Can The Ethanol Market Stand On Its Own Two Feet?
from the etha-what? dept
Soaring energy prices have created an ideal climate for alternative energy investment, as evidenced by the boom in that space. You'd think, then, that with the market doing a good job of sorting things out, there'd be little need for the government to intervene. But while entrepreneurs and VCs are seeking to build sustainable, profit-making businesses, the ethanol industry has sought to profit from the largesse of the US taxpayer. The industry has been helped by direct subsidies as well as indirect ones, such as laws that impose added costs on its rivals. While many people champion higher CAFE standards in order to protect the environment, the ethanol lobby has been a particularly big booster of them, because of a 1988 law carved out an exception for vehicles that could run on ethanol. Meanwhile, this favorable treatment towards the industry causes problems in other pockets of the economy. Increasingly, companies have to be concerned with "agflation", the soaring price of agricultural commodities due to the heightened demand for corn (which, as you learned in econ 101, increases prices for corn substitutes, like rice and wheat). If ethanol is going to be a meaningful energy source in the future, it needs to stand on its own in the market. Otherwise, the existing setup appears to be just more counterproductive agriculture subsidies, cynically concocted in the name of national security and the environment.Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.
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Greedy.
This is some what off subject, but there are a lot of consumers out there that don't know very much, and will always be exploited.. They see something in a commercial, and realize for some reason they need it. Maybe it was advertized as classy, or smart, or the new trend of some sort.. Society is becoming less sophisticated all the time making it possible to exploit others. We percieve everything entirely wrong these days.. It's like the new iphone idiot consumers are going to buy one, anduse it for only a few things. But they will never use it to it's full potential because they just bought it to impress their friends. So what if it could make traveling easy by looking up directions, or maybe a network admin could use it similar to a pocket pc to check the server uptime. People in socitey take one look at the commercial, say wow that's neat, buy one, then never realize how amazing it really is. And that's just my opinion on corporations. I'm all for making a profit.. But not for the exploitation of a lesser sophisticated society. And yes.. there are the good people out there that do good deeds, and the corporations that do not exploit. Go honesty!
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Re: Greedy.
Soon? WT1999
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Re: Re: Greedy.
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Ethanol
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Re: Ethanol
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Re: Re: Ethanol
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Re: Re: Ethanol
But I don't think that's necessarily a deal breaker. It's more a matter of who you want to support -- oil companies or ethanol companies, and perhaps how concerned you are about the environment, given that ethanol burns much cleaner than gasoline.
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Re: Re: Re: Ethanol
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Re: Ethanol
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Ethanol is crap
Tell your friends to support hybrid high-temperature nuclear power plants/hydrogen production plants.
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This is some of the best discussion there has been
thanks team
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Substitutions creating substitutions
It's funny to see the price of flour go up, because the price of corn went up, because the price of oil went up. Considering that there aren't a lot of direct substitutions in oil, it's almost surprising to see so much demand for a product create so many problems for other industries. I still don't understand why hydrogen hasn't been a viable solution, but that seems like the right way to go for me. Either way though, I hate to see the subsidies, taxpayers just end up paying it when they go to the grocery stores instead.
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Re: Substitutions creating substitutions
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Re: Substitutions creating substitutions
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Re: Re: Substitutions creating substitutions
How does nuclear fission harness hydrogen for power? It doesn't. It's the other way around, and only in a large scale nuclear/hydrogen production plant.
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Hear, Hear!
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Ethanol
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Alternate fuels and alternative vehicles
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The final straw for Ethanol
In Mexico, they have started to push (ag talk for pulling trees or crops out of the ground) Agave plants in order to plant corn. They are doing this because corn is going for such a high price right now. Less agave = higher fuel price.
Another issue regarding Ethanol, is that we don't fully understand the toxins release by it. It is like MTBE, the greens had to have that in the fuel, they rush it to market and pass laws to force its use. Then they realize it is worse for the enviornment. Millions of dollars later they make laws forcing MTBE out. Ethanol already has some negative testing.
http://www.scienceblog.com/community/older/1997/A/199700109.html
Also, if Ethanol were to be main stream, every piece of open ground in America would have corn growing on it. What do you think is worse for the environment, a hole in the ground or displacing hundreds of thousands of acers of animal habitat to grow corn?
I did not even mention the old stand by, it takes more oil based fuel to plant, grow, harvest and refine Corn into ethanol that the fuel it would create gallon to gallon.
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there's better and worse bioethanol
It's also true that ethanol has only about 70% as much energy per gallon as unleaded gas. However, Butanol, a slightly longer chain alcahol, can also be made from biomass and has closer to 90% of the energy per gallon, and cars can run on it without having to be "flex fuel." The cost of butanol can soon be much lower than gasoline, without raising food costs.
I think a big challenge will be taking good new technology from "start up" to replacing gasoline. That requires a lot of production and distribution capacity. Some big oil companies, like BP, see that their oil reserves will eventually run out and are looking to make the transition to biofuels. Hopefully those types will help scale up biofuels quickly. We should also close the CAFE loophole for Flex Fuel vehicles, so we don't get Ford Excursions that are capable of running on biofuel, but really using standard petroleum and getting 13 miles per gallon.
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Heck, Milk's getting pretty pricey now too. I've been going non-dairy for coffee lately and starting to shy away from other products I see creeping up in price.
The best explanation I heard was this:
First - ask yourself - what would the 'perfect' fuel be?
* Answer's pretty simple - being able to make a fuel out of something that's already waste or not needed for anything else, is renewable, and in plentiful supply, eg: Garbage.
So - from that respect, Corn's horrible - as we use it for so much else right now. However; it's renewable and it's in plentiful supply - well, for now... :)
You know, I read a while back about a 'Fuel Vaporization' system for cars - wonder why it's not looked at more seriously --> http://www.rexresearch.com/ogle/1ogle.htm
US Patent# 4,177,779
Obviously - there must be *some* way of completely vaporizing gasoline and since the fumes are far more volatile than a 'spray', it would burn far cleaner and deliver more energy..
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Subsidies
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Re: Subsidies
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Efficiency
As for the 75 MPG minimum efficiency stated above...yeah right . The combustion engine is not a proprietary invention, if they could be that efficient, someone would have done it. No one, and I mean no one, has invented an engine capable of that efficiency short of all electric cars, and until this country understands that nuclear energy is not Satan's battery , that is a pipe dream.
People need to understand, wind power, solar, nuclear, ethanol, and other renewables all in combination is the only real route available. We can't put all of our eggs in one oil well ever again.
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Re: Efficiency
This expected tripling or quadrupling of gasolene consumption efficiency has the effect of doubling or tripling the world's oil supply used for transportation without spending a penny on exploration or extraction. We aren't going to run out of oil any time soon. Economics teaches us that as resource supply declines, increased efficiency and substitutes appear. The "Chicken Little's" of the past have repeatedly been proven wrong. There was a widespread panic about copper shortages, for example, some years ago, to the extent that smart people at the then AT&T went to poorer performance alloy wires. Now with the advent of cellular, microwave, fiber optics, we hear little or nothing about the "copper shortage" and copper prices in real terms are in the toilet.
Initial quick-fix technological reactions to perceived impending shortages have often been wrong, in retrospect. Just so with some of the approaches to oil. The tar sands development in Canada have made that country the leading emitter of Carbon pollution. Ethanol (in the US) is a scam which benefits mostly Archer Daniels Midland at the price of massive inflation and unemployment if the weather creates a shortfall in corn production. In contrast we are just getting started with increased auto efficiency and there the problem is public taste and entrenched obsolete production capacity in Detroit and not technology. Amory Lovins showed us how to produce comfortable 100 mpg cars well over 20 years ago; we are just getting started.
"We have met the enemy and they are us" to quote Pogo, not some "oil shortage".
By the way, reducing gasolene demand through increased auto efficiency is a far better and less costly national security strategy than any other. The Arab oil producers are the marginal producers of OPEC, and the Saudis and other countries with large reserves are the marginal producer of the marginal producers. Swings in oil demand are very leveraging on them. Buying a hybrid car will save the lives of untold numbers currently threatened by terrorists who are ultimately funded by oil money.
David Sternlight, Ph.D.
Los Angeles
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Re: Re: Efficiency
Really? With the oil rich nations lining up against the U.S. on an grand scale, you had better be worried about a shortage.
Your PH. D. means nothing to me when you can not even see reality. A shortage by any means is a shortage, and we didn't learn from the 70's. We are still petulant and self absorbed and OPEC can damn near crush us overnight. Until we move away from oil we are at their mercy.
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Who is responsible?
This happened once before when El Nino caused the anchovies off Peru, the primary source of fish meal cattle feed, to disappear. We had the above chain reaction resulting in massive inflation.
So let's "follow the money". Whining about the "ethanol lobby" is speaking in the third person invisible. The real culprit is the major force and beneficiary of ethanol lobbying, Archer Daniels Midland. Public contumely directed there would be more effective than against the "ethanol lobby" since the broad range of their products are much more susceptible to economic resistance than that of some semi-invisible lobby.
David Sternlight, Ph.D.
Los Angeles
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OPEC can ..crush us overnight
What actually happened (I studied the data extensively at the time) was that oil prices moved in response to the tightness or looseness of oil markets in Western Europe. The correlation was perfect. On several occasions we took pro-Israel steps and OPEC did nothing; in contrast, on several occasions we took no action with respect to Israel yet OPEC raised prices in response to high demand in Western Europe. There was zero correlation between US policy toward Israel and oil prices.
Another factor that affects oil prices is the extent of reserves. Saudi Arabia has big reserves and doesn't want high oil prices to kill their long-term market by stimulating conservation and efficiency. Iraq has much more limited reserves and wants high prices; they don't care if the long-term market is ruined because they won't have any oil to sell, relatively speaking, in the long term. By taking advantage of this insight, Prof. Dermot Gately of NYU built an oil price model that was able to forecast OPEC pricing decisions six months in advance.
Finally, we use domestic oil first, then nearby oil, only then if demand isn't satisfied do we use Arab oil (OPEC is not just the Arabs; the Arabs are OAPEC). Similarly in Europe; first they use oil from the North Sea and then from further away. It's pure economics, driven by transportation costs which vary with distance. Oil is fungible; the Arabs have tried to "tag" oil to enforce a boycott, but cannot. Once an international oil trader gets his hands on oil it can go anywhere. We could, for example, stop selling Alaskan Oil to Japan if OPEC tries to embargo us, and let the Japanese buy from the Arabs.
It is OPEC that lives in mortal fear of things like US energy conservation and efficiency increases. If we use less gasolene, the reduction comes entirely out of the Arabs hide; we're not going to reduce our use of Alaskan oil. Thus a small percentage drop in consumption here is a big percentage drop in imports from the marginal producers (the Arabs).
Every so often the Arab Oil producers become desperate aa demand weakens and prices fall. To save them, we bought a lot of oil and dumped it into the ground, calling it the "Strategic Petroleum Reserve".
Please stop making snide remarks about my Ph.D. I spent about 10 years as the Chief Economist of a major international oil company, and this is an area of my expertise.
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Not gonna happen.
The big 2.8 are throwing their weight behind this because they can be perceived as green without much effort.
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It's about the money
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