Sunday, April 19, 2009

Exposing the Ethanol Fantasy in Iowa

A town of 4,000, Dyersville, Iowa is best known as the location of the 1989 film "Field of Dreams." In the film, a voice urges Kevin Costner to create a baseball diamond in a cornfield and the ghosts of baseball past emerge from the ether to play ball. Audiences suspended disbelief as they were charmed by a story that blurred the lines between fantasy and reality.

That's pretty much the story of ethanol. Consumers were asked to suspend disbelief as policy makers blurred the lines between economic reality and a business model built on fantasies of a better environment and energy independence through ethanol. Notwithstanding federal subsidies and mandates that force-feed the biofuel to the driving public, ethanol is proving to be a bust.

~Wall Street editorial by Max Schulz, senior fellow at the Manhattan Institute

11 Comments:

At 4/19/2009 3:35 PM, Blogger rufus said...

The Wahhabi St Journal (owned by Newscorp - 15% iirc owned by Saudi Prince Walahid sp. Strikes Again. LOL.

Verasun, and Aventine have one thing in common. Neither CEO understood the agriculture business. Both, after the worst flooding in decades, shorted corn all the way to the "TOP;" and, then, turned around and committed many months in advance at the highest corn prices in history.

This is similar to several large oil distributors (Flying J) that did the same thing with oil.

Good ethanol companies like Poet went about their business buying corn, and making ethanol, and are doing just fine.

In the last 9 months corn prices have fallen by 50%. Food prices, which are influence many times more by oil prices, and labor costs, haven't fallen hardly any.

When we were subsidizing corn for cattle producers, and Kelloggs, there was about 2.2 cents of corn in a box of corn flakes. Today, there is less than $0.04 of corn in a box.

Mexican tortillas are made with Mexican-grown White Sweet Corn. Ethanol is made with U.S. grown Yellow Field Corn. There was no vector between the two.

Mexican corn prices, which were Much higher than U.S. prices, didn't start going down until Jan 2008 when the import restrictions on U.S. corn were lifted.

Searchinger "research" was a joke. It's been thoroughly discredite. It was, simply, a string of "could be's," "might be's," and "possiblee's." There is no record, anywhere, of a single tree being chopped down as a result of corn ethanol.

The whole idea is ludicrous. We carried over 1.7 Billion bushels this year, and 5 Million Acres are Coming Out of production. This is not an anomoly; it's the trend. We've taken something like 50 Million acres out of rowcrop since WWII.

And on, and on.

As a Mr. Petrowski (CEO of Gulf Oil) said, "What would the price of gasoline been in 2008 Without the 9 Billion Gallons of Ethanol?"

 
At 4/19/2009 3:58 PM, Blogger QT said...

Rufus,

If ethanol does not affect world food prices ie. foods made with corn & animal feedstock. How is it that in Haiti mud cakes became a dietary staple?

Notice that you have not mentioned water usage which varies from 19 to 96 gallons to produce 1 gallon of ethanol.

As a matter of curiosity, what state do you live in? Could it be Nebraska or Iowa by any chance?

 
At 4/19/2009 3:59 PM, Anonymous gettingrational said...

The subsidies would have been better spent on building infrastructure for natural gas distribution for delivery vehicles. The U.S. is naturally the Saudi Arabia of natural gas and unnaturally of corn.

 
At 4/19/2009 4:29 PM, Blogger rufus said...

QT, Haiti has BIG problems; but their problems aren't in any way connected to corn, or ethanol.

I don't know what 1.3p converts to; but I seem to remember these people were paying about twenty, or thirty cents/lb for those mud cakes.

Corn is selling for less than $0.07/lb. Add on shipping and you're still less than ten cents/lb.

The average ethanol refinery is probably using about 3 gal of water for a gallon of ethanol. The better ones about 2.6 gallons. A fifty million gal/yr ethanol refinery uses about the same amount of water as a municipal golf course. There are 5,000 of them in the U.S. (compared to 196 ethanol refineries.

Many ethanol refineries use "grey" water from municipal sources, water from utility holding ponds, etc.

Only 4% of the corn used in ethanol is irrigated. Of that, virtually all is from shallow well (not the Ogallala Aquifer.) Most all of the water that's used is released as Steam, and then returns as precipitation.

I live in Mississippi. I was raised on a farm, but haven't set foot on one in 40 years. Unlike Max Shulz, who is Senior Fellow at the Big oil, Big Tobacco-supported Manhattan Institute, or the Wall Street Journal, largely owned by a Saudi Prince, I have NO Financial position in Ethanol, Agriculture, Oil, Retailling, etc. I am a Retired Insurance Salesman.

I do, however, drive a flexfuel Chevy Impala.

I don't want my grandkids dying for oil.

I, also, think it's ridiculous business to import a Billion Dollars of oil every day from people that will spend a certain amount of that money to try and kill me, and my family.

I don't think this energy debate is about what you think it's about.

 
At 4/19/2009 5:01 PM, Blogger rufus said...

Gettingrational, there are a lot of people that think Oil has ALREADY peaked. (We'll know sometime after the recession, I suppose.)

A whole lot more think we're going to peak, "sometime soon." If either case is correct our immediate need is for a "broad-based" transportation fuel that will "Mix" with gasoline. Nat gas doesn't work in that scenario.

Overlooked in all the sturm and drang is that about 8% of that stuff in your fuel tank is ethanol. It will soon be closer to 13%.

8% of 250 Million vehicles means that about 20 Million Americans are being transported by ethanol. Other technologies will play a role in the future. Electric/hybrid to some (possibly large) extent. Nat gas, maybe, but it's hard to evaluate the "shale play," which is what natgas is all about, right now.

Thing is, Ethanol is "NOW." We're using it, and we can expand it like crazy.

 
At 4/19/2009 7:33 PM, Blogger 1 said...

This comment has been removed by the author.

 
At 4/19/2009 7:42 PM, Blogger 1 said...

Let's see now... rufus who describes the Wall Street Journal as a wahhabi rag starts filling us in with his fairy tales about ethanol...

Funny how there's no mention by rufus about the substantial government subsidies needed to prop up ethanol production...

Then again its been known for quite some time now that ethanol as a fuel source can't pay for itself in any practical way...

"Searchinger "research" was a joke. It's been thoroughly discredite"...

Hmmm, which credible group of people did this alledged discrediting?

"As a Mr. Petrowski (CEO of Gulf Oil) said, "What would the price of gasoline been in 2008 Without the 9 Billion Gallons of Ethanol?""

Hmmm, how many gallons of domestically produced gasoline could've have had if it were NOT for the Democrats?

"The average ethanol refinery is probably using about 3 gal of water for a gallon of ethanol. The better ones about 2.6 gallons. A fifty million gal/yr ethanol refinery uses about the same amount of water as a municipal golf course. There are 5,000 of them in the U.S. (compared to 196 ethanol refineries"

Iowa uses 6 gallons of water to make one gallon of ethanol - California's 2,100 gallons

 
At 4/19/2009 8:02 PM, Anonymous gettingrational said...

rufus, Yes we ae now experiencing Peak Oil and it it on the way down the supply curve. No natural gas is not at the same supply scenario and much more easier to extract with the resulting abundance in the U.S. Te problem is a delivery system to vehicles as a transportation energy source. I think the best system sould be to set a distribution system for delivery vehicles in metropolitan areas. This way a totally disbursed system is not needed but availoable for delivery vehicles at a very low emission level.

I am not sure what the percent of oil saved would be but it would be significant. Farming is not easy but ethanol that is subsidized does not pencil out at this point in history,

 
At 4/19/2009 10:36 PM, Blogger rufus said...

We, currently, are shipping about $500,000,000.00 Daily to foreign countries for oil. We have a Four Hundred Billion Dollar Annual Negative Trade Balance.

Since 2003 we've spent, approx., One Trillion Dollars, and 4,000 of our Childrens' Lives "Protecting" the Oil.

Oh, yeah, and we spent $4.5 Billion last year on Ethanol Subsidies. On the other hand, Merril Lynch, and Ia State Univ. research indicated that we saved somewhere between $0.29 and $0.50 on Every Gallon of gasoline we purchased (competition from that 9 Billion Gallons, again.)

That would be savings of somewhere between $40 Billion, and $70 Billion on gasoline.

It seems that study was including water obtained through irrigation and used in growing the corn. That study did not take into consideration that an acre of corn "Transpires" 4,000 gallons of water daily. This water returns as precipitation in the next county, or state (or, right back on your head.)

I'm a registered Republican, who, reluctantly, voted for McCain.

Ethanol pencils out, Gettingrational, when the cost of production is about 20% below the wholesale price of Gasoline. It penciled out "real good" for awhile last year, but is about $0.30/gal short, now. Next year, we'll see.

 
At 4/20/2009 8:03 AM, Blogger 1 said...

"Since 2003 we've spent, approx., One Trillion Dollars, and 4,000 of our Childrens' Lives "Protecting" the Oil"...

Oh yeah?!?!

You mean it wasn't for this? "Saddam
Hussein must not be allowed to threaten his neighbors or the world with nuclear
arms, poison gas, or biological weapons
"...

BTW Benjamin Scafidi says taxpayers are on the hook for $112 billion per year for single mothers...

"We, currently, are shipping about $500,000,000.00 Daily to foreign countries for oil"...

Well we know where part of that cost comes from...

"That would be savings of somewhere between $40 Billion, and $70 Billion on gasoline"...

Apparently those alledged savings aren't all they are cracked up to be... In fact ethanol wouldn't and can't stand on its own: Corn Ethanol Subsidies: "A Poor Investment Economically And Environmentally""I'm a registered Republican, who, reluctantly, voted for McCain"...

Not my fault...

Voting for McCain would've been little if any difference than voting for Obama

 
At 4/20/2009 10:25 AM, Blogger QT said...

That study did not take into consideration that an acre of corn "Transpires" 4,000 gallons of water daily. This water returns as precipitation in the next county, or state (or, right back on your head.)Water vapour accounts for 60% of the greenhouse gas effect.

 

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