Renewable Fuels Association poll results
The Renewable Fuels Association contracted a pair of polling firms to survey voters' beliefs on ethanol as a renewable fuel. Two firms were selected to get both Democratic and Republican opinion. The opening paragraph of the report, linked above, gives the results:
The on-going campaign to force the nation to revisit and reduce its commitment to ethanol has failed to move most American voters. A recent bi-partisan survey of 1,200 registered voters shows that by a 2:1 margin, the public supports increased use of ethanol in our nation’s fuel supply. This majority crosses party lines, capturing conservatives and environmentalists alike. Voters largely blame the rising cost of food on fuel prices; less than one in ten blame the expanded use of ethanol.
59% of voters support increased use of ethanol while 30% oppose. The survey oversampled environmentalists and in that group 63% supported increasing ethanol production. Also, voters polled believe higher oil prices are causing increased food prices by a margin of 71% to 17%.
It appears the anti-ethanol campaign has failed to sway the American voting public, so I doubt elected officials will be changing the current laws regarding ethanol. My contention that ethanol is a growing integral part of the U.S. motor fuel infrastructure continues to strengthen. Those that think corn based ethanol will soon be history are in the wrong (and smaller) camp.
As this is an investment oriented site, take a look at VeraSun Energy (VSE) when they release their quarterly earnings early in August. You may be surprised.
Note: I have a long position in VSE.
This article has 73 comments:
When taking a poll, the results are affected by the way the question is worded. In this case, I believe the poll's question was worded to favor ethanol.
gordon
moral question: should corn be used to feed automobiles or to feed humans who are starving?
> jack
I agree with the previous commentators. The results depend on how the questions are framed -- in particular if no distinsction is made between corn ethanol and ethanol made from non-grain feedstocks.
Another survey [50 kb PDF], conducted in May by a group that has <em>no</em>... connections to the ethanol industry (unlike the Renewable Fuels Association), found that 42 percent of the participants in the survey thought that that the mandate should be eliminated to reduce ethanol production and use. One-quarter percent wanted the mandate to be partly eliminated to reduce ethanol production and use, and 16 percent wanted it left unchanged. Of the rest, 6 percent wanted it partly expanded to increase ethanol production and use, and 2 percent wanted it significantly expanded to increase ethanol production and use.
Nine percent were undecided, didn't know what to answer, or refused to answer.
Even among people living in the Farm Belt, 25 percent percent said they wanted the ethanol mandate repealed entirely, and another 30 percent wanted it scaled back.
www.nationalcenter.org...
Also, most life-cycle analyses of corn ethanol show a net return of energy compared with the fossil energy that went into producing it. But that is neither here nor there: lots of energy forms are profitable to make by using cheaper, less-convenient energy. That is what happens when electricity is generated from coal, for example.
What is more important is that, ignorring land-use effects, corn ethanol yields only small improvements in greenhouse gas emissions. When prairie land is ploughed up to plant corn for ethanol, it is a net loser. And when Amazon forest is cut down to plant soybeans as a result of expanding corn acreage at the expense of soybean production in the United States, it becomes an important contributor to GHG emissions.
Tim Plaehn may be right that it is too early to sound the death knell for corn ethanol. But that is because the lobby for it is so powerful, not because corn ethanol makes any economic or environmental sense.
Tiedeman
Yes, there have always been hungry people in the world. But the recent rises in the prices of grains and oilseeds have hit the urban poor in developing countries particularly hard. Analysts at the World Bank estimate that biofuel policies (in the EU as well as in the USA) have accounted for more than 2/3 of the increase in food-commodity prices since January 2002. Commodities only account for 20-25% of the final cost of food purchased in America, where the typical diet includes highly processed and highly packaged items. And Americans spend only 10% of their income (obviously more if you are poor), on average on food, whereas people in the poorest third of the world spend 50% and in some cases 70%. Those people do not eat Corn Flakes, they eat corn meal, or corn flour, or cracked wheat -- products for which the price of the grain accounts for a large percentage of the final price of their food.
For them, the biofuel-driven price rises have been a disaster.
Peters
Some folks think so
Peters
www.sfgate.com/cgi-bin...
Peters
* * Lower price for food, gas, water, beer, cleaner air and funds for the budget from oil profit.
Don't you wonder where all these people with wild ignorant statements with nothing to back them up come from? Are they being generated by some hacker?
Yes, some things are done due to populist sentiment, but it won't be long before even the masses are informed about what a bad idea corn based ethanol was. They have near ZERO motivation to push for it as a fuel once it's explained that it makes no sense economically, enviromentally, or even morally.
It's just a matter of time before those who chose to invest based on this boondoggle crash and burn.
With everyone in crisis mode regarding the US economy,
this sounds like "rearranging deck chairs on the Titanic".
From a scientific and economic standpoint, "growing energy"
is a net loser, despite popular opinion; which is just that, opinion spoon fed by the media & politicians.
pharma
you see like the previous posts have illuminated...How you ask and the wording can make a difference in answers! Even the American public which is not too bright would see through the Ethanol Conspiracy!
llo
As for corn, 7years of feeding it to my cat via Friskies has given him Chronic Renal Failure, the most prevalent feline disease and every morning when I give him his shot of saline solution to keep him alive he looks out through the slider window at the corn fields and curses Monsanto ADM and Nestle. He leaves a shriveled up tater in the field at night, that's his rationale and thoughts about ethanol.
Picture
Unfortunately, ethanol requires costly modifications or replacement of pumps, tanks, and fuel lines. This has prevented many gas stations from adding E85 as an option. If there is one good reason for a subsidy, it is this: the subsidy helps promote the ethanol infrastructure.
Quite frankly, I would like to see this go further. The best way to prevent huge spikes and volatility in the price of any item is to make sure there are plenty of subsititutes. In our current state, oil obviously has very little price elasticity -- despite gasoline prices increasing by over three times in one decade, we are actually using more gasoline than we were then. Imagine what would happen if you could pull up to a gas station and have your choice of gasoline, natural gas, propane, ethanol, electricity, and compressed air. Then, imagine if every car is "flex-fuel," by which I mean every car can work on at least two different fuel types.
When I owned convenience stores, we often discussed adding E85 capability. Our biggest concern was the government. We were afraid we would make the investment only to see the government change direction in the same way it did with CNG (compressed natural gas) and EVs (electric vehicles in California).
Making vehicles "flex-fuel" is not expensive. In the case of ethanol, the cost is only a few dollars.
My suggestion ... 1) stop subsidizing alternative fuels, 2) increase taxes on gas from oil by 50 cents over 10 years (5 cents / year), 3) require all vehicles sold be flex-fuel within 10 years by incrementing the amount that should be flex-fuel by 5% each year.
One last note: let's be a little more fair about the effect of ethanol on food prices: 1) the increased demand for grains from China and India exceed the worldwide demand from ethanol by a factor of two, 2) the byproduct of ethanol production is used for feed for cattle so that only half of the food value is lost, 3) a large portion of the grain price increase is from the fall of the dollar and 4) one of the biggest reasons grain prices are up so much in third world countries is because the cost to transport the grain has skyrocketed along with the price of oil. I'm not saying that ethanol doesn't compete with food, but it is a much smaller part of the equation than many like to think.
Even if you are not living in a State ofering these additional subsidies, $3.36 would not be a great deal: it is 82% of the price of gasoline, so only on par with the difference in mileage that your friends with FFVs are getting compared with running on gasoline. (Worse, if we were to believe the official EPA ratings, which generally show a drop of 25% in fuel economy for FFVs, not 15-20%.)
As for your assertion that ethanol is "a much smaller part of the equation than many like to think", the figures I have seen suggest the opposite. (1) The diversion of grains to biofuel production (not only in the USA but also in Canada, China and the EU) has considerably exceeded the increased demand for grains from China and India in the last two years, which is when the most dramatic price rises have occurred. (2) Despite obtaining a byproduct animal feed, DDGs, from ethanol production, two-thirds -- not one-half -- of the food value is lost. (3) A modest, not large, portion of the grain price increase is due to the fall of the dollar. And (4) the cost of transporting grains has gone up, but for consumers in third-world countries living close to the coasts (which accounts for a large proportion of the population), the rise in the price of the grains is still the main reason for the rise in the prices of foods based on those grains.
Otherwise, yes, (1) stop subsidizing alternative fuels, and (2) increase taxes on gasoline and petroleum diesel. But no requirement that all vehicles be flex-fuel within 10 years should be contemplated until and unless the "dual fuel loophole" (the one that gives manufacturers generous credit against their CAFE standards for every FFV they sell) is repealed. Even then, such a requirement should not be needed: if ethanol is such a bargain, the market will send the signal to manufacturers to make their vehicles E85-capable.
It would also have been reasonable that all of those participating in such a survey also had an acceptable base-line knowledge of economics and global alternative markets of ethanol & methanol.
Had the participants' level of competency been rated average or higher, I would bet the survey respondents supporting ethanol (derived from a food source) use in the US would be a percentage equal to or lessor than the current approval of the US Congress:
n i n e p e r c e n t
t h i n k a b o u t i t
The two main arguments against corn ethanol are nonsense. We pay farmers not to grow anything, so it is not immoral to have them grow fuel. Also, the value of energy varies widely with oil being the most expensive. So if corn ethanol is a way to turn NG to oil, then it may be OK even without energ gain. Let the markets decide.
I agree that it is not immoral to have farmers grow feedstock for fuel ... if the demand for it were indeed being driven by market forces. But it is not only market forces that are driving the diversion of crops into fuel, and market forces may not even be the predominant driver. And when the government mandates biofuels, it gives priority to the use of agricultural feedstocks for fuel over other uses. That, to many people, IS immoral.
Definitely: remove the tariffs, and do more than "maybe phase out subsidies over time": end them, or at least do not renew them when the current ones expire.
No, I can't imagine the U.S. Congress maintaining the VEETC and reducing (or, better yet, eliminating) the import tariff. But one can dream that sense might eventually prevail, and they eliminate both the VEETC and the tariff.
After all, if ethanol is mandated, why is a tax credit needed? It is either only there to hide the true cost of ethanol from motorists, or to provide a windfall to corn farmers and the ethanol producers.
When i was a kid we would grow hundreds of acres of corn than the goverment would give us a set price to not harvest it and let it rot in the fields so the market would not be flooded with supply and keep the cost up. We just need to get back on track,
Someone or something is stopping this.
You don't get it. It is the current economic policies and the current energy policies, namely, addiction to oil $$, which are devestating the economy. Oil is killing our economy. The annual hidden costs of oil are, by one estimate, over $800 billion just in the U.S. This year, it's adding close to that amount to our trade deficit. At $60 bbl oil, it was over $300 billion. Add wars in the mideast, which are obviously about oil, to a large extent. Our annual military costs of protecting oil shipments are $100 billion, war or not. And it is destroying our ecosystems, which is in fact much more important than the economic dangers.
A recent scientific study estimates that we have lost 25% of our biodiversity in 35 years. That would be alarming if it was 1% of biodiverstiy in 350 years. Every ecosytem on earth is in danger. Do you not understand that there is no issue as important to man's well being and survival? Do you not understand that we are an interdependent part of the general ecosystem? Without a healthy environment, we are doomed. Period.
What would have a bigger positive impact, would be mandating plug in hybrid cars. They don't have the range limitation of an all electric, so people would buy them.
The average American driver would get 100mpg overall, since they would do all or nearly all their local driving, such as commuting, on battery power. 40-60 miles per day. Most people would end up doing 60% of their driving on battery power. To learn more, see. www.pluginpartners.org/
In any case, "net energy balance" is not the main issue. Many energy sources are made by taking more of a low-grade source of energy (e.g., black liquor from pulp mills) and transforming it into a cleaner, more-versitile form of energy (e.g., electricity), with a net loss in energy. But if it is profitable -- without subsidies -- then it still may make economic sense.
The problems with corn-ethenol -- indeed, any ethanol made from garins -- stem more from the high cost (in $ per CO2-equivalent) of reducing CO2 emissions through its use, and the CO2 generated through land-use changes as new prairie land is brought under the plow to satisfy the growing demand for biofuels. And, yes, there is a high demand for the starch in grains. No animals, and especially not hogs and poultry, live on protein alone.
Ethanol is not a good CO2 reducer...better than gasoline alone but not good
As far as the economics of subsidies...considerat... needs to be given to the formation of domestic capital, reduction of imports, state and local tax base support, etc. Let's not forget the economic devestation of farming communities from the 70's through the 80's and into the 90's...(anyone remember Farm Aid?)
The protection of and formation of domestic capital is a correct role of government within a capitalist democracy. I would even go a step further and say that the employment of government capital in the private sector to accomplish social and environmental goals which do not otherwise offer a competitive roe and/or roi is vital. I assume you agree and are argueing that the government's capital is better used elsewhere regarding CO2 emmisions?
My arguements in favor of corn based ethanol are primarily based in Nationalism both economically and politically....and a belief that the debate about corn based ethanol is primarily a matter of global vs. national economics. "In case you didn't notice, we just got our a**'s kicked" Corpral Hudson in the movie Aliens
P.S. the high demand for starch is primarily in the form of corn syrup for processed food products that without a great deal of sweetening are almost inedible....and in terms human terms about world hunger there is only a shortage of protein not sugar.
gao.gov/new.items/d071...
Here's a quote from page 26:
"Since fiscal year 2004, the [Fish and Wildlife] Service has acquired, on average, 79,000 wetland and grassland acres per year through easements and fee-simple acquisitions, spending about $17 million each year. If this pace continues in the future, it would take the Service around 150 years and $2.6 billion (2007 dollars) to acquire [and permanently protect as much as possible] its goal acreage [of an additional 12 million acres of “high-priority” habitat—at-risk acreage capable of supporting a high number of breeding duck pairs per square mile] if none of this land were converted to other uses. Emerging market forces, however, are creating a scenario in which the Service may have less time in which to acquire its goal acreage. For example, [the U.S. Department of] Agriculture’s Economic Research Service reported in 2006 that rising demand and prices for corn and other commodities used to produce ethanol and other renewable fuels increasingly entice landowners who do not produce crops to convert their land to cropland. Furthermore, in March 2007, the Congressional Research Service reported that corn prices—the prices received by producers—increased from $2.50 per bushel in September 2006 to $4.16 per bushel in January 2007, primarily because of growing demand for ethanol, a corn-based renewable fuel. This demand contributed to an increase in 2007 crop acreage, and the demand is expected to continue."
Look west and north, young men: that (and other grasslands of the world) is where the prairie land is being converted, not Illinois.
Tim, do you have a source for that, or did you just make that figure up? My source is the USDA's long-run projections, from February of this year.
www.usda.gov/oce/commo...
Here is what THEY expected of average corn yields over the next 10 years (in bushels per acre), from Table 7 in that publication:
2007-08 ... 153.0
2008-09 ... 155.3
2009-10 ... 157.3
2010-11 ... 159.3
2011-12 ... 161.3
2012-13 ... 163.3
2013-14 ... 165.3
2014-15 ... 167.3
2015-16 ... 169.3
2016-17 ... 171.3
2017-18 ... 173.3
Ignorring the fact that the USDA's even more recent estimates of corn yields for 2007. 2008 and 2009 are, respectively, just 139.0, 133.6 and 141.2 bushels per acre, an increase from 153 to 173 is just 13% by my counting, not a doubling.
orkforbigoil
?
Has it never occurred to you that there are plenty of people -- fiscal conservatives, environmentalists, farmers who have to rent their land -- that might not be keen on subsidizing and mandating ethanol? Meanwhile, it is hard to imagine that the oil industry is that dead set against biofuels, when Shell is the world's leading distributor of them, and BP is not far behind.
And why is it that, while some of us are providing hard numbers to make our points, when an ethanol booster like Tim throws out a number that is completely made up ("Corn yields are expected to double in the next 10 years"), you do not consider that misinformation?
You must think the rest of us are stupid to not know the difference between field corn, white corn, and sweet yellow corn. We know that the major use is as animal feed. But that does not mean that diverting corn to ethanol production is not having knock-on effects on other markets, like for feed wheat and white corn. Deny it if it makes you feel good, but there is no way that diverting 30% of the USA's corn crop (and, now, a significant proportion of Canada's corn crop) is not having a major effect on world food-commodity markets.
Ethanol was feasable at far less than 130$/barrel. It makes better, not less, sense than it did 2 years ago.
According to numerous press articles the ethanol industry is not exactly making money hand over fist at the moment. Take this recent report, for example:
jamestownsun.com/artic...
"We’re disappointed but not surprised that construction of the ethanol plant in the Spiritwood Energy Park is on hold. But it’s also true that other plants in the country have been delayed. VeraSun Energy Corp. said Tuesday that it has started up a plant at Hankinson but it also has two other projects on hold. With current corn prices reaching as high as $7 a bushel, Harold Newman of the Newman Group said the plant would lose 26 cents per gallon if it were operating now."
That's losing $0.26 per gallon, DESPITE, the federal volumetric ethanol excise tax credit, and the various state subsidies on offer:
forbes.com/feeds/ap/20...
ampc.montana.edu/polic...
What does it take for you guys to wake up and smell the coffee?
Your question does not make sense to me. I am in favor of revoking the mandates, eliminating the subsidies (or at least letting them expire, as scheduled, and not renewing them once again), and eliminating the import tariff on fuel ethanol. I am not somebody predisposed to central planning, so I do not advocate the government making ANY decision as to what is grown on land that currently grows corn. What I do advocate is the government stopping to so heavily favor corn (and a few other "program crops") at the expense of other crops.
The United States used to be an important producer of oats. Now Quaker Oats and other companies import their oats from Canada. Other grains (wheat and barley, for example) are also being squeezed by the expansion of the two main biofuel crops, corn and soybeans. The high price of farmland in corn country has also hurt a budding organic vegetable industry, because land rents have become too expensive.
If farmers responded to market signals, instead of government subsidies and dictates, who knows what mix of crops they would grow?
In response to your latest question, "Current corn prices $5.25 ish ..... Did we suddenly stop making ethanol?" Corn prices and oil prices are highly volatile. For most of the last two years, ethanol production would not have been profitable without subsidies. For some periods it will be. If so, great. But then the subsidies are only serving to over-stimulate the industry, provide windfall profits, and set it up once again for a boom-bust cycle.
So, no, I'm not saying don't produce ethanol, I'm saying don't mandate its use, subsidize it, and protect it from foreign competition.
In response to bouzerdad, I'm sorry you regard my contributions as "bad pr". I'm trying to provide a perspective that is more data-driven then most of the comments here.
United States Energy and Economic Policy should be based on what is good for America and the citizens of America and not based on economic idealism or what is good for Brazil, India, and Dubai. To make my point about who is trying to influence our representatives I will quote some of a recent Barron's Commodities Corner dealing with a recent decline in sugar prices:
"The global sugar market has been saddled with a glut for years, since Brazil and India expanded cane output at mid decade. But a longer-term turnaround for sugar prices is expected..."
"Production in India is on the decline, where growers are planting more grains. Meanwhile, Braziliam sugar-based ethanol shipments to the U.S. have surged this year. It would be very bullish if the U.S. decides to reduce the 54-cents-a-gallon tarriff on Brazilian Ethanol. Sugar can in Brazil is grown on vast, contiguous fields, where labor and other inputs are cheaper than in the United States. India is aided by proximity to Dubai..."
P.S. What do you think used to be on those "vast, contiguous fields" of sugar cane in Brazil? (according to you and a recent Time magazine article corn based ethanol is responsible for deforestation...hmmm?)
The Mississippi river was closed last week because of a fuel spill. It was not Ethanol. Did the Exon Valdez spill Ethanol on the Alaska coast? Are we buying Ethanol from terrorist or Communist?
When mixed 90/10 gasoline/Ethanol my car gets better mileage than when I use 100% gasoline.