Saturday, June 04, 2011

We're in Era of "Peak Renewables," To Be Followed By An Age of Fossil Fuels That Has Just Begun

Scott Grannis points to this excellent Salon article "Everything You've Heard About Fossil Fuels May Be Wrong" about natural gas and fracking, here are some excerpts:

"According to the conventional wisdom, the U.S. and other industrial nations must undertake a rapid and expensive transition from fossil fuels to renewable energy for three reasons: The imminent depletion of fossil fuels, national security and the danger of global warming. What if the conventional wisdom about the energy future of America and the world has been completely wrong?

The U.S., Canada and Mexico, it turns out, are sitting on oceans of recoverable natural gas. Shale gas is combined with recoverable oil in the Bakken "play" along the U.S.-Canadian border and the Eagle Ford play in Texas. The shale gas reserves of China turn out to be enormous, too. Other countries with now-accessible natural gas reserves, according to the U.S. government, include Australia, South Africa, Argentina, Chile, France, Poland and India.

Because shale gas reserves are so widespread, the potential for blackmail by Middle Eastern producers and Russia will diminish over time. Unless opponents of fracking shut down gas production in Europe, a European Union with its own natural gas reserves will be far less subject to blackmail by Russia. The U.S. may become a major exporter of natural gas to China -- at least until China borrows the technology to extract its own vast gas reserves. 

Two arguments for switching to renewable energy -- the depletion of fossil fuels and national security -- are no longer plausible.

The arguments for converting the U.S. economy to wind, solar and biomass energy have collapsed. The date of depletion of fossil fuels has been pushed back into the future by centuries -- or millennia. The abundance and geographic diversity of fossil fuels made possible by technology in time will reduce the dependence of the U.S. on particular foreign energy exporters, eliminating the national security argument for renewable energy.

Conclusion: Eventually civilization may well run out of natural gas and other fossil fuels that are recoverable at a reasonable cost, and may be forced to switch permanently to other sources of energy. These are more likely to be nuclear fission or nuclear fusion than solar or wind power, which will be as weak, diffuse and intermittent a thousand years from now as they are today. But that is a problem for the inhabitants of the world of 2500 or 3000 A.D.

In the meantime, it appears that the prophets of an age of renewable energy following Peak Oil got things backwards. We may be living in the era of Peak Renewables, which will be followed by a very long Age of Fossil Fuels that has only just begun."

MP: The chart above shows that natural gas has become so abundant in the U.S. because of technological advances in drilling that prices for commercial users today (adjusted for inflation) are lower than at any time since November of 2002. 

To understand how horizontal drilling and hydraulic fracturing work and have revolutionized natural gas production, check out this video (thanks to Pete Friedlander). 

44 Comments:

At 6/04/2011 9:22 PM, Blogger VangelV said...

If shale gas were to offer a positive return why is it that most of the players are bleeding red ink and spinning a shale liquids story? At $4-$10 million per well and a massive depletion rate you can't make money in natural gas and that abundance that you are claiming will require tens of thousands of new rigs and rig crews just to keep the treadmill going.

As usual you are allowing hype to cloud your judgment. While some shale formations are fabulous and will make investors rich, most are worthless and will destroy wealth as the energy produced will be less than the energy invested in that production. There is no free lunch.

 
At 6/04/2011 10:05 PM, Blogger Larry G said...

Let's assume that we are sitting on the largest deposits of natural gas in the world.

But let's put it in context.

If we were to substitute whatever that huge estimated number is - for gasoline for cars and electricity instead of coal - how long would it last?

500 years?
100 years?
25 years?

 
At 6/04/2011 11:48 PM, Blogger Rufus II said...

"Fraccing" is not "new" technology, at all. It's been around for decades. The problem with fracced wells is: they produce like the dickens for a short period, and deplete, rapidly.

Also, a shale deposit has a "sweet spot." It will produce very well, but as you move out away from there the production falls off rapidly.

And, of course, some of those fraccing liquids are pretty nasty stuff. Some are proven carcinogens - benzene, for ex.

Anyway, it's something, but we really shouldn't bet the farm on it. Not yet, at least.

Now, producing enough for "transportation fuels," now, that's a whole 'nother animal. I gotta be real, super skeptical on that one.

Here's a little thought process. What would be the investment in infrastructure to supply a city of, say, 125,000. That would be 100,000 cars/light trucks.

Well, to convert the automobiles, themselves, would be about $400,000,000.00 (about $4,000.00 apiece.)

Figure 75 fueling stations. That would be, at least, $200,000,000.00

Pipeline to town? I don't know; leave that blank for awhile.

So, for 125,ooo people we have an infrastructure cost of at least $600 Million, and counting.

That's $4,800.00 per person + pipeline infrastructure + drilling, etc.

$4,800.00 X 300,000,000 (pop. of U.S.) = $1,440,000,000,000.00

$One Trillion, Four Hundred and Forty Billion + Pipelines + Drilling + Disposal of Carcinogenic Fraccing Waste

And, all that on a gamble that the shale plays will meet the optimistic expectations, and that the price of nat gas won't go to $25.00, or $30.00, or more.

Meanwhile, we're still importing 10% of our nat gas from Canada.

I don' know.

 
At 6/05/2011 12:05 AM, Blogger Rufus II said...

On the other hand, half of the GM, Ford, and Chrysler autos made this year (2912) will be flexfuel. They sell for the same price as Non-Flexfuel autos.

A biorefinery converting local ag waste, or switchgrass to ethanol for 100,000 autos (about 5.5 Million gallons/yr) should cost approx $15 Million ($30 million if you want to produce 5 Megawatts of electricity off the left-over lignin - left over after you've fired the process.)

All other infrastructure is in place.

So, $1.44 Trillion vs $15 Million.

One truly is "renewable, and sustainable," and the other . . . . . . ?

 
At 6/05/2011 12:06 AM, Blogger Rufus II said...

2912 should be 2012.

 
At 6/05/2011 12:23 AM, Blogger Rufus II said...

Yikes, my bad. It's getting late, and my eyes are hurting.

You would need 55 million gallons of ethanol, not 5.5 million.

The plant would be in the $150 Million dollar range.

Cost for country would be $150,000,000.00 / 125,000 X 300,000,000 = $360 Billion.

Or, about 1/4 the cost.

 
At 6/05/2011 4:28 AM, Blogger Ron H. said...

Rufus,

I'm not sure where you are getting your numbers, but try these: There are approx. 254 million autos in the US that use 137 billion gals of gasoline per year. That's the energy equivalent of 205 billion gals of ethanol. If you fuel the 1/2 of the cars that are flex fuel vehicles, with ethanol, then 102 billion gals per year are needed.

If you can get 300 gal/acre - feel free to use some other number - then you need to grow 340 million acres of something to make into fuel.

That's almost 4 times the total acreage of corn currently grown in the US, and is almost twice the land area of Texas.

I think the cost of processing plants might be the least of your worries.

I don't mind being wrong, so feel free to explain it to me.

 
At 6/05/2011 9:40 AM, Blogger Rufus II said...

Ron, I was figuring 550 gal/yr. This is a bit better than the present 240 million vehicle fleet is getting, but the fleet is getting more fuel efficient, now, every year. I'm looking at the new valving technology in the Buick Regal 2.0, and the addition of the heated Delphi injectors soon to hit the market.

But, here is the most important consideration. We can get way more than 300 gal/acre on switchgrass. In the Southeast 20 tons of bone-dry switchgrass is nowhere near the high point. Figuring 75 gal/ton you're looking at 1,500 gal/acre. And this is using a lot of land that, at present, we are paying farmers Not to plant.

Then you have the Municipal Solid Waste which can yield approx 10 Billion gal/yr, and Ag waste (corn stover, wheat straw, etc) than can yield another 10 Billion Gallon/yr.

Of course, the real goal is to use our oil, and replace the oil that comes from overseas, and is, subsequently, refined into gasoline. The Diesel is another animal, and we might very well use some nat gas there.

So, I'm looking at about 90 Billion Gallons/yr. Maybe 60 Billion gallons from energy crops (switchgrass, miscanthus, etc.) I think this is very doable. If you took the SE Quadrant of the U.S. (say 500,000 sq miles) you would need approx. 12.5% of each county. Trust me, there are very few counties in La, Ms, Al, Ga, Fl, and SC that couldn't give up 12% of their scrub land for energy independence.

And, of course, all of that is just One scenario. There are many others that will likely play out.

 
At 6/05/2011 10:29 AM, Blogger VangelV said...

A biorefinery converting local ag waste, or switchgrass to ethanol for 100,000 autos (about 5.5 Million gallons/yr) should cost approx $15 Million ($30 million if you want to produce 5 Megawatts of electricity off the left-over lignin - left over after you've fired the process.)

But you can't get a positive return from ethanol. You will need to invest as much energy in fertilizing, tilling the fields, planting the crop, harvesting, processing, and distribution as you will get in energy from the ethanol. (If you arr lucky.) That means that there was no net energy created, which means that there is no solution to our problem.

 
At 6/05/2011 10:51 AM, Blogger VangelV said...

We can get way more than 300 gal/acre on switchgrass.

You can't. There is no process yet that will allow a POSITIVE energy return on the energy invested. In fact no matter which material we start with producing ethanol requires about as much than it provides using current practices. This means that the way things are done now it takes more than a barrel of oil to make the fertilizer that feeds the crops, pump the water to irrigates the crops, drive the tractors that till the soil and harvest the corn, drive the trucks that take the crops to the facilities, and process it into enough ethanol to replace a barrel of oil.

Now I don't know about you but I see that as a big problem. But suppose that you and the other optimists are right and that if we change the methods that we use we can come up with improvements that would decrease the cost of producing ethanol so that we get a 20% improvement. Well, this means that for every five gallons of ethanol we will be able to replace one gallon of oil. But at a subsidy of $0.60 per gallon this means that the government pays the biofuel industry $3 for each gallon of oil that they replace. No matter how we spin it, that does not make any sense to any rational person.

I too have no trouble being proven wrong. Please feel free to correct my errors or come up with a better argument.

 
At 6/05/2011 11:02 AM, Blogger Jason said...

But you can't get a positive return from ethanol.

That's using David Pimentel's and his associates' numbers. Other studies indicate anything from a slightly positive return to a good positive return. If you exclude numbers from Pimentel's and related studies, the energy return is anywhere from 1.1 to 6.

WIkipedia has a good article on this.

 
At 6/05/2011 11:46 AM, Blogger James said...

“The arguments for converting the U.S. economy to wind, solar and biomass energy have collapsed.”

Baloney! There was never an argument that would stand up in the first place. A rational analysis of any of these would have shown that they can never work.

The fools behind these seem to think that they are competing with the price that fossil fuels MAY be in the future and by some law of nature that price must go up. If they could deliver, and they can not, they would have to compete with the cost of extraction plus an acceptable profit. The last cost estimate I saw to extract a barrel of Saudi oil was in the range of $2. Add a profit and shipping and none of these will ever be competitive.

But cost is not relevant. None of these things are capable of delivering the energy we need. Why did we have to send billions down a rat hole before we figured that out? If indeed, we have figured that out. This was never a rational decision based on a sound analysis.

 
At 6/05/2011 11:55 AM, Blogger VangelV said...

The last cost estimate I saw to extract a barrel of Saudi oil was in the range of $2. Add a profit and shipping and none of these will ever be competitive.

An average barrel of Saudi Oil costs a great deal more than $2. And if you look at the newly produced, marginal oil barrel, you are looking at a cost of $75 or more. This is why the Saudis have never been able to do what they claimed that they could and why their production of conventional light sweet crude is down.

 
At 6/05/2011 12:08 PM, Blogger Buddy R Pacifico said...

Are manipultors driving the price of natural gas down? (<:

Natural gas seems a natural for delivery trucks in urban areas. Fed Ex, UPS, USPS etc. could be using nat gas in dense urban areas.

 
At 6/05/2011 12:32 PM, Blogger Rufus II said...

Vange, you're just Way Off on everything you think you "know" about ethanol, especially cellulosic ethanol. It is being produced, as we speak, by Genera Energy, at Vonore, Tn., and by Inbicon, in Denmark. The numbers are starting to solidify.

The main place where you're way off is in the energy needed to grow, and process biomass to produce ethanol. It takes very little fertilizer (None after the first two years of the plant's Nine Year Growth Cycle,) A miniscule amount of fuel to harvest and transport to a local biorefinery, And Zero fossil fuel to operate the refinery.

There is so much lignin left over after powering the plant that virtually All cellulosic facilities will have an adjacent Electrical Power Plant to burn the remaining mass. A typical cellulosic biorefinery will power itself, and produce a Megawatt/yr of electricity for every million gallons/yr of ethanol produced.

The rest of your numbers are just as bad. Patzek, and Pimental were wrong, even when they produced their studies (Patzek was founder, and Director of Southern Ca OIL Consortium, and Pimental has always had strong allegiance to the Coal Industry - he champions "coal to ethanol."

There are many Good sources out there. There is no need to rely on such outdated, and inaccurate representations.

 
At 6/05/2011 12:40 PM, Blogger Ron H. said...

Rufus

"Dave Bransby, a scientist at Auburn University, recently recorded a one-year switchgrass yield of 15 tons per acre, according to the DOE, and a six-year average of 11.5 tons per year. Such yields could make up to an impressive 1,500 gallons of ethanol per acre!"

This IS impressive, but how much is actually being produced in the real world at large scales that are actually available to go in my fuel tank?

What's taking so long? I keep hearing about this bright new day, but there's never anything to see.

Are there any major obstacles?

This all sounds so simple. It almost sounds too good to be true.

 
At 6/05/2011 1:16 PM, Blogger Rufus II said...

Ron, James Schlesinger once said, "We have Two Modes: Complacency, and Panic." We're not quite to the "Panic" mode, yet.


Huge gains in the efficiency of the necessary enzymes have only taken place in the last two years. Prior to that, cellulosic was, pretty much, out of the question. Also, some really strong "hybridization, and gene-splicing" it taking place in the plants, as we speak. These things take time to soak into the public realization.

Also, the Political Headwinds are Very Strong, right now. The fact of the matter is: There is Zero money available, at this time, for anything biofuel-related that is not covered by Federal Loan "Guarantees."

Let me ask this: If you were a Banker would you loan several Hundred Million, today, to a new company, with new management, proposing a new technology, to go up against the Oil Companies, The Saudis, and The Tea Party? Pretty tough move, eh?

Here's the thing. I'm a retired old fart with not a dime in the world invested in ethanol, farming, retail, politics, or any of the rest of it. I don't even operate a "blog." I've studied this quite a bit in my rather copious amount of "spare" time.

I can see no other medium-term option. And, not only can I see no other acceptable option, This One looks like an extremely attractive option. We're paying farmers Not to plant almost as many acres as it would take to replace all of the rapidly disappearing foreign oil that's wrecking our economy in the first place.

A couple of large plants will begin construction this year that will use ag waste. I figure along about 2013 we will see a huge Boom in Ag waste to ethanol plants (corn stalks, wheat stalks, etc) like we saw with corn-to-ethanol plants in 2007.

Until then? We just wait, I guess.

 
At 6/05/2011 2:07 PM, Blogger rjs said...

GE Sees Solar Cheaper Than Fossil Power in Five Years

 
At 6/05/2011 2:21 PM, Blogger VangelV said...

Are manipultors driving the price of natural gas down? (<:

No. There is too much supply given the very weak real economy.

Natural gas seems a natural for delivery trucks in urban areas. Fed Ex, UPS, USPS etc. could be using nat gas in dense urban areas.

That may be true. Nat gas cars and trucks are not uncommon in many areas.

 
At 6/05/2011 2:57 PM, Blogger Rufus II said...

Natural gas seems a natural for delivery trucks in urban areas. Fed Ex, UPS, USPS etc. could be using nat gas in dense urban areas.


I will "ditto" this as well.

With a small caveat. Nat Gas Is going higher. I don't know how much higher, but most of the drillers I've read say there won't be much of a pickup in "fraccing" until nat gas is around the $6.00 to $8.00 tcf level.

But, that should still be a very economic level for the above-mentioned operations.

 
At 6/05/2011 2:58 PM, Blogger VangelV said...

Vange, you're just Way Off on everything you think you "know" about ethanol, especially cellulosic ethanol. It is being produced, as we speak, by Genera Energy, at Vonore, Tn., and by Inbicon, in Denmark. The numbers are starting to solidify.

Really? How many million gallons of ethanol does Genera produce each month and how much per gallon does the ethanol cost to make? How much cash flow does it generate? What about Inbicon? Without its EU grants and subsidies will it be able to make a profit? Have its partners been able to solve the enzyme cost issues and what would its cash flows be if it had to pay everything at market cost and received no subsidies?

The market is on my side of this debate. There are no cash-flow positive corn and cellulosic ethanol producers who are not heavily subsidized. Until there are, there is no evidence that you can generate a positive return on the energy invested.

The main place where you're way off is in the energy needed to grow, and process biomass to produce ethanol. It takes very little fertilizer (None after the first two years of the plant's Nine Year Growth Cycle,) A miniscule amount of fuel to harvest and transport to a local biorefinery, And Zero fossil fuel to operate the refinery.

Some of what you write is true for grass. But I do not see how you can be very efficient when you have to move something that has such a low energy density very far. That means that you have to build many smaller plants that will convert locally produced grasses into ethanol. And move the ethanol to market from there. That is not easy to make work except in a few niche applications.

There is so much lignin left over after powering the plant that virtually All cellulosic facilities will have an adjacent Electrical Power Plant to burn the remaining mass. A typical cellulosic biorefinery will power itself, and produce a Megawatt/yr of electricity for every million gallons/yr of ethanol produced.

Great. We just went back to burning wood and straw to make heat. But let us look at the numbers for a moment. The Inbicon plant cost around $75,000,000 not counting the co-generation facility next to it that uses its lignin. The plant produces 1.4 million gallons of ethanol. (At above market price but let us ignore that for a moment.) At 20 miles to the gallon, an ethanol burning engine uses 500 gallons for every 10,000 miles traveled. That means that the Inbicon plant produces enough ethanol to fuel 2,800 vehicles that average 10,000 miles per year of driving.

Now I don't know about you but I do not consider a $28K in capital per each car and an above market price to be a good investment unless the government made it worth my while. This is not to say that the government won't make it worth my while by using subsidies and tariffs to ensure that I can produce a profit. I just don't think that the process will lead to a real solution or real profits.

The rest of your numbers are just as bad. Patzek, and Pimental were wrong, even when they produced their studies (Patzek was founder, and Director of Southern Ca OIL Consortium, and Pimental has always had strong allegiance to the Coal Industry - he champions "coal to ethanol."

I don't really care about their motives. I care about whether the conclusions are supported by the market. So far the pro-ethanol conclusions are not supported by positive cash flows and production numbers. Didn't someone on this site publish a link to a story about a turkey/chicken fat to oil plant going out of business even though it got the input for free from an ag company? It is easy to make claims early on when everyone is excited and there is grant money and loans to finance the dream. But it is not so easy when you have to produce something that has to be sold at a competitive price and the laws of nature get in the way.

 
At 6/05/2011 3:01 PM, Blogger VangelV said...

Other studies indicate anything from a slightly positive return to a good positive return. If you exclude numbers from Pimentel's and related studies, the energy return is anywhere from 1.1 to 6.

I have never seen any credible study that has a return of 6. If such a process were possible there would be many subsidy free plants operating around the world.

 
At 6/05/2011 3:04 PM, Blogger VangelV said...

This all sounds so simple. It almost sounds too good to be true.

How many companies are producing commercial ethanol that require no subsidies and can sell for the same price per BTU as other sources before taxes?

There aren't any. That means that this is still just in the hype stage and needs to move forward by a breakthrough or two before it can work.

 
At 6/05/2011 3:13 PM, Blogger VangelV said...

Huge gains in the efficiency of the necessary enzymes have only taken place in the last two years. Prior to that, cellulosic was, pretty much, out of the question. Also, some really strong "hybridization, and gene-splicing" it taking place in the plants, as we speak. These things take time to soak into the public realization.

Gains or not it is still too expensive and the net return on energy is still negative. For the system to work it has to produce much more energy than the energy input.

Also, the Political Headwinds are Very Strong, right now. The fact of the matter is: There is Zero money available, at this time, for anything biofuel-related that is not covered by Federal Loan "Guarantees."

So? The oil industry was not built by government grants. Neither was the steel industry, the computer industry, etc. Something either makes sense or it does not make sense. And if you could get a positive energy return it is easy to get financing from private sources.

Let me ask this: If you were a Banker would you loan several Hundred Million, today, to a new company, with new management, proposing a new technology, to go up against the Oil Companies, The Saudis, and The Tea Party? Pretty tough move, eh?

What a stupid way of asking the question. If I were a banker and I got a proposal showing that I could get a six to one ratio from the process you are damn right I would make the loan. But I would not if the return were 20% or negative because it makes no sense.

Here's the thing. I'm a retired old fart with not a dime in the world invested in ethanol, farming, retail, politics, or any of the rest of it. I don't even operate a "blog." I've studied this quite a bit in my rather copious amount of "spare" time.

OK. I will play. I retired ten years ago, and unlike you have skin in the game. That means that I have to look at everything and to make sure that what I read is real, not hype.

I can see no other medium-term option. And, not only can I see no other acceptable option, This One looks like an extremely attractive option. We're paying farmers Not to plant almost as many acres as it would take to replace all of the rapidly disappearing foreign oil that's wrecking our economy in the first place.

When there is no positive return it is not an option. If the return is low it is not an option. We need serious people to find serious solutions, not hype and rent seekers selling greed and fear.

I can see no other medium-term option. And, not only can I see no other acceptable option, This One looks like an extremely attractive option. We're paying farmers Not to plant almost as many acres as it would take to replace all of the rapidly disappearing foreign oil that's wrecking our economy in the first place.

A better option is to stop paying farmers not to plant and to let them produce more food for the world that needs it. And to get government out of the way and to let people who have solutions try them in a competitive marketplace that does not tolerate waste and bad ideas.

 
At 6/05/2011 3:21 PM, Blogger VangelV said...

GE Sees Solar Cheaper Than Fossil Power in Five Years...

There are many hedged statements in the story.

"Solar power MAY BE cheaper than electricity generated by fossil fuels and nuclear reactors within three to five years because of innovations, said Mark M. Little, the global research director for General Electric Co."

"IF we can get solar at 15 cents a kilowatt-hour or lower, which I’m HOPEFUL that we will do, you’re going to have a lot of people that are going to want to have solar at home."

Well someone could argue that if pigs can produce biogas that can be used to power plants making electricity while we sell their meat to consumers we could see both cheap power and food. But that would be a ridiculous statement because it is very unlikely to happen.

And let us note that the high price in some states come down to charges and subsidies designed to sell solar, wind, and other 'alternative' sources to consumers. Get rid of those costs and the price of a kilowatt-hour for electricity ranges from would drop to around 12 cents in most states and would still make solar far too expensive.

 
At 6/05/2011 3:54 PM, Blogger Rufus II said...

BTW, I should have said One Megawatt, not one Megawatt/yr. It would come out to about 8,700 Megawatt/hrs, annually for every million gallons of ethanol produced.

According to the USDA the energy balance on ethanol produced at a dry-grind corn ethanol plant is now about 2.3:1. It will get much better in the future. For ex. 1/3 of all dry-grind plants now produce corn oil for biodiesel on the back end. Several are starting to use their syrup, wood waste, landfill gas, etc. for their process energy.

The Inbicon plant is a research/first of a kind type of plant. They use Novozymes enzymes. There are also state of the art enzymes from Dupont (they paid $5.8 Billion for their enzyme-maker, Danisco.)

The latest number is $0.40 for enzymes per gallon of ethanol produced. Just a couple of years ago it was $5.00 per gallon.

And, yes, I have pounded the drum for a couple of years, now, for small, localized refineries producing for the local market. My deal is: A twenty million gpy refinery in every county. That would be as easy as falling off a log.

Poet, family-owned business, operator of 26 ethanol plants (started with One still on the old man's farm) is looking at being able to sell ethanol from corn stover, profitably, for $2.00/gal (Unsubsidized.) Add shipping, and taxes, rack fees, markup, etc, and you should be looking at ethanol at the pump in the $2.75/gal range. Unsubsidized.

That would put you rolling down the road in your Buick Regal (3,600 lbs) for $0.10/mile, Unsubsidized.

 
At 6/05/2011 4:12 PM, Blogger Rufus II said...

Vange, when you see a CBOT ethanol price of, say, $2.50 gal the only subsidy in that price is an approximate $0.05 subsidy to the farmer for part of his crop insurance. In other words, everyone in that supply chain, backwards (refinery, shippers, farmer, etc) is turning a profit at $2.65 + $0.05 or $2.70/gal.

When corn hits $4.50 in the Fall that will lower the profitable, unsubsidized price to about $2.00 gal.

The $0.46 Blenders' Credit is applied when the ethanol is, actually, blended. It is, in the case of E10, almost always, entirely passed along to the consumer.

So, what has actually happened when you go down to the corner and buy a gallon of ethanol is: the government has borrowed four and a half cents from China, and given it back to you in the form of a four and a half cent discount on your gasoline.

The Good News is: That 900,000 Barrels/Day of Ethanol on the market has lowered the cost of gasoline, significantly, due to the Competitive/Replacement Effect of having the Competing fuel in the Marketplace.

 
At 6/05/2011 4:54 PM, Blogger Ron H. said...

James

"Baloney! There was never an argument that would stand up in the first place. A rational analysis of any of these would have shown that they can never work."

You are absolutely right, but none of your sensible argument matters, as none of this has anything to do with energy.

You are forgetting that this about government picking winners and losers, based on who bids the most for their services, , and about redistributing taxpayer dollars to the highest bidders.

When I view it that way, everything makes perfect sense.

 
At 6/05/2011 4:57 PM, Blogger VangelV said...

According to the USDA the energy balance on ethanol produced at a dry-grind corn ethanol plant is now about 2.3:1. It will get much better in the future. For ex. 1/3 of all dry-grind plants now produce corn oil for biodiesel on the back end. Several are starting to use their syrup, wood waste, landfill gas, etc. for their process energy.

There are a lot of claims that are being made that the market has shown to be false. At a return of 2.3:1 you can make money by making significant amounts of fuel. The fact that nobody does tells us that the numbers being thrown around are not correct.

 
At 6/05/2011 5:02 PM, Blogger VangelV said...

The Good News is: That 900,000 Barrels/Day of Ethanol on the market has lowered the cost of gasoline, significantly, due to the Competitive/Replacement Effect of having the Competing fuel in the Marketplace.

This is nonsense. Fuel and food would be cheaper without the mandates and subsidies. Subsidies are a much bigger deal than you claim, which is why it helps to check the facts.

 
At 6/05/2011 5:50 PM, Blogger Rufus II said...

What in the world would leave you to believe no one's making money?

Van, that link was just silliness. I'm gonna give it up. You've worn me down. :)

 
At 6/05/2011 5:51 PM, Blogger James said...

An average barrel of Saudi Oil costs a great deal more than $2

Ok I was lazy and did not look it up. I should have known that you would not let me slide on that. So here it is:

Here:

“i have attended enough presentations by OPEC to understand that they expect a price of $80 (let us note that it costs saudi arabia $2 to pump a barrel out of the ground).

And here:

“While a barrel of oil costs the Saudis $2-3 to get out of the ground and to market, that same barrel costs Iran as much as $15-18.

also:

“Iraq will pay the companies to get the oil out (about $2 a barrel), at which point the oil belongs to the Government to sell. The oil companies also have to pay for all the equipment and drilling stuff. “

There is more but I will let you Google for them.

In any event this is what solar et al is competing with. None of these alternates is going to be competitive with the lowest price they can take and still have a profit. That is why they are willing to fund these projects. It keeps the competition chasing rainbows instead of doing something that will work.

 
At 6/05/2011 5:56 PM, Blogger Rufus II said...

But, one last thing: EROEI has Nothing to do with "making money," an vice versa. That would depend on the price of the energy going in, and the value of the energy coming out.

In its gaseous form nat gas isn't worth a lot (about $4.70/1,000 cf.)

The liquid coming out of the plant is valuable because it can be used to power momma's car. EROEI is not, in most cases, a worthwhile way to look at the real world.

 
At 6/05/2011 6:12 PM, Blogger Ron H. said...

"Also, the Political Headwinds are Very Strong, right now. The fact of the matter is: There is Zero money available, at this time, for anything biofuel-related that is not covered by Federal Loan "Guarantees.""

reality check: This isn't political, but economic. It means that those who must risk their own money, don't think biofuels are a good investment.

"If you were a Banker would you loan several Hundred Million, today, to a new company, with new management, proposing a new technology, to go up against the Oil Companies, The Saudis, and The Tea Party?"

I would if they had a good business plan, but I'm not aware of any that do, as they rely heavily on taxpayer subsidies. This doesn't instill confidence in those being asked to risk their own money.

Federally guaranteed loans? Oh, sure. Any amount you want.

 
At 6/05/2011 6:29 PM, Blogger Ron H. said...

"But, one last thing: EROEI has Nothing to do with "making money," an vice versa. That would depend on the price of the energy going in, and the value of the energy coming out.

In its gaseous form nat gas isn't worth a lot (about $4.70/1,000 cf.)

The liquid coming out of the plant is valuable because it can be used to power momma's car. EROEI is not, in most cases, a worthwhile way to look at the real world.
"

It's the ONLY way to look at it. If you can't produce something at a profit, it will always be a government boondoggle, and will divert resources away from other, better uses. Government choosing a motor fuel for us will lock us into that fuel forever, as it will always require taxpayer support, and will discourage innovation in anything else.

 
At 6/05/2011 6:37 PM, Blogger VangelV said...

What in the world would leave you to believe no one's making money?

The conference calls and financial reports. The analysts. The fact is that without the subsidies and mandates most of the ethanol players are insolvent because they can't compete. This is not true in Brazil where sugar cane crops make it easy to make cheap ethanol that is competitive for now.

Van, that link was just silliness. I'm gonna give it up. You've worn me down. :)

What I say or think does not matter because the market is telling us what is going on. And right now the ethanol, wind, and solar producers are in big trouble because they cannot compete without massive subsidies. To stay in business they need the assistance of government.

 
At 6/05/2011 6:43 PM, Blogger James said...

Free Solar Energy is of Little Use

GE Sees Solar Cheaper Than Fossil Power in Five Years...

That will not happen. I suspect they are trying to get a larger subsidy with that assertion.

More important: So What?

Even if solar energy was free it would be of little use to us.

I believed in solar power until an electrical engineering professor gave me high noon power reading from the sun and asked me to convert it from metric units to the amount of horsepower that could be derived from a one meter square solar array. Using his numbers I came up with one quarter horsepower. That is a little high for the real world. Most claim you can get 150 watts. At the time practical conversion to mechanical power got about 10 percent of that. More modern systems can convert about 18 percent. So baring overcast, rain, bird droppings, etc on an average day you get nothing for 12 hours a day then you go from nothing at sunrise to18 percent of one quarter horsepower at high noon and then declines to nothing at sunset.

Most people do not have a feel for metric units. That is why solar advocates always express their numbers in metric units. These numbers are tossed out like they are significant amounts of power. They are not.

150 watt solar panel is about is a square meter in size

1 horsepower = 745.7 watts so 150 watts is .2 horsepower. That is peak power not average power.

There is no breakthrough in solar efficiency and/or materials science that will make solar be anything but a subsidized sideshow. Postulate an ideal material and 100 percent solar efficiency and it still does not work. There is no scientific breakthrough to be had. The sun does not supply enough power. Power is energy transfer per unit of time. Your car powered by the gasoline engine that ran my grandmother's washing machine would perform better than your car powered by the sun. And you could go at night. In the land of solar powered vehicles the man with a horse and buggy is king of the road.

 
At 6/05/2011 6:46 PM, Blogger VangelV said...

There is more but I will let you Google for them.

Sorry but just because someone says something it does not make it true. While it may be true that during its days of glory Ghawar could produce oil at $2 from its Arab-D reservoir that is certainly not true of the AVERAGE Saudi well.

Ask yourself a simple question. If it was possible for the Saudis to pull oil out at $2 a barrel why are they spending hundreds of millions on drill rigs for the Gulf off-shore areas or opening up difficult fields that had to be shut down years ago because they were far too expensive. If it was that low why would the Saudis spend millions of dollars to pump several million barrels of sea water per day to maintain pressure and hundreds of millions on equipment necessary to handle the higher water cut that results from those efforts?

Here is a commentary that fits the actions better.

 
At 6/05/2011 6:56 PM, Blogger VangelV said...

But, one last thing: EROEI has Nothing to do with "making money," an vice versa. That would depend on the price of the energy going in, and the value of the energy coming out.

It does make a difference. If I have to spend 1 million BTU to create a product that contains 0.5 million BTU and both products can be used for the same purpose I can't make a profit for very long because the market will find an equilibrium that reflects the energy content of the input and output.

 
At 6/06/2011 2:49 PM, Blogger nates said...

Lacking a government to centralize, control, and subsidize power production I find solar to be far more favorable. There's no reason to build miles and miles of line per rural dwelling. A couple panels and a solar water heater would provide most of what people need. People buy cars for 50,000+ dollars every day, but balk at the idea of investing 10,000 into solar panels which will practically eliminate electrical bills and immediately improve the value of their home, while also deflecting energy that otherwise would turn their attic into a furnace.

A design such as the following allows for easy upgrading as future cells improve, cheap single axis tracking, and is fairly robust compared to exposed photovoltaic cells.

http://www.absolicon.com/

 
At 6/06/2011 9:49 PM, Blogger randian said...

That's almost 4 times the total acreage of corn currently grown in the US, and is almost twice the land area of Texas.

Apparently sprawl is OK, if it's in service of something the left likes.

 
At 6/07/2011 2:53 AM, Blogger Ron H. said...

nates,

"A couple panels and a solar water heater would provide most of what people need. People buy cars for 50,000+ dollars every day, but balk at the idea of investing 10,000 into solar panels which will practically eliminate electrical bills and immediately improve the value of their home, while also deflecting energy that otherwise would turn their attic into a furnace."

Sounds Great! Actually, I guess my first question is, do you have these installed at your house, or you know anybody who does?

My second question has to do with price. You mention $10,000, but what size system will that get you? This is important in determining how much power you can get.

You should be aware that the sun provides approximately 350 watts/sq. meter. This is a maximum, and is at best good for 5-6 hrs/day. Everything else will be something less. It doesn't matter how you collect or concentrate this sunlight, the amount striking your panel is, at most 350watts/square meter.

Most state-of-the-art solar panels
are about 18% efficient these days, so you can count on, at peak sunlight, 70-80 watts per sq. mtr. Your mileage may vary.

Check your current electric bill to see what your daily avrage usage is, then calculate how large an array you need to supply that amount, the cost, and how long it will take to break even on cost. I'll bet that system won't fit on your roof.

Without huge rebates supplied by taxpayers, I'll bet you will NEVER break even within the expected life of the system, which is probably 15-20 years.

Do some real life calculations on this, and let me know what you come up with.

There are a lot of important questions you need to ask about

 
At 6/07/2011 10:44 AM, Blogger VangelV said...

A couple panels and a solar water heater would provide most of what people need.

The last time I looked a couple panels would have a hard time providing enough power to run a refrigerator, a computer, and a few lights. Solar is still a failure and most of the solar companies would be bankrupt without subsidies or mandates.

 
At 6/28/2011 9:26 PM, Blogger VangelV said...

According to Bill Powers the Fayetteville area has peaked after six years.

"So what is this table telling us about EURs in the Fayetteville shale? First, based on the above information, there is little doubt that CHK and SWN have grossly overstated their EUR per well. For example, the 594 wells drilled between 2005 and 2007 are unlikely to ever produce much more than 1 bcf each. While I do not have access to the actual decline curves for these wells, there is no doubt that Fayetteville operators are using unrealistic decline curves that include transient flow (the gush of gas occurring immediately after a well is put on production which should not be included in proper analysis) and b-factors that are unrealistically high."

He also points out that less than one third of one percent of wells are producing more than 2 bcf while Chesapeake Energy’s CEO Aubrey McClendon is claiming that the company expects a EUR per average well of 2.6 bcf. What this means is that Art Berman was right while all of the idiots who ignored the data were wrong. It seems to me that the media, EIA, and Wall Street have managed to blow another bubble that we should have seen coming. Yet, even smart people like Mark fell for it hook, line, and sinker.

Now I know that one data point does not make a trend. But there are many other data points available for those that have been awake and willing to sift through some of the research and conference calls. So let us not pretend that this is something that we could not see coming. And let us remember that a less active sun signals that cooling is more likely in our future.

 

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