More Bad News for the Anti-Ethanol Crowd 67 comments
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USDA_DOE_biofuels_letter_61208.pdf (application/pdf Object).
The link above is the Department of Energy’s response to several questions concerning biofuels' impact on food and energy prices. The questions are from Senator Jeff Bingaman, Chairman of the Senate Committee on Energy and Natural Resources. The 16 page report is in question-and-answer form and here are some selected quotes:
First, the effect of biofuels on U.S. food prices:
During the first 4 months of 2008, the all food CPI increased by 4.8 percent, with increased ethanol and biodiesel consumption accounting for only about 4-5 percent of the total increase while other factors accounted for 95-96 percent of the Increase.
That’s right: Biofuels account for 4-5% of the recent food price increases. Data for 2007 show a lesser effect.
Next, how much has U.S. biofuel production affected global food prices:
From April 2007 to April 2008, in the absence of any growth in biofuel production in the United States, we estimate that the International Monetary Fund [IMF] global food commodity price index would have risen by 40.6 to 42 percent as opposed to 45 percent.
In other words, biofuels account for 3-4% of the 45% increase of food commodities globally.
How has increased ethanol and biodiesel consumption affected gasoline and diesel prices?
Biodiesel use has had a negligible effect on diesel fuel prices since biodiesel fuel production is so small compared to total diesel fuel use.
We estimate that, if we had not been blending ethanol into gasoline, gasoline prices would be between 20 cents per gallon to 35 cents per gallon higher.
Remember, when diesel fuel cost less than gasoline? Remember when the U.S. did not produce 9 billion gallons of ethanol to blend into gasoline?
I know there are many readers who do not believe any reports that do not agree with their point of view, but they will believe the fear mongering of an anonymous website. Those types should not read the report. For those who like to read and make their own decisions, scan through the entire report.
Another piece of good news came from VeraSun Energy (VSE) yesterday. The company is now starting up its new North Dakota refinery, which it put on hold less than a month ago, due to improving market conditions. Maybe because corn has fallen from $8/bushel to $6 and nobody noticed. (Press release here.)
These news pieces reinforce my ongoing belief that corn ethanol is an integral, necessary and growing part of the U.S. fuel structure. Neither the politics, economics or technology (i.e: cellulosic ethanol) will change the equation anytime in the foreseeable future.
Note: I have a long position in VSE.
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This article has 67 comments:
And then, the DOE cautions about "hasty judgments, driven by highly questionable, agenda-driven calculations." As we all know, our govenment is a non-political, non-agenda driven agency that never makes hasty judgments, and only cares about Our Best Interests -- so surely any reports issued by the government are reliable and enlightening to the dumb masses. Hey, if you can't trust our government, who can ya' trust!?
Here's a radical idea that would "reduce our dependence on foreign oil" -- let's drill our OWN oil and bring that to market! Oh right, I forgot it's a New Paradigm Economy now: we don't need natural resources to supply our country its wealth anymore -- our wealth nowadays is provided by credit markets, government jobs, and exporting knowledge.
the main thrust of this report was to say if you do anything to disturb the status quo (making 9 billion gallons of ethanol from corn and soybeans this year, and increasing production every year thereafter) - you are going to pay more for gasoline from 25 cents to 35 cents per gallon. further, this report said the food price increase for the consumer (based on cpi calculations) would add less than 0.7% to the cpi for all foods.
let me think. the price of corn and soybeans have doubled in two years. a large minority of the world population barely has enough income for food and the price of a staple in many of their diets has doubled.
i agree with the report that we do not want to be hasty in making any changes before we educate ourselves on biofuels. i was a big proponent of biofuels. but this year has opened my eyes to the effects on the food prices due to using food we eat to make gasoline.
why not remove the $0.51 per gallon ethanol blenders tax credit for starters, and let market forces decide whether we should eat corn and soy, or burn it in our cars.
Let's see Brazil grows sugar not even corn for it's fleet think it can spare a few acres for it's own poor?
Oh yes Norway where it just awarded the Nobel Peace Prize to the carbon computer model hypothesis originator. Can we ask them for a few corn shipments since they have no problem with
fighting the Russians for drilling rights in the North pole,
and has the second highest sovereign wealth fund 285 billion for 5 million people -for investments!
I think Americans needs to put on hold the new reports of food crises and ask what the oil exporters can do for their crisis and not the oil importers.
something in denmark smells rotten
> jack
quote:
"something in denmark smells rotten"
/quote
Well atleast they have plenty of ventilation
Maybe thats causing worldwide global warming.
Corn politics is most powerful among lobbies. Corn is King. The PNAC crowd loves BIG anything. No surprises here with corn ethanol. Numbers be damned.
Corn for fuel can be replaced with a wide variety of vegetable sources and even organic waste. That is not profitable enough. A pity. Is that what market forces really mean?
1. Virtually NO ONE thinks ethanol is a bad idea, just CORN ethanol. Ethanol made from sugar and grasses have a bright future.
2. The main problem with deriving ethanol from corn is it takes MORE energy to MAKE than it PUTS OUT.
3. You CANNOT blame corn farmers for wanting to hold on to this windfall. Born at a time when farming was in an economic depression, the idea appeared to make sense.
4. Like all the rest of us receiving government HANDOUTS, corn farmers want to hold on to theirs. You can't blame them for that, either.
5. As time goes forth, SUGAR TARIFFS are ended and SWITCHGRASS proves itself, corn ethanol will die a natural death. And deservedly so.
... It requires more energy to make it than it yields.
... It yields SUBSTANTIALLY less miles per gallon than regular gasoline.
... Production, and transportation of ethanol results in more pollution than gasoline produced by oil
...It results in the depletion of the rain forests thereby adding to pollution.
... Yes, it has resulted in food shortages in less developede countries. Why were they rioting? Because their children were starving.
Al Gore is "ozone man" he has his head in the clouds if he feels that we will achieve our alternate energy needs without the use of nuclear energy and carbon-free coal. France derives 80% of its electricity from nuclear plants and has never had an accident. We have 250 nuclear powered ships in our Navy and have had nuclear ships for over 50 years.Never had an accident.
Murray Gross
It looks like we'll ride the train to work in the future........ Suburbia may get lonely. If you want to keep property values in your community up lobby for light rail service.
And if we were to drill our own oil.
Maybe we can keep our money here in the USA..
When a panel of international scientists, business leaders, and politicians come together to review the literature and make conjectures (as they do in the Intergovernmental Panel on Climate Change), you can bet that whatever they reproduce will be as honest, independent, and untainted by political desires as possible (though the results were actually toned down by pressure from China). When Bush's administration, on the other hand, publishes a report, you can bet there are some land mines laying around. I mean really, despite the fact that the USDA said it was urgent to "reduce greenhouse gas emissions," what the hell have they been doing OTHER THAT SUPPORTING BIOFUELS?
One leads to another. Of course they're going to say that biofuels aren't responsible for the food crisis - they're touting them as the solution to a much bigger problem!
C'mon guys, you should hear yourselves. Park our cars, move to central cities, reduced property values, etc., etc. Don't you remember Jimmy Carter's nonsensical ERA OF LIMITS? No offense, but you all sound just like him.
Our nation's ECONOMY HAS DOUBLED since then. Sure, we're short of oil as the rest of the world has decided to emulate us. But we've DOUBLED our natural gas reserves in the past 5 years alone, and we have enough other domestic energy resources we can develop to power our economy forever!
PLEASE, stop listening to doomsayers like Jimmy and Al Gore (... who claimed to have invented the Internet... Right!) Let's get on with the job of BUILDING OUR ECONOMY and making our nation great once more.
Did we come through the past 200 YEARS to end up like a nation of sheep, doing whatever some half-baked politicans told us to? Of course not! So vote for people and ideas that will lead us and our children to a brighter future.
Besides, this is one hell of a sorry example we're setting for them, wouldn't you agree...?
Why? Even the Bush Administration (or at least someone with a brain operating therein) understands diversification is the key - you do not want to be beholden to anyone crop or industry.
To address your first piece of misinformation about how the only scientists who disagree w/ warming theory are crackpots (I know you've heard this repeated over and over by the EnviroFascists, but it simply isn't true). So, here's a letter to the IPCC from a panel of scientists, including a Nobel Laureate (hint: these people are NOT crackpots), asking them to retract their stance on global warming:
www.climatescienceinte.../ipcc_letter_14april0...
Here's another extremely well-respected scientist who says warming theory is bunk: S. Fred Singer, an atmospheric physicist, is Research Fellow at the Independent Institute, Professor Emeritus of Environmental Sciences at the University of Virginia, and former founding Director of the U.S. Weather Satellite Service. Do you suppose he might know something about climate, as the former founding director of the U.S Weather Satellite Service? Or is he another shill for the oil companies/Republicans/... aliens who are out to disprove global warming? Here's some of what he has to say:
www.independent.org/ne...
Look up Dr. William Gray, also known as the Godfather of Hurricane Prediction. He is, bar none, the most accurate predictor of hurricanes on the planet -- so he might have a pretty good grasp of complex climate models and systems. In fact, he probably has a better understanding than most of his peers, given his record. Dr. Gray on warming theory: "It bothers me that my fellow scientists are not speaking out against something they know is wrong. But they know they'd never get any grants if they spoke out."
I could go on and on. It's not just "crackpots" who believe global warming is bunk. Far from it. You're buying the Envirofascist's party line (on "crackpots"), without independently researching what they're telling you.
To your second, misguided belief that "When a panel of international scientists, business leaders, and politicians come together to review the literature and make conjectures (as they do in the Intergovernmental Panel on Climate Change), you can bet that whatever they reproduce will be as honest, independent, and untainted by political desires as possible."
I admire your faith in humanity. However, there were actually severe conflicts of interest going on within the panel. Many of the "business leaders" actually own companies that profit from trading in "carbon credits." They were EXTREMELY motivated to get the world to believe in global warming. And the global warming messiah, Al Gore, is President of Generational Investment Management, which also sells carbon offsets. You think these people have your best interests at heart? Think again. They profit from your naive trust in their propaganda.
Additionally, some of the "scientists" who signed the IPCC consensus were plastic surgeons, doctors, etc., who know NOTHING about climatology.
I don't have time to talk about global warming for 10 pages in this post, but if you start doing some real independent research (hint: get away from your TV and your newspaper and MoveOn.org), you'll see that the science is bad and the people promoting it are unabashed profiteers.
As to the scientific method, you can prove my argument very simply by actually *using* the scientific method all by yourself. You don't even need a well-respected plastic surgeon to do THIS math: Warming theory states that temperature rises as atmospheric greenhouse gases rise. Over the past 10 years, atmospheric greenhouse gases HAVE risen -- and yet, from 2007 to 2008 we experienced the largest one-year temperature DROP in the history of instrumentation. Under warming theory, it isn't possible for temperature to drop while greenhouse gases rise, yet that is exactly what has happened. Therefore, warming theory is *wrong*.
Once again, don't take my word for it; look it up. But keep in mind that naysayers are ridiculed and censored by the mainstream media, so you might have to dig a little harder to get to the truth.
www.climatescienceinte...
The current ethanol producers will be the ones who get more ethanol from corn stalks and cobs as soon at it becomes economically feasible.
For the question above: Ethanol is currently about 7% of the "gasoline" used in the U.S. It will not replace petroleum gas, but very likely be 15-20% of motor fuel by 2015. Blends of up to E30 have been shown to run fine in modern cars with no noticeable change in fuel economy, even improvement in some models.
When most Americans think about corn they think about sweet eating corn-on-the-cob. But that is not what commodity corn is at all. Commodity corn is a totally different variety, that is hard and not sweet and not eatible off the cob. Commodity corn is used to make corn sweetners and animal feed. Yes this corn is used to make ethanol also, IT IS NOT A FOOD CORN. Increased demand for ethanol did not cause the spike in corn prices, IT WAS OIL PRICES. It takes alot of fertilizer to grow commodity corn and fertilizer is a oil product. As the oil prices have risen so has fertilizer prices.
So who has been putting forth these stories that Ethanol is evil and going to cause people around the world to starve, FOLLOW THE MONEY. Oil companies do not control or own ethanol companies, mostly farmers do. Oil companies have billions to loose if Americans start to drive on E85 or 100%biodiesel in any meaningful way. They are funding millions to slow the manufacture of higher efficiency engines, and this campaign to paint ethanol as evil is a marketing ploy that environmentalist have been suckered to believing hook, line and sinker to the detriment of their own beliefs.
Ethanol is not evil, and increased biodiesel production would actually lower inflation because it is a diesel replacement.
Biodieselmama
The USDOE and USDA analysis is unlikely to convince the experts. For one, it ignores knock-on effects of corn on the prices of other commodities, such as wheat. Also, in the oilseed market they look only at soybeans. Analyses that have looked at the effects of biofuel policies (EU as well as US) have also considered the diversion of rapeseed oil (canola) into biodiesel.
Tim, from where are you getting your numbers? You say that "ethanol is currently about 7% of the "gasoline" used in the U.S. According to the RFA's statistics, consumption is running at the rate of 8.4 billion gallons a year. That is about 6% of consumption on a volumetric basis, but only 4% on an energy-equivalent basis.
On one thing I will agree with you, Tim: the massive investment in corn planting and harvesting makes it highly unlikely that King Corn is going to be overthrown by any upstart ethanol feedstocks any time soon.
If the ethanol industry hadn't existed in January 2007, American farmers would not have planted a record number of acres and there would still have been insufficient corn that fall, due to the crop failures in the southern hemisphere.
So the only way you can blame ethanol for the high price of corn is by being blind to the effect that ethanol has had on US farmers. It has given them reason to plant acreage that they would otherwise leave fallow.
The Pimental analysis showing corn ethanol takes more energy to produce than is present in the fuel is wrong for a large number of reasons. The number is large because he had to make a large number of mistakes in order to get the answer that he wanted. (If you think his opinions are balanced, you should do a google search on Pimental and the Sierra club to see his opinions on immigration.)
On the other hand, if the only source you trust for science opinions are academics, then you can read the report at the University of California, Berkeley's "Renewable and Appropriate Energy Laboratory": Ethanol Can Contribute to Energy and Environmental Goals, by Alexander E. Farrell, Richard J. Plevin, Brian T. Turner, Andrew D. Jones, Michael O'Hare and Daniel M. Kammen, published in 27 January 2006, Vol 311, Science.
The work at Berkeley is good, but they have moved beyond the analysis they did (in 2005) for the January 2006 paper, and are now asking the same questions raised by Tim Searchinger et al. in the paper they published in February 2008. For those not familiar with that paper, it found that diverting food and feed crops to biofuels displaced production of those crops elsewhere was likely encouraging new, previously uncultivated land, to come under the plow, leading to even higher greenhouse gas emissions than the petroleum fuels they displace.
The tariff on foreign ethanol is necessary to protect an industry in it's infancy, much the same way China has protected it's industries from American competition. Once the infrastructure of Ethanol has been built, they will probably not be necessary.
The oil industry does not have a monopoly: at most it behaves as an oligopoly. The oil industry, including refineries, have been investigated on numerous occasions by the FTC, and it has never turned up anything like the degree of collusion and coordination that would be required to keep ethanol off the market.
No, the "savings" in farm subsidies do not offset all the subsidies to ethanol, only the volumetric ethanol excise tax credit. When one adds in the other transfers to the industry they are at least $8 billion per year, and are set to escalate rapidly in the future.
Oil is not a monopoly? go put something other than gasoline in your car today. Go to your local car dealer and try to buy a car that runs on something other than gasoline. Try to fill your natural gas car every place you want to go. No single company has a monopoly, but the industry has a monopoly on our motor fuel.
Last year we used 7 billion gallons of ethanol. Using .51 gallon for the subsidy that is only $3.5 billion in subsidies. Look at the farm subsidies the last year corn did not excede the government floor price of $2.95 bushel. Farm subsidies were over $8 billion dollars.
I do not understand your comment "Other transfers in the industry" are you making this up as you go along?
I would do away with the subsidies over the next 5 years and keep the mandates in place. Ethanol is already cheaper than gas, the refiners and mixers need no financial ncentive to use it.
For those of you who continue to argue that climate change is not real/not a concern, read this quote:
"There is increasing evidence that the earth's climate has warmed on average about 0.7 C in the last century. Many global ecosystems, especially the polar areas, are showing signs of warming. CO2 emissions have increased during this same time period — and emissions from fossil fuels and land use changes are one source of these emissions."
Guess where that comes from? The website for ExxonMobil. Every major IOC (International Oil Company) has acknowledged the veracity of climate change, and the need to do something about it.
If you do some "real independent research" and/or take the time to sit in on a comprehensive college course that addresses the concrete science behind climate change, maybe you'll be able to see this for yourselves.
And by the way, Mayan civilization as history knew it was extinguished by Spanish intervention and aggression in 1697. Dillish, maybe you are the one who should dust off your old textbooks and clear the cobwebs from your memory.
As for other transfers to the industry, you can read them in the reports prepared by Doug Koplow for the Global Subsidies Initiative:
www.globalsubsidies.or...
The transfers include those created through border protection, state-level subsidies and fuel-tax exemptions (e.g., Kentucky pays an additional $1.00 per gallon on top of the U.S. excise credits). What are not counted in the estimates are the additional transfers to grain and oilseed producers created through higher prices, however.
The "$8 billion savings" you claim can be measured only in comparison with the record payment year 2005, when Hurricane Katrina depressed prices because of corn could not move out of Gulf ports for several months. If the comparisons are made with most previous (i.e., more normal) years, the differential is not so great. And if one compares the total of biofuel tax credits plus farm payments in 2003 with biofuel tax credits plus farm payments in 2007, the differential shrinks even less.
Well, yes, if you define a monopoly as a single industry selling a particular product, there are monopolies everywhere. The automobile industry must be a monopoly by your definition since, if you want to but an automobile, you have to buy it from that industry and only that industry. Same for housing, prescription medicines, shoes, fountain pens. I guess you could even say, then, that the ethanol industry has a monopoly on ITS product also.
Yet, despite portraying itself as David against the oil Golliath, the biofuels industry doesn't mind using taxpayer money to bribe -- as it portrays the transaction -- oil distributors to sell its products, ethanol and biodiesel. How is that breaking up the so-called oil monopoly?
And given that the bribes have been going on for 30 years already, why should anybody believe that they have changed anything?
You are certainly right that it is difficult to "Go to your local car dealer and try to buy a car that runs on something other than gasoline." Exactly. Why is GM (and, truth be told, several oil companies, as long as they can get taxpayers to underwrite the extra cost) so keen on E85? Because it ensures that the internal combustion engine, and liquid fuels, will continue to be the dominant technology for personal transport.
Electric cars, by contrast, would not be popular with Detroit, the oil companies, or biofuel producers. Funny that, eh?
Other transfers includes the profit of the corn industry? Would you prefer that money transfer to Middle East oil companies?
By your definition of transfer, or subsidy, where does military cost to protect the oil suppliers and shipping lanes fall in. I think the cost of the Iraq war has been something like $1.5 trillon. That makes ethanol look cheap.
Long therm, electric is the goal for consumer transportation. That is years away. if we could get to 80/20 gas ethanol and cut our overall liquid fuel consumption, which $4 gas is making happen, we can drasticly shink the amount of money flowing out of our economy.
We can cut our trade imbalance if we use all of the clubs in our bag. Parts of the country with corn or switch gras can use ethanol. Places with abundant Natural gas will see fleet owners use Natural gas, think UPS. Coastal regions without corn or NG like the North East could import ethanol from Brazil. Brazil likes us. Hybrid cars followed by plug in hybrids will ease our problem maybe solve it, untill plug in electric can be made cost effective to manufacture.
Which energy industry does not get a government subsidy? Wind and solar get tax breaks, those are subsidies. Oil and gas get preferential tax treatment on depreciation. That is a subsidy. Home owners get a tax deduction for making their home more fuel efficient. that is a subsidy. Our tax system is a carrot/whip senerio. Ethanol is less harmful than buying oil from countrys that hate us. Oil causes most of our air polution therefore I don't mind it being punitively taxed. I wish it was.
Why would electric cars be unpopular with Detroit? GM will be making them. Battery technology is the only thing keeping GM from rolling out an electric car today.
Also, several oil companies are keen of E85? Without the mandates oil compaines would not put alcohol in their fuel. They do not want to let ADM and Monsanto have a piece of their monopoly.
"I think the cost of the Iraq war has been something like $1.5 trillon. That makes ethanol look cheap."
Well, gosh, if you put it THAT way, I guess ANYTHING looks cheap. Biodiesel from earwax ... might cost hundreds of billions of dollars -- but, hey, it's still cheaper than $1.5 trillion!
Public policy is not, or at least should not, be about jumping on the first bandwagon because it might be cheaper than one that is even more expensive. It is, or should be, about getting the most bang for the public buck.
As for the money being spent on the Iraq war, are you attributing that all to petroleum? We broke it, and now we're trying to fix it. No conceivable volume of biofuels that the USA could consume over the next several years is going to make one iota of difference to how much the country spends on and in Iraq.
Returning to your first question, no "other transfers" does not include profits to the corn industry. But it does include some of the subsidies (direct payments) for growing that proportion of the corn that gets used in making ethanol. But more important are the increased transfers to ethanol producers resulting from protection from imports.
People have done analyses of what they consider to be the cost of protecting oil supply lines, which benefits all petroleum of course, not just imports to the United States. But even allocating that cost entirely just to U.S. oil consumption does not bring the subsidy to oil to anywhere near the rate per gallon expended on ethanol.
If the country ever gets to the point of ethanol supplying 80% of its gasoline needs -- which would imply 150 billion gallons a year (assuming, generously, that consumption of gasoline drops from 140 billion to 125 billion gallons a year, and a substitution ratio of 1.5 gallons of ethanol for evergy gallon of gasoline), or almost 20 times current consumption -- that would impose an enormous stress on the country's transport system. And if the current level of production subsidy for cellulosic ethanol ($1.01/gallon) were maintained, that would mean expenditure of $150 billion per year.
That is no small potatoes.
Yes, other industries get subsidies, but some much more than others. And the distortions that the subsidies create vary considerably. Subsidizing too much solar energy is at worst a waste of money. Subsidizing too much biofuels production from biomass grown on arable land can drive up food prices.
Of course, instead of producing ethanol, some of it could be imported from Brazil. "Brazil likes us", you say. Well they certainly don't like Congress's repeated extension of the $0.54/gallon tariff on their ethanol, and it looks now like they are going to take their complaint to the WTO.
You claim that, without the mandates, the oil companies would not put alcohol in their fuel. Is that so? Got any proof of that, citing times when ethanol was cheaper than gasoline (even after adjusting for its lower heat value)? So, even though Shell started investing in Iogen more than a decade ago, it did so with no intention of actually using the fuel? And BP, with its investments in plants in Australia and Brazil: it's just doing it so that it can dump the ethanol into the sea?
Admit it: claims that the mandates are necessary to force oil companies to buy ethanol even when it would profit them to do so is just a smokescreen for the real reason, which is that the industry wants a guaranteed market -- a free insurance policy protecting it against fluctuations in oil prices and in its feedstock costs.
iht.com/articles/ap/20...
Brazil is poised to begin WTO protest over ethanol tariffs
"GENEVA: Brazil is likely to ask the World Trade Organization to open a blockbuster case into U.S. ethanol tariffs, a senior official said Wednesday, outlining the first possible dispute to arise as a result of this week's global trade talks collapse.
"Roberto Azevedo, Brazil's WTO ambassador, said there was a 'strong possibility' that the Latin American country would make a formal complaint in September. Brazil would then be able to ask for the establishment of a WTO panel if a two-month consultation period with the United States fails to produce an agreement.
"The case would concern a U.S. ethanol tariff of 54 cents per gallon, which critics say is designed to protect American corn farmers who cannot produce the fuel as cheaply as sugarcane growers in Brazil.
"The U.S. considers ethanol the only U.S. product outside the scope of WTO rules, but Brazil would challenge this designation so that tariff cuts on the fuel would have to be a part of any future global trade pact."
I am curiously watching the run up in grain prices to see if the WTO was correct. Market forces pushed the price of grains above the US support levels. Lets see if this has the positive effect on world wide grain production they said it would.
I would like to restate that I have no illusions of ever getting to 80% ethanol in our liquid fuels. Ethanol has it's best economics at 20-30% of the gasohol mix. Cars with computerized timing and airflow sensors see little drop in miles per gallon when using up to 30% alcohol. So forget your 1-1.5 ration. In Brazil you choose your ethanol to gas ratio based on the price of each and what your car likes.
Dear subs ethanol which you say has been around for 20 years has really been around for about 100. An honest attempt to go large scale is only a couple of years old. Oil has come close to crushing it several times. They chose to use MTBE because it was a petroleum product. Thanks for the toxic ground water big oil.
I am in favor of lowering the tariff on imported ethanol over time. 1-5 years. Good luck to Brazil on the WTO taking their side. It has not helped us open China's markets no matter how many times the WTO has sided with America.
Dear subsidy eye. Allow me to point out. Ethyl Alcohol comes from organic distillation. Ethanol is a fuel made from mixing alcohol and gasoline, it is not blend percentage specific. You use the word Ethanol when referring to alcohol and every blend of alcohol/gasoline. This makes it difficult to fact check or follow what you are saying.
Are you saying the war in Iraq was not about oil? What other reason did we have to invade a country that never attacked us?
Can you put a price on the safety of our country? Sending billions of dollars a year to countries that support terrorism makes littles sense to me.
And what is the value of cleaner air?
Ethanol may not be the long term answer, but it will help get us off Mid East oil until plug in electric cars can be developed and made cost effective. It can help cut our trade imbalance. It lowers the amount of air pollution we breath right now.
Right now ethanol is subsidizing gasoline not the other way around. Take a look at this comparison. Alcohol is selling at $1.55 on the spot market. And the refiners and blenders get a $.51/gallon fed subsidy. So their cost is $1.04 plus shipping expenses. NYMEX RBOB says gasoline sells for 3.16 plus shipping. so alcohol is $2.12/gallon cheaper than gasoline, yet E85 sells for $.4 less than gasoline. The refiners are making a higher profit on alcohol than they are on gasoline. That is your tax money subsidizing gasoline.
These are the pump prices in my area yesterday. Your numbers should vary.
When I speak of ethanol, I am speaking of it as a pure, anhydrous ethyl alcohol that may be blended with gasoline in various percentages. When I speak of subsidies to ethanol, I am referring to the rate of subsidization for E100.
I am not privey to all the discussions that preceeded the invasion of Iraq. Surely concern about a country like Iran gaining control of the oil fields was a factor. But so may have been revenge (Poppy didn't complete the job, in Shrub's view), wanting to appear to be kicking the terrorist's butts (hence the misinformation about WMDs), worry about what trouble Saddam might stir up in the region, and in Israel in particular, etc., etc.
But it was supposed to be a clean job: the Iraqi's would greet their liberators with open arms, and the troops would go home within months. (Remember "Mission completed"?)
Say the USA did wean itself from imports of oil from the Middle East. Do you think that the Middle East would just shrivel up and disappear? Are U.S. greenbacks the only ones that count? What is fueling terrorism in the Middle East is resentment over U.S. policies (especially in respect of Israel), the perception among jihadists that the west (led by the USA) is engaged in some form of modern-day crusade against Islam, and simple criminal opportunism. The terrorists will not be starved of money no matter what the United States does to reduce its own oil consumption. China and India will happily buy what we don't.
That is not to say that the United States shouldn't try to reduce its oil consumption dramatically. But reducing the terrorist threat is a lame argument for defending current biofuel policies.
*******
Yes, multilateral agricultural policy reform was supposed to lead to increased commodity prices, and end subsidized exports. But the deal was to be implimented over 10 years or so. At the end of those 10 years, commodity prices were forecast to rise by 10-20% over what they would have in the absence of a WTO agreement (nobody was thinking about the demand from biofuels at the beginning of the Doha Round).
You are right that subsidized exports, by pushing down the prices of corn, cotton and other commodities made it almost impossible for countries in Africa to invest in improving their agriculture and exporting their way out of poverty. But the solution to that was not supposed to be a sudden reversal of the situation. You can't expect farmers in Mozambique or Malawi to all of a sudden zoom from a crawl to 100 miles per hour.
*******
Yes, cars with computerized timing and airflow sensors can get better gas mileage than those without, but they still get fewer miles per gallon running on ethyl alcohol. Drivers in Brazil with flex-fuel cars know that, and make their decisions on whether to buy ethanol or gasoline accordingly.
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I didn't say that ethanol has around for only 20 years, I said it has been subsdized (in the USA) for 30 years. You say it has been
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There is a value to cleaner air. But with current formulations for gasoline, the marginal increase in cleaner air provided by ethanol is not very large. Some pollutants are lower, some are higher. And research conducted by Stanford University suggests that widespread use of ethanol (e.g., in the form of E85) would on balance worsen problems related to ground-level ozone.
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Will ethanol reduce the country's trade imbalance? The United States imports most of its fertilzers. The N part of N-P-K typically comes from countries with abundant oil and natural gas -- the Middle East for one. And as the country devotes more land to corn for ethanol it becomes a bigger importer of wheat and oats. Subsidized import substitution rarely produces net economic gains, as witnessed by the failed policies of many Latin American countries and India before it (partially) liberalized its economy.
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The latest rack prices for ethanol that I've seen put the national price at $2.8372, not $1.55 per gallon:
www.dtnethanolcenter.c...
What's your source?
In any case, if you really believe that ethanol is cross-subsidizing the petroleum industry, then I should think you'd be in favor of eliminating the ethanol tax credit.
The price of diesel fuel made up most of your price increase. Oil is heavy, it cost more to ship than corn flakes. Theres is still only 10 cents worth of corn in a box of corn flakes that sell for $3.
You are also correct in saying that our money will be replaced with money from China and India, in the coffers of Middle east terrorist. So will their anger. If we are no longer their biggest trading partner we are no longer the symbol of economic development and education. Religious extremist fear the education and Westernization of their people. It lessons their control. It is all about power and control. If China becomes the new trading partner and economic engine, China will become the focus of their hate. Just my opinion. I also believe China is too smart to put themselves in our position of being dependent on such an unstable part of the world. China has no trouble subsidizing alternative energy.
Dear Sub, we should have coffe some time, I think we would agree more than you believe.
Regarding your theory that trade begets resentment, there may be some cases of that. But there are plenty of other cases. The USA hardly trades with either North Korea or Cuba -- not exactly bossum buddies.
No, I don't think it is the inflow of petro-dollars that angers the extremists so much as the inflow of American television and films, and everything else that they regard as decadent. Making the USA independent of oil imports from the Middle East will not turn off that tap.
In any case, the countries breeding terrorists with a grudge against America include many countries that are not significant oil exporters (Afghanistan, Somalia), and many oil exporters (Canada, Mexico, Norway), even ones in the Middle East (Qatar, Dubai), are friendly towards the USA.
Again, that is not an argument for complacency on reducing oil use, just an argument that terrorism is not simply about oil and petrodollars, and hence the small contribution that biofuels can be expected to make to reduce those flows is unlikely to materially reduce the terrorist threat.
The incredible IRONY of your post is that you don't see the valid point that Dillish is making. His point was: in COLLEGE he learned about Global Cooling! 30 years ago, he could have made YOUR EXACT ARGUMENT to someone who didn't believe in global cooling. "Well, I just graduated from Rice University and so I think I'm a bit of an expert on Global Cooling..." etc. Get it? You make his point *exactly*. 30 years from now, YOU may be the one telling someone how "Jeez, we learned all about global warming in school, and it turned out it was all crap. And NOW they're telling us that the real problem is Global Belching."
As I said before, run screaming. It's not about "climate change" -- it's about gaining control of our citizens and our economy. People don't fight socialism and fascism when they're convinced beforehand that it's "for the greater good."
Which food product got to the store without using oil? If there is only 10 cents worth of corn in a box of corn flakes, and corn flakes cost $5 at your store where is the other $4.9 going? Transportation cost and the health care cost at Kellogs, the grocery store, and the trucking company that brought the corn flakes to your store.
The corn syrup in your other products is a byproduct of ethanol production. It is one of the things left after you remove the starch from corn. Ethanol production increase the amount of corn syrup being produced in the US.
Corn is currently selling at $5.5/bushel. 50 years ago corn was $3/bushel. 50 years ago gas was 30cents/gallon. Today it is $3.56.
Stop blaming ethanol.
www.extension.org/faq/...
www.wipo.int/pctdb/en/...
corn condensed distillers solubles, a product of dry-mill plants (and sometimes called, confusingly, "corn syrup"), is used for cattle feed, not human consumption.
Perhaps you are thinking of wet-mill plants? In that case, corn syrup is an alternative product, not a co-product, of ethanol production. Quoting from the RFA website:
www.ethanolrfa.org/res.../
Once, the starch is separated, it "and any remaining water from the mash can then be processed in one of three ways: fermented into ethanol, dried and sold as dried or modified corn starch, or processed into corn syrup."
That last "or" is decidedly not an "and".
I used to work for a company issued Reg D limited partnerships. We raised money for start ups and expansions. Ethanol companies were coming to us to raise money. One of the entreprenuers told me they were producing so much Corn Syrup that the market could not absorb it all and the price was crashing. They were retrofitting several plants to burn corn syrup in lieu of natural gas at times of over supply. I asked why they did not build wind mills to generate the heat they needed. He said they would in states that allowed them to sell extra capacity back into the grid at a fair price, but this state was not one of those.
Hmmm, it sounds as if your entrepreneur friends were talking about what the dry millers call "corn syrup", but which is different from the kind we consume on our pancakes. But necessity is the mother of invention, and my understanding is that producers have since figured out how to incorporate it into DDGs, thus transforming it into DDGS -- dried distillers grains with solubles (e.g., cattle feed).
Yes, Religious extremist hate our movies and music. They see thier followers making decisions that they don't like. when the Chinese and Indians become the major trading partners of the Middle East, their cultures will start rubbing off too. The Religious Extremist will consider that a threat also. Do you think the Muslims want to see people living Hindu lives in their contry? Have you notice China's stand on religion? They will take some of the focus off of us. This is only my opinion.
Perhaps. But Muslims have been attacking Hindu-dominated areas for years (Bali, not a "trading partner", is just the latest example). That is nothing new. Hate and intolerance knows no bounds.
I run my vehicle on E85 for this reason. The more I encourage the government and business that this is a good alternative, the more they work with it. Check out www.extension.iastate.... for current conversion information.