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By Robert Rapier on Dec 23, 2010 with 140 responses

Who’s Been Naughty? Ethanol Interests

The previous essay spoke of the selfishness of many of today’s political leaders in spending tax dollars for votes, while compromising the economic opportunities for the next generation. In this essay, I want to focus on the selfishness of a particular group: Ethanol special interests, who have succeeded in gouging taxpayers for another $6 billion in wasteful spending in 2011.

Let me make it clear — again — that I am not against ethanol as fuel. In fact, I have spoken out many times in favor of ethanol in specific circumstances. I reiterated this position recently on a Podcast interview on This Week in Energy. For example, I think many areas of the Midwest could produce ethanol sustainably, use it locally, and displace foreign oil. But that’s not what is done at present. I have two complaints, that less discerning readers sometimes mistakenly interpret as an anti-ethanol position.

First, I believe that we have made very big mistakes in the way our ethanol policies are structured. This has resulted in a situation that has led to perpetual welfare for the ethanol industry, and will continue to do so unless major reforms are enacted. So I speak out against specific ethanol policies because I want to help facilitate that reform.

Second, one of the reasons that we have made such big mistakes with our ethanol policies is because ethanol special interests generate lots of misinformation regarding their product. In fact, during the recent debates on extending ethanol subsidies, some of that information can’t be characterized as anything other than outright lies, as documented here.

When Lobbying Reaches a Crescendo of Hypocrisy

In this essay, I want to document the actions of some of the bad actors; those who are telling lies and engaging in much hypocrisy that will simply result in keeping the ethanol industry dependent upon government handouts as they have been for over 30 years.

Let’s start with the ethanol lobbies. There was the Renewable Fuels Association, funding bogus studies to scare people into believing 100,000 jobs could be lost if we didn’t give the ethanol industry a $6 billion handout next year. For those who owned a calculator and looked at the study in question, even in their scare story we would spend on average $50,000 tax dollars to save a job that averaged $37,500. Just for reference, according to David Swenson, a professor in the College of Agriculture at Iowa State University, the entire ethanol industry only employs 30,000 to 35,000 people. In that case, $6 billion in subsidies means each ethanol industry job costs taxpayers $171,000. Yet the claim was that elimination of the subsidy — even though the 2011 mandate for 12.6 billion gallons of ethanol remained in place — would somehow cost 100,000 jobs. Yes, that’s the kind of garbage that is costing our kids their future tax dollar.

When they weren’t funding bogus studies, the RFA was simply telling lies about the level of subsidies that ethanol receives relative to “Big Oil.” Ignoring the lie for a moment, it is clear that ethanol interests believe the answer to subsidies is more subsidies. Personally, I would try to eliminate any legitimate oil company subsidies instead of heaping ethanol subsidies on top to level the playing field. But they don’t do that, because corn farmers don’t want to pay more for diesel.

Then there were ethanol-friendly senators like Chuck Grassley engaging in complete hypocrisy. Senator Grassley is normally a fiscal conservative who abhors wasteful spending. But if the wasteful spending flows into the state he represents then he is fine with it. So he stood on the floor of the Senate and repeated the bogus study on the loss of 100,000 jobs. He repeated the argument from the ethanol industry that if this tax credit wasn’t extended, there would be an immediate 4.5 cent price increase at the pump. Here is a press release from Growth Energy making that claim (it is pretty clear where Senator Grassley gets his talking points).

The Market Provides Expert Testimony

Meanwhile, the actual behavior of ethanol prices in the market was telling a different tale. When opposition to extending the credit was mounting, ethanol prices started to fall on the fear that the credit wouldn’t be extended. As it became more obvious that the ethanol lobby would siphon money from taxpayers for another year, ethanol prices started to climb:

Ethanol Climbs to Six-Week High as Tax Credit Extension Passes

Ethanol futures advanced for an eighth day in Chicago as Congress passed an $858 billion bill extending Bush-era tax cuts and provisions that help support the biofuel industry.

The grain-based additive capped its longest string of advances in six weeks as lawmakers extended a 45-cent incentive to refiners for each gallon of the fuel blended with gasoline and renewed a 54-cent tariff on Brazilian imports.

“We’re simply placing it solely on the shoulders of the tax bill,” said Rich Nelson, director of research at Allendale Inc., a commodities research and brokerage firm in McHenry, Illinois. “That’s supportive for the market.”

So the truth is, not only are we taking money from taxpayers to funnel into the ethanol industry, doing so is clearly propping up ethanol prices. So what the consumer gets in return for $6 billion in taxes is higher fuel prices. While naughty ethanol interests will claim otherwise, they can’t hide what happened in the market.

Growth Energy vs. the RFA and Corn Lobby

Then there was Growth Energy. This ethanol lobby had broken from the pack back in the summer, suggesting that perhaps it was time to debate whether the ethanol credit was accomplishing its intended function. Perhaps, as I had long suggested, it might make more sense to redirect some of that money into building out some E85 infrastructure in the Midwest. They announced their Fueling Freedom Plan, which would redirect subsidies toward infrastructure like E85 pumps. But the RFA’s Bob Dinneen made it clear that he wasn’t interested in jeopardizing the industry’s welfare check or his $300,000+ salary:

“Now is not the time to add uncertainty and complexity to the energy tax debate,” said Bob Dinneen of the Renewable Fuels Association. “Losing the tax incentive will shutter plants and cost tens of thousands of jobs.”

Two interesting digressions in that quote. First, if you follow Dinneen you know that “never” is the time he is comfortable with debating the ethanol industry’s subsidies. Indeed, I have tried to engage the RFA in debate, but then they would have to defend their claims. So they always try to put off those discussions, while insisting that the uncertainty — caused in large part by their unwillingness to debate the issues — means that taxpayers need to continue funding them. The other thing is that when Dinneen made that statement, the RFA already had in hand the study — that they paid for — claiming over 100,000 jobs lost if the subsidy wasn’t extended. Seems like even he couldn’t claim those job loss numbers with a straight face, until the opposition to extending the subsidies grew. One wonders if by this time next year the number will have grown to a million lost jobs if the gravy train stops rolling.

Growth Energy Does a 180

So how did Growth Energy respond? They did a complete flip-flop. By the end of the year, not only were they insistent that the subsidies be continued, they indicated that they would be upset if they were scaled back at all. They had been chastised by the other ethanol lobbies and by the National Corn Grower’s Association, and by year’s end they stepped back in line.

Of course they weren’t immune to a good dose of irony themselves. During the debates on extending the subsidies they issued this press release:

American Ethanol Responds to Distortions

There are some special interests that put their own corporate profit before America’s public interest, and we’re seeing that today with these desperate tactics today by Big Oil and Big Food to distort the truth.

Special interests, corporate profits before America’s public interest, and desperate tactics perfectly describe the campaign by the ethanol lobby to keep their subsidies unchecked.

Pacific Ethanol’s Smear Campaign

Last but not least, we have Tom Koehler, co-founder of Pacific Ethanol. In response to a story at NRDC arguing for ending the subsidies, Koehler wrote some pretty nasty bits and made some groundless accusation. First there was this:

“When Junk Food and Meat Industry say “jump” you say “how high?” Of course that is where the money is in this well coordinated campaign. Your continued polarization of the issue is a disservice to all the service men and woman risking their lives in the Middle East and a disservice to our political discourse. I can only hope the corrupt influence of Junk Food money stops sooner than later at NRDC.”

Followed by this:

“I note that NRDC has not denied and or proved that they are not taking any money from the Junk Food or Meat Industries or from groups or consultants associated with them. Until they are willing to open their books their silence and lack of transparency speaks volumes as does their total coordinated campaign. All while American die in far off places to protect the free flow of oil into our country. Has any American soldier ever died fighting for corn ethanol? Corruption can be the only reason to NRDC’s total polarizing position on this issue.”

This is disgusting on several levels. First, Koehler didn’t identify himself as being involved with Pacific Ethanol until someone called him out. So while he was accusing the NRDC of letting money influence their positions, there is no question that he is a vested interest. (If his comments are indicative of Pacific Ethanol’s management, their bankruptcy filing makes even more sense).

In his comments above, Koehler made a completely groundless accusation that the NRDC is slanting their reporting because they are being funded by the junk food and meat industries. His proof? Nothing. He didn’t even attempt to justify his accusations, he was just attempting to smear. This is not surprising from someone who “has not denied and or proved that they are not taking any money” from organized crime, corrupt politicians, or terrorists.

But the other reason this is disgusting is that he uses the deaths of soldiers fighting in the Middle East as justification for ethanol subsidies. If the ethanol industry was really so concerned about that, why are they exporting ethanol? Doing so only increases our dependence on foreign oil. After all, it takes oil to run those trucks and tractors that are used to make ethanol, and the more ethanol that is exported the more oil we will need to import. Yet these hypocrites turn around and do export some of that ethanol — in record quantities in fact — and this only increases our dependence on foreign oil.

Conclusion

I call on the ethanol industry to stop this hypocrisy. If the industry is so concerned about soldiers fighting in the Middle East, please do the following:

1. Stop exporting ethanol.

2. Start working on getting laws passed into law that only E85 can be sold in Midwestern states where ethanol is produced in abundance.

3. Get laws passed that farm equipment and trucks involved in the production of ethanol must be operated on ethanol.

Then — and only then — can you start to claim any sort of moral high ground over soldiers dying in the Middle East. Given the situation as it really is, your use of this as a tactic to justify more subsidies is repulsive. It is a dishonor to soldiers who — to the extent they are fighting to protect access to oil — are protecting the diesel that goes in your farm equipment.

At the end of the day, this is all about money. Ethanol interests do and say the things they do so they can keep the tax dollars flowing in their direction. All lobbies do that. But I would submit that other lobbies aren’t quite so blatantly dishonest and misleading in presenting their arguments. Some are content to argue the points and hope that their case is compelling. As we have seen from various ethanol interests, they must not feel that their case is compelling enough just to let the facts speak for themselves. Otherwise, why would they have to lie so much?

As always, I invite a response from ethanol interests or readers who wish to dispute my points. If someone wishes to engage on these points, the floor is open, and I am open to publishing any feedback.

This will be my last posting before Christmas. In the week following Christmas, I will post my Top 10 Energy Stories of 2010. Best wishes for a safe and happy holiday season for all my readers.

  1. By sameer-kulkarni on January 3, 2011 at 10:59 am

    Robert Rapier said:

    If it was obvious we should see it in the data. As I said, there are some things that aren’t accounted for. For instance, it has taken a lot of oil to build out ethanol infrastructure. For instance, the embedded oil in building and maintaining an ethanol plant; those sorts of energy inputs aren’t accounted for. So it is quite possible that there are just a lot more oil inputs than we generally recognize.

    RR

     


     

    The petroleum-resources required for building the ethanol (or any
    other biofuel) infrastructure is warranted for the simple reason being that we
    are on a process of transition from petroleum fuels to biofuels. While I would
    have been more than happy to see Biofuels being churned out from the existing
    petroleum refinery, today unfortunately it isn’t practical (until somebody
    comes up with a process to synthesize equivalent green bio-crude).

    However it is an even bigger issue, when speaking of renewability,
    where it is not just that the prospective biofuels should be a drop in replacement for the existing
    petro-fuels, but the alternative chemicals coming out of these bio-refineries should
    be swapped for the existing petrochemicals (eg. Lubricants, plastics, elastomers
    etc.,) consumed in the construction of the plants for the future. Only breakthroughs in research in coming years shall provide the solutions.

     

    A Very happy New Year to you & all the readers

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  2. By the long shot on December 23, 2010 at 8:52 am

    Good article. It was a sad day when the subsidies were extended. Glad you picked up on the ISU study. Dermot Hayes and Bruce Babcock of CARD are good academic sources for subsidy impact studies and the foolishness of keeping them around as well.

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  3. By Rufus on December 23, 2010 at 12:34 pm

    Ah, Robert, that’s awfully simplistic. There has been a Lot going on in the energy, and commodity markets the last couple of months. Corn fell, and then All Commodities (corn included) took off for the moon. Oil has bounced around a bit (now, taking off.) The last two months the economy, overall, has started moving pretty strongly. Canada, has started requiring 5% Ethanol. The Euros are requiring more ethanol, and Brazil is falling out of the “Export” Market due to lousy sugar crops all around the world.

    We just drove more miles in November than in any November in history. Lots and lots of stuff going on. Einstein said, “Make it as simple as possible, but no simpler.” At least, I think it was “Einstein;” Maybe it was my uncle Doofus. Anyways, it don’t matter. It’s probably good advice.

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  4. By Bobby Fontaine on December 23, 2010 at 9:01 am

    You might find this article interesting -

    Ethanol: First Big Challenge for the Tea Party
    http://www.americanchronicle.c…..iew/204172

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  5. By Wendell Mercantile on December 23, 2010 at 9:46 am

    3. Get laws passed that farm equipment and trucks involved in the production of ethanol must be operated on ethanol.

    Hear! Hear! Until there is a mandate telling corn farmers and ethanol producers they must burn ethanol, they have no business asking for mandates telling others to burn the fuel they make.

    If ag implement makers and corn farmers aren’t interested in burning ethanol, how can they expect us to be? The NCGA, RFA, and GE need to lead by example, instead of only lobbying Congress and state assemblies an trying to make back-room deals.

    By the way: How did Wes Clark ever get involved with Growth Energy? Top of class at West Point; Rhodes Scholar; four-star general; Supreme Allied Commander of NATO; presidential candidate; and now a shill for corn ethanol? I just don’t get it.

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  6. By Wendell Mercantile on December 23, 2010 at 9:50 am

    Part 3 of NPR’s 3-part series on corn ethanol:
    NASCAR Gives Ethanol Green Flag; Who Will Follow?

    When it comes to ethanol, price, fuel economy and engine performance matter to lots of American drivers. The ethanol industry fights hard to shape public opinion of the fuel, and it has now found a new way to get its message across in a partnership with NASCAR.

    “On gasoline, we made the round trip with 36.5 gallons of gasoline,” Edmunds says.

    He then repeated the trip using E85, with 85 percent ethanol. The fuel is available in small pockets throughout the country.

    “And on E85, it took 50 gallons — 37 percent more fuel to make the round trip,” Edmunds says. “Same distance, same vehicle.”

    So, as ethanol replaces gasoline, you’ll likely need to make more stops at the gas station. Still, the ethanol industry says it has done its own research, which says otherwise.

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  7. By Rufus on December 23, 2010 at 10:25 am

    I drive a, more or less, standard flexfuel car, and give up about 20%. Some will do better, some will do worse. Edmunds should have known that it’s very important to do a few thing “right” in order to test E85.

    First: You have to be Very careful, after initially filling with the High Ethanol Blend that you DO NOT shut the motor off until you’ve driven 8 or 10 miles (and, the first fill-up has to be enough to inform the car’s computer that the car has had a “refueling event” – at least 6 or 7 gallons.) Even still, you shouldn’t “check mileage” until the second tank (in which you follow the same guidelines.)

    Second: this type of test is fraught with dangers. Wind, Weather, Elevation are vitally important. So are Driving Speed, Rush Hours, etc. I’ll guarantee you Edmunds violated some of these rules.

    Interesting year. China is buying a lot of corn for the first time in Many years, and Ethanol is wholesaling for $2.90/gal in Europe.

    Valero is probably giving us a glimpse into the immediate future. They are going to forego selling E15 in favor of adding more E85 Pumps. This makes a lot of sense, and is, quite likely, the outcome the Administration was wanting from the get-go.

    With wholesale unleaded at $2.42 there will be only a handful of counties in the U.S. that will see 87 Octane less than $3.00/gal Monday morning. By Summer, I’m looking for Unleaded to average $3.49, and E85 to be available in the Midwest for $2.29 (possibly less.)

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  8. By Frank Williams on December 23, 2010 at 10:26 am

    Uh, guys…Farm tractors and trucks run on diesel fuel, not gasoline. So how could a farmer use E85 in his John Deere? By the way, most farmers I know do use biodiesel in all their farm equipment and they drive FFV pick-ups. So get off your high horse. There’s also research underway to use ethanol in irrigation pumps, on-farm generators, spray planes and other farm equipment.

    As for exports, there isn’t a single ethanol producer in the country that would rather export ethanol than use it here domestically. But guess what, the government says we can’t use more than E10 and the oil companies refuse to sell E85… If there’s no domestic market and other countries in the world want your product, what are you going to do? Of course you’re going to export to keep your doors open…

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  9. By Wendell Mercantile on December 23, 2010 at 10:37 am

    Uh, guys…Farm tractors and trucks run on diesel fuel, not gasoline. So how could a farmer use E85 in his John Deere?

    Frank~

    Of course most farm equipment runs on diesel — but it doesn’t have to. Companies such as Scania of Sweden have developed compression ignition engines that burn ethanol. In fact, they have been around for at least 20 years. Why haven’t companies such as John Deere, Case-IH, New Holland, and the others put engines using that technology in their ag equipment.

    The even bigger question: What haven’t lobbying groups such as the NCGA, the Farm Bureau, and RFA asked the ag equipment makers to put those engines in farm equipment so their members can burn ethanol when working their fields?

    And the biggest question: Why haven’t those lobbying groups asked Congress to pass a law mandating ag equipment makers put ethanol compression ignition engines in farm equipment?

    They want mandates for us to burn ethanol, why not ask for mandates saying farmers must use ethanol?

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  10. By Rufus on December 23, 2010 at 10:49 am

    Wendell, there is No Mandate for YOU to burn ethanol. You said, yourself, said that there are stations close to you that sell ethanol-free gasoline. A lot of the stations that sell E85 offer ethanol-free gas. You could, also, drive a diesel-fueled car.

    My guess is, after the first of the year you are going to see more, and more, E85 pumps being installed. The American Auto Manufacturers are ramping up the production of flexfuel cars (I’m sure you’re noticing more on the road,) and with Gasoline breaking the $3.25 level in many areas many people will start casting about for a better (cheaper) deal.

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  11. By Wendell Mercantile on December 23, 2010 at 10:51 am

    But guess what, the government says we can’t use more than E10

    Frank,

    But guess what? The government doesn’t say we can’t use more than E10. Anyone who would like can open a filling station that sells E85.

    You have to ask the RFA, the NCGA, and the Farm Bureau why they haven’t opened their own chains of E85 filling stations throughout the Corn Belt. There is no reason they couldn’t do that. But they would rather lobby and complain to their politicians than to invest in building their own chains of E85 filling stations from the ground up. How do you think Texaco, Sinclair, and Phillips 66 built their networks of filling stations in the 1920s and 30s? They did it by investing, selling franchises, and finding dealers who would sell their product.

    Why doesn’t the Iowa Corn Growers Association have their own E85 filling stations along I-35 and I-80 as those highways pass through Iowa? It’s a good question, and I don’t know the answer. All I can do is guess they would rather take the political route of lobbying instead of investing capital and building.

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  12. By Kit P on December 23, 2010 at 10:58 am

    “By the
    way, most farmers I know do use biodiesel in all their farm equipment
    and they drive FFV pick-ups. So get off your high horse. There’s also
    research underway to use ethanol in irrigation pumps, on-farm
    generators, spray planes and other farm equipment.”

     

    Thanks
    for the input Frank. We are five years into the experiment that
    started with the 2005 Energy Bill and I think great progress has been
    made in both ethanol and biodiesel. We live in a magic wand society
    of instant gratification where some do not understand that producing
    energy happens one step at time. Imperfect solutions are compared to
    impractical solutions. As soon as technologies make something
    practical, a crowd of anti’s come out against it.

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  13. By Frank Williams on December 23, 2010 at 11:08 am

    Wendell,

    If you gave RFA or the Iowa Corn Growers the same money that Texaco and Sinclair or any other oil company has, I’m sure they would be obliged to open some E85 stations. But that’s not really their job in the first place–they are trade groups that lobby. They aren’t businesses. That’s like saying the trade group representing the steel milling industry should by car companies to ensure there’s a market/end use for their product…or the trade group that lobbies for computer makers should own the stores that sell computers. That isn’t how it works.

    But I do think that several state corn groups and RFA too (I think) have a grant program where they do actually offer grants to retailers who put in E85 or blender pumps to help defray the cost. And I know that the RFA and corn groups have tried to work with Deere, Cat, and Detroit Diesel and others to see if “E-diesel” is possible.

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  14. By Nicholas Hollis on December 23, 2010 at 11:10 am

    If you pull back the curtains on the so-called “ethanol interest groups” you will find that they are all puppets – dancing on invisible strings with one master puppeteer in control. In fact, if you research back far enough, you will understand that one company (ADM) which largely masterminded the ethanol market from the 1970s- also set /took control via funding of these groups. Of course, the puppets compete with eachother- and new groups/leaders are introduced -like new divisions on a battlefield–when more campaigning is necessary. For years, ADM ran this phalanx of toady groups without need of a Washington office and often without even much of a presence on the pro forma broads. Important business is handled by phone

    RFA misinforms the media regularly –and no one questions its information in any timely rebuttal. A classic lately is the statement that POET – a company which didn’t exist only a few years ago- is now reported (by RFA) to be the largest ethanol producer. Of course, no one can verify this fraud because POET is privately-held and does not disclose its real ownership or business links (with ADM). The real purpose of this fraud is to reduce the likelihood of official anti-trust inquiries concerning the level of control one company exerts within the ethanol sector (include transport, finance, refining/production and marketing)

    Instead of creating more confusion about the so-called “Ethanol lobby”- or blaming hapless corn farmers– why not focus on the real manipulative power and beneficiary behind this rip-off– ADM?

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  15. By Frank Williams on December 23, 2010 at 11:22 am

    Kit P–

    Bravo! You are right on target. The second that any alternative energy source goes from being theoretical to being a real-world option, the claws come out and the anti’s start crying about all of the flaws. There is no perfect energy source. Period. Rather than comparing ethanol to “nothing” or to some theoretical test tube fuels, we should be comparing it to oil.

    When electric cars start to make a dent in the world’s vehicle fleet, we will start to hear complaints that electricty rates are increasing to unsustainable levels (particularly for the world’s poor who are lucky enough to have access to electricity) and the environmentalists will see that we’re burning more dirty coal to provide the additional electricity. Not to mention that there aren’t enough rare earth materials to build the batteries that would be needed for all of these EVs…

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  16. By Wendell Mercantile on December 23, 2010 at 11:34 am

    If you gave RFA or the Iowa Corn Growers the same money that Texaco and Sinclair or any other oil company has…

    Frank~

    Do you think Texaco or Sinclair and the other small oil companies were rich when they started one hundred years ago? No. They had a product they wanted to market — just as does Big Ethanol — and they went out and invested and built a network to sell their gasoline.

    But as Kit P. said, you have to start small and build a business — not just ask Congress for mandates, subsidies, tax breaks, and protective tariffs. Ethanol has been more concerned with taking the easy political path, instead of building a business of distributors and retailers.

    Rather than comparing ethanol to “nothing” or to some theoretical test tube fuels, we should be comparing it to oil.

    You’re right Frank. Compare ethanol to oil. The ethanol business should be building their business as the oil companies had to do at the beginning of the 20th century, instead of asking for the legislative fix of mandates and subsidies.

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  17. By rrapier on December 23, 2010 at 11:39 am

    Frank Williams said:

    Uh, guys…Farm tractors and trucks run on diesel fuel, not gasoline.


     

    Yes, I think that was made abundantly clear in the article.

    So how could a farmer use E85 in his John Deere? By the way, most

    farmers I know do use biodiesel in all their farm equipment and they

    drive FFV pick-ups. So get off your high horse.

    But they don’t burn E85. That’s the point. I know some that drive FFV pick-ups as well. They don’t run E85 because of the price. Instead, they would rather force the rest of the country to use the stuff instead of use it close to home.

    There’s also research

    underway to use ethanol in irrigation pumps, on-farm generators, spray

    planes and other farm equipment.

    I know how “research” works. This is the same thing that coal-fired power plants always throw out there: Sure, we use coal today, but we are doing research to sequester it. So just give us some time.

    As for exports, there isn’t a single ethanol producer in the country

    that would rather export ethanol than use it here domestically. But

    guess what, the government says we can’t use more than E10 and the oil

    companies refuse to sell E85…

    You really think you are going to misinform readers like that? The oil companies refuse to sell E85? Are you kidding? There are more and more E85 stations opening all the time. They are all over the Midwest and growing. And guess what? E85 sales are stagnant. That isn’t an oil company problem. That is a pricing problem. Ethanol interests would rather point fingers at others than take that resposibility though. But that is exactly why they don’t open their own E85 stations. It can’t compete on price.

    If there’s no domestic market and other

    countries in the world want your product, what are you going to do? Of

    course you’re going to export to keep your doors open…

    Then stop the hypocrisy of complaining about soldiers dying for oil, when the ethanol industry is causing us to use more oil by exporting ethanol.

    RR

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  18. By rrapier on December 23, 2010 at 11:43 am

    Kit P said:

    As soon as technologies make something practical, a crowd of anti’s come out against it.


     

    Sort of like when you turn anti the second someone writes an article on solar power?

    The fact is, that was a lot of blather from you not to have addressed a single point in the article. So I will just ask you the question you have refused to answer again and again. Explain why extending the $6 billion subsidy was a good value for taxpayers. Be prepared to defend that answer. Please try to stay on point; I don’t really don’t want to see a random collection of stories of your childhood or other stuff that amounts to a digression. Just answer the question.

    RR

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  19. By Rufus on December 23, 2010 at 11:44 am

    The oil companies didn’t have Big Oil beating on their head every step of the way.

    Look, ethanol is a bet that oil is “peaking.” It’s a bet on China, India, and the other emerging economies. Ethanol is a bet that Oil is going to get godawful expensive, and that a lot of people won’t be able to use BEVs. Ethanol is a bet (Hedge) on the Future.

    And, ethanol should be compared, not just to oil, but to the “marginal barrel of oil.” That would be the Tar Sands Oil. And, the Ultra Deep Oil. And, the oil from places that support Terrorism, and Stone Women for going out in public w/o a male relative.

    Speaking of oil: It just crossed $91.00/bbl.

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  20. By rrapier on December 23, 2010 at 11:50 am

    Frank Williams said:

    Kit P–

    Bravo! You are right on target.


     

    Kit is on target about 5% of the time. The rest of the time he is a rambling commenter who would rather insult than engage. And this is not one of the times he is on target.

    The second that any alternative energy source goes from being theoretical to being a real-world option, the claws come out and the anti’s start crying about all of the flaws.

    Real world option? The industry still claims that they couldn’t possibly survive without mandates, subsidies, and protective tariffs. How is that a real world option? That is an option that only exists because the government has said it must exist. For something to be a “real-world option”, I would think that it needs to be able to stand on its own. Isn’t it time to take the training wheels off after 30 years of subsidies — especially since the RFS is in place?

    I will ask you the same question I have asked Kit, and he has refused to answer. Was the extension of $6 billion in subsidies a good value for taxpayers? What would have been the impact had the subsidies not been extended? My answer to that latter question is “Not much, since the mandate still increases to 12.6 billion gallons next year.”

    RR

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  21. By Rufus on December 23, 2010 at 11:58 am

    At any given time there can be as much as $0.50/gal difference in the “rack price” of ethanol from state to Adjoining state. That has nothing to do with the Ethanol Producers. THAT is a function of the Blender/Super Jobber (usually, a Major Oil Company.)

    In the same vein, ethanol producers don’t export their product. They sell their product on the open market. Some product is bought by Companies in the Import/Export Business. That is the model for ALL business in the U.S.

    Rex Tillerson, the CEO of Exxon Mobile, said that he was more or less agnostic about the tax credit in that most of it gets passed on to the consumer. So, basically, what is happening is: the government is borrowing $6 Billion from whoever it is that’s buying U.S. Bonds, today (slightly more than 51% are U.S. entities/individuals,) and passing the money back to us as a Four, and a Half Cent Discount on our gasoline.

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  22. By rrapier on December 23, 2010 at 12:06 pm

    Rufus said:

    So, basically, what is happening is: the government is borrowing $6 Billion from whoever it is that’s buying U.S. Bonds, today (slightly more than 51% are U.S. entities/individuals,) and passing the money back to us as a Four, and a Half Cent Discount on our gasoline.


     

    So then how do you reconcile the behavior of ethanol prices in the market when this issue was being debated? When ethanol producers were skeptical that the credit would be renewed in full, ethanol prices fell. As it became more obvious that the credit would pass, ethanol prices rose. So your theory runs smack into the reality of what happened in the markets. And I pointed that out in the article. We are borrowing $6 billion from our children so ethanol interests can make more money by propping up ethanol prices. So for our $6 billion, we actually get higher fuel prices. The market just told us that.

    RR

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  23. By rrapier on December 23, 2010 at 1:18 pm

    Ah, Robert, that’s awfully simplistic.

    No, really it isn’t. The ebb and flow of the VEETC debate was cited both times as the reason for the fall and the subsequent rise. As I quoted a trader in my article when ethanol prices were climbing “We’re simply placing it solely on the shoulders of the tax bill. That’s supportive for the market.”

    And it has long been clear that ethanol interests believe the credit props up ethanol prices. That’s a major reason they fight so hard to keep it in place. Of course they can’t come out and say that in so many words, because then it is apparent that $6 billion is buying consumers higher fuel prices.

    I think what’s simplistic is thinking that consumers are getting a 4.5 cent break on price when the market behaved in a way that would indicate the opposite. No, simplistic isn’t the right word. Denial is.

    RR

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  24. By flee on December 23, 2010 at 1:52 pm

    I would think commodity investors would sell upon pessimistic outlook of losing federal credit for ethanol. That would temporarily drop futures price. The investor is predicting that future consumption would be lower, better to dump ethanol.

    If federal credits were removed, my guess the supply of ethanol would increase as price of ethanol including profit would be higher than current demand. The high supply eventually would require producers of ethanol to lower cost just to move product and lower inventories of corn. This downturn would reverberate back to corn price, farm equipment sales, manufactures of ethanol equipment or farm ethanol equipment, etc. The ethanol sector would stall upon expansion and retract. The newest companies and weakest would go bankrupt. Same down the line for supplying ethanol solutions.

    If you want more of something subsidize it. Same goes for unemployment. Just make sure the subsidy is as efficient as possible. Collecting tax dollars and handing back to consumers inefficient. Changing regulations very efficient with no taxpayer cost.

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  25. By Nicholas Hollis on December 23, 2010 at 1:56 pm

    ADM’s Dwayne Andreas cranked the corn ethanol game into the big tent back in the 1970′s as a clever solution to surplus corn molasses. ADM was the 800 lbs. “Gorilla” in the room – already a multi-billion dollar corporation –and its dominance (carefully manicured behind curtains) has been maintained to the present. Corn farmers – for the most part– are used to masquerade the true nature of this scam. Once they release their corn to local elevators (often ADM controlled) they have zero leverage. Now that over one third of all corn is being diverted to ethanol- and the market is assured with Federal mandates and protected from competition by tariffs–the supply/demand squeeze has moved corn prices up for the first sustained period in decades, benefitting the farmers. But farmers’ input costs for corn production, particularly fertilizers, pesticides, herbicides, diesel fuel – have soared more than 400% in some cases- adding enormous risk to their already-risky calculations. Only ADM – buoyed with subsidies and government protection is assured of profits at the taxpayer expense– and those billions sloshing into the coffers of the “Supermarket to the World” are being used to deepen the political corruption at all levels which have straitjacketed the nation- and its beleagured motorists.

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  26. By Kit P on December 23, 2010 at 3:25 pm

    “Sort of like when you turn anti the second someone writes an article on solar power?”

     

    It sounds like RR thinks that solar is a practical way of making electricity.  On the other hand I am buying E10 every time I fill up and I could not do that 5 years ago.  

     

    “When electric cars start to make a dent in the world’s vehicle fleet, we will start to hear complaints that electricty rates are increasing to unsustainable levels (particularly for the world’s poor who are lucky enough to have access to electricity) and the environmentalists will see that we’re burning more dirty coal to provide the additional electricity.”

     

    Frank that is already happening to a certain extent.  There is a whole segment of the population who get confused between reality and the number news stories about something.  I would be very happy if the US POV transportation had the equivalent of E10 which is E10 (electric).  Lots of good minds in the electricity generating industry like Duke Energy are working on it.  When 10% of the motor pool cars are BEV at Duke Energy, I will not need some pseudo economist to explain the benefits.  In the meantime, I am not going to spend $33k on a BEV that my dealer does not have to sell me but Shell is selling E10.  

     

    “Ethanol is a bet (Hedge) on the Future.”

     

    Leave it to Rufus to get to the essence of the issue.  Interesting thing about this hedge, it is money maker.  Energy producers pay taxes.  Providing a lower tax rate for those who take a higher risk for the public benefit is dogmatically called a subsidy.  I call it an incentive to do the right thing.

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  27. By Wendell Mercantile on December 23, 2010 at 3:37 pm

    And I know that the RFA and corn groups have tried to work with Deere, Cat, and Detroit Diesel and others to see if “E-diesel” is possible.

    Frank~

    Then they’re not working very hard. Scania of Sweden has been doing it for 20 years. Surely RFA and the corn groups must be aware of that.

    [link]      
  28. By Kit P on December 23, 2010 at 4:10 pm

    “Changing regulations very efficient with no taxpayer cost.”

     

    Flee you are kidding right?  New regulations enacted by congress on coal plants is costing me a taxpayer $240 per year.  My utility is spending billion on pollution control equipment to make clean air clean.  If I lived where the air quality was not ‘good’ then I would agree that regulations would be an efficient way to fix a problem but there is still cost.  I can also tell you what will happen when rate payers start getting higher bills.  The congressmen who voted for the regulations will blame the greedy energy companies.  We fired this poor sap.  He would still have his job if he had stood up to the Speaker of the House who has no coal and bad air quality.   

     

    I think that a federal PTC and state RPS are good ways to promote renewable energy.  It cost more to produce renewable energy otherwise energy producers would already be doing it that way.  

     

    If flee would like to provide of an example of a cost free regulations I would be interested in hearing them.  Here are several examples.  Low flow shower nozzles, home insulation, and smoke detectors have very low cost/benefit ratios with minimal intrusion into personal freedom. 

    [link]      
  29. By rrapier on December 23, 2010 at 4:12 pm

    Kit P said:

    “Sort of like when you turn anti the second someone writes an article on solar power?”

     

    It sounds like RR thinks that solar is a practical way of making electricity.  On the other hand I am buying E10 every time I fill up and I could not do that 5 years ago.  

     


     

    And I have a friend who has been running his home on solar for more than 5 years. Face it, you are an anti when you want to be, and then use that as a derogatory term when you want to. But your negative comments on solar aren’t different than my comments on ethanol.

    By the way, you still haven’t answered the question on the subsidies. You can buy E10 because there is a mandate in place. We could just as easily put solar mandates in place. I suppose if a mandate is in place, then something is practical to you.

    RR

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  30. By Dave on December 23, 2010 at 4:23 pm

    I agree with many of your conclusions but I have a problem with some of your arguments.

    The crux of the debate about alternative energy is that the playing field should be level between renewables and fossil fuels.  I am not talking about the relatively small about of direct subsidies that fossil fuels receive.  I am more concerned about the indirect subsidies (i.e. war, keeping the shipping channels clear, etc.)  and externalities (climate change, other pollution, etc.)  that are, as you know, best addressed by a carbon tax.  In my mind, there is too much debate here and elsewhere about direct subsidies for fossil fuels and too little attention paid to the externalities.  That is the primary reason why renewables have a very difficult time competing on price.  The costs of fossil fuels are not reflected in their price.

    I would also like to point out that the 6 billion of ethanol subsidies is partially offset by a reduction in agricultural subsidies for the growers of corn. To an extent, what is really happening is that the meat producers and consumers of the world are picking up some of the tab for ethanol. (In addition, the use of ethanol to offset gasoline will to some extent lower the cost of gasoline, so drivers are getting a little benefit, also at the expense of the meat producers and consumers.)  The actual numbers here are very hard to calculate as there are numerous other factors that come into play.

    My next point is that in theory it is okay to have a mandate or subsidy but not both.  However, look at the case of the biodiesel industry.  Until 2010, there was a blenders’ credit of $1 per gallon produced.  Refiners were also mandated to use 1.15 billion gallons of biodiesel by the end of 2010.   At the beginning of 2010, the blenders’ credit expired and for virtually the entire year the credit was stuck in congressional limbo.  The refiners opted to fight the mandate in court.  The result was that 85% to 90% of biodiesel capacity was either shut down or idled. Though there were several other factors at work – rising cost of soy oil, the European tariff (primarily the ending of the ‘splash and dash trade’) – most producers cite that the most important factor in strangling the industry was the ending of the $1 per gallon credit.  This was a near death experience for the juvenile biodiesel industry and resulted in the permanent loss of 50% to 75% of capacity.   The biggest issue is that investors are no longer interested in biodiesel and it will take a while before they regain any appetite to invest again, which will continue the dependence of the industry on grants and subsidized loans.

    Lastly, you point out that the renewal of the ethanol blenders credit resulted in an increase in the price of ethanol.  Your conclusion, in my opinion, was faulty:

    So the truth is, not only are we taking money from taxpayers to funnel into the ethanol industry, doing so is clearly propping up ethanol prices. So what the consumer gets in return for $6 billion in taxes is higher fuel prices. While naughty ethanol interests will claim otherwise, they can’t hide what happened in the market.

    Per the article you referenced, the price of “denatured ethanol for January delivery rose 3.1 cents, or 1.4 percent, to settle at $2.218 a gallon on the Chicago Board of Trade, the highest price since Nov. 11”.  Certainly, there was also some run up in price in anticipation of passage of the bill. Unless I am mistaken, the $2.218 is the future price not reduced for the amount of the blender credit.  It is also clear that ethanol prices did not go up more than the subsidy of $.45. I imagine that the price of ethanol (paid to the producer) will go up a bit, the blender will take a bit, and the consumer will also benefit a bit from lower prices at the pump.  Many people discussing these subsidies assume that only one party benefits.  Often, several parties split the benefits.

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  31. By the long shot on December 23, 2010 at 4:30 pm

    Frank Williams said:

    Uh, guys…Farm tractors and trucks run on diesel fuel, not gasoline. So how could a farmer use E85 in his John Deere? By the way, most farmers I know do use biodiesel in all their farm equipment and they drive FFV pick-ups. So get off your high horse. There’s also research underway to use ethanol in irrigation pumps, on-farm generators, spray planes and other farm equipment.

    As for exports, there isn’t a single ethanol producer in the country that would rather export ethanol than use it here domestically. But guess what, the government says we can’t use more than E10 and the oil companies refuse to sell E85… If there’s no domestic market and other countries in the world want your product, what are you going to do? Of course you’re going to export to keep your doors open…


     

    Most farmers use B2 or B5 and a few B20, and yet no one uses B100 because it just doesn’t work.  I have a hard enough time Blending Cetane boost at the change over from Fall to winter in all my Fuel tanks with the small amount of Biodiesel they blend from my Diesel supplier.  Most farmers don’t drive FFVs and the ones that do, do not fill up with E85 all the time.  They know when they get rotten gas mileage for the cost of the fuel and when they don’t.  According to E85prices.com there is an average of 19% percent spread in 100% gas vs E85 and with an average cost of gas mileage of 25 to 30% it makes it uneconomical to use e85 even to its most staunch supporters.  On farm generators are oft run on diesel and not on ethanol.  Diesel engines can run longer and have more HP for job.  No farmer wants to go out and check his generator 1/3 more often to see if he has to fuel it up by using ethanol over gasoline if he had such a generator.  Ethanol just doesn’t work economically or operationally.  It has cold weather issues, fueling issues, and is BTU weak.  You are taking a step back by using a product that has 66 to 70% of the energy content along with all the other bagage it brings to the party.

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  32. By the long shot on December 23, 2010 at 4:41 pm

    Rufus said:

     

    In the same vein, ethanol producers don’t export their product. They sell their product on the open market. Some product is bought by Companies in the Import/Export Business. That is the model for ALL business in the U.S.

     


     

    Actually that is wrong.  Ethanol plants can produce ethanol for the domestic market or for the export market.  Since there is different specs for both there is a active decision to produce ethanol for export.  The Use of denaturants and moisture content are key factors are the markers for whether an ethanol plant is going to make ethanol for the export market or for domestic usage.  The Ethanol plants/lobby which are one and the same know when they have saturated the market and thus focus on getting their ethanol exported through retooling their plants.  The same goes for the new CARB standards where plants are ramping up new methods of processing to be able to sell to the markets in California.

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  33. By the long shot on December 23, 2010 at 4:45 pm

    Dave said:

     

    Per the article you referenced, the price of “denatured ethanol for January delivery rose 3.1 cents, or 1.4 percent, to settle at $2.218 a gallon on the Chicago Board of Trade, the highest price since Nov. 11”.  Certainly, there was also some run up in price in anticipation of passage of the bill. Unless I am mistaken, the $2.218 is the future price not reduced for the amount of the blender credit.  It is also clear that ethanol prices did not go up more than the subsidy of $.45. I imagine that the price of ethanol (paid to the producer) will go up a bit, the blender will take a bit, and the consumer will also benefit a bit from lower prices at the pump.  Many people discussing these subsidies assume that only one party benefits.  Often, several parties split the benefits.


     

    That is partially right.  If you read Dr. Bruce Babcock’s study on ethanol subsidies there is a passthrough effect from the blenders credit that ultimately benefits the ethanol plant more than the blender and the consumer.  The mandates in place do not give the consumer choice on the a good portion of the coastal populations and thus the subsidy does not provide a break in price to the consumer so the majority of the population is actually paying a hidden tax on their gas for less mpg and the blender is modestly bribed off for doing the blending but the majority of the benefit goes to creating a market for the ethanol plant.

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  34. By the long shot on December 23, 2010 at 4:54 pm

    Rufus said:

     

    My guess is, after the first of the year you are going to see more, and more, E85 pumps being installed. The American Auto Manufacturers are ramping up the production of flexfuel cars (I’m sure you’re noticing more on the road,) and with Gasoline breaking the $3.25 level in many areas many people will start casting about for a better (cheaper) deal.


     

    E85 is not cheaper its actually more expensive per mile driven than gasoline. To put in a new pump requires either the sacrifice of a current pump at a station or the additional island to hold that pump.  You are looking at a cost of 150,000 to 250,000 dollars for such an undertaking depending on the age and material of your storage facility.  As my C-store friends say.  When you make between 2 and 5 cents a gallon of gasoline “it ain’t worth it”.  You have to sell A LOT of fuel to claw back the investment alone on a small sector of the market.  When you run the math, it pays more to install a diesel pump than it does to install a E85/E15/E20 pump.

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  35. By the long shot on December 23, 2010 at 5:05 pm

    Kit P said:

     Interesting thing about this hedge, it is money maker.  Energy producers pay taxes.  Providing a lower tax rate for those who take a higher risk for the public benefit is dogmatically called a subsidy.  I call it an incentive to do the right thing.


     

    It’s a money loser.  A subsidy is a bribe.  The oil industry was not subsidised into existance and no successful industry has been ever.  Economics are not about “doing the right thing”.  Depends on what side of the wallet you are on.  If there were a shred of economic viability of ethanol it would not be riding a mandate, a subsidy and a tariff right now.  There is no morality in fuel.  We don’t even have the capacity in any measure to run on e100 if the car fleet of the US turned into FFV overnight.  The production possibility is not there nor is the infrastructure even if we were to hijack the oil industry in the process.  Ignoring the production limitations for a second, the pipeline and storage facilities would have to expand 33% overnight to accomodate the current car fleet. Just the NIMBY issues alone would kill it.  To produce the ethanol for an E100 system would require more land than the US has currently for food and fuel and pasture and rangeland.  Its just plain rediculous to continue with Ethanol as a replacement fuel.

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  36. By rrapier on December 23, 2010 at 5:31 pm

    Dave said:

    The costs of fossil fuels are not reflected in their price.


     

    Agree, but industries like ethanol that are dependent upon fossil fuels also benefit from the cost not being reflected in the price.

    I would also like to point out that the 6 billion of ethanol
    subsidies is partially offset by a reduction in agricultural subsidies
    for the growers of corn.

    How so? With a mandate in place, corn producers are going to have the same market with or without the subsidies. It might be incrementally higher, but not much.

    The result was that 85% to 90% of biodiesel capacity was either shut down or idled.
    Though there were several other factors at work – rising cost of soy
    oil, the European tariff (primarily the ending of the ‘splash and dash
    trade’) – most producers cite that the most important factor in
    strangling the industry was the ending of the $1 per gallon credit. 

    Even Bob Dinneen has come out and said that the regulatory framework in place is much stronger for ethanol. So if the subsidy disappeared, I would have made a bet with anyone that refiners would continue to abide by the RFS.

    Per the article you referenced, the price of “denatured ethanol for
    January delivery rose 3.1 cents, or 1.4 percent, to settle at $2.218 a
    gallon on the Chicago Board of Trade, the highest price since Nov. 11”.
     Certainly, there was also some run up in price in anticipation of
    passage of the bill. Unless I am mistaken, the $2.218 is the future
    price not reduced for the amount of the blender credit.  It is also
    clear that ethanol prices did not go up more than the subsidy of $.45.

    Actually it did. See for yourself:

    http://www.ers.usda.gov/briefi…..a.htm#eth2

    But my operating assumption has always been that some portion of the subsidy does flow through to consumers, which subsidizes consumption. Hence my argument that it isn’t fair for people who don’t drive to subsidize the consumption of those who do.

    In any case, it is clear that there isn’t a 4.5 cent flow-through to consumers. The subsidy props up prices to some extent, and by doing so there isn’t that flow-through. There might be a 1 or 2 cent flow-through, but that isn’t much of a return on $6 billion. Heck, if all you did was apply that $6 billion to our annual gasoline consumption, you get almost a nickel benefit.

    RR

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  37. By rrapier on December 23, 2010 at 6:24 pm

    Kit P said:

    Leave it to Rufus to get to the essence of the issue.  Interesting thing about this hedge, it is money maker.  Energy producers pay taxes.  Providing a lower tax rate for those who take a higher risk for the public benefit is dogmatically called a subsidy.  I call it an incentive to do the right thing.

    Instead of a lot of superficial platitudes, why don’t you show the benefit? Oh, I forgot. You can’t. I have asked you numerous times to show the benefit of the $6 billion we are spending. You avoid that question because you can’t show a benefit, and therefore are left to simply repeat the same baseless claims.

    Who is taking a high risk? Ethanol producer who have a mandated market? That’s not taking risk. That’s taking tax dollars for a market that would still be there if you didn’t get the tax dollars. Where I am from, we call that “wasteful spending.” Ironically, if we were talking about anything else you would agree, but you have blinders on here, and always have. But you are wrong, which is why you never attempt an actual defense of the argument. You would be chewed up and spit out.

    RR

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  38. By Kit P on December 23, 2010 at 8:18 pm

    “A subsidy is a bribe.”

     

    Wow, long shot! Since you took time to reply, I will respond even though I think we may have a language barrier. A few years ago I attended a public hearing sponsored by the US NRC and the state environmental protection agency for a proposed nuke where I lived. One citizen expressed the opinion that wind and solar should be built. The NRC moderator answered that the mix of energy is a public policy decision and NRC regulated the safety and environmental impact of nuclear power.

    Energy production in the US is heavily regulated but economics favor the status quo. As a matter of public policy our elected official that a small fraction of energy come from alternative sources that may result in higher cost and risk for producers. I happen to think that the mandate in the 2005 Energy Bill is a good environmental and economic choice.

    “Its just plain rediculous to continue with Ethanol as a replacement fuel.”

     

    What we have learned is that E10 is practical but there are barriers to overcome before we can figure out to what extent ethanol can replace oil.

    “And I have a friend who has been running his home on solar for more than 5 years. ”

    So on one hand we have anti-ethanol argument projecting that E100 is not practical when E10 is practical. On the other hand anecdotal evidence of one house that something is practical.

     

    I will pay RR’s friend or anyone else for that matter 20% more for practical solar electricity if they can show it has show an environmental benefit. First, I have 40 trees that would cause negative environment impact. So you are going to have to put those PV panels someplace else. This means that you will have to use the public utility transmission lines. That means that you will have to have a public hearing. I live someplace called Forest. RR’s friend is going to have to get my neighbors agree to cutting down trees so they can look at solar panels. RR’s friend is going to have to get some batteries too. A lot of them. It is cold and dark in the winter here and the last few days have not been sunny. Not practical!

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  39. By Dave on December 24, 2010 at 1:53 am

    I agree with your points
    and was, at the risk of being off-point, merely pointing out the sorry state of
    the biodiesel industry due to the suspension of the blenders credit and that
    the ethanol blenders’ credit was partly paid for by offsetting agricultural
    subsidies.  I agree that with the
    mandate there is little benefit.

    However, I do have a
    question about your last point:

    Actually it did. See for
    yourself:

    http://www.ers.usda.gov/briefi…..a.htm#eth2

    Now I am not a commodities
    expert so please excuse my ignorance.   I assume you are referring to one of the charts that
    look somewhat like this one for ethanol prices:

     

    Ethanol Spot Prices

     

    Ethanol spot price: http://tfc-charts.w2d.com/chart/AC/W

     

    Are you saying that the
    reinstatement of the ethanol blenders credit is the cause of the price increase
    from the July low of about $1.50 to the recent price of $2.20?  If so, that is not how I read the
    charts.  Many commodities – corn,
    wheat, rice, gold, copper, to name a few – hit bottoms during the summer and
    have since rebounded.  People have
    explained this on fading fears of a double dip recession, quantitative easing
    part 2, inflation fears, economic rebound, etc.  Corn especially has had a pretty dramatic run up in price.
    Of course, corn and ethanol prices can both affect each other. However, from
    what I can tell, the run up in ethanol price since July has mostly been ethanol
    following the price of corn. Also, the spot prices reflect the current market
    environment and are not completely reflective of the future market
    environment. 

     

    I think a more telling
    chart is the price of ethanol futures for January 2011 delivery:

     

    January Delivery Fuel Ethanol Last 4 months 2010  

     

    January Delivery Fuel
    Ethanol Last 4 months 2010 – http://tfc-charts.w2d.com/chart/AC/W

     

    Note the big leap in early
    October. QE2 was announced on October 3 ending speculation about new
    quantitative easing that had been circulating since August.  More importantly, per Ethanol Producer
    Magazine

     The USDA put a wow factor
    in the market the day the Oct.10 supply and demand report was released reducing
    national yield by 8.9 bushels per acre—well below traders’
    expectations—dropping production 496 million bushels from the previous
    projection. The demand table was slightly altered as feed demand and export
    figures declined, due to price rationing. Remember that corn ending stocks were
    increased at the end of September, which offered some cushion to the punch the
    USDA delivered Oct. 8. Nonetheless, the December corn contract was 25+ cents
    higher the day the report was released and traded to a contract high of $5.88
    just days later.

    Those two factors, in my
    mind, explains the lions share of the jump in early October.  I think that the dip in price in
    early/mid November was a result of the mid-term election, with the Tea Party
    influenced Republicans winning big gains. 
    There was much buzz that the small government, anti-subsidy crowd would
    do away with the ethanol blenders’ credit.  This is why the price went down from $2.275 in early November
    to about $2.075 in early December. 
    When the blenders’ credit was renewed in mid-December, the price went back up.  It is fair to attribute with a high
    degree of confidence the increase of $.2206 (from $2.075 to the current $2.301)
    to the renewal of the blenders’ credit. 
    Any more than that becomes less clear, in my humble opinion.   

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  40. By rrapier on December 24, 2010 at 5:25 am

    Kit P said:

    So on one hand we have anti-ethanol argument projecting that E100 is not practical when E10 is practical. On the other hand anecdotal evidence of one house that something is practical.
     


     

    That makes absolutely no sense. Do you believe it is only anecdotal that there are houses that run off of solar power? Just like you go fill up with E10, they run their electrical appliances on solar power. That isn’t any more anecdotal than you filling up with E10.

    I will pay RR’s friend or anyone else for that matter 20% more for
    practical solar electricity if they can show it has show an
    environmental benefit.

    Have you ever shown an environmental benefit from ethanol? No, you haven’t. You merely make claims. So I will be like you: Of course there is an environmental benefit from using solar power. Q.E.D., Kit style.

     It is cold and dark in the winter here and the last few
    days have not been sunny. Not practical!

    You know what they say: “As soon as technologies make something practical, a crowd of anti’s come out against it.” Stop being an anti if you are going to whine that other people are anti’s. Strive for consistency.

    RR

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  41. By Kit P on December 24, 2010 at 11:31 am

    “Do you believe it is only anecdotal that there are houses that run off of solar power?”

     

    RR you provided anecdotal evidence that solar is a practical. If you would like to provide more information to support the practicality, please do.

     

    “Evidence, which may itself be true and verifiable, used to deduce a conclusion which does not follow from it, usually by generalizing from an insufficient amount of evidence.”

    http://en.wikipedia.org/wiki/A…..l_evidence

     

    I think there is sufficient evidence that E10 is practical. At this time we are still collecting data evidence about solar. I support incentives to keep building solar so we can continue to collect information and learn how to do it better. In the last fifty years, nuclear has gone from prototypes to a practical source of electricity providing 20% of the electricity in the US and 80% in France. The huge effort that has gone into solar has only demonstrated that it is not practical.

     

    “Have you ever shown an environmental benefit from ethanol? No, you haven’t.”

     

    Yes, I have but RR chose to ignore it. How many times will we have to tell RR that the purpose of biofuels is a hedge against OPEC?

     

    “Stop being an anti if you are going to whine that other people are anti’s. Strive for consistency.”

     

    I have been very consistent. In general, I am for utility scale solar, I against putting collectors on the roofs of homes unless you are smart enough to do. RR’s friend may have an practical system that meet his needs but RR has not presented the data. I have designed and built an soalr how water systems. What I learned was that it was much more practical to make hot water with electricity.

     

    As a matter of disclosure, the company I work for does nuclear, biomass, wind, and solar. Skip the public debate and we could replace the 893,000MWh of fossil generation on Hawaii in five years while saving rate payers. Not much would be solar because Hawaii does not have good solar resources.

     

    http://tonto.eia.doe.gov/state…..cfm?sid=HI

     

    I am much more interested in what the doers do than what anti’s think. I want to know how much electricity your system produces and how much biofuels your plant produces. If you are good at it, I want to know how you got good at it.

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  42. By rate-crimes on December 24, 2010 at 1:41 pm

    Kit P said:

    “The huge effort that has gone into solar has only demonstrated that it is not practical.”

    Permettez nous éviter votre attrape.  It would be clumsy of us to step into your smoldering word, “practical”. 

    That said, there is ample evidence – both theoretical and practical – that existing solar technology is an economical source of both electricity generation (e.g. PV, solar thermal) and the replacement of electricity consumption (e.g. solar hot water) in sunny climes at a proportion of ‘market share’ much higher than existing biofuel technology even proposes to be in its ‘market’.

    [link]      
  43. By rrapier on December 24, 2010 at 1:59 pm

    Kit P said:

    “Do you believe it is only anecdotal that there are houses that run off of solar power?”

    RR you provided anecdotal evidence that solar is a practical. If you would like to provide more information to support the practicality, please do.


     

    No, I provided the same standard of practicality that you did. You declared ethanol practical because you can go fill up with E10. By the standard that you declare ethanol — which has to be subsidized, mandated, and tariff-protected to show up on the market — “practical”, then solar is certainly practical. The problem is not the information I have provided, it is that you are applying different standards to the two situations.

    “Have you ever shown an environmental benefit from ethanol? No, you haven’t.”

    Yes, I have but RR chose to ignore it. How many times will we have

    to tell RR that the purpose of biofuels is a hedge against OPEC?

    No, you have merely claimed it. You have never examined all of the environmental pros and cons. In fact, you have never discussed the cons at all and put them into the equation. So, no, you have never shown the environmental benefits. If you think you have, please cut and paste what you thought you showed, and I can show you what’s wrong with it.

    “Stop being an anti if you are going to whine that other people are anti’s. Strive for consistency.”

    I have been very consistent. In general, I am for utility scale

    solar, I against putting collectors on the roofs of homes unless you are

    smart enough to do. RR’s friend may have an practical system that meet

    his needs but RR has not presented the data. I have designed and built

    an soalr how water systems. What I learned was that it was much more

    practical to make hot water with electricity.

    Again, this is because your definition of practical is different for ethanol and for solar. If you believe otherwise, please provide an objective definition by which we can measure both. I will show your inconsistency. 

    As a matter of disclosure, the company I work for does nuclear,

    biomass, wind, and solar. Skip the public debate and we could replace

    the 893,000MWh of fossil generation on Hawaii in five years while saving

    rate payers. Not much would be solar because Hawaii does not have good

    solar resources.

    That is probably one of the dumbest things you have ever written here. Hawaii has one of the best soalr resources in the world:

    http://www.oksolar.com/abctech….._large.gif

    Perhaps you should visit sometimes. Be sure to bring sunglasses and lots of sunscreen. The solar insolation here is pretty intense. Of course we are all well aware of the geothermal potential here, but the public debate is a fact of life.

    I am much more interested in what the doers do than what anti’s

    think.

    Then perhaps you should stop being such a hypocrite. Why do you think anyone cares what you — an anti — think about solar energy? I am more interested in the doers like my friend who has a solar home than what anti’s like you think of it.

    RR

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  44. By rate-crimes on December 24, 2010 at 1:59 pm

    Kit P said:
    “At this time we are still collecting data evidence about solar.”

    Who is “we”?  What “evidence” is still being collected?  And, for what purpose?

     

    If you are referring to utilities/energy companies that have enormous investments in nuclear-, coal-, and gas-powered plants, then I suspect that “we” will still be “collecting data evidence about solar” long after China has consumed the last ounce of the world’s uranium.  Surprised

    [link]      
  45. By Rufus on December 24, 2010 at 3:23 pm

    Pretty Good Analysis, there, Dave. Pretty, pretty good.

    [link]      
  46. By Herm on December 24, 2010 at 4:04 pm

    Rufus said:

     So, basically, what is happening is: the government is borrowing $6 Billion from whoever it is that’s buying U.S. Bonds, today (slightly more than 51% are U.S. entities/individuals,) and passing the money back to us as a Four, and a Half Cent Discount on our gasoline.


     

    At the same time all that ethanol displaces actual barrels of oil that otherwise would impact our balance of trade, I know about the energy equivalency issue but the coal and NG that is used to make ethanol is mined in the US.. and we have plenty of it.

     

    The 4.5 cent discount is a tax break for the consumer.. that stimulates the economy.. The Farmers, Brewers and miners also benefit, further stimulating the economy. Price supports for farmers perhaps can be reduced also, not sure about that one.

     

    How many barrels of actual oil have been displaced by ethanol?

     

    [link]      
  47. By mac on December 24, 2010 at 4:05 pm

    Australia: 2010 Rooftop Solar Installations Are Through The Roof
    Submitted by eBoom Staff on December 21, 2010

    The Clean Energy Council has released its Clean Energy Australia 2010 Report [pdf] highlighting the country’s renewable energy growth this year.

    Taking the spotlight was solar power rooftop installations. This past year there were over 100,000 solar power installations in Australia; this equates to more than the combined installations of the past ten years (81,232).

    http://wind.energyboom.com/eme…..rough-roof

    There are actually more rooftop solar installations in Australia, a nation of 19 million than in the U.S. (308 million), although Australian installations are generally smaller in size. While no one seems to know for sure, some estimate U.S. installations of residential solar to be around 100,000. The conservative NREL in its Open PV project web-site says more like 75,000 and shows the U.S. roll-out in a great inter-active time lapse graphic. To use the graphics features of the site, I think you must first register with them.

    http://openpv.nrel.gov/time-mapper

    Japan recently re-introduced its own version of the feed-in tariff. Some thing like 40.000 applications were received in the Tokyo area almost immediately and additional staff were being hired to handle the crush of applications. Ontario, Canada just put in place its own feed in tariff and so, the solar boom is off to the races north of the border.

    With a compound growth rate approaching 50% a year, solar is doubling about every 2 years.

    Sounds to me like all of this is more than just an “anectdote”.

    [link]      
  48. By Kit P on December 24, 2010 at 4:09 pm

    “it is that you are applying different standards to the two situations.”

     

    I am applying different standards for different situations. There is a standard for providing a hedge against imported oil. There are standards for making electricity.

    “That is probably one of the dumbest things you have ever written here. Hawaii has one of the best soalr resources in the world:”

    I did provide a link RR. RR’s link is for solar insolation not solar resource. Thinks like clouds, humility and elevation must be taken into account. In any case, if solar is practical in Hawaii with all the expensive oil fired power plants you should be able to provide lots of links to the practical solar applications.

     

    I am pitching underhand to RR. Hawaii has a mild climate, RR lives, and after all RR is a self proclaimed energy expert. Dazzle me RR with facts about renewable energy in Hawaii. To be fair to RR I know the problem.

    “but the public debate is a fact of life.”

    A colleague and good friend is from Hawaii. From what I hear the public debate might not be too civil.

    “I am more interested in the doers like my friend who has a solar home than what anti’s like you think of it.”

    Me too! I built a passive solar home. I am very interested, maybe we can exchange notes. How much wood does he burn? I had a booth at a earth day event to educate school children on renewable energy . I overheard two of the off grid solar guys exchanging view on gasoline powered generators that was the practical source of their electricity.

    “Who is “we”? … And, for what purpose?

     

    If you are referring to utilities/energy companies … “

    Yes, that’s right, the leaders in producing solar energy are the likes of FPL, Duke Energy, and other utilities that are also very good at running nukes coal plants. Costs of generating electricity have to be justified to the PUC before being passed along to the rate payers. A few years ago, the CEO of a utility explained on their web site was not good for the rate payers. The PUC ordered solar be built. Down comes the objection up goes the BS about how wonderful solar is.

    “long after China has consumed the last ounce of the world’s uranium.”

     

    China does not currently use much nuclear power. The growth of demand for electricity in China has made it impractical for China to meet demand with just coal. China has built few nukes and now has a very ambitious construction program. While construction of a nuke plant requires a lot of workers, those workers move to the next plant when they are done. A coal plant needs train load of coal a day, a nuke plant needs two or three trucks to deliver fuel every two years. In fact, the manufacture of fuel assemblies for a new nuke plant in China just started this week in South Carolina. There are three facilities in the US that manufacture fuel assemblies. The reason that nuclear power is practical is that it only requires a small amount of raw material greatly reducing the amount of transportation needed.

     

    The world is not going to run out of fissionable material.

    [link]      
  49. By Herm on December 24, 2010 at 4:16 pm

    Robert Rapier said:

    Kit P said:

    It sounds like RR thinks that solar is a practical way of making electricity.  On the other hand I am buying E10 every time I fill up and I could not do that 5 years ago.

     


     

    By the way, you still haven’t answered the question on the subsidies. You can buy E10 because there is a mandate in place. We could just as easily put solar mandates in place. I suppose if a mandate is in place, then something is practical to you.

    RR


     

    Say thats an idea, mandate that new construction have solar panels and many people would benefit.. and it should prop up the resale price of homes.

    [link]      
  50. By Kit P on December 24, 2010 at 5:08 pm

    “Sounds to me like all of this is more than just an “anectdote”.

    Mac, how much electricity was produced and when? Mac how many toy trains were sold during the same period?

    Let see about the part of California served by the California ISO. 1,503 MWh or 1503/619,409 = 0.25% of demand. That is a lot better than the other day when only 75 MWh was produced. To put it in perspective Mac that is an hour an 15 minutes at just one of California’s nuke plants.

    http://www.caiso.com/green/ren…..sWatch.pdf

    What I am trying to tell you Mac that there is a difference between cool graphics and making electricity. If your imcome was a $100,000 and you got a $250 raise would you change your living style?  

    “Sounds
    to me like all of this is more than just an “anectdote”.

     

    Mac, how much electricity was produced
    and when? Mac how many toy trains were sold?

     

    Let see about the part of California
    served by the California ISO. 1,503 MWh or 1503/619,409 = 0.25% of
    demand. That is a lot better than the other day when only 75 MWh was
    produced. To put it in perspective Mac that is an hour an 15 minutes
    at just one of California’s nuke plants.

     

    http://www.caiso.com/green/ren…..sWatch.pdf

     

    What I am trying to tell you Mac that
    there is a difference between cool graphics and making electricity.

    [link]      
  51. By Kit P on December 24, 2010 at 5:20 pm

    “mandate that new construction have
    solar panels and many people would benefit.. and it should prop up
    the resale price of homes.”

     

    So Herm, do you think that adding $25k
    to the price of a new home to make $350/yr is a good idea?

    [link]      
  52. By rrapier on December 24, 2010 at 5:42 pm

    Kit P said:

    “it is that you are applying different standards to the two situations.”

     

    I am applying different standards for different situations. There is a standard for providing a hedge against imported oil. There are standards for making electricity.


     

    Yet you have to be consistent if you want to argue about praciticality. You said it is practical because you can go fill up with E10. But that standard, solar power is practical.

    “That is probably one of the dumbest things you have ever written here.
    Hawaii has one of the best soalr resources in the world:”

    I did provide a link RR. RR’s link is for solar insolation not solar
    resource. Thinks like clouds, humility and elevation must be taken
    into account. In any case, if solar is practical in Hawaii with all the
    expensive oil fired power plants you should be able to provide lots of
    links to the practical solar applications.

    You provided a link describing the overall energy situation in Hawaii. How you think it supported your point I have no idea; you will have to be more specific. Perhaps you are unaware that there are many different climate zones in Hawaii; some receive solar insolation almost year round, that’s why people come to Hawaii to swim over Christmas. That solar resource is why you can’t stay out in the sun for long without having a lot of sunscreen on.

    But again, you show your different standards. We do have solar power here. Yes it is subsidized just like ethanol. No, it isn’t mandated like ethanol. I suppose if it was, then like ethanol it would be practical per your definition. After all, ethanol’s practicality to you seems to be because it exists for consumption — regardless of the costs of making it available.

    I am pitching underhand to RR. Hawaii has a mild climate, RR lives,
    and after all RR is a self proclaimed energy expert. Dazzle me RR with
    facts about renewable energy in Hawaii. To be fair to RR I know the
    problem.

    Well maybe you should try harder, because you are embarrassing yourself with your double-standards and complete lack of understanding of what a solar resource actually is.

    RR

     

    [link]      
  53. By Kit P on December 24, 2010 at 7:18 pm

    “complete lack of understanding of what a solar resource actually is ”

    Since RR does not know for the state he lives in, does anyone know how many MWh of electricity are made with the ‘solar’ resource out of the 893,000MWh generated? Please express the answer in MWh rather than BS per sunscreen ounces per beach visit.

    “regardless of the costs of making it available.”

     

    That right because ethanol is made by American farmers. Like my electricity that starts with coal miners in West Virginia. However, since the spot price for crude is $92.91/barrel I think that is why the price of my E10 is trending up. I like everyone I have met from West Virginia and I have not met RR. I am know offering to pay RR’s friend what ever it cost plus 10% for him produce electricity for my house PV. See first I think zero times what ever is still zero. On the off chance that RR’s watermelon actually can make electricity to meet my needs, it will be worth it to watch those who ponder the meaning of navel lint to actual work.

    [link]      
  54. By rrapier on December 24, 2010 at 8:00 pm

    Kit P said:

    “complete lack of understanding of what a solar resource actually is ”

    Since RR does not know for the state he lives in, does anyone know how many MWh of electricity are made with the ‘solar’ resource out of the 893,000MWh generated? Please express the answer in MWh rather than BS per sunscreen ounces per beach visit.


     

    Arrogance combined with stupidity is always entertaining. Since you clearly do not know standard nomenclature in the energy business, let me explain it to you. A resource is a source of energy that is available for current use or future development. For example, the U.S. has enormous oil shale resources. Actual production of oil from shale is zero. But the resource is there.

    So perhaps now you understand why your claim that Hawaii doesn’t have good solar resources was so idiotic. Oh, and just so you know — because of this excellent solar resource you see more homes here with solar hot water heaters than any other place I have ever been. I have one on my own house.

    Try to understand standard nomenclature before burying your foot any further in your mouth. (If you had actually gotten that degree that you always imply that you have, you would probably not find yourself in these awkward situations).

    “regardless of the costs of making it available.”

    That right because ethanol is made by American farmers. Like my

    electricity that starts with coal miners in West Virginia.

    So ethanol is practical because it is made by American farmers. Glad we got your definition out there. Then solar panels made by American workers are clearly practical — per your own definition. Something is practical, regardless of cost, if it is made in America.

    However, since the spot price for crude is $92.91/barrel I think that is why the price of my E10 is trending up.

    You don’t have to think. You can know. You can actually check that the price of ethanol has also risen sharply along with oil prices. In fact, ethanol prices have risen 50% over the past few months. Oil prices over that same time period are up by 20%. So you see, you don’t have to “think.” You can actually go and calculate that your E10 is rising because both gasoline and ethanol prices have risen.

    I like everyone I have met from West

    Virginia and I have not met RR. I am know offering to pay RR’s friend

    what ever it cost plus 10% for him produce electricity for my house PV.

    See first I think zero times what ever is still zero. On the off

    chance that RR’s watermelon actually can make electricity to meet my

    needs, it will be worth it to watch those who ponder the meaning of

    navel lint to actual work.

    The infamous, rambling digression. Unable to answer the questions, you just ramble incoherently. But at least we established that by your definition of practicality, any solar power generated by domestically produced panels is practical.

    RR

     

    [link]      
  55. By mac on December 24, 2010 at 8:05 pm

    “To put it in perspective Mac that is an hour an 15 minutes at just one of California’s nuke plants.”

    Get your facts straight, Kit. In China, solar thermal hot water heaters alone dis-place the need for 140 modestly sized nuke plants roaring 24/7.

    That’s SOLAR Power Kit. Get it ? Solar ?

    To put it in perspective, You don’t know what you are talking about.

    [link]      
  56. By rrapier on December 24, 2010 at 8:48 pm

    Herm said:

    How many barrels of actual oil have been displaced by ethanol?


     

    Not much. When I looked, my conclusion was that you can’t see any displacement:

    http://www.consumerenergyrepor…..m-imports/

    Part of my conclusion:

    What to conclude from this exercise? The easiest conclusion is that
    the claims of petroleum import displacement have been at a minimum
    grossly exaggerated. It may even be that ethanol hasn’t backed any
    petroleum imports out, or that the impact is so small as to be
    unnoticeable.

    RR

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  57. By paul-n on December 24, 2010 at 8:55 pm

    Mac wrote;

    With a compound growth rate approaching 50% a year, solar is doubling about every 2 years.

    Sounds to me like all of this is more than just an “anectdote”.

     

    Mac, the only reason solar has been growing is because of the egregious subsidies being paid for it.  Subsidise anything enough, and it will grow.

    Here in Australia (where it is a mild 91F at midday on Christmas day as I write, and even the kangaroos are sleeping in the shade of the trees), most of the electric utilities are canning their solar feed in tariffs, as they are over budget.  That means they have spent more money on this, and less on cost competitive sources of electricity, and so are destroying wealth, not creating it. The only winners are the Chinese solar panel makers.

    Being back on the farm here in sunny Oz for the last week has been a good reminder how the agriculture industry is very reliant on fossil fuels – if ever oil supplies are really squeezed, we can be sure the farmers will be first or second in  line for what is available, (or what they make) – the RV drivers will have to stay at home.

     

    In a perverse twist of government regulations, even if Australian farmers make their own biodiesel for their own use, they are still required to pay federal energy taxes on it!  This part of the reason why not many of them do it.

     

    Best wishes to all for a Merry Christmas, and thanks to Robert for a year of great great blog articles and to Sam for putting the site together – I have enjoyed it, learned lots from it, and look forward to an interesting year to come.

     

    Paul Nash.

     

     

    [link]      
  58. By Anonymous One on December 24, 2010 at 8:58 pm
    [link]      
  59. By Kit P on December 24, 2010 at 10:23 pm

    “where it is a mild 91F at midday on Christmas day as I write”

     

    Wrong again Paul. It is Christmas eve night and a mild 28F here. The fireplace is roaring so you I will enjoy that for you and yours have a safe holiday.

     

    “I have one on my own house.”

     

    So how does it work? Now that RR has changed the topic from making electricity to making warm water in a tropical climate, RR can avoid discussing the how solar hot water works. At KitP’s house we use low flow shower nozzles, energy star washer with cold water detergent so we do not use much hot water. Conservation is very practical. It works in any climate.

     

    “Get your facts straight, Kit.”

     

    The facts were about making electricity in California because that is where I could find the data.

     

    So Mac where do you live? Do you have a clue about China? I always wonder why people start talking about someplace they nothing about except what they read about in books. I designed and built a solar hot water system when I lived at 2000′ elevation in California. It worked fine and I considered starting a business. The problem is the lawyers in California that drive up the cost of doing business.

     

    Solar hot water may be very practical in China. So Mac if you want to tell me about your solar hot water I am interested. I always wonder why people get upset for me when I explain why I do not do what they do not do.

    [link]      
  60. By PeteS on December 24, 2010 at 10:25 pm

     

    I’m disappointed nobody picked up on Kit P’s Freudian typo earlier:

     

    RR’s link is for solar insolation not solar resource. Thinks [sic] like clouds, humility [sic] and elevation must be taken into account.

     

    Cool

     

    [link]      
  61. By rrapier on December 25, 2010 at 12:39 am

    Kit P said:

    So how does it work? Now that RR has changed the topic from making electricity to making warm water in a tropical climate, RR can avoid discussing the how solar hot water works. At KitP’s house we use low flow shower nozzles, energy star washer with cold water detergent so we do not use much hot water. Conservation is very practical. It works in any climate.


     

    LOL! You are so predictable. It was inevitable, once you were exposed for not knowing what a resource actually is — and making matters worse by wearing that badge of ignorance with arrogant pride — that we would get an immediate change of subject. You see, I didn’t change the subject. I addressed your ignorance, and then gave you an additional piece of information. Further, because electricity in Hawaii is produced from oil, solar hot water here backs out oil.

    Merry Christmas, Kit.

    RR

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  62. By rrapier on December 25, 2010 at 12:41 am

    Kit P said:

    I always wonder why people start talking about someplace they nothing about except what they read about in books. 


     

    You mean like you did when you said Hawaii doesn’t have good solar resources? Confused

    RR

     

    [link]      
  63. By rrapier on December 25, 2010 at 12:42 am

    PeteS said:

     

    I’m disappointed nobody picked up on Kit P’s Freudian typo earlier:

     

    RR’s link is for solar insolation not solar resource. Thinks [sic] like clouds, humility [sic] and elevation must be taken into account.

     

    Cool

     


     

    Pete, I saw it and laughed, but was too busy explaining to Kit what an energy resource is. Kit doesn’t seem to think solar resources are linked to solar insolation, so I had to explain that to him.

    RR

    [link]      
  64. By Anonymous One on December 25, 2010 at 2:14 am

    I forgot to label my previous link as US DOE Hawaii’s Solar Power Resource

    Merry Christmas!

    [link]      
  65. By Kit P on December 25, 2010 at 10:14 am

    “You are so predictable.”

     

    Yes we are, RR is not going to tell me how his solar hot water system is working, how much it costs, he is not going to tell me how much electricity they make in Hawaii with PV. What good is a resource if you do not use it?

     

    I know RR does not like me to talk about economical and practical solutions for meeting our energy demand. He want me to engage in a circular argument about subsidies. He defines that subsidies are bad, he then calls something a subsidy, therefore it is bad. RR spends almost no time taking about solutions and a lot of time explaining what is wrong with ethanol.

     

    The most practical solution for hot water usage is conservation. A nice low flow shower nozzle costs $10. Very practical and economical. I actually give them as Christmas gifts. I bought my wife a energy front loading washer. It costs about $200 more but besides using less energy and water, it does a better job of get cloths clean with less wear and tear. Not just my wife’s opinion but documented by consumer reports.

     

    Putting a solar hot water system on a roof with protecting for cold cost about $4000 and has a lifetime of about 10 years. Conservation seems a lot more practical and economical.

    [link]      
  66. By Ralph Hayes on December 25, 2010 at 1:05 pm

    “Pete, I saw it and laughed, but was too busy explaining to Kit what an energy resource is. Kit doesn’t seem to think solar resources are linked to solar insolation, so I had to explain that to him. RR”
    ———————————————————————————-
    Dear Robert,
    For some time now, I have enjoyed the topics which you write about and the discussion which follows. On this Christmas Day, I choose to let you know how disappointed I am in that your blog has been sidelined and taken over by someone using an alias of KitP. It is painfully obvious that most people end up arguing with this intruder instead of sharing other thoughts and ideas which has been wonderfully educational.

    As a suggestion: Could you set up a mechanism to route KitP’s dialoge to a separate channel entirely? Then only those who choose could go there and listen to his rants — the rest of us could carry on in a much more logical, educational and benefical means without him.

    I have read your blog long enough to realize what a problem this character is and have noted that you have erased many of his former posts for specific reasons. In summary, I think you should act as author of this blog to improve its content simply by eliminating or re-routing such a source of continued disturbance. Why not take an online vote here? Wishing everyone who visits and contributes a better dialog in the New Year. Thank you.
    Ralph Hayes

    [link]      
  67. By rrapier on December 25, 2010 at 1:30 pm

    Ralph Hayes said:

    “Pete, I saw it and laughed, but was too busy explaining to Kit what an energy resource is. Kit doesn’t seem to think solar resources are linked to solar insolation, so I had to explain that to him. RR”

    ———————————————————————————-

    Dear Robert,

    For some time now, I have enjoyed the topics which you write about and the discussion which follows. On this Christmas Day, I choose to let you know how disappointed I am in that your blog has been sidelined and taken over by someone using an alias of KitP. It is painfully obvious that most people end up arguing with this intruder instead of sharing other thoughts and ideas which has been wonderfully educational.

    As a suggestion: Could you set up a mechanism to route KitP’s dialoge to a separate channel entirely? Then only those who choose could go there and listen to his rants — the rest of us could carry on in a much more logical, educational and benefical means without him.

    I have read your blog long enough to realize what a problem this character is and have noted that you have erased many of his former posts for specific reasons. In summary, I think you should act as author of this blog to improve its content simply by eliminating or re-routing such a source of continued disturbance. Why not take an online vote here? Wishing everyone who visits and contributes a better dialog in the New Year. Thank you.

    Ralph Hayes


     

    Hi Ralph,

    Sam Avro, who is the site founder and editor, and I both know what Kit does to the forums. He has a detrimental impact, and probably drives people away. We are in the process of making some upgrades, hopefully sooner rather than later, that will enable us to block specific users. While I believe I have been very tolerant of Kit and his antics, I agree fully with you that we can’t have all discussions side-tracked into endless bickering. The first step we are taking is a member’s only area for more serious discussion without the trolls, but we should be able to block specific, unproductive people soon.

    Cheers, and Happy Holidays.

    RR

    [link]      
  68. By Benny BND Cole on December 25, 2010 at 2:12 pm

    Excellent commentary by RR, one of the nation’s premier energy industry observers.

    BTW and OT, but the NYT delivered nearly a love letter to the Chevy Volt today , claiming better range and mileage than even GM claims.

    http://www.nytimes.com/slidesh…..-volt.html

    This is good news; we have options going forward other than liquid fossil fuels.

    I agree with RR regarding ethanol; however I wonder if a PHEV fleet, carrying onboard 100 percent ethanol motors (for onboard charging purposes), might be an appealing option. So little ethanol would be used, that we could supply all of our liquid fuel needs this way, along with CNG cars, and perhaps Hyundai’s upcoming fuel cell cars (Hyundai claims it will go to mass production in 2015!)

    Regarding KitP, RR has shown considerable patience, but I think it is past time for a change. I dislike censorship immensely, and myself have been censored out of the OIl Drum, for exceedingly questionable reasons. (I did not post at all with the frequency or animus of KitP–I merely wondered if Peak OIl was the huge threat portrayed). So my sentiments are with the banned, in general. Usually, there is an agenda behind the banning.

    In this special case, however, a forum for exchanging ideas is being debased.

    [link]      
  69. By Rufus on December 25, 2010 at 2:38 pm

    Banning is for cowards, and losers.

    You’re not going to learn Anything in an “Echo Chamber,” kiddos.

    [link]      
  70. By rrapier on December 25, 2010 at 4:28 pm

    Kit P said:

    “You are so predictable.”

     

    Yes we are, RR is not going to tell me how his solar hot water system is working, how much it costs, he is not going to tell me how much electricity they make in Hawaii with PV. What good is a resource if you do not use it?


     

    I am flabbergasted that you would even ask that question. But then I was also flabbergasted that you didn’t know what the term ‘resource’ actually meant. Just keep flailing.

    I know RR does not like me to talk about economical and practical solutions for meeting our energy demand.

    I would love for you to. But you keep talking about ethanol — which must be mandated, subsidized, and tariff-protected — to turn up in our fuel tanks. Clearly that is not economical. So what did you have in mind?

    Putting a solar hot water system on a roof with protecting for cold cost about $4000 and has a lifetime of about 10 years.

    Yes, the cold here in Hawaii is a killer. Must be because of our terrible solar resources.

    RR

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  71. By rrapier on December 25, 2010 at 4:32 pm

    Rufus said:

    Banning is for cowards, and losers.

    You’re not going to learn Anything in an “Echo Chamber,” kiddos.


     

    I am a pretty patient person, and you of all people know that I don’t ban on the basis of someone having a different opinion. But there are cases where someone is constantly rude and disruptive to pretty much all other posters. When it begins to impact the people who would stay and have a rational discussion, then banning is appropriate. It has nothing to do with wanting an echo chamber, it is all about having productive discussions. Kit is rarely involved in productive discussions; in fact he derails them all the time.

    RR

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  72. By sam-geckler on December 25, 2010 at 9:02 pm

    Robert,

     

    Earlier today I was thinking exactly what Ralph Hayes has now posted. Several individuals posting here add nothing to the dialog, but only distract from the message. I’m actually astonished that both Rufus and Kit P continue to read your blog at all. If I felt the way they apparently do about you and your thoughts, I would have long ago stop reading much less spending my time posting on your blog. I don’t know how you keep up the energy to respond to them; I my opinion you’ve tolerated them both for far too long.

     

    On another note, I caught myself earlier today, wondering if there is a “better use” argument against growing corn for ethanol  production. Assuming the land isn’t needed for local food production, what mass of fuel do you think is annually producible, from acres currently dedicated to ethanol production, using a sustainable forestry program as you have envisioned in these pages several times?

    How many seedlings would 6 billion buy?Laugh (although local reforestation efforts in Indiana have focused on, get this, not mowing down “volunteer” trees as opposed to actually planting).

     

    Merry Christmas Robert,

     

    Sam Geckler

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  73. By Rufus on December 25, 2010 at 10:54 pm

    Simply Amazin’.

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  74. By Kit P on December 26, 2010 at 12:17 am

    Here is a free book on forest lands in the US.

    http://nrs.fs.fed.us/pubs/gtr/….._nc219.pdf

     

    “About 33 percent of the U.S. land area, or 747 million acres, is forest land.

    About 504 million acres of forest land (67 percent of all forest land) is classed as timberland—forest land capable of producing in excess of 20 cubic feet per acre per year and not legally withdrawn from timber utilization;….”

     

    About 20% of Indiana is timber land. The northern part of Indiana and Ohio were scraped flat by glaciers. It was cleared for farm land but there are still lots of wooded area. Rolling hills to the south are heavily wooded. The only energy harvesting I am aware of is from sugar maple for maple syrup.

     

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  75. By BilB on December 26, 2010 at 4:19 am

    I’d agree with all 3 of your conclusion points RR as a matter of common sense. And I would think that growing trees along with corn would be better farming practice. To transition from field crops to trees would require a significant lag. It would be at least 4 years before anything could be harvested from a tree crop ( at least that is what it is in Australia where trees are grown for fire wood cropping).

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  76. By Herm on December 26, 2010 at 2:02 pm

    Robert Rapier said:

    Herm said:

    How many barrels of actual oil have been displaced by ethanol?


    Not much. When I looked, my conclusion was that you can’t see any displacement:
     

    http://www.consumerenergyrepor…..m-imports/

    Part of my conclusion:

    What to conclude from this exercise? The easiest conclusion is that

    the claims of petroleum import displacement have been at a minimum

    grossly exaggerated. It may even be that ethanol hasn’t backed any

    petroleum imports out, or that the impact is so small as to be

    unnoticeable.

    RR

    I read your article but I’m not convinced, ignoring the BTU content equivalency, it does not take 1 barrel of oil to make one barrel of ethanol, so that ethanol that was produced displaces oil used to make gasoline. I’m not talking E85 with its large MPG hit, but just E10. How much OIL does it take to make ethanol?
     

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  77. By Pauli T form Finland on December 26, 2010 at 5:25 am

    I understand RR’s frustration with ethanol subsidies in US. You are not alone; the same mistakes are made here and it was decided that 10% ethanol is now added to to gasoline to make E95 and surprisingly (not) the price of ethanol jumped from 465 to 580 USD in just few months. So we are doing our fair share to support US ethanol exports.

    The problem with corn ethanol is the same as with the street drugs: business will go on unchecked because too many people in high positions are making too much money with it

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  78. By Kit P on December 26, 2010 at 9:04 am

    Pauli T 5% ethanol is used some places in the US as an additive to reduce air pollution, that would be called E5. If you add 10% ethanol to gasoline you get E10. If you want to know gasoline is increasing it cost, you should check what is happening to the cost of a barrel of oil.

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  79. By Kit P on December 26, 2010 at 2:43 pm

    “How much OIL does it take to make ethanol?”

     

    About 1%. American farmers are very energy efficient and productive. Of course there are other energy inputs to growing crops.

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  80. By rrapier on December 26, 2010 at 4:41 pm

    I read your article but I’m not convinced, ignoring the BTU content equivalency, it does not take 1 barrel of oil to make one barrel of ethanol, so that ethanol that was produced displaces oil used to make gasoline.

    The point is — if you read the article — that there is no detectable import displacement in the data. So various people have tried to calculate how much might be replaced — many of them grossly exaggerating — but at the end of the day it has to show up in the data or those calculations are meaningless.

    RR

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  81. By rrapier on December 26, 2010 at 4:42 pm

    Kit P said:

    “How much OIL does it take to make ethanol?”

     

    About 1%. American farmers are very energy efficient and productive. Of course there are other energy inputs to growing crops.


     

    1% of what? Source please.

    RR

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  82. By Kit P on December 26, 2010 at 5:03 pm

    “Source please.”

     

    memory

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  83. By Rufus on December 26, 2010 at 6:00 pm

    Okay, one more time.

    It takes, on average, a little less that 5 gallons of diesel to farm an acre of corn.

    Av. yield is about 160 bushels of corn per acre.

    Poet gets 3 gallons of ethanol from one bushel of corn.

    However, you retain 40% of your cattle-feeding ability in the DDGS.

    Hence you multiply 160 X 3 and divide by .60 for an answer of 800 Gallons of Ethanol per Acre.

    Divide that by 5 gallons of diesel, and you get 160 gallons of ethanol for every gallon of diesel used in the farming, and harvesting of the corn.

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  84. By Rufus on December 26, 2010 at 6:27 pm

    Now, there are 303 gallons of ethanol in a ton, and it takes a gallon of diesel to transport a ton of product about 500 miles by train. Let’s say the average gallon of ethanol is transported by rail 1,500 miles.

    That would be 303 gallons divided by 3 gal/diesel, or 1 gal of diesel for 101 gallons of ethanol for rail transport.

    So, for farming, harvesting, and rail transport you’re looking at about 1.6 gallons of diesel for 100 gallons of ethanol.

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  85. By Rufus on December 26, 2010 at 6:46 pm

    There would be a very minor amount of diesel used in transporting the corn to the refinery. May be 0.4 gallons per 100 gallons of ethanol.

    If you called the grand total 2.0 gallons of diesel in the farming, harvesting, truck transport of corn, and rail transport of ethanol of 100 Gallons of Ethanol you would probably be pretty close.

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  86. By rrapier on December 26, 2010 at 9:29 pm

    Kit P said:

    “Source please.”

     

    memory


     

    Useless information then.

    RR

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  87. By rrapier on December 26, 2010 at 9:42 pm

    Rufus said:

    Okay, one more time.

    It takes, on average, a little less that 5 gallons of diesel to farm an acre of corn.

    Av. yield is about 160 bushels of corn per acre.

    Poet gets 3 gallons of ethanol from one bushel of corn.

    However, you retain 40% of your cattle-feeding ability in the DDGS.

    Hence you multiply 160 X 3 and divide by .60 for an answer of 800 Gallons of Ethanol per Acre.

    Divide that by 5 gallons of diesel, and you get 160 gallons of ethanol for every gallon of diesel used in the farming, and harvesting of the corn.


     

    And I have always said that this is sleight of hand accounting, because it implies something that isn’t really true. You can’t in fact get 800 gallons of ethanol from an acre. When you say something like that, people might actually assume that from 1 acre of land you could produce 800 gallons of ethanol. But you and I both know that isn’t true, hence it is an answer designed to mislead. Further, you can’t use what POET claims to get as your basis; you need to go to an actual agency that reports these things as POET has a vested interest in claiming the highest possible yields.

    Further, the oil in corn farming extends to the pesticides, herbicides, seed corn production, etc. From the USDA’s report over the summer in which they claimed an energy return of over 2 for ethanol, they had farming inputs as 41,000 BTU/bushel of corn (about half of that is natural gas). The diesel alone was over 5 gallons, and then they had gasoline, lpg, oil for pesticides, etc. If we apply 41,000 BTUs to your 160 bushels per acre, that is the fossil fuel energy equivalent of just under 50 gallons of diesel. Like you, they allocate a big chunk to byproducts (66%), but then they still end up — after the DDGS has been accounted for — with 18 gallons of diesel equivalent per acre.

    So in short, your 5 gallons/acre never stood up to any sort of scrutiny. It was based on all sorts of generous assumptions in favor of corn and ethanol, and it doesn’t square with the data. And Kit’s memory has obviously failed him.

    RR

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  88. By Kit P on December 26, 2010 at 10:15 pm

    “Useless information then.”

     

    Hmmm! Since RR said ‘please’ I answered his question despite RR’s recent warning about banning me.

     

    “But there are cases where someone is constantly rude and disruptive to pretty much all other posters.”

     

    I will resume by practice of not responding to RR since it invariable leads to warnings. I will continue to offer information. I will continue to read what others write like Rufus and Paul. Sometimes I agree and sometimes I don’t.

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  89. By rrapier on December 26, 2010 at 10:30 pm

    Kit P said:

    I will resume by practice of not responding to RR since it invariable leads to warnings. I will continue to offer information. I will continue to read what others write like Rufus and Paul. Sometimes I agree and sometimes I don’t.


     

    It must have escaped your attention, but I have had numerous requests to ban you, and numerous complaints about you. So don’t try to put this off on me. The problem lies with you.

    Regardless, when you make a claim that looks ridiculous, you will be asked for a source. “Memory” is a concession that you can’t back up the claim.

    RR

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  90. By Rufus on December 27, 2010 at 1:54 am

    The Question wasn’t “BTUs/Bu,” Robert. Nor was it “BTUs of Natural Gas.”

    The Question dealt with “Petroleum inputs.” I tried to answer that question the best I could.

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  91. By Wendell Mercantile on December 27, 2010 at 9:58 am

    RR and Rufus~

    The way to settle this would be for an actual corn farm and an actual ethanol distillery to operate without using any fossil fuel inputs — using the ethanol they produce in place of diesel oil, gasoline, and natural gas to see if the process could continue running.

    Theoretically, such a closed system process should be able thrive and grow if the ethanol industry’s numbers are correct. Personally, I think it would eventually grind to a stop and they would realize they weren’t producing enough fuel and fertilizer to keep themselves running.

    At any rate, we’ll never find out because the ethanol industry is too risk adverse to attempt such an experiment since a failure would mean curtains for the industry — it would mean betting the ranch on one experiment. (Although I am surprised one of the several distinguished land grant universities in the Corn Belt is not willing to try that experiment.)

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  92. By the long shot on December 27, 2010 at 10:21 am

    Rufus said:

    Okay, one more time.

    It takes, on average, a little less that 5 gallons of diesel to farm an acre of corn.

    Av. yield is about 160 bushels of corn per acre.

    Poet gets 3 gallons of ethanol from one bushel of corn.

    However, you retain 40% of your cattle-feeding ability in the DDGS.

    Hence you multiply 160 X 3 and divide by .60 for an answer of 800 Gallons of Ethanol per Acre.

    Divide that by 5 gallons of diesel, and you get 160 gallons of ethanol for every gallon of diesel used in the farming, and harvesting of the corn.


     

    You forgot the fertilizer to produce the corn.  At 180 lbs of Nitogen fertilizer to make the ethanol.  At 14 gallons of Nat gas to make one lb of nitrogen fertilizer you will have consumed 2,520 gallons of natural gas used to raise an acre of corn plus the diesel.  That is not even taking into account the chemicals that are derived from petroleum to raise ethanol.  Then there is the diesel to haul the grain to town and then on a train to the processing plant.  Its a greater net you must cast to capture what it takes to make ethanol than you think.

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  93. By Kit P on December 27, 2010 at 10:53 am

    I tried to answer that question the best I could.”

     

    You did a very good job too Rufus. I suspect that Rufus started with RTFQ. Navy nukes learn something called ballpark math. Sometimes you only need an answer get you in the ballpark. Furthermore,each ballpark is different.

    The ballpark answer is that it only takes a small amount of transportation fuel to provide transportation to customers. It is just common sense. Corn ethanol meets the common sense rule.

    I tried
    to answer that question the best I could.”

     

    You did a
    very good job too Rufus. I suspect that Rufus started with RTFQ.
    Navy nukes learn something called ballpark math. Sometimes you only
    need an answer get you in the ballpark. Furthermore,each ballpark is
    different.

     

    The
    ballpark answer is that it only takes a small amount of
    transportation fuel to provide transportation to customers. It is
    just common sense. Corn ethanol meets the common sense rule.

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  94. By the long shot on December 27, 2010 at 12:43 pm

    Rufus said:

    Okay, one more time.

    It takes, on average, a little less that 5 gallons of diesel to farm an acre of corn.

    Av. yield is about 160 bushels of corn per acre.

    Poet gets 3 gallons of ethanol from one bushel of corn.

    However, you retain 40% of your cattle-feeding ability in the DDGS.

    Hence you multiply 160 X 3 and divide by .60 for an answer of 800 Gallons of Ethanol per Acre.

    Divide that by 5 gallons of diesel, and you get 160 gallons of ethanol for every gallon of diesel used in the farming, and harvesting of the corn.


     

    One other item I forgot…  It takes LP or natural gas to dry corn before its shipped/stored/handled.  It takes .02 gallons per 1 pt of moisture per bushel.  Lets say you harvest in Illinois where they like to harvest corn around 28%.  That is 13 pts to dry or 13 times .02 times an assumed 180 bu an acre or 46.8 gallons of Liquid Propane (derived from petroleum) per acre.  Then there is 4 cents of electricity per gallon handled which is likely drawn from Nat Gas or Coal.  It just goes on and on.

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  95. By Wendell Mercantile on December 27, 2010 at 1:02 pm

    Its a greater net you must cast to capture what it takes to make ethanol than you think.

    longshot~

    Rufus needs to cast his net even further. I can’t see that he included the energy used to make the seed corn. Farmers decades ago quit holding back some of their crop to plant the next year — in fact with hybrid seed, it’s not even possible.

    Making hybrid seed corn is energy-intensive, and I’ve yet to see an EROEI calculation for corn ethanol include it.

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  96. By Benny BND Cole on December 27, 2010 at 1:03 pm

    Rufus, et al:

    This is why the price system was invented–you don’t have to argue and use computers to figure out if a business model is efficient. You have to survive based on what the market says the value of your product is, and your costs.

    I will concede weaknesses in the price system–pollution is missed, and the cost of dependency on oil-thug states. There can be intelligent debates about adding or subtracting costs from a product to counteract these weaknesses in a pure price system, although any system of subsidies is a slippery slope.

    But I don’t hear those arguments.

    I hear that ethanol is wonderfully competitive, but we need subsidies and mandates.

    I again ask Rufus to reveal who he is.

    My name is Benjamin Cole, I live in Los Angeles, I am washed-up journalist now woodworker, and I receive no funding from anyone to post here.

    Rufus?

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  97. By rrapier on December 27, 2010 at 1:13 pm

    Kit P said:

     

    The ballpark answer is that it only takes a small amount of transportation fuel to provide transportation to customers. It is just common sense. Corn ethanol meets the common sense rule.

    I tried

    to answer that question the best I could.”

     

    You did a

    very good job too Rufus. I suspect that Rufus started with RTFQ.

    Navy nukes learn something called ballpark math. Sometimes you only

    need an answer get you in the ballpark. Furthermore,each ballpark is

    different.

     

    The

    ballpark answer is that it only takes a small amount of

    transportation fuel to provide transportation to customers. It is

    just common sense. Corn ethanol meets the common sense rule.


     

    Likewise, the ballpark answer is that it only takes a small amount of electricity for solar power to provide electricity to their customers. It is just common sense. Solar power meets Kit’s common sense rule.

    Except for some reason, he thinks that it doesn’t and subsidized, mandated, and tariff-protected ethanol (which uses a lot of natural gas that can be used directly as transportation fuel) does. The only explanation is completely different standards when comparing the two cases.

    RR

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  98. By Rufus on December 27, 2010 at 1:53 pm

    The average gallon of ethanol from a dry-grind refinery will probably be embedded with somewhere around 32,000 – 33,000 btus of nat gas. That includes fertilizer, seed corn, drying, and refinery operations (biorefinery operations can vary greatly, however. Corn Plus uses about 16,000 btus of nat gas, Poet probably uses something in the 22 – 23,000 btu range, and some older refineries are, probably, closer to 30,000 btus.)

    Many older refineries are taking steps to become more efficient in their natgas use, and some are starting to use biomass for process energy.

    If you figured 35,000 Total BTUs, Fossil Fuel Energy you would be very safe.

    Now, here’s the question: In light of the fact that a gallon of ethanol will take my 2008 Impala 20 miles, how far will 35,000 BTUs of, mostly, nat gas take it?

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  99. By Benny BND Cole on December 27, 2010 at 2:38 pm

    No, Rufus, the question is who are you? Are you being compensated (directly or indirectly, by whatever means) for posting globally, in every meaningful forum where the word “ethanol” results in a google alert?

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  100. By Rufus on December 27, 2010 at 3:15 pm

    Benny, I Don’t post “Globally” in every “meaningful” forum where the word ethanol results in a “google alert.” I’ve never received a “Google Alert” in my life (I don’t even know how to sign up for such a thing.)

    I’m a retired insurance peddler. I get neither a nickel, nor a dime from anyone other than the insurance company for whom I at one time toiled.

    I’m not about to post my name for any crazed Saudi Sheik, or Venezuelan thug to read. If I were compensated, I might consider otherwise; but I’m not, so I won’t.

    p.s. I really think the informative question is: How many miles will 35,000 BTUs of, mostly, natural gas take my Impala?

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  101. By rrapier on December 27, 2010 at 4:03 pm

    I really think the informative question is: How many miles will 35,000 BTUs of, mostly, natural gas take my Impala?

    Is that a rhetorical question? Pretty sure I worked that out for you once before.

    The thing about natural gas is that it doesn’t require mandates or subsidies to work. The price per BTU is a fraction of ethanol’s, hence the question isn’t how far you can get on 35,000 BTUs of either; the question is how much it cost you directly and indirectly.

    RR

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  102. By Rufus on December 27, 2010 at 4:34 pm

    I remember asking the question once before; I don’t remember getting an answer. Maybe I was absent that day.

    Price can be a bit tricky. First: How much will it cost me to convert my chevy to nat gas? That would have to be included, no?

    Then: Do we use the $13.00 from a couple of years ago, or the $4.00, today? If we start converting a lot of our private vehicles to nat gas, how will That affect the price?

    Actually, I don’t know if all of this makes much difference. Hofmeister, the ex-President of Shell Oil, said today that “Gasoline will hit $5.00/gal in 2012. If it does, I imagine there will be a market for almost anything you can come up with.

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  103. By Benny BND Cole on December 27, 2010 at 5:07 pm

    Rufus. Oh please, RR puts his name and location right out there. I have done so, and I rest confident that no one will take action against me.

    CNG vehicles? You can buy one right now. This guy in Okie says he will sell you a used Ford F-150 off the lot, ready to run on CNG, for $6k. See http://www.cngvehicles.net.

    I have 3 CNG filling stations with five miles of my home, that I know of.

    The conversion of US cars to CNG might take off, I don’t know. Probably RR, Rufus and Benny BND Cole shoudl get together, form a company to create a national chain of CNG used car lots. It’s called an industry roll up. IPO-out, and we get rich.

    Exxon is saying they can produce shale to the moon for way less than $4.

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  104. By Rufus on December 27, 2010 at 5:22 pm

    I don’t know what I’d do with all that money, benny. Prolly get in trouble. You guys go ahead. :)

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  105. By the long shot on December 27, 2010 at 5:34 pm

    Rufus said:

    I remember asking the question once before; I don’t remember getting an answer. Maybe I was absent that day.

    Price can be a bit tricky. First: How much will it cost me to convert my chevy to nat gas? That would have to be included, no?

    Then: Do we use the $13.00 from a couple of years ago, or the $4.00, today? If we start converting a lot of our private vehicles to nat gas, how will That affect the price?

    Actually, I don’t know if all of this makes much difference. Hofmeister, the ex-President of Shell Oil, said today that “Gasoline will hit $5.00/gal in 2012. If it does, I imagine there will be a market for almost anything you can come up with.


     

    Will you concede that if a mandate is in place as it is now that it will try to keep ethanol the “status quo” while displacing a more economical fuel?  That is likely occuring now with the government “picking the winners and losers” via subsidy and mandate.  If price is a determinant of what fuel we use then why do we mandate ethanol?  Price clearly disincentivises ethanol’s use and so does it’s logistics.  What if Natural Gas or a derivative of it is the better fuel but the focus on Ethanol is choking off it’s development.  Tractors used to run on LP and with no problem at all in conversion, run on Natural Gas.  Yet today we subsidise Biodiesel to keep it in the mix.  If diesel/gasoline goes through the roof why wouldn’t we go to LP/NatGas again?

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  106. By BilB on December 27, 2010 at 5:44 pm

    Well here is another angle from a distance off broad perspective…

    http://johnquiggin.com/index.p…..ed-timber/

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  107. By Rufus on December 27, 2010 at 5:47 pm

    Can’t you get something like a $67,000.00 Grant to convert, or produce, a “semi” to run on CNG? And, isn’t there, also, a sizable “Grant” available for CNG passenger vehicles?

    BTW, you guys are aware that we still “Import” about 13% of our Nat Gas from Canada, right?

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  108. By Benny BND Cole on December 27, 2010 at 6:21 pm

    Rufus-

    You say you do not get Google alerts.

    There is a blog I read, Carpe Diem. It is an economics blog. One of thousands of econo blogs. Yet when the topic of ethanol came up, you started posting. You posted on no other topic.

    Same story at Coyote Blog.

    So, how do you come across other blogs posting about ethanol, if not by Google alert? Do you search for blogs where people are talking about ethanol? All just out of concern for your country?

    Something doesn’t ring true here, Rufus. I don’t think the big baddies in Riyadh are going to track down Rufus in Arkie and beat him up.

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  109. By Benny BND Cole on December 27, 2010 at 6:33 pm

    Add on. Rufus: Doing a quick search, I find you have also posted on Optimist123, MaggiesFarm, Mongabay, E85, Ethanol News, and possibly cosmiclog.

    On the last blog someone named “Rufus Gibbons,” from Kennet, Mo., wrote hopefully about how kudzu could be converted to ethanol. Of course, Rufus, you could be posting under other names as well

    Really, this is all just a pasttime for you? Posting about the glories of ethanol every day on dozens of blog and websites? Sounds like a gig to me.

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  110. By Kit P on December 27, 2010 at 6:37 pm

    If you want to know how to fuel a with NG.

     

    Digging into the 2009 SMUD annual report:

    http://www.smud.org/en/about/d…..report.pdf

     

    “SMUD was awarded $2.5 million in grants from DOE and the California Energy Commission for the electric transportation project. SMUD and its partners, the State Department of General Services and the City of Sacramento, will test 29 Volts as part of the project.”

     

    First you run the NG though a power plant.

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  111. By Rufus on December 27, 2010 at 7:43 pm

    You left out Wattsupwiththat, and the elephant bar.

    It’s been over a year since I’ve posted at Maggiesfarm, and, at least two years since I posted at Coyote, or the SkepticalOptimist (I think that’s 123 blog.) I’m not familiar with cosmicblog, or Rufus Gibbons. I, also, read the oil drum every day (although my commenting was rudely interrupted, there,) and Hot Air, Gateway Pundit, and Ace of Spades. Also, Bloomberg, NCGA, DTN, Autobloggreen, Greencarcongress, and Cleantechnica.

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  112. By Benny BND Cole on December 27, 2010 at 8:00 pm

    Rufus:
    Really, you do not know a Rufus Gibbons who thought that kudzu could be used to make ethanol? Another Rufus who floated out the kudzu-to-ethanol balloon?
    Well, I got kicked off of the Oil Drum too. I also wonder about their agenda and sources of funding.

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  113. By Rufus on December 27, 2010 at 8:32 pm

    What’s even stranger is that I have relatives in Kennet, Mo (who wouldn’t have a clue that I post ethanol-friendly comments.) But, no; I don’t know the person.

    As for the Drum? Some pretty good info gets dissiminated, there. Also, a lot of hogwash, of course. Mostly “true believers,” I think. I just don’t “truly believe” a lot of the stuff that they “truly believe.” :)

    I do think we’re at “peak oil;” but it was OPEC’s failure to ramp up in 2008 that convinced me of that. “Global Warming,” I think, is a bunch of hooey.

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  114. By Kit P on December 27, 2010 at 9:44 pm

    1603 Program: Payments for Specified Energy Property in Lieu of Tax Credits

    http://www.treasury.gov/initia…../1603.aspx

     

    This program is up to $5.8 billion. Spot checking:

    • Wisconsin 40 solar projects, 3 biomass.
    • Washington State got $356 million for wind
    • Oregon got $277 million for wind.
    • Hawaii 46 solar projects
    • California 100+ solar projects

     

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  115. By rate-crimes on December 28, 2010 at 11:36 am

    Kit P said:
    1603 Program: Payments for Specified Energy Property in Lieu of Tax Credits

    http://www.treasury.gov/initia…../1603.aspx

     

    This program is up to $5.8 billion.

     

    I think my favorite is ‘Grayhawk Golf, LLC’ in Arizona for $57K.

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  116. By Wendell Mercantile on December 28, 2010 at 11:56 am

    Of course, Rufus, you could be posting under other names as well

    Benny~

    Rufus is aka “Kum Dollison.”

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  117. By Kit P on December 28, 2010 at 1:11 pm

    “I think my favorite is ‘Grayhawk Golf, LLC’ in Arizona for $57K.”

     

    Because?

     

    “Grayhawk Golf Club is Going Green!”

    http://www.grayhawkgolf.com/gone_green/

     

    It is just a matter of time before all golf courses and wineries in California and Arizona have been green washed with tax payers money.

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  118. By Wendell Mercantile on December 28, 2010 at 1:49 pm

    It is just a matter of time before all golf courses and wineries in California and Arizona have been green washed with tax payers money.

    Kit P~

    It’s just a matter of time until the golf courses in CA and AZ will be brown because people will finally decide they need to use their limited water resources for more important things.

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  119. By robert on December 28, 2010 at 6:56 pm

    We water the golf courses with reclaimed water. We won’t run out of water. It will just become too expensive to irrigate crops. Phoenix used to be surrounded by cotton fields but that’s all gone now. Houses can always put in a rain water harvester for a price. What little outdoor waterring there is (mainly resorts that attract tourist dollars) will go grey water.

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  120. By Kit P on December 28, 2010 at 9:27 pm

    Watering golf courses is a good use of gray water as cooling tower water for Palo Verde Nuclear Generating Station. My issue is not with making electricity with PV but using solar for green washing. It does look to me like the PV on the roof Grayhawk Golf Club is a serious project at a location with a maintenance staff that will keep the PV pumping out the juice. At least I hope they are not the same who write the web page.

     

    “2,925 TREES SAVED”

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  121. By Herm on December 30, 2010 at 3:58 am

    Robert Rapier said:



    Further, the oil in corn farming extends to the pesticides, herbicides, seed corn production, etc. From the USDA’s report over the summer in which they claimed an energy return of over 2 for ethanol, they had farming inputs as 41,000 BTU/bushel of corn (about half of that is natural gas). The diesel alone was over 5 gallons, and then they had gasoline, lpg, oil for pesticides, etc. If we apply 41,000 BTUs to your 160 bushels per acre, that is the fossil fuel energy equivalent of just under 50 gallons of diesel. Like you, they allocate a big chunk to byproducts (66%), but then they still end up — after the DDGS has been accounted for — with 18 gallons of diesel equivalent per acre.

    So in short, your 5 gallons/acre never stood up to any sort of scrutiny. It was based on all sorts of generous assumptions in favor of corn and ethanol, and it doesn’t square with the data. And Kit’s memory has obviously failed him.

    RR


    Ok, we are getting somewhere.. out of that 41,000btu/bushel of corn you say half is natural gas, thus I can assume the other half is diesel?.. diesel has 139,000 btus/gal so that ends up being 1 bushel of corn uses 0.15 gallons of diesel.. at 3 gallons of ethanol per bushel that works out to 20 gallons of ethanol per gallon of diesel.

    For the purposes of my question ignore the DDG, assume that stuff is buried in a dump, assume the propane can be replaced by NG and assume most of the fertilizer is made from NG.. thus making that 1 million gallons of ethanol per day took about 50k gallons of diesel and a lot of NG. There must be lots of displacement of oil by making ethanol when we use 35.5 million gallons of ethanol every day. Not sure why it does not show up in the importation data.

     

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  122. By Kit P on December 30, 2010 at 9:49 am

    “thus I can assume the other half is diesel?”

     

    If you like getting the wrong answer Herm! The source of the BTUs in corn is the sun. That is why it is renewable energy. The world of plants in the environment is to produce food (protein and energy) and fiber. So 100% of the energy in corn is the sun. I have a fire in the fire place this morning with wood from my neighbors trees. The energy to split, stack, and carry the wood into the house was renewable energy too. It came from food I ate. Herm’s question was simple.

    “How much OIL does it take to make ethanol?”

     

    The simple answer is you measure how much diesel a farmer uses to harvest the food produced with the energy from the sun. Both Rufus and I provided the correct answer.

    “For the purposes of my question ignore the DDG ..”

     

    I do not know where you live Herm but where I grew up in Indiana and Ohio the purpose of growing corn was to produce food. We did not have fresh corn at Christmas dinner. It was tradition to have dried corn which took a lot of work and in hindsight tasted pretty bad compared to canned or frozen corn. I can not go out to the garden and get vegetables because they would be rotten and frozen. It takes energy to store food until we need it. We have to freeze (using electricity), can, or dry food so that we will have it for winter. When we dried corn from the garden, we used sunlight and a large surface area. Framers use propane or NG in drying bins. During the 70s energy crisis corn was rotting on the ground because there was a shortage of NG and propane.

     

    The point here is that the purpose of growing corn is to produce food. The energy to process and transport food belongs under the food column since ethanol is byproduct of food production.

    “Not sure why it does not show up in the importation data.”

     

    Why would you expect it to show up? When I was heating with oil and added a wood boiler I could estimate how much oil we were not importing by the estimating the amount of heating oil I was not using. On one very cold night (-40F), both the wood and oil boilers were running at capacity and could keep the house above 60F. On night like that, the grid operator will tell you that demand spikes as people start turning on electric space heaters to keep pipes from freezing. Even so the plumbers are busy.

    When looking at a mountain of data national data, one cold night in one area is not going to show up. However, a couple of months of cold nights over a large region will show up. Production of ethanol is something you can measure. Use of diesel fuel by farmers is something that can be measure. It only takes a small fraction (1%) of imported oil to make ethanol.

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  123. By Herm on December 30, 2010 at 10:28 am

    Kit, I just wanted to simplify the question by taking out the BTU equivalency out, thus out with the DDG also or NG to dry up corn, the question was not how much oil it took to make DDG.

     

    Many make the argument that brewing ethanol from corn is a GTL process that uses NG and sunlight to make ethanol.. and yes I am assuming that future cars will get the same MPG with E85 as with gasoline, as GM promised. The question again is how many gallons of oil it takes to make gallons of ethanol.

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  124. By Kit P on December 30, 2010 at 2:18 pm

    “The question again is how many gallons of oil it takes to make gallons of ethanol.”

     

    Zero. It takes the same amount of diesel fuel to grow corn regardless of what you end up doing with it. Processing some of the energy out corn to make ethanol does not use oil.

    I do not know what you do for a living Herm but when you produce energy there are always those who do not understand the process. However lets say Herm owns a sawmill and makes lumber. Herm has a few trucks that he fuels to bring the trees to his sawmill using 1000 gallons of diesel fuel. Herm also uses diesel fuel in a boiler to dry the lumber. That is another 1000 gallons of diesel fuel. Since his father had the sawmill, waste was opened burned until some watermelons moved up from California and complained about the smell of wood smoke. OMG Herm is polluting the air with PAH. Herm now buys some trucks and hauls the waste to the landfill at $16/ton and uses 500 gallons more of diesel fuel. Herm is now having trouble competing with foreign sources of lumber who do not have to follow the same rules. Along comes Energy Products of Idaho who sells Herm a fluidized be boiler designed to burn the waste and dry his lumber. Herm just saved 1500 gallons of diesel fuel and a $16/ton tipping fee.

     

    The GE comes along a sells Herm a non-condensing turbine to turn his sawmill into a CHP electricity generator. Herm is now making 100,000 MWh of electricity worth about $5 million a year. He did have to hire a few extra workers. So Herm how much oil did it take to produce 100,000 MWh of electricity?

     

    Zero! It take diesel fuel to get the trees to the sawmill but the energy produced by the waste is a byproduct of the process. Adding capital equipment to make it a CHP was expensive but the JCs give Herm the environmentalist of the year award for making the air cleaner and keeping jobs in the community.

     

    Down at the coffee shot Herm over heard some farmers complaining about the watermelons from California. A ban on open burning is going into effect and is going to cost them a $16/ton tipping fee

    to take waste to the landfill that they used to burn. Herm understands because he was the first one the watermelons tried to put put of business. Herm turns around and offers to bring his grinder out to the farms and grind up the waste and haul it way for $5/ton. Herm is going to have hire two more workers and to buy $1500 diesel fuel to make more electricity worth about $5 million a year. So Herm how much oil did it take to produce the next 100,000 MWh of electricity?

    Zero! It take diesel fuel to get the waste to the landfill anyway.

     

    Just when Herm thinks it can not get any better. PualN comes buy and tells him that he can make wood pellets, ship them to the EU where they will pollute their air and call it renewable energy.

     

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  125. By rrapier on December 30, 2010 at 2:57 pm

    Kit P said:

    “thus I can assume the other half is diesel?”

     

    If you like getting the wrong answer Herm! The source of the BTUs in corn is the sun. That is why it is renewable energy. The world of plants in the environment is to produce food (protein and energy) and fiber. So 100% of the energy in corn is the sun.


     

    Wow, you are more misinformed on this than I would have ever imagined. A major chunk of the energy in corn is from the fertilizer that is generally produced from natural gas (sometimes from coal). So the answer to the question that Herm asked is that the other half of the 41,000 BTU input is oil and oil-based pesticides, etc.

    RR

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  126. By rrapier on December 30, 2010 at 3:20 pm

    Herm said:

    Robert Rapier said:

     

     


    There must be lots of displacement of oil by making ethanol when we use 35.5 million gallons of ethanol every day. Not sure why it does not show up in the importation data.
     

     


     

    There are a couple of possible reasons. The first is that there are actually more embedded oil inputs into the system than are generally accounted for. For example, the USDA has always acknowledged that they ignore some of the energy inputs. So perhaps to support the entire system the oil inputs are greater than what is generally accepted.

    The other is that the amount is so small relative to the amount of oil we import, it isn’t really visible above the noise.

    RR

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  127. By Wendell Mercantile on December 30, 2010 at 3:39 pm

    The source of the BTUs in corn is the sun.

    Kit P~

    Next spring spread some seed corn on your driveway. Make sure you pick a spot where it gets lots of Sun. You can even water the seed corn if you’d like. Then next October, please report back and tell us how much corn you harvested.

    Of course corn gets some energy from the Sun, but it takes a combination of water, fertilizer, carbon dioxide, and the Sun to produce an ear of corn. The Sun does stimulate the photosynthesis of water and CO2, but it is not the only source of energy. Without the energy fertilizer or nutrients in the soil — which long ago have been sucked out — provide, the yield would be minimal.

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  128. By Kit P on December 30, 2010 at 3:59 pm

    Herm may want to clarify what he means by ‘in corn’. Does he mean energy to produce corn, energy to produce ethanol, or the energy ‘in corn’ that can be stored and recovered as food and fuel?

    The energy in corn comes from sunlight. Photosynthesis converts carbon dioxide into organic compounds, especially sugars, using the energy from sunlight. The diesel fuel used in a tractor does not end up in the corn. A small amount of fertilizer properly applied increase the yield of corn. Fertilizer does not add energy to corn but allows the same field to absorb more energy from the sun. A small amount of fertilizer multiplies the amount of energy produced.

    Farmers do not have to pay for sunlight but they have to buy seed, fertilizer, and diesel fuel. So energy is a big part of budget that farmers manage.

    There is a lot of energy in corn. Some people use dried field corn as fuel in pellets stoves.

     

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  129. By Kit P on December 30, 2010 at 4:07 pm

    but it is not the only source of energy”

     

    The only source of energy in corn and other plants is sunlight.

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  130. By Herm on December 31, 2010 at 6:35 am

    Kit P said:

    The energy in corn comes from sunlight. Photosynthesis converts carbon dioxide into organic compounds, especially sugars, using the energy from sunlight. The diesel fuel used in a tractor does not end up in the corn. A small amount of fertilizer properly applied increase the yield of corn. Fertilizer does not add energy to corn but allows the same field to absorb more energy from the sun. A small amount of fertilizer multiplies the amount of energy produced.

    It is obvious the energy in corn comes from sunlight, otherwise we would grow it in caves by just applying fertilizer. You make the argument that the corn would have been grown anyways, even if ethanol did not exist.. maybe so but still that corn is being used to make ethanol… probably without the ethanol demand it would not have been grown since farmers like to make a living. For the sake of simplifying my question we are still burying the DDG.

    My simple question again: how much oil is used to make ethanol.. seems like a fairly simple question.

    Another simple question.. how much fertilizer is used to grow corn, how much NG does it take to make this fertilizer?.. urea or ammonia would be the biggest portion of that fertilizer is my guess. I will assume the diesel used to distribute the fertilizer is negligible.

    So far, I think you guys are saying half the energy used to make ethanol is oil, the other half is coal and NG.. plus sunlight of course. We could work out what proportion of the total energy in corn came from sunlight, probably most of it, but I’m not interested since sunlight is free and renewable.

    So 20 gallons of ethanol used 1 gallon of diesel, plus one gallon equivalent of NG and coal… a total 260,000 btu of fossil fuels.. 20 gallons of ethanol contain 1,520,000 btu, approx a 6:1 ratio. I think it is obvious ethanol displaces oil usage.

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  131. By rrapier on January 2, 2011 at 6:11 pm

    Herm said:

     

    It is obvious the energy in corn comes from sunlight, otherwise we would grow it in caves by just applying fertilizer.


     

    Actually there are some species of algae that grow without sunlight. It is also possible for plants to receive plenty of sunlight, and not grow, because sunlight is only one part of the equation.

    So far, I think you guys are saying half the energy used to make

    ethanol is oil, the other half is coal and NG.. plus sunlight of course.

    We could work out what proportion of the total energy in corn came from

    sunlight, probably most of it, but I’m not interested since sunlight is

    free and renewable.

    The real metric of interest is how many BTUs of fungible fuel are used to make ethanol. If, for instance, you used gasoline to make ethanol, you clearly need a good multiplier on your BTU investment. But you could do it with coal and that wouldn’t be such a big issue. To me, the thing about natural gas is that it works just fine as a fuel in its right. As I have pointed out here before, for all the talk about Brazil and biofuels, they have a natural gas vehicle fleet that is much larger than ours in the U.S.

    So 20 gallons of ethanol used 1 gallon of diesel, plus one gallon

    equivalent of NG and coal… a total 260,000 btu of fossil fuels.. 20

    gallons of ethanol contain 1,520,000 btu, approx a 6:1 ratio. I think it

    is obvious ethanol displaces oil usage.

    If it was obvious we should see it in the data. As I said, there are some things that aren’t accounted for. For instance, it has taken a lot of oil to build out ethanol infrastructure. For instance, the embedded oil in building and maintaining an ethanol plant; those sorts of energy inputs aren’t accounted for. So it is quite possible that there are just a lot more oil inputs than we generally recognize.

    RR

     

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  132. By rrapier on January 3, 2011 at 9:33 pm

    SAM said:

     

    The petroleum-resources required for building the ethanol (or any

    other biofuel) infrastructure is warranted for the simple reason being that we

    are on a process of transition from petroleum fuels to biofuels.


     

    Hi SAM,

    The question is not whether it is warranted, it is whether failure to account for it is a reason we don’t see the expected drop on oil imports that you would expect from bringing that much ethanol onto the market.

    RR

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  133. By sameer-kulkarni on January 4, 2011 at 12:23 pm

    Robert Rapier said:

    Hi SAM,

    The question is not whether it is warranted, it is whether failure to account for it is a reason we don’t see the expected drop on oil imports that you would expect from bringing that much ethanol onto the market.

    RR


     

    Hi Robert,

    I would agree with you partially because oil is still a commodity (a pricey one though as on today) & not a luxury (thankfully). Yet I would like to justify that almost 10-15 years earlier when there was this onset of mobile phone communications here in India, the handsets & services would cost a bomb back then and were out of reach for the common people. While today the picture is completely different where even rag picker here in India can possibly afford a mobile phone.

    And speaking of dependence on oil imports, I believe that unlike the Petroleum industry, which has matured over a period of time, the Biofuels industry is still evolving.  Even though I that admit the problems associated with Oil are far greater than expensive cellular services, I shall like to conclude that we are all optimists & having our fingers crossed are

    working hard towards bridging the gap towards a sustainable future…after all “Patience is a virtue

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  134. By ronald-steenblik on January 9, 2011 at 3:20 am

    SAM wrote:

    Yet I would like to justify that almost 10-15 years earlier when there was this onset of mobile phone communications here in India, the handsets & services would cost a bomb back then and were out of reach for the common people. While today the picture is completely different where even rag picker here in India can possibly afford a mobile phone.

    And speaking of dependence on oil imports, I believe that unlike the Petroleum industry, which has matured over a period of time, the Biofuels industry is still evolving.

    @SAM — This is a common false analogy, invoked by investors hoping to profit from government handouts: that the biofuels industry is immature, and with scaling its unit costs will drop dramatically. Despite even the Energy Information Administration characterizing the current ethanol industry as technologically mature, the myth persists. The biodiesel industry is based on a transesterfication process that is essentially kitchen chemistry, and has not changed markedly over the last decade.

    Mobile telephones are precisely the example that shows why big reductions in unit production costs for ethanol and biodiesel are unlikely over the long term, and that the more sober forecast is that their costs will rise in the future.

    In the case of mobile telephones, the cost of materials in the phone itself are a fraction of the total cost. New generations of telephones command a high price because the market will bear it, and the pricing strategy of producers is to recover R&D costs in the first months that the product goes on sale. Once a plant is set up to assemble a particular model, the marginal unit costs of producing a phone are small.

    By contrast, over 50% of the cost of manufacturing biofuels is the cost of raw materials — the starch, sugar-containing or oil-containing plant itself, and the cost of the energy used to transform the starch, sugar or oil into a fuel. In the case of biodiesel, the opportunity cost (i.e., the market value) of the feedstock vegetable oil itself is often as high as 80% of the selling price of the fuel. Especially with growing worldwide demand for food, and competition for (often depleting) water resources, prospects for a change that will result in significantly cheaper feedstocks for biofuels are slim.

    I understand that there is great hope for 2nd-generation “drop-in” biofuels based on a theoretically abundant supply of waste biomass or even algae grown in a way that does not compete for land or water with the growing of food. But that vision remains unproven.

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  135. By sameer-kulkarni on January 11, 2011 at 11:46 am

    Ronald Steenblik said:

    Mobile telephones are precisely the example that shows why big reductions in unit production costs for ethanol and biodiesel are unlikely over the long term, and that the more sober forecast is that their costs will rise in the future.

    In the case of mobile telephones, the cost of materials in the phone itself are a fraction of the total cost. New generations of telephones command a high price because the market will bear it, and the pricing strategy of producers is to recover R&D costs in the first months that the product goes on sale. Once a plant is set up to assemble a particular model, the marginal unit costs of producing a phone are small.

    By contrast, over 50% of the cost of manufacturing biofuels is the cost of raw materials — the starch, sugar-containing or oil-containing plant itself, and the cost of the energy used to transform the starch, sugar or oil into a fuel. In the case of biodiesel, the opportunity cost (i.e., the market value) of the feedstock vegetable oil itself is often as high as 80% of the selling price of the fuel. Especially with growing worldwide demand for food, and competition for (often depleting) water resources, prospects for a change that will result in significantly cheaper feedstocks for biofuels are slim.

    I understand that there is great hope for 2nd-generation “drop-in” biofuels based on a theoretically abundant supply of waste biomass or even algae grown in a way that does not compete for land or water with the growing of food. But that vision remains unproven.


     

    Hi Ronald,

    I agree with you as once the manufacturing facility is set up, it keeps going on for many years. As in mobile phones the design/utility of handsets differs with time, but the production facility essentially remains the same with some timely up-gradation to incorporate mfg lines for new variants. Coming back to ethanol, say if we construct an ethanol plant based on corn, it could be tailored to process lignocelluloses when that technology becomes viable. I suppose that it will materialize any time soon within next 5 years (http://www.inbicon.com/Biomass…..inery.aspx).

    If we already have a corn ethanol plant running today, the lead time to retrofit it to ferment lignocelluloses (corn stover) will be far lower than that for constructing a new one from scratch because both the processes are quite similar in many respects. So once the R&D costs for developing & retrofitting the lignoocellulosic ethanol have been recovered, the plant shall keep churning out cheap ethanol from cheap feedstocks. This is being accomplished for other prospective biofuels as well (http://www.gevo.com/pr-gevo-an…..utanol.php). Btw I am more of a speculator than a soothsayer. 

     

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  136. By ronald-steenblik on January 11, 2011 at 12:28 pm

    SAM wrote:

    Coming back to ethanol, say if we construct an ethanol plant based on corn, it could be tailored to process lignocelluloses when that technology becomes viable. I suppose that it will materialize any time soon within next 5 years (http://www.inbicon.com/Biomass…..inery.aspx). If we already have a corn ethanol plant running today, the lead time to retrofit it to ferment lignocelluloses (corn stover) will be far lower than that for constructing a new one from scratch because both the processes are quite similar in many respects. So once the R&D costs for developing & retrofitting the lignoocellulosic ethanol have been recovered, the plant shall keep churning out cheap ethanol from cheap feedstocks. 

    Hi Sam,

    It is not just a question of having (or extending) the production capacity. The manufacturing cost of producing ligno-cellulosic ethanol (harvesting the material, breaking it down into sugars, fermenting it, distilling it) is still much larger as a percentage of its final sales value than would be the case for an established-technology cellular telephone.

    As for corn stover, the amount that can be harvested sustainably (ensuring adequate soil carbon, and protection against erosion) is probably less than 25% of that produced. That which could be harvested economically is probably less than that. And there are economies of scale in producing ethanol from ligno-cellulosic biomass. That limits the number of existing corn-ethanol plants that are likely ever to have a ligno-cellulosic ethanol unit bolted onto an existing plant.

    So permit me to doubt that we will ever see a large amount of stover harvested and converted to ethanol — large “produce it at any cost” subsidies notwithstanding.

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  137. By sameer-kulkarni on January 11, 2011 at 12:56 pm

    Ronald Steenblik said:

     The manufacturing cost of producing ligno-cellulosic ethanol (harvesting the material, breaking it down into sugars, fermenting it, distilling it) is still much larger as a percentage of its final sales value than would be the case for an established-technology cellular telephone.

     


     

    The success of a Cellulosic Ethanol process depends upon high EROEI which in turn depends upon the percentage of solids in the fermentation mash. So higher the solids, higher the sugars & correspondingly higher titers of ethanol. So the energy incurred in distillation comes down significantly. The result is that you have surplus steam available for supplying power to the grid. This surplus power could be traded for harvesting the material i.e compensating it for Nat Gas utilized in production of fertilizers.

    Now Inbicon guys have claimed to improve their pretreatement by fermenting high percentages of Dry matter (30 -40% against 12-15% in conventional cellulosic facilities) in their mash, the corresponding titers are higher. However there is still room for improvement as these things are just getting started

     

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  138. By rrapier on January 11, 2011 at 1:10 pm

    SAM said:

    Ronald Steenblik said:

     The manufacturing cost of producing ligno-cellulosic ethanol (harvesting the material, breaking it down into sugars, fermenting it, distilling it) is still much larger as a percentage of its final sales value than would be the case for an established-technology cellular telephone.

     


     

    The success of a Cellulosic Ethanol process depends upon high EROEI which in turn depends upon the percentage of solids in the fermentation mash. So higher the solids, higher the sugars & correspondingly higher titers of ethanol.


     

    Hi SAM,

    There is another side to that, though, and it is that higher solids make it more difficult to pump and agitate the mixture. This is something that cellulosic companies struggle with. Further, in any case due to the toxicity of the by-products, the titers are generally in the 4% range, which makes then uneconomic to recover.

    RR

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  139. By sameer-kulkarni on January 11, 2011 at 1:22 pm

    Robert Rapier said:

     

    Hi SAM,

    There is another side to that, though, and it is that higher solids make it more difficult to pump and agitate the mixture. This is something that cellulosic companies struggle with. Further, in any case due to the toxicity of the by-products, the titers are generally in the 4% range, which makes then uneconomic to recover.

    RR


     

    Hi Robert, 

     

    “Because Inbicon’s pre-treatment yields a much higher concentration of sugar in the liquid going to fermentation, the resulting “beer” or alcohol concentration is at least double (30-40% dry matter) the normal percentage expected in cellulosic ethanol processing. So each batch has a lot less water and a lot more ethanol, further increasing yield and efficiency. This, of course, will translate to a lower-cost renewable fuel for the consumer.”

    ..Is what is claimed by Inbicon o their website. So for an average 35% DM mash the ethanol titers would be:

    350 g/l solids X 0.6 g/g theoritical Glucose yield X 0.5 theoritical ethanol yield = 105 g/l or 10.5%. In corn ethanol we get around 18% average. 

     

    In conventional cellulosic process the solids concentration are aound 12-15% DM, so the ethanol titers are: 

    140 g/l solids X 0.6 g/g theoritical Glucose yield X 0.5 theoritical ethanol yield = 42 g/l or 4.2%.

     

    So the concentration of Solids in the mash is the key that unlocks the potential of a viable cellulosic ethanol facility.

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  140. By sameer-kulkarni on January 12, 2011 at 11:50 am

    Robert Rapier said:

              Hi SAM,

    There is another side to that, though, and it is that higher solids make it more difficult to pump and agitate the mixture. This is something that cellulosic companies struggle with. Further, in any case due to the toxicity of the by-products, the titers are generally in the 4% range, which makes then uneconomic to recover.

    RR


     

    I guess I overlooked the toxicity aspect of pretreatment in your reply. Sadly I haven’t studied their patent yet, so cannot comment on their detoxification stategy.

     

    Secondly I hurried off with the conversion calculation & given below is a more explicit one. Regret the miscalculation. Embarassed

     

    35% DM Stover: 350 g/l solids X {(0.45 g/g theoretical Hexoses yield X 0.5 theoretical ethanol yield) + (0.29 g/g theoretical Pentoses yield X 0.5 theoretical ethanol yield)} = 130 g/l or 13% Max.

     

     

    14% DM Stover: 140 g/l solids X {(0.45 g/g theoretical Hexoses yield X 0.5 theoretical ethanol yield) + (0.29 g/g theoretical Pentoses yield X 0.5 theoretical ethanol yield)} = 52 g/l or 5.2% Max. 

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