal obligation -- that has to be met this year: 11.1 billion gallons, of which 10.5 billion will be met by corn ethanol (and some imports of sugarcane ethanol), and most of the rest by soy-based biodiesel.

Look at the prices, too: ethanol is selling at a considerably higher price than gasoline -- not because it is preferred by consumers but because blenders are obliged to use it or they get fined.

Never, never turn your back on this industry. Here, from a recent posting on the DTN Ethanol Blog, is an insight into the way the industry thinks:

"For the next two years, farmers ought to produce as much corn as possible to 'flood' the market with cheap feed in order to create a firm E [i.e., ethanol] industrial base for their future corn production. Otherwise, the search for an alternative to corn will continue; once alternatives take hold, this will jeopardize the economic basis of corn-based ethanol."

Translation: "Let's make corn ethanol so dominant that nothing will knock it off its throne."

Doesn't sound to me like the corn-ethanol industry is planning to bow out of the picture any time soon.

 
At 2/06/2009 11:38 PM, Blogger OBloodyHell said...

Ethanol has a substantially lower energy per gallon than Diesel, to say nothing of Gas.


Ethanol as has been noted, is intersoluble with water, which means it attracts condensation and moisture problems.

Ethanol is corrosive. So is gasoline, but protection from gasoline corrosion is not the same as protection from alcohol corrosion (or water corrosion for that matter), so all parts need to have three-way corrosion resistance not one.

Ethanol sucks excess food from the world food supply, increasing prices and chances for starvation in poor peoples' aroud the world.

In short, ethanol is a stupid, idiotic idea whose time is not only not here, it never will be.

And, appropriately enough, the word verification is "dunfor".

 

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