Ethanol Revisited

[DaveR]

Back to the ethanol discussion. Here is some alternative information on the Pimentel perspective.

(broken link removed)

The Truth About Ethanol – Addressing the Myths of the Pimentel/Patzek Study

Recent media reports about a dubious study on the net energy balance of ethanol have garnered considerable national attention. The study, conducted by David Pimentel of Cornell University and Tad Patzek of the University of California-Berkeley, alleges ethanol production requires more fossil energy than the resulting ethanol fuel contains. Despite a wealth of research to the contrary, Pimentel has repeatedly made this same assertion in the past.

Additional studies and analysis can be found at the following link including studies looking at the effect of corn ethanol production on food prices. I wonder if anyone has looked at the effect of corn plastic production on food prices? Walmart is trying to use more plastic packaging derived from corn and other renewable sources for products. This could could be a very dangerous precedent as these materials compete with food that they now also package.

(broken link removed)

By the way corn prices have dropped precipitously this past week along with the rains finally falling throughout the heart of the corn belt. I wonder if all of those reporters writing stories about higher corn prices driving food prices higher will retract those reports if corn prices settle lower this Fall should we be blessed with an abundant harvest? Personally, I doubt that food processors, wholesalers, and retailers will lower their prices as a result of lower corn prices because energy costs from higher electricity rates, oil prices, and natural gas prices are the real culprits behind higher food costs. I also suspect some businesses selling products saw a convenient scapegoat to justify improving their own profit margins eroded by higher energy costs which don't seem to get much media attention beyond gasoline prices that some use in a sordid attempt to increase support for more Government Control of markets.

Here is a link to recent commodity price reports that makes for interesting reading. Not only does it note a sharp drop off in corn prices, it also notes soybean prices falling and an unprecedented surplus in soybeans expected to remain at the end of the 2006/2007 marketing period. Economics 101 at work in free markets to great benefit of free people, or at least freer markets and freer peoples. Now if only we could get to work on changing Government Policy relative to reducing taxes, tariffs, subsidies, and monopoly power in strategic markets that frustrate more efficient free market allocation of these resources to benefit the greater good of the American public.

(broken link removed)

Keep praying for timely rains and good growing conditions. Abundant harvests have been known to work wonders on market prices.

 

[begreen]

It's to be expected that the quoted National Corn Growers Assn. is going to be biased toward corn. The argument is still ongoing from both sides. This is a good thing, especially with regard to influencing national policy. Ultimately, I think they are going to have to have a process that is not fertilizer intensive, can be grown year round, needs minimal machinery for planting, harvesting and processing, and has minimal environmental impact. So far, corn doesn't fit the bill.

(broken link removed)
(broken link removed)
http://www.physorg.com/news90166168.html

Seems the Senate has a bit of a concern as well. Global food prices are jumping. And the secondary effects of corn increases are just starting to be noticed.:

(broken link removed to http://www.earth-policy.org/Transcripts/SenateEPW07.htm)
http://www.ft.com/cms/s/175eda2e-1b24-11dc-bc55-000b5df10621.html

 

[DaveR]

It's to be expected that the quoted National Corn Growers Assn. is going to be biased toward corn. The argument is still ongoing from both sides. This is a good thing, especially with regard to influencing national policy. Ultimately, I think they are going to have to have a process that is not fertilizer intensive, can be grown year round, needs minimal machinery for planting, harvesting and processing, and has minimal environmental impact. So far, corn doesn't fit the bill.

(broken link removed)
(broken link removed)
http://www.physorg.com/news90166168.html

Seems the Senate has a bit of a concern as well. Global food prices are jumping. And the secondary effects of corn increases are just starting to be noticed.:

(broken link removed to http://www.earth-policy.org/Transcripts/SenateEPW07.htm)
http://www.ft.com/cms/s/175eda2e-1b24-11dc-bc55-000b5df10621.html

Keep in mind the last link only reports the Dow Jones News Service's daily commodity reports. Fact, grain prices moved sharply lower as commodity speculators bailed out of markets with improved growing conditions benefitting from recent rains. The Financial Times article you linked is already dated by the sharp selloff in commodity markets. I hope you at least read the materials before passing judgement on them being biased. I am well aware of the growing interest in cellulosic ethanol and do agree cellulosic ethanol offers potential for better energy returns but capital investment in plant and machinery for harvesting, processing, and transport of switchgrass, miscanthus, or other feedstock is not minimal. The infrastructure investment to launch this effort is substantial, not to mention that static feedstock prices based upon local hay markets are not likely to be representative of market prices for these resources with exponential increases in resource demand favoring producers in early market prices until the market reaches equilibrium. That is one reason this industry is focused on first tapping more readily available wood wastes as feedstock for cellulosic ethanol plants now in start-up. Many corn based ethanol plants are also looking at capital investment required to readily convert facilities over to cellulosic ethanol production.

We can agree that robust debate and objective analysis of the technology, economics, and return on investment are critical to better policy outcomes. Lets hope Americans are looking for real long term solutions rather than the typical reactionary posturing in policy.

 

[begreen]

The FT report is just a snapshot of global effect of rising grain prices. True, it is last week's report, but a sharp drop in US commodity prices can be followed by a sharp uptick tomorrow or next month following a drought or Katrina like event. My point is the interconnectedness of food markets long-term and how they are being affected by ethanol policies. I think this will become an increasing global concern as petroleum resources become more dear.

As to your closing sentiments, I wholeheartedly agree. Well put.

 

[Sandor]

AG,

Seems like you are certainly on the Ethanol bandwagon.

Lets see some EROEI figures in your threads.

I know cellulose will "solve the problem", but its not here yet.

For an unbiased opinion, I read Robert Rapier's energy blog regarding ethanol. His credentials are impeccable. Search for the "r squared energy blog" and read away.

 

[begreen]

As far as I can see, ethanol is political smoke. It is costing us a fortune in subsidies (1995-2005 = 51.2Billion). It will never make the pie in the sky goals set by the administration. It is decreasing real fleet mileage because by producing gas guzzlers that are flex fuel vehicles, car companies get energy credits towards their fleet mileage. And NOx emissions are much higher with ethanol. It's going to be interesting how lobbyists confront the EPAs new rulings that target NOx specifically. So while ethanol is political elixir for getting critical mid-west - read Iowa - primary votes, it is not necessarily good policy.
http://www.slate.com/id/2122961/
http://oregonstate.edu/dept/ncs/newsarch/2007/Jan07/biofuels.html

From Consumers Reports:
* The FFV surge is being motivated by generous fuel-economy credits that auto-makers get for every FFV they build, even if it never runs on E85. This allows them to pump out more gas-guzzling large SUVs and pickups, which is resulting in the consumption of many times more gallons of gasoline than E85 now replaces.
(broken link removed to http://www.consumerreports.org/cro/cars/new-cars/ethanol-10-06/overview/1006_ethanol_ov1_1.htm)
and http://www.energytribune.com/articles.cfm?aid=481

As to whether current ethanol policies are neutral and working, this is an interesting report. They bring up the question, why is ethanol subsidized, but biobutanol - a fuel closer to gasoline made from biomass, isn't? :
http://www.card.iastate.edu/iowa_ag_review/spring_07/article1.aspx

 

[webbie]

The tack taken with alternative fuels should be "guilty until proven innocent" as opposed to "sounds good and the farmers like it, so let's subsidize it". Unfortunately, as you know, there is a group that benefits financially whenever ANY policy decisions is made, and as John Mellencamp, Willie Nelson and other have found out, the "poor American Farmer" who is disappearing is always a good political image - never mind if it is Archer Daniels or Monsanto or the refining company making the real dough, if the farmer can get even a small piece and show up in a couple TV commercials praising the fuel, that is all most voters need to see.

Do you think the average american has any idea what a BTU is? Or has any idea about input vs. output? Of understands the formulas of how much fossil fuel must be used to create a gallon of ethanol? I could venture to say that most legislators don't even understand this stuff.

If that is true (and I suspect it is) that GM is making money from building all those "yellow" cars that will probably never use a drop of corn fuel....well, that is sickening and just more of the same. What a farce!

 

[jjbaer]

you folks miss the point...let's assume for arguments sake that the net energy is negative.....doesn't matter for now (cellulotic production will solve this)...what's important is that we do whatever it takes to get off foreign oil.....

 

[webbie]

you folks miss the point...let's assume for arguments sake that the net energy is negative.....doesn't matter for now (cellulotic production will solve this)...what's important is that we do whatever it takes to get off foreign oil.....

That seems like a myopic view. Getting off foreign oil is a bit of an oversimplification. There are many countries on the earth that will be glad to sell us oil for the next 5 decades or more. What we need is to have alternatives to this oil for many of the things it is not needed for, which then frees up the supply and lowers the price. Of course, it goes without saying that we should buy it on the open international market rather than fight wars for it.

So, I think we agree we need to:
1. Conserve
2. Develop additional sources of energy
3. Increase efficiency of current appliances, vehicles and processes that use energy.

Although the argument to "replace one devil with another" just to solve a "problem" (and I put that in quotes because the problem is not foreign oil but all fossil fuels whether imported or produced here.) might sound tempting, it would only be wise to apply it IF we had no other alternative! In other words, as a last ditch effort.

But we have LOTS of other alternatives......which are quickening as we speak, and would happen much faster if the GOP didn't just block the oil tax....which was slated for R&D.

We can have plug-in hybrids and get 50-100 MPG - that will go a long way. We can use wind, wave, tidal, solar and biomass energy to power the plug in part. Why waste fossil fuel making renewable fuel if the conversion is not very good? It seems silly from any viewpoint except PR. If we took the hundreds of billions of dollars which are being directed to chancy fuels - and put it into more solar PV R&D, we would quickly build up an incredible amount of factories with advanced technology to produce lower and lower cost cells.

Again, I'm not say that liquid biofuels could not be a part of the landscape, but even if the conversion factor was 1 to 2 (1 gallon of fossil equiv used to make two gallons of ethanol, that means you end up burning 150% more fuel than just the 1 gallon of oil out of the ground. More CO, more other possible pollution.

I know we all have varying opinions on these matters, but "getting off foreign oil" is about as realistic of a goal as "getting off foreign financing of our debt" or any such thing. I have no problem at all with buying oil from Chavez, Russia, Libya, etc. as long as we buy it at fair market prices and do not use aircraft carriers (very costly) to secure it. There is no need to secure anything when you have a willing seller and a willing buyer.

The real issues, in my mind, are:

1. Treating it as the valuable commodity that it is - use it for what we need to use it for, and use other stuff for the rest.
2. Mitigate the pollution aspect to the highest possible degree
3. Leave some for later until we are 100% certain we have replacements.
and
4. Don't make it a political and pork barrel football, throwing money around in a way that obviously buys votes.

 

[DaveR]

AG,

Seems like you are certainly on the Ethanol bandwagon.

Lets see some EROEI figures in your threads.

I know cellulose will "solve the problem", but its not here yet.

For an unbiased opinion, I read Robert Rapier's energy blog regarding ethanol. His credentials are impeccable. Search for the "r squared energy blog" and read away.

Let's back up for one moment since everyone wanting to argue about ethanol are suddenly concerned about the price of corn. What do you believe is the "right" price for corn? What facts or assumptions do you use in arriving at this "right" price for corn? Would you use this same logic to set prices for all other commodities, goods, and services traded in American markets?

I believe you will find the information you are asking for in the studies I have offered links to. I have also read and thought about in some depth both pro and con positions regarding ethanol. I am fully satisified with the position I have staked out which includes reducing Government intervention in the market allocation of these resources in the form of taxes, tariffs, and subsidies. I have also suggested that corn based ethanol is most likely a transitional fuel source that I believe is worth sustaining in the short term rather than waiting for the perfect renewable energy solution to be created by the all wise and all knowing central planners aching to wrest away complete control of the levers of government and markets.

I believe in the superiority of free markets and free peoples pursuing technological innovation to overcome the challenges presented in an uncertain world. I believe in evolutionary free market progress that is in harmony with the natural laws guiding all of creation and ordained by humanity's creator. If natural selection and random probability is capable of yielding the diversity and complexity of life found on planet earth, it must certainly be more than capable of yielding better market solutions and outcomes than reactionary command and control policies designed to force market change thought best by a small cadre of technocrats upon all the rest of society. Price is the best and most rational mechanism for allocating resources in the absence of public or private monopoly power when process and information is jealously guarded for individuals to make informed decisions.

You might be surprised to learn that the prospect of higher corn prices has thrown cold water on many planned corn-based ethanol facilities. The Wall Street Journal just ran an article this past week discussing the real possibility of a consolidation in the ethanol industry resulting from current market trends in corn prices, ethanol prices, and energy markets. Cellulosic ethanol may well become a reality sooner rather than later out of economic necessity caused by current market realities introduced as a result of higher corn prices. Government policy in the form of taxes, subsidies, and tariffs interject bias into this process of natural selection in free markets and often frustrates rapid adaptation of products and services to changes in the market environment. Remove tariffs/subsidies and domestic industry must become more competitive to survive provided we also remain vigilant to unfair competition and manipulation of prices in competing products coming from trading partners.

I am on the bandwagon to leverage excess American agricultural product and capacity for renewable energy initiatives that offer potential to break the pricing power of foreign energy cartels and nations hostile to American interests. I am on the bandwagon to utilize these renewable resources to the greater good of Americans, first meeting the nation's need for food and second keeping American tax and energy dollars invested in American communities and the American people. I am on the bandwagon of aggressive unapologetic domestic energy development complimented by aggressive unapologetic energy conservation encouraged through generous tax credits for individuals and business.

But lets dispense with the idea of new energy taxes which only add insult to injury to average American citizens already suffering from higher energy costs.

 

[begreen]

ADM would be proud of you AG, but how does natural selection get mixed up with free market actions? Ordained by God? I just read an article entitled -"Ethanol is the Agricultural Equivalent of Holy Water." At first I thought the title was a stretch, but maybe not.

Ethanol isn't going to break any cartel's back in my lifetime, but it might break the country's economic back if we are not careful about diverting funds from real solutions. It may be a small part of the answer, but not while it's giving car companies an excuse for further excess. And it isn't going to put a dent in the 3.2 billion gallons of aviation fuel/yr. currently used by the Air Force (half of all govt fuel usage).

If you're advocating for dropping of subsidies for ethanol, I'm with you brother. Let ethanol rise to its real cost and let's see if the free market is still interested. Roughly $9.4 billion subsidized making of 5 billion gallons of ethanol in 2006 so add about $1.90 to the price.

Still unanswered, why subsidize ethanol and yet no subsidies for biobutanol? And why isn't 9.4 billion being put towards conservation if breaking the cartel's back is our goal? Reason is, that is not our goal at all. Remember the govt. is a Major customer and the administration needs fuel to run its empire.

On butanol, according to Wikipedia:
"Butanol better tolerates water contamination and is less corrosive than ethanol and more suitable for distribution through existing pipelines for gasoline.[3] In blends with diesel or gasoline, butanol is less likely to separate from this fuel than ethanol if the fuel is contaminated with water. [4] There is also a vapor pressure co-blend synergy with butanol and gasoline containing ethanol, which facilitates ethanol blending. This facilitates storage and distribution of blended fuels."

 

[jjbaer]

I have no problem at all with buying oil from Chavez, Russia, Libya, etc. as long as we buy it at fair market prices and do not use aircraft carriers (very costly) to secure it. There is no need to secure anything when you have a willing seller and a willing buyer.

Craig,

yes there is.....if the seller decides (for whatever reason) to stop selling, then he has us (no pun intended) "over a barrel"........and when that happens, the only thing you and I get to decide is if we want to "be the husband or the wife".......and neither choice is one anyone would want to contemplate.....so...for the short term I say "do whatever it takes" to be independent, even if in the short term that means the cost rises a bit............technology will eventually reduce that cost but if our country wants to decide our own destiny, then we need to be energy independent.......and now....

 

[keyman512us]

AG....
First off, Let me just say that I believe that farming is "Probably the most honest living" ....but in this day and age ADM, Monsanto, and all the other big players have ruined it "for the little guy." No other aspect of the "American way of life" has suffered more at the hands of "big business and the politicians that serve it". Having said that, in a "perfect world" I would look favorably towards ethanol...but unfortunately...we don't live in a perfect world. The American people might be "addicted to oil" and it's probably an addiction we will never collectively get over. The only addict that is worse than a "crack head" or a "heroin junkie", the kind that will knife or shoot you for your pocket change....is a smiling politician looking for their next fix from their dealer...big business.
...Until those addicts are "taken care of" ethanol, and how it is viewed by the American public at large...doesn't stand a chance.

 

[DaveR]

ADM would be proud of you AG ...

... If you're advocating for dropping of subsidies for ethanol, I'm with you brother. Let ethanol rise to its real cost and let's see if the free market is still interested. Roughly $9.4 billion subsidized making of 5 billion gallons of ethanol in 2006 so add about $1.90 to the price.

Still unanswered, why subsidize ethanol and yet no subsidies for biobutanol? And why isn't 9.4 billion being put towards conservation if breaking the cartel's back is our goal? Reason is, that is not our goal at all. Remember the govt. is a Major customer and the administration needs fuel to run its empire.

On butanol, according to Wikipedia:
"Butanol better tolerates water contamination and is less corrosive than ethanol and more suitable for distribution through existing pipelines for gasoline.[3] In blends with diesel or gasoline, butanol is less likely to separate from this fuel than ethanol if the fuel is contaminated with water. [4] There is also a vapor pressure co-blend synergy with butanol and gasoline containing ethanol, which facilitates ethanol blending. This facilitates storage and distribution of blended fuels."

I don't necessarily think so. Go back and read some other posts. I am no supporter of corporate welfare for profitable industries. Government policy in the form of taxes, tariffs, and subsidies that benefit a few at great expense to the many should be eliminated. However, to believe that agricultural commodity prices should remain fixed in light of sharply higher production and transportation costs caused overwhelmingly by higher energy costs does not seem to me to be a reasonable expectation.

Just for the heck of it, take a look at the following link showing a graph of corn prices going back several decades. You might also want to make note of yields while you are looking at the information which are an indication of growth in productivity and efficiency resulting from technological innovation.

(broken link removed to http://www.ncga.com/WorldOfCorn/main/production2.asp)

Notice anything interesting about these prices. Now just for the heck of it, take a look at the following link discussing the economic costs for growing corn in 2006.

http://www.farmdoc.uiuc.edu/manage/newsletters/fefo07_05/fefo07_05.html

Economic costs for growing corn in Illinois for 2006 was shown to be $2.74 to $3.11/Bushel. Does the price for corn seem to be generating excessive profit at $3.20/Bushel? Does the previous years price of $2.00/Bushel seem to be generating excessive losses? Was anyone currently complaining about higher corn prices concerned about the economic consequences of extremely low corn prices in 2005? Just average the commodity price for corn over the last five years and then tell me what the "right" price for corn should be relative to the costs of producing corn, or soybeans, wheat, etc. Correlate the price of corn to the price of oil, natural gas, or electricity and let me know what you think. Agricultural production costs are greatly influenced by energy costs.

How many individuals and businesses would like to operate in an environment where prices for goods and services have changed little from 1976? How many individuals and businesses would like to operate in an environment where prices for goods and services do not cover the cost of those good and services? The only thing that has kept American agriculture in the game is unprecedented growth in operational efficiencies through the application of technology to increase yields and dramatically reduce input costs along with government subsidies to close glaring gaps with that cost being shared by all Americans in the form of taxes. However, remember government subsidies to agricultural producers fall as market prices rise. If only we would initiate similar mechanisms in subsidies for oil, natural gas, and coal.

If it does not make economic sense and cannot compete on its own merits in the marketplace without tariffs and subsidies, I too am reluctant to deplete the public treasury for benefit of a few at great expense to the many. Change Government policy in the form of tariffs, subsidies, and mandates for ethanol and the price of corn would never exceed its free market value based upon its energy content relative to oil and other alternative energy sources including Brazilian ethanol and butanol which I have also read about.

 

[begreen]

Agreed Corn -> fuel is very expensive. Ethanol currently has a poor EROEI. Iowa state has reached the same conclusion as you have pointed out:
http://www.insidegreentech.com/node/1292
Here's an interesting summary on the history, politics and players in the debate:
http://american.com/archive/2007/may-june-magazine-contents/biofuels-or-bio-fools

Maybe in 10 years bio-technology will provide some more cost effective answers, but currently, the only practical, rapid return on investment is to mandate conservation, starting at the top with the US govt., the biggest addict of them all.

Seattle and several other cities are taking the first steps in spite of the lack of Federal action. We need a lot more of this nationwide:
(broken link removed to http://www.cityofseattle.net/environment/clean_air.htm)

 

[jpl1nh]

you folks miss the point...let's assume for arguments sake that the net energy is negative.....doesn't matter for now (cellulotic production will solve this)...what's important is that we do whatever it takes to get off foreign oil.....

That seems like a myopic view. Getting off foreign oil is a bit of an oversimplification. There are many countries on the earth that will be glad to sell us oil for the next 5 decades or more. What we need is to have alternatives to this oil for many of the things it is not needed for, which then frees up the supply and lowers the price. Of course, it goes without saying that we should buy it on the open international market rather than fight wars for it.

So, I think we agree we need to:
1. Conserve
2. Develop additional sources of energy
3. Increase efficiency of current appliances, vehicles and processes that use energy.

Although the argument to "replace one devil with another" just to solve a "problem" (and I put that in quotes because the problem is not foreign oil but all fossil fuels whether imported or produced here.) might sound tempting, it would only be wise to apply it IF we had no other alternative! In other words, as a last ditch effort.

But we have LOTS of other alternatives......which are quickening as we speak, and would happen much faster if the GOP didn't just block the oil tax....which was slated for R&D.

We can have plug-in hybrids and get 50-100 MPG - that will go a long way. We can use wind, wave, tidal, solar and biomass energy to power the plug in part. Why waste fossil fuel making renewable fuel if the conversion is not very good? It seems silly from any viewpoint except PR. If we took the hundreds of billions of dollars which are being directed to chancy fuels - and put it into more solar PV R&D, we would quickly build up an incredible amount of factories with advanced technology to produce lower and lower cost cells.

Again, I'm not say that liquid biofuels could not be a part of the landscape, but even if the conversion factor was 1 to 2 (1 gallon of fossil equiv used to make two gallons of ethanol, that means you end up burning 150% more fuel than just the 1 gallon of oil out of the ground. More CO, more other possible pollution.

I know we all have varying opinions on these matters, but "getting off foreign oil" is about as realistic of a goal as "getting off foreign financing of our debt" or any such thing. I have no problem at all with buying oil from Chavez, Russia, Libya, etc. as long as we buy it at fair market prices and do not use aircraft carriers (very costly) to secure it. There is no need to secure anything when you have a willing seller and a willing buyer.

The real issues, in my mind, are:

1. Treating it as the valuable commodity that it is - use it for what we need to use it for, and use other stuff for the rest.
2. Mitigate the pollution aspect to the highest possible degree
3. Leave some for later until we are 100% certain we have replacements.
and
4. Don't make it a political and pork barrel football, throwing money around in a way that obviously buys votes.

Craig, very well said, I agree 100%!

 

[DaveR]

Has anyone seen any retractions from papers or other media outlets blaming corn prices for inflationary pressures on food and energy prices? With corn prices falling faster than recent rains offering improved growing conditions throughout the corn belt, I would expect all those food processors and retailers blaming corn for causing them to increase prices to consumers for food and energy to begin lowering those prices substantially now that corn prices have dropped dramatically. Climate change has chased most speculators out of corn markets for the moment with improved prospects for an abundant harvest shifting focus away from the demand side of the equation to the improving supply side. Prospects for higher corn prices has also begun to set the stage for weeding out less efficient and financially stable ethanol producers. Economics 101 at work again without market suffocating command and control government intervention. If corn is the cost driver for all of those products previously mentioned, the sharp drop in corn prices must surely now lead to lower prices for those same goods. Let's see what really happens through the end of this year.

(broken link removed to http://www.ncga.com/ethanol/main/index.asp)

Anyone interested in rereading the ethanol studies and food vs. fuel studies available from agricultural community? At least it allows for a more balanced perspective on which to base conclusions.

Some might also like to read recent unbiased fact based analysis of agricutural commodity markets available from the NCGA at the link below.

(broken link removed)

Corn futures closed lower on the day. The bears were in full force this morning after receiving larger than expected numbers from USDA.

Or keep up with news on renewable energy initiatives beyond just corn like the article found at the following link regarding cellulosic ethanol and butanol.

(broken link removed to http://www.checkbiotech.org/green_News_Biofuels.aspx?infoId=14993)

U.S. is creating 3 centers for research on biofuels
By Matthew L. Wald

WASHINGTON - The Energy Department is creating three bioenergy research centers to find new ways to turn plants into fuel.

The three centers, which the department described as three start-up companies with $125 million each in capital, will be in Oak Ridge, Tenn.; Madison, Wis.; and near Berkeley, Calif. They will involve numerous universities, national laboratories and private companies. The goal of the centers, which are to be announced on Tuesday, is to bring new technologies to market within five years.

While corn-based ethanol is not likely to be the final destination in America's journey toward renewable energy sources and reduced dependence on foreign oil, it seems to be a reasonable step along the way which keeps American energy dollars at home for benefit of American communities and American citizens.

Relative to American Energy Policy here is an interesting link from the Heritage Foundation for additional consideration. I believe it makes some important points relative to Energy Policy structured around free markets principles for the greater good of free people.

(broken link removed to http://www.heritage.org/Research/EnergyandEnvironment/bg2046.cfm)

June 26, 2007
Twelve Principles to Guide U.S. Energy Policy
by Stuart M. Butler, Ph.D. and Kim R. Holmes, Ph.D.
Backgrounder #2046

 

[begreen]

As noted earlier, I think a more balanced perspective comes from outside of the corn growers assn. The impact of pricing is not instant, particularly for manufactured foods and for grain we sell overseas. Let's hope it's a mellow summer and -globally- a good year for crops. That should help bring prices on food down, but we'll see. I think the references given earlier in this thread speak for themself WRT food vs fuel. Have you spent some time reading on : http://i-r-squared.blogspot.com/ ? A link was provided to Iowa state's assesment of ethanol from corn feasibility. Have you read that report?

As to the last reference, I visited it and read the doctrine. Take look at the source and reread it. It's exactly this kind of thinking that has gotten us into this mess to start with. They are loathe to mention conservation and all for letting free enterprise have free reign at the planet. There is no acknowledgement of corporate irresponsibility and it's costs or consequences. There is no mention that the past ten years has seen the development of an enormous corproate welfare system fueled in the past 5 years by a massive build up (and incredible consumption of resources) of the military industrial complex. There is no mention of the increasing blowback from these misinformed policies.

Think the government is on track? Follow the votes:
http://www.insidegreentech.com/node/1369

 

[DaveR]

As noted earlier, I think a more balanced perspective comes from outside of the corn growers assn. The impact of pricing is not instant, particularly for manufactured foods and for grain we sell overseas. Let's hope it's a mellow summer and -globally- a good year for crops. That should help bring prices on food down, but we'll see. I think the references given earlier in this thread speak for themself WRT food vs fuel. Have you spent some time reading on : http://i-r-squared.blogspot.com/ ? A link was provided to Iowa state's assesment of ethanol from corn feasibility. Have you read that report?

As to the last reference, I visited it and read the doctrine. Take look at the source and reread it. It's exactly this kind of thinking that has gotten us into this mess to start with. They are loathe to mention conservation and all for letting free enterprise have free reign at the planet. There is no acknowledgement of corporate irresponsibility and it's costs or consequences. There is no mention that the past ten years has seen the development of an enormous corproate welfare system fueled in the past 5 years by a massive build up (and incredible consumption of resources) of the military industrial complex. There is no mention of the increasing blowback from these misinformed policies.

Think the government is on track? Follow the votes:
http://www.insidegreentech.com/node/1369

The balanced perspective is found by reading all sides and understanding the context from which all sides approach the issue. Principles, priorities, self-interest guide all of us and determine our approach to many issues. Many who are criticial of utilizing excess American agricutlural produce and capacity for renewable energy initiatives are big oil and big business interests who benefit from the status quo and deflect attention from their own self-interests blaming agriculture instead of admitting their own opportunism. I believe in free markets and free people where the integrity of information and process are jealosuly guarded by accountable government of the people, by the people, and for the people. I have seen the failures, brutality, and inequities of command and control socialist and communist systems and want no part of a growing nanny state with its fallacious promises of cradle to grave security. Give me life enriching liberty not life suffocating bureaucratic security. The seminal principles of American Liberty and Exceptionalism promised to all generations of Americans in the Declaration of Indpendence and embodied in the original intent of the Constitution are not easily dismissed by Liberty's critics. These principles are still worth defending and dying for.

I have read the information you have posted and agree conservation is important. I choose to conserve and to be energy efficient within the limits of my own personal financial abilities. I do it out of a sense of personal responsibility, stewardship, and frugality. I live in a modest well insulated home with a high efficiency natural gas furnace and central air. My energy costs and carbon footprint are far less than many who have made other choices and are quick to lecture everyone else about conservation while personally choosing to waste exponentially far more energy than average American citizens from whom they would demand new sacrifice.

I believe government policy in the form of taxes, tariffs, and subsidies that introduce waste and inequities in free markets should be reduced and eliminated. I believe government policy it is far too reactionary and susceptible to influence from small but well financed and organized special interest groups that do not represent the interests of the broad majority of average American citizens. I suspect we would differ in our perspective on which of these special interest groups are worthy of government's fickle benevolence.

Here is another article on the fuel vs. food debate from the agricultural community's perspective.

http://www.acga.org/News/2007/062607c.html

Blame It on Industry Greed, Not Corn Farmers
An Editorial Comment on the Corn, Ethanol and Food Prices
By Larry Mitchell, Chief Executive
American Corn Growers Association
June 22, 2007

Freedom to Farm eliminated the 60 year-old soft floor price on corn and ushered in a decade for corn farmers that saw their cost of production rise to over $3.00 per bushel and prices drop well below $2.00 per bushel. In the fall of 2005, some were forced to sell their corn for as little as $1.18 per bushel and they delivered the corn to the local elevator with $3.30 per gallon diesel fuel. OUCH! There is nothing historic about $2.00 corn other than it has been relatively short in the history of economics, but excruciatingly long and painful for the farm families that have been forced to sell below cost of production for over a decade.

When adjusted for inflation the current price for corn relative to its economic costs of production, do not seem unreasonable. That is the basic position of the agricultural community. Here is another analysis of food prices relative to grain prices.

http://www.acga.org/programs/foodvrsfarm/default.htm

Just something else to think about as you consider your regular sources of information with their own inherent bias.

 

[begreen]

AG, you and all who are already taking on the personal responsibility of conservation are to be lauded. Congratulations and thanks. But this needs to be a national effort. It is the single most effective step we can take. And it has the potential to be much more effective than ethanol. Certainly it is more cost effective.

As to the corn-> ethanol issue, were it just the US affected, then the impact might not be untolerably severe. But this is affecting the world. When the cost of your prime staple food goes up 60% in one year, as it has now in Mexico, it is anything but trival. It is the stuff revolutions are born out of.

 

[BrotherBart]

The heck with tortillas. Corn is a major beer ingredient. Now THAT is a call to arms!

 

[DaveR]

AG, you and all who are already taking on the personal responsibility of conservation are to be lauded. Congratulations and thanks. But this needs to be a national effort. It is the single most effective step we can take. And it has the potential to be much more effective than ethanol. Certainly it is more cost effective.

As to the corn-> ethanol issue, were it just the US affected, then the impact might not be untolerably severe. But this is affecting the world. When the cost of your prime staple food goes up 60% in one year, as it has now in Mexico, it is anything but trival. It is the stuff revolutions are born out of.

Some in this country who find a reason to complain about anything and everything cannot have it both ways. You can find many of these same folks whining about the devastating effects of higher corn prices on global markets complaining a few months ago about the devastating effects of low corn prices resulting from U.S. policy on global markets. You don't have to go back very far to find these same empty talking heads complaining about low corn prices affecting Mexican Farmers. Here is a sampling of some of these articles from 2005 and 2006.

http://www.bilaterals.org/article.php3?id_article=3009

Low prices force Mexicans from fields

By Bill Lambrecht

POST-DISPATCH WASHINGTON BUREAU

Sunday, Oct. 30 2005

NOCHIXTLAN, MEXICO

Over thousands of years since Jesus Leon’s ancestors developed corn from a wispy grass, Mexican farmers have had an abiding relationship with the crop they call maize.

Near Leon’s hometown in southern Mexico, a museum features ancient murals depicting humans being born of corn stalks. Patches of white, blue and red corn dot the mountainsides of the region.

But in just over a decade, the bond between many Mexican farmers and their favorite plant has been broken. An estimated 1 million farmers in rural Mexico have lost their livelihoods. ...

... The result, according to Nadal, was a 48 percent drop in Mexican corn prices, which triggered the upheaval in Mexico’s farm sector that continues to this day.

Meanwhile, Mexico dismantled its price regulation agency, which was to have been phased out gradually, while reducing state support for agriculture.

In the United States, corn subsidies averaging $4.2 billion in recent years give farmers a leg up on the competition. Mexico gives smaller subsidies to its corn farmers - but farmers in half of its 32 states get no corn subsidies. ...

(broken link removed)

Mexican corn farming, under pressure from cheap U.S. corn, withers. Small holders continue to be forced from the land. The S.F. Chronicle piece claims that Mexico has 2 million corn farmers, "two-thirds of whom subsist on 12 acres or fewer and 90 percent of whom lack irrigation." Note that their competitors in the U.S. Midwest are highly consolidated and lavishly capitalized. It doesn't seem far-fetched that 1 million or more Mexican corn farmers -- and their families -- will be knocked off the land over the next several years.

And here is a recent article that suggests higher corn prices are likely to have some positive impact on Mexican farmers and the Mexican economy as they plant more corn to meet domestic demand. It may even help remove some of the motivation for many of these displaced agricultural workers to sneak into the U.S. seeking better incomes. There is a downside for tequila drinkers since corn is displacing Agave in Mexican fields. For those concerned about higher tequila and beer prices affecting their lifestyles, I guess you can complain.

http://www.truthabouttrade.org/article.asp?id=7025

... Higher Mexican corn prices will improve incomes for Mexican farmers, both commercial and limited resource farmers, and stimulate increased production. Whether these higher prices will cause a change in Mexican farm support programs is uncertain. The strong demand for corn in the U.S. for ethanol plants will lessen the potential for U.S. farmers to increase white corn production to compete with Mexican white corn. The downside is that the Mexican government will need a long-term plan to help low income people pay for corn based products.

Political groups in Mexico that were urging renegotiation of NAFTA because of concerns that Mexican farmers would be put out of business by cheap U.S. corn are now pushing renegotiation because the U.S. is causing high food prices in Mexico. With or without NAFTA Mexico cannot wall itself off from the effects of market forces outside the country. The economic evidence of the past 50 years shows that economic and trade policies need to be flexible enough to adjust to outside market forces. ...

I have pointed out before that U.S. Farm policy has been repeatedly criticized around the world for flooding global markets with low priced agricultural commodities keeping domestic farmers in other nations from being competitive in meeting domestic demand. I guess you did not bother to read this information. Utilizing excess American agricultural produce and capacity to fuel renewable energy initiatives gives Mexico and other countries critical of U.S. Farm subsidies the opportunity to develop their own domestic agricultural industry and to return to more self-sufficiency providing higher incomes to their own citizens dependent upon agriculture. This is not a bad thing. Market prices that better cover economic productioncosts for corn and other grains thereby reducing government spending on farm subsidies paid to American farmers is not a bad thing. Keeping U.S. energy dollars at home and invested in American communities and American citizens is not a bad thing.

Criticism is easy. Taking time to understand global markets and look beyond simplistic reactionary rhetoric that is little more than shallow propoganda takes some effort and research beyond popular media and anticapitalistic blogs. By the way you did notice that I do read Gristmill. I do not always find exception with their perspective. Few of us are entirely wrong in the perspectives we choose to champion.

 

[begreen]

Very good points AG. Markets can be very fickle and I am not criticizing the use of excess capacity, but pointing out the global and local ramifications of weak policy. I'm all for us working towards energy independence. But without conservation at the forefront, any policy is doomed. There are questions for using corn, but I am not totally against ethanol as a temporary, partial solution. The farmers are not the problem. The smaller farmers have my utmost sympathy. If they benefit, that's great. But policies of corporate welfare and boneheaded solutions written by self-serving lobbyists are an issue. I am certainly not anticapitalistic, nor is Robert Rapier in the referred to link. I think that shifting our economy towards energy independence can be a great economic stimulation with a focused effort on the level of the space race. But this is not our current policy. That is the center of my concern. Switching to ethanol (or any current solution) so that we can keep up our current rate of consumption is unsustainable folly.

As to the crops, are we at excess capacity to start with or is this a result of subsidies as farmers switch to corn or other biofuel? Should these fields be growing corn when the sugar beet contains so much more potential ethanol and is easier to grow in a cooler climate? Can our aquifers support the expansion necessary to satisfy even 10% of the fuel demand? Is ethanol the right direction to go when it requires so much infrastructure retooling and is much lower in energy than alternatives? These are subjects of intense debate right now and that's good. But framing the debate should be long term benefits to the next generation and the responsibility for all of us to tighten the belt a bit and shoulder them. I am not hearing that from Washington yet, but keeping an open ear.

 

[begreen]

The heck with tortillas. Corn is a major beer ingredient. Now THAT is a call to arms!

Now that's getting serious! The EU wants to force less than perfect vineyards destroyed and their wine converted to ethanol. Take away the $1/litre wine from the French and you will have a revolution.

 

[DaveR]

The heck with tortillas. Corn is a major beer ingredient. Now THAT is a call to arms!

Now that's getting serious! The EU wants to force less than perfect vineyards destroyed and their wine converted to ethanol. Take away the $1/litre wine from the French and you will have a revolution.

Energy costs are more likely to cause a revolution when American citizens realize wrongheaded Government Policy has restricted development of Energy resources necessary to sustain the economy and are now the cost driver behind present inflationary pressures across a broad range of products and services. Individuals and businesses are already adjusting energy use in response to higher energy costs. Smaller more fuel effecient cars are being purchased with recent articles highlighting the increased sales of vehicles with 4-cylinder engines and foreign brands. Conservation is occurring as a rational response to higher energy costs. Individuals are conserving and evidence can be found to support this from market data. Businesses are also conserving to preserve profits critical to present and future viability. Innovation is being introduced in markets to provide more alternatives with those offering the greatest savings being purchased and sustained.

What Government policy should be initiated to force conservation on the American people? Maybe government should restrict energy use for all American households to that level used by median American households. Maybe government should restrict the size of American homes to that of the median size of home constructed in the 1970's. Maybe government should restrict the number of homes owned per household to just one. Maybe government should restrict the number of cars owned per household to just one. Or maybe government should initiate carbon taxes or carbon tax and trade schemes to drive up energy costs to consume ever more disposable income of Average American citizens and those on fixed incomes so that only the truly wealthy can afford to waste energy resources at great expense to everyone else. Now there is an idea to save the planet and force Americans to conserve energy resources that only central planners could love.

Free markets and free people will work through resource allocation as well or better than any command and control central planning initiative can offer and often embrace previously unknown innovations and technologies overlooked by dominant technologies and market leaders. History has proven this fact out many times over. One size and one choice to fit all is a terrible strategy in meeting humanity's changing needs. Adaptive free market evolution of new technologies will consistently yield better results.

Even if corn ethanol is not the final destination in America's journey toward renewable energy alternatives to oil, it is not the problem some critics would make it out to be because free markets will adapt to price changes in resources and raw materials. Here is one more link to consider relative to corn prices and their effect on food prices.

(broken link removed to http://www.bio.org/ind/biofuel/20070620facts.asp)

Fact: Current fluctuations in food prices from increased demand for corn for ethanol do not represent a permanent competition between fuel demand and food security.

Food prices increased 3.7 percent in the United States from April 2006 to April 2007 due not only to increased corn prices, but also increased costs of oil, worldwide weather-related disruptions of food (droughts and freezes), and contamination scares. The costs of all goods, excluding energy and food, rose 2.2 percent in the same period, according to the U.S. Department of Labor Bureau of Labor Statistics, which compiles the Consumer Price Index (May 2007 CPI Release PDF).

According to Iowa State University's Center for Agricultural and Rural Development (CARD), traders have anticipated higher prices and have built them into futures contracts. Most of the anticipated price changes have already shown up in market prices (CARD Publication: Emerging Biofuels: Outlook of Effects on U.S. Grain, Oilseed, and Livestock Markets). Further, higher corn and crop prices increase income for farmers throughout the world. Farmers in many other countries historically have been priced out of the world market by inexpensive U.S. corn. Higher corn prices could change that situation.

Removing the tariffs on Brazilian ethanol and Foreign sugar alone would go a long way in moderating corn ethanol's effects on market prices for agricultural commodities. Here is an interesting link to information for consideration of the unintended consequences of Government Policy in the guise of taxes, tariffs, and subsidies on American citizens relative to food costs. Government policy is the primary cause of the problems noted in this article because it frustrates free market allocation of resources and natural free market adaptation.

http://www.reason.com/news/show/36207.html

I believe in free markets and free people. Government policy is too often a reactionary response originating in political opportunism without consideration of long-term consequences and is always resistant to change long past its relevant need once enacted. Heaven forbid Government attempt to force energy conservation beyond its already restrictive policies toward agressive domestic energy development. Higher energy costs are already spurring conservation among American families and businesses as they adapt to ever rising energy prices.