The reverse of UN's disastrous "oil for food" program: Ethanol uses 40% of US Corn Crop

hotrod ( Larry L ) says:
March 5, 2011 at 4:07 pm
The actual cost of the corn fraction of common food products is trivial, in a box of corn flakes the cost of the corn to make it is less than 10 cents, the real cost is in the packaging and shipping (oil) to get the product to the consumer.
A most critical point, and perhaps ultracritical when it comes to oil supply.
Global Traders seek to sell commodities as far afield as possible from point of origin to command the hightest prices. Where we left off just prior to the last oil price crash (which the Saudis fear) was Global Trade run amok that put unbearable pressure on the bunker oil supplies. The bunker oil for ships ran short, so diesel production was dipped into to add bulk to the bunker oil supplies.
This is where speculation does the greatest damage: At the Global Trade level. Speculating oil to skyrocket prices affects all trade, and thus the pressure is on all commodities, not just food. Unfortunately for people, they have to eat. Double unfortunately too many are out of work worldwide.
This is a speculative bubble we are witnessing. It will pop, but before it does so many nations/governments will sink into chaos.
Growing corn for fuel, at this point, is akin to rubbing salt in the wounds of speculative chaos.

“Ethanol production continues to increase in efficiency. The latest numbers from USDA’s 2008 Energy Balance for the Corn-Ethanol Industry report show for every British Thermal Unit (BTU) of energy used to make ethanol, 2.3 BTUs were produced. This is a marked improvement from the last report in 2004 when it took 1.76 units of energy to make 2.3 BTUs of energy. The report goes on to say efficiency will continue to improve as the ethanol process evolves requiring less corn per gallon of ethanol plus increasing corn yields will mean more ethanol per acre”
“A study by the University of California at Berkeley says that use of ethanol as a transportation fuel offers a positive life cycle energy balance, while producing slightly fewer greenhouse gas emissions than petroleum fuel use. Dan Kammen and Alex Farrell of the Energy and Resources Group (ERG) at the UC Berkeley published their research in the journal Science. While earlier studies suggested that the energy to produce ethanol was greater than the actual energy content of ethanol, this overview work argues that those assertions were incorrect. The ERG research report also noted that most ethanol today is produced through corn and, as such, the subsequent greenhouse gas emissions thought to cause global warming are only marginally cut. That will change, however, when such non sugar feedstock sources as switchgrass are put to use on a large scale, supplanting corn.
The UC Berkeley study examined several earlier assumptions and then corrected for errors and outdated information as it relates to how much energy it takes to grow corn and then make ethanol. The study says that ethanol produced from corn creates 10-15 percent fewer greenhouse gas emissions than burning gasoline. Similarly, a study from the International Energy Agency in Paris agrees, saying that while grain-based ethanol requires substantial amounts of fossil fuel inputs, that fuel additive is still responsible for creating 20 percent fewer greenhouse gas emissions than conventional fuels. “

Italy produced the first Methanol run car in 1936, there are about 500,000 methanol cars in Italy today.
I have a methanol plant in my basement which is supplied by household waste, and garbage, it heats the house,runs my wife’s car, those that are interested ‘google’
costs = wife’s car 7,000 km per year
= heating 260 M2 house 3/4 months
= cooling 260 M2 house 2/3 months
cost and installation of methane plant $6,800 (5 years ago)
maintenance $ 150.00 per year
Taxes $0.00
my savings over 5 years $20,000 – $25,000
Now if some one can tell me why you have not a plant in your basement ?

One nice thing about ethanol. We don’t have to send young men to the middle east to stabilize the politics and protect our fuel supply when we grow it here. When the disruptions in Libya spread to Saudi Arabia we’ll all be talking about how to grow corn in our gardens and build stills in our backyards.
On the subject of farm subsidies. The big farmer in my neighborhood who farms nearly 10,000 acres is waiting for the day subsidies go away because it means payment limitations go away. His speculation is that once payment limitations go he’ll be able to take over and drive the remaining small time guys out completely. It is true that farm subsidies hinder farm productivity. On the other hand do we want to deal with farms becoming too big to fail. It’s not inconceivable that a player like ADM could leverage its control of grain processing into control of the planting and harvesting of the crop. If this seems far fetched look at what has happened in the poultry business. It is vertically integrated and mostly in the hands of Perdue, Tyson Foods, and Pilgrim’s Pride. On balance it is probably a good thing because it helps us buy chicken so very cheaply that we can afford the luxury of jumping in a car and going down to get a KFC Double Down – all chicken – no bread sandwich.
The bottom line-
There is a price on a barrel of crude at which growing crops to be turned into fuel makes sense. That was how transportation worked when horse feed was grown to fuel our transportation in the horse and buggy days.

Layne Blanchard says:
But the EPA isn’t interested in factual data.
The number of gallons of bio-fuels that refiners must use each year was mandated in the 2007 EISA Act by Congress. The only thing EPA has power to do is determine the mix of source of bio-fuels.
Unfortunately, all the ‘happy talk’ about how much biofuel could come from cornstalks, grass clippings, wood chips and french fry grease was just ‘happy talk’ with no basis in reality.
The result is that for all intents in purposes all bio-fuels end up coming from the corn, which was not the original intent of the law.
There is no shortage of ‘happy talkers’ in the environmental movement who like to talk about ‘theoretical’ possibilities. It’s theoretically possible that I’m going to win the lottery but I’m holding off on spending my ‘winnings’ until I actually win. Unfortunately, in the biofuels game congress confused possible with actual.

220mph, “…ethanol fires in Indycar are fought largely with water”
So the NRT is lying?
NRT Quick Reference Guide: Fuel Grade Ethanol Spills (including E85) (PDF) (U.S. National Response Team)
“Fighting fires of fuel blends containing 10% or more ethanol by volume requires the use of an Alcohol Resistant-Aqueous Film Forming Foam (AR-AFFF).”
I don’t find fighting fires “silly”.

220mph, “Higher fuel prices? …. nope
Ethanol, even E85, costs LESS – not more – than gasoline – per e85prices.com the national avg is $2.90 for e85 and $3.48 for gasoline (E10) – a 16.6% savings
In my area I pay $2.59 for e85 and $3.38 for gas (e10) – or 23% LESS for e85 … this trend largely holds for areas where e85 is prevalent”
Sorry but the national average is 16% without adjusting for BTU or subsidies.
$3.503 – Regular Gasoline (AAA)
$2.929 – E85 (AAA)
Now lets get the actual price of E85,
$3.854 – E85 BTU Adjusted Price (AAA)
+0.450 – VEETC Subsidy (U.S. Department of Energy)
$4.304 – E85 BTU and Subsidy Adjusted Price
So much for that!

harrywr2
“There is no shortage of ‘happy talkers’ in the environmental movement who like to talk about ‘theoretical’ possibilities”
I tend to agree with this sentiment about happy talk. On the other hand some soul out there willing to risk capital (or his reputation if he works in a company) is likely to have the seeds of some future innovation happily brewing away in his mind. When I was 20 the idea of individuals being able to afford a personal computer was big time happy talk. Now even my computer has its own computer to handle the graphics part of its task. Happy talk is indeed “just talk,” but there are more innovations in our future waiting to be implemented by the right persons.

I think it might be useful to imagine a real life scenario.
Sometime in the near future China and India has a major crop failure, and these countries begin to starve. Here in N. America we stop exporting grains, to reserve, our supplies, to ensure, we do not run out.
As China starves, we continue driving around, blowing corn fumes out our tailpipes. How are we going to feel, at this time?
Now, put yourself, in the shoes of the poor, starving Chinese, who must endure hunger as they witness us drive around blowing corn fumes out our asses.
How long before they move on us? GK

This many comments and not one mention of the Iowa Caucus (apologies if I missed any).
For European readers, the Iowa Caucus is a key first post in the horse race to become president of the USA. Here is a link to a site that you can navigate to learn all about the Iowa Caucus – with what is hopefully a relevant starting point 🙂
http://www.iowacaucus.org/ethanol.html
You can find many links to the political importance of the Iowa Caucus and the ethanol connection. Here is just one example.
http://www.ft.com/cms/s/0/04f0a668-b71b-11dc-aa38-0000779fd2ac.html#axzz1FpsvWT43
A quote from this article is as follows:
“If you want to be president and you’re running in the Iowa caucuses, you have to support ethanol,” says Jerry Taylor of the Cato Institute, a free-market think-tank in Washington that opposes the industry.
That has forced some erstwhile doubters to reconsider their stance: Hillary Clinton, who opposed ethanol subsidies before she launched her bid for the Democratic nomination, has since come out forcefully in support of the industry.” end quote
The discussions above are very interesting, but honestly, the short answer is that were it not for the Iowa Caucus timing we would not be talking about ethanol, because there wouldn’t be any.

Biofuels really are not that big of a deal for the US itself. World-wide it has more negative effects in countries that can not produce as much food and give much more subsidies for them, but here its pointless to really guess what actual food production would be without ethanol.
Point in fact: Anything that is grown for food is price-controlled. The amount of foodstuffs grown is rather constant and the price only changes because of the price on fuel to ship the stuff. Corn for food will never go up in price because its controlled by the Government. I will not argue whether this is a good or bad thing, but this is just common sense. So in essence, food prices in the US are simply related to transportation costs and as such are related to the price of oil.
Food shortages are common in addition. Look through history and at either shipping costs or famines caused by bad weather. Both happen and regardless its the old story of anything that is sustainable can be taken away due to one storm. Sustainable is a myth, we as a society have never run out of anything that we can mine, but I can point to over 100’s of times in history where we ran out of food that is called sustainable by the same people. Pure and simple, its a myth. The oil in the ground is not going to disapear due to a heat or cold wave. But the biofuels could disappear because of those events.
Its a very large distinction, its almost like the entire sustainable argument took common sense on its head and turned it around.
In the end, that argument does not matter either though. The true cost of anything should be analyzed and then let the markets decide if we do indeed live in a free market. Subsidies just bias markets for a “preferred” product.
That being said, biofuels are harder on engines as a rule. You have to use more products to keep your engine running well with biofuels. You have to get your oil changed more often. You get slightly less MPG. But nothing there is really terrible and can’t be dealt with. You can also start designing engines for usage with biofuels which is what is starting today with some models running just as well with them. But when you engineer for a certain product, you still miss out, because the entire concept of increased BTU’s is paramount there with pure oil.
But if biofuels ARE cheaper, I see no issues with using them. This takes a very comprehensive cost/benefit analysis. First, remove the subisidies and remove all mandates for its usage. Then if it survives, great. If not, oh well.
That is what an open market is for. Let the market decide on green schemes that do nothing to help the environment and only make us more susceptible to mother nature. I would prefer the “sustainable” oil drilled from the US then biofuels, but shrug, its an open market for a reason, if it survives well that is the breaks.

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Poptech says:
March 6, 2011 at 8:11 am
John Wright, “I had never heard about the effect of Prohibition on the elimination of alcohol from vehicle fuels (and thanks to Larry L for that titbit).”
Ethanol was never eliminated from vehicle fuels because of Prohibition. Ethanol could still be used in a denatured state, it just had to be mixed with a small amount of another chemical making it undrinkable. Thus if you are mixing it with gasoline it is “denatured”. Ethanol blends stopped being used because gasoline was cheaper no other reason.

The picture is a little more complicated that you want to present the Poptech. The volstad act (Prohibition) did not explicitly prohibit fuel ethanol, and denatured ethanol was still “legal”, it just became unavailable in the open market. By outlawing beverage alcohol they destroyed the industry that would create an adequate supply of fuel ethanol.
As prohibition was seen to be a soon to be imposed fact, the capital investment and plants of the large scale ethanol producers became nearly worthless, and were sold at fire sale prices many to the Rockefellers (oil industry), and all their skilled brewers and the chemists that supported them were diverted into either the oil industry or went underground into the boot leg industry.
Likewise the same prohibition on beverage alcohol made it illegal for small farmer still operations that could produce high proof alcohol on the farm. The farmers then could no longer provide their own fuel on the farm for their own farm equipment and transportation they were forced to buy from the only game in town the oil industry.
At that time the wide spread network of service stations to provide fuel for transportation did not exist, but folks in the rural areas could if they chose make their own fuel. By closing down the rural distributed fuel production economy and removing a secondary income stream from beverage alcohol it became to run most breweries.
Coors Brewing here in Colorado shut down their brewing operation and shifted into porcelain ware, which is now a second division of the company. That kept the company alive until prohibition ended. Not all brewers had the funding or smarts to make a similar move.
That concentrated the source of transportation fuel directly in the hands of a defacto monopoly in the oil companies and their suppliers. Even after prohibition was ended, that oil monopoly continued to squash small businesses that sold fuel ethanol. One of their tactics was to black ball fuel distributors that sold ethanol for “bad business ethics”, and refused to sell them kerosene or other petroleum products. In short the oil industry at that time ran a protection racket out in the open, and destroyed any business that sold fuel ethanol, by cutting them out of the supply chain for the other products they needed to run a successful business.
It was another example of unintended consequences, like the oil crisis in the 1970’s destroyed the majority of the independent gas station owners and left only the corporate chain stations. Many of the independents who went out of business in the 1970’s were selling gasohol and got cut off from fuel deliveries from the major oil chains. They always got their fuel deliveries late, or simply got driven out of business by corporate chain stations down the street selling gasoline at prices below their wholesale prices.
Larry