Regular readers know I am no fan of ethanol — over-subsidized gasoline substitute that has helped to drive food inflation aggressively higher (and, it gunks up my engines!)
With the price of Oil down $18 over the past week — off 12% from the $147 high — perhaps its time to pull out the BioFuels/Ethanol DeathWatch Map.
Its a terrific Google Maps Mashup (via GigaOm) that shows the various biofuel plants that are having "hiccups."
click for more info
The author notes that this is a "a work in progress" You can add new notices or extra information in the comments.
>
Previously:
The Costanza Energy Policy: 25 Ways to Drive Oil to $150 (May 29, 2008)
http://bigpicture.typepad.com/comments/2008/05/how-to-drive-oi.html
Source:
Maps: Biofuels Deathwatch
Craig Rubens
Earth2Tech, January 9th, 2008 at 12:00 am
http://earth2tech.com/2008/01/09/earth2tech-maps-biofuels-deathwatch/
Excellent!
I look forward to the day when these dark satanic mills go up in flames, to liberate our food supply.
Smash the ethanol bandits!
Relief at last !!
Those poor folks in the SW US and Mexico can again afford their tortillas.
;)
–Ken
Ethanol is a fuel, pure and simple. While it may raise food prices (in the short term), it lowers gasoline prices, because the two fuels are near-substitute goods. And corn (if that is the feedstock at issue) is hardly a difficult crop to grow; if you want more, it will be there, for there is no shortage of acreage.
So it’s not so clear that the consumer, on average, has less money in his or her pocket, even given the supposed evil of subsidization (meaning tax policy?).
Good riddance to this policy. There are better ways of reducing pollution and turning corn into ethanol was energy and water intensive, so this never made sense except to the producers.
Demand destruction contining to eat away at oil prices. (Where are the $200 calls now???) This stock rally will have legs as long as oil continues to head south. Then we will probably see rotation back from financials into energy again.
BR – any idea where the floor is going to be in oil from a TA perspective? $100 or higher? That number when we get there might be a limiting factor for the bear market rally, another being resistance at XLF 25, SPX 1300.
Why does everybody assume we have to decide on a single source of fuel for energy? A little bit of ethanol is a good thing, if only for the US jobs it creates, but it’s not a replacement. Only ethanol is a bad thing.
We need more wind, solar, nuclear, coal, oil, thermal, bio-fuel, hydrogen, etc…
btw, love your site.
Amazing that one of the few products that we can export for foreign exchange is instead burned on the highway.
Don, I would strongly disagree with your statement that gasoline and ethanol are near substitutes, and that ethanol has reduced gasoline prices.
An E-10 mix of ethanol in the Northeast does not provide the same mileage in a typical car or truck as 10 gallons of straight gasoline. As Barry mentioned, it gums things up both when a transition to ethanol is made as well as afterwards, when problems with water separation come to play.
With E-10, a typical car is probably going as many miles as it would on 9.5 gallons of normal gasoline and that is probably generous.
If you are a boat owner and can only buy E-10, the costs of this can go sky-high. Small engines are killed when they are filled with gas from a small can sitting for over a month with E-10 in it. E-10 is a nightmare that needs to end.
this is a textbook example of malinvestment.
we should understand how this came about.
It does not ‘gum up your engine’. Flat period… it does not. An engine burning an ethanol blend will be cleaner than one burning straight petroleum. It has been used in some states for decades now – show me the statistical proof of problems. It also removes water from the gas tank (people uesd to actually pay extra $$$ for cans of ‘Heet’).
As for driving up the price of corn – that’s a tougher question. Speculation certainly did drive it up, particularly uninformed speculation such as that the early summer floods would drastically reduce the crop. At least that higher corn price stays totally inside the US.
~~~
BR: That not what Evinrude Motors says:
“Many Boat Owners, in recent years, have unknowingly used gas, blended with too high (unsafe) levels of ethanol alcohol. Running on gas with over 10 % alcohol in a marine engine will cause performance problems, and can also cause permanent damage to your marine motor.
Understanding the dangers and effects of alcohol gas, in addition to following all the necessary marine fuel system precautions, is now necessary to avoid any problems with E10 gasoline.
There has been much controversy, misinformation and confusion since the recent (2006) increased distribution of ethanol gasoline in the United States.”
http://www.evinrude-parts.com/boat_ethanol_danger_precaution.html
Mike in NOLa, all the points you make are valid. Here is why I say “near substitute”:
1. Both fuels (gas and ethanol) are liquids that can be burned in spark ignition internal combustion engines.
2. Their BTU heat content on a per volume basis, while plainly not the same, are not wildly different.
I am also a boat owner, and know some of the problems with E-10 (especially on fuel lines and certain gas tanks as well). But from an engineering standpoint, they are not that big. They are painful when using equipment not designed for E-10 (or in the future, up to E-90), but the newer products are better.
The really nice thing about ethanol is it can be made from just about any fruit or grain (it is chemically the same stuff as moonshine). In addition, technologies are now being developed to turn cellulose into ethanol as well (that’s the plant stalks, tree bark, sawmill dust, corn husks and so on, that is not anybody’s food unless you are a termite).
So I hate to see a fuel with such a long history, and maybe a great future, be buried by the usual “it can’t be done” crowd.
I don’t understand the “ethanol creates food inflation” theory. U.S. corn goes 60% livestock feed, 30% ethanol, 5% starch (used in plastics) and 5% sweeteners (the evil High Fructose Corn Syrup in Coke, etc.) No one eats #2 Field Corn except livestock, the producers which do not set their prices. Corn does not compete with other food crops such as vegetables (i.e California, growers which have had their water supplies cut 30% to divert to cities, mostly for lawns) or rice (try finding a rice field in the corn belt). I have no idea if ethanol is feasible or not, but ethanol does not create food inflation any more than the prohibiting of short stock sales will save financial companies from their own poor business decisions.
~~~
BR: By livestock, do you mean cattle and chicken . . . ?
Hey Don,
What are the exact costs to grow corn? Ask a farmer about filling the tank on the tractor and buying seed and fertilizer and all the other stuff needed to grow corn and see if Ethanol still makes sense as engine fuel. Corn takes a heavy toil on the soil too in terms of nutrients, but we Americans don’t worry too much about that, yet…
I recall Gates (as in Bill) taking a pretty good bath on one of these…but he has plenty so it’s all relative.
Leave it to our gov’t to actively push a food source as a fuel source. Worked out pretty good for the Comm. traders and a few I-banks though.
You can have demand destruction with oil but when it is a food stuff…..well….people can die.
Ciao
MS
Whenever my wife and I use gas with ethanol, it definitely affects the performance of our Subaru Outback. The “Check Engine” light often comes on and our “cruise control” light blinks on and off incessantly until we pour fuel injector cleaner in there followed by gas without ethanol. Coincidence? I think not.
lurker, there are a lot of variables in your question. But if it takes about $3 to grow one bushel of corn, and the ethanol plant can make about 2.5 gallons of ethanol per bushel(these numbers are not that far off, I think), you can see the cost is about $1.20 per gallon of ethanol.
I frequently leave my car sit for several days without running and can tell you that the thing has quite a bit of trouble with ethanol breakdown – every sign is the same as water in the tank.
Also, I attended a talk by the CEO of Briggs and Stratton and without going too far on the tangent, mentioned that ethanol is a problem with their small engines; one that has significant impact on engine performance and life.
Nothing like running highly solvent and unstable/degradable “biofuels” made from usable food stocks through our engines instead of biofuels in the form of petroleum.
Lurker, University of Illinois budget for 2009 has cost of production to produce 200 bushels per acre of corn, excluding land, at $500 per acre.
thanks Don and Russell. excluding the land is a long-term mistake but I would still argue, probably incorrectly I guess, that is makes no economic sense to grow food for fuel. Should be growing and eating soybeans instead. I like tofu a lot. anyway, thanks for being civil with me and for posting thoughtful responses. best.
http://www.runet.edu/~wkovarik/papers/fuel.html
Did you know that one of the biggest booster of alcohol fuel in the U.S. was Henry Ford? The fact that petroleum producers got a distribution system in place early is the reason we mostly use gasoline today rather than alcohol.
Good post. Arkansas produces about half the rice in the USA. Lots of soybeans too. But many of those farmers are switching over to corn due to the high price. That’s the free market responding. More supply will help bring down corn, but wheat, rice and soybeans likely go up. Remember the rice shortages earlier this year? But why is the cost of corn going up so much? Because of stupid policy.
http://www.msnbc.msn.com/id/19502744/
Ethanol’s deal-killing drawback is that its EROEI (Energy Return on Energy Invested) is basically flat. It takes about as much petroleum-based energy to plow the corn fields, produce and apply the fertilizer, harvest the corn, truck it to the ethanol plant, distill and pump the mash, and dispose of the waste stream, as one obtains in ethanol energy on the output end.
Energy-wise, the ethanol industry resembles an “Ozark do-nothing” — a linkage toy where you crank the handle round and round … and nothing happens.
Without government subsidies bought with campaign contribution bribes, the ethanol industry would not exist. As such, the entire industry represents a monumental malinvestment. Add it to other boneheaded malinvestments — too much housing, too much retail space, too large a military sector — and one day you wake up and say, damn, when did we become a banana republic?
I saw a segment on CNBC and checked with the ethanol plant 20 miles from here.
Locally they take corn, squeeze out 10% into liquid ethanol. The sludge or dry pulp is still a feed stock of which 40% of the remaining 90% is shipped as feed stock. I’m sure they are attempting to improve that.
The increase in food prices comes from a larger market for grains, yes. The ethanol factories are struggling with that too.
But just think … how does the corn get planted? Petro. How does the corn get picked? Petro. How does the feed get to the chicken farm? Petro. How do the chickens get to Tyson? Petro. How do the the packaged chickens get to the grocery store? Petro. How do the employees get to the store to stock the shelves? Petro.
As far as water usage, our local plant had a hearing on that. Studies came out that rainfall and the ground soak water table this rural plant sits over, has plenty to spare.
Also it sits next to a river. In a more perfect world we would print enough money to install a river filtration system so in dryer times the corn in the fields would not be starved, and the fish would get abit cleaner living enviroment too.
I have trouble understanding why we can’t print enough money to handle every task. Oh ya, thats right, wasteful human desires.
“I don’t understand the “ethanol creates food inflation” theory.”
A theory? Not quite as per this entry in Naked Capitalism blog.
“Biofuels have forced global food prices up by 75% – far more than previously estimated – according to a confidential World Bank report obtained by the Guardian.
The damning unpublished assessment is based on the most detailed analysis of the crisis so far, carried out by an internationally-respected economist at global financial body.
The figure emphatically contradicts the US government’s claims that plant-derived fuels contribute less than 3% to food-price rises.”
There is nothing theoretical in a 75% increase, unless you’re paying your bills with theoretical dollars.
and
I’m not doing that crappy job.
Wolf pack institution.
Talk about unintended consequences – catfish farms in the south shutting down due to high corn prices. Another TeamBush Ready, Fire, Aim… gift to the world.
http://www.nytimes.com/2008/07/18/business/18catfish.html?em&ex=1216526400&en=7976ef1118d3d547&ei=5087
Talk about unintended consequences – catfish farms in the south shutting down due to high corn prices. Another TeamBush Ready, Fire, Aim… gift to the world.
http://www.nytimes.com/2008/07/18/business/18catfish.html?em&ex=1216526400&en=7976ef1118d3d547&ei=5087
Why nobody is outraged with the subsidies the big oil receives? The are larger by orders of magnitude than any existing ethanol subsidies – both direct (tax breaks, land use rent waivers), and indirect (US military presense).
we get a little too stupid when we focus on Corn. Bio-fuels, as discussed in the World Bank studies, is not defined, solely, by Corn. If we think about Palm Oil, for instance:
http://www.fedepalma.org/oil_palm.htm
it’d help out understanding there are others
Robert, I am suspicious of the correctness of the statement that ethanol’s “EROEI (Energy Return on Energy Invested) is basically flat.” A similar argument was leveled against nuclear power in the 1970’s, as (a small) part of an ultimately successful effort to turn the US away from that energy source at that time. Now it’s surfaced again, but being applied against an energy source that can hardly be more different. Curious.
And even if it is true (which I doubt), it is not relevant. There are a variety of inputs to produce a product, and energy is just one of them. The benefit of any product cannot just be measured by its energy content, even if it is a fuel. I can absolutely guarantee you that the EROEI of electricity in your house is lower than 1; in fact, its about 30%. Yet people still buy it.
And Greg0658, please do not take as gospel the statements supposedly from a “World Bank” report. Seriously, are your food prices up by 75%? There is a fair amount of agenda-driven information being distributed; please be cautious in believing all of it, even it it is sourced from what seems to be a reputable institution.
Don, I’m sorry but there is a shortage of acreage, and it is a shameful waste of good farmland to be growing corn for fuel. The imbalance in land use caused by any significant shift to ethanol derived from corn is a net loss in the end. Cellulosic fuels do improve the equation but right now ethanol is ultimately a loser.
>. The benefit of any product cannot just be measured by its energy content, even if it is a fuel.
Really? Well, then. You bring me a gallon and a half of gasoline and I’ll give you two gallons of ethanol. This is precisely what the agri-ethanol industry is doing on the American tax-payers dime, every day, so it must make sense, right? You want to make that trade too, I’ll happily take you up on it. You, of course, are free to continue to ignore the fact that ethanol has only 55% of the energy of gasoline, because a gallon is a gallon, right?
That the ethanol industry gets to make 25% of our feed crop simply disappear into thin air is just an added bonus.
Barry, you are usually one who thinks outside the box and you are usually ahead of the curve on most issues. I’m not going to let you off easy on this one. You sound like a stodgy old fart when talking on this subject. You sound like Kudlow on this subject so we are going to have to step in to try and save you. This GenX-er is going to try and argue for some more complexity in this debate.
And to really make my point, let’s not rest our hopes on Cellulose based Ethanol, and assume for simplicity that it is never going to happen. Let’s just debate on the sugar to alcohol process we currently have.
We are just in the early phases of including ethanol into our economy … a wonderful opportunity made possible during this most recent spike in energy costs.
The process of adaptation takes time, and there are bumps in the road. As engineers in Detroit work out the “duh” problems of supporting flex fuel systems (usually by identifying a simple problem, like the liner material in fuel line or filters, etc) … these kinks are trivial to overcome. Sadly, Detroit (or North American Engine Manufacturers) are slow adapters and have a knack for being rigid, stupid, and believe themselves entitled to market share which seems to constantly erode.
Note Brazil and their non-problems with ethanol use in their 9-5 commute to work. Also note their non-deprecating currency. Also note that they are not using corn.
Ethanol is not causing the price of corn to spike. The market place, full of regrettable distortions (subsidies for both ethanol and oil) also happens to be full of rational actors who are risk averse.
Because farmers are risk averse and rational actors, they grow a FAMILIAR crop, and are hedged because they are able to sell it for food or fuel use. Corn is not an ideal ethanol feedstock. There are zillion other crops which can be grown which yield more.
Note the gallons per acre yield for other crops:
http://www.swivel.com/graphs/show/5090130
Also, engine manufacturers, like Evinrude and Briggs and Strat are also (lazy) rational actors. Why deal with the complexity (warranty and customer support) when they can just sit on their asses like they always have and say “don’t use that demon fuel E85”. By doing so, they are ONCE AGAIN leaving room for Honda to come in, innovate with a few tweaks, and erode their market share. Take a trip down memory lane on who capitalized and blazed the trail on 4 stroke outboards (which do not kick out 15% of their fuel into the ocean like 2 stroke engines do?) You will see a familiar cast of characters.
Corn for Fuel = Starving People is a gross oversimplification of the system dynamics. It is also a highly convenient argument for the energy companies.
E85 may not be a panacea, but it certainly is part of energy diversification and energy independence.
Watching the free market work will be an enjoyable process on this one. When oil drops back down and the mania subsides for a while, some of these ethanol plants will be able to be purchased from bankrupt producers and pennies on the dollar. I wonder who will be buying low here? Because oil is going to continue to trend up this will be a great opportunity.
As farmers figure out that corn is an energy intensive crop to grow (fertilizer, and poor sugar or starch yield per acre) and grow more appropriate crops, this issue will fade because it is not based in reality. The food is not disappearing from bellies around the world. Quite the opposite.
As Greg0658 points out … with corn (or any other crop) the sugar/starch is utilized during the ethanol production process. The byproduct mash is the remaining protein (!!!) and other goodies which are dried and used as feed for livestock. A pretty cool process if you think about it.
So we get vegetarian fed cattle, energy diversification, and we still get to eat steak! That is a pretty sweet deal.
The glass way more than half full with this whole “ethanol thing”.
Barry, you are usually one who thinks outside the box and you are usually ahead of the curve on most issues. I’m not going to let you off easy on this one. You sound like a stodgy old fart when talking on this subject. You sound like Kudlow on this subject so we are going to have to step in to try and save you. This GenX-er is going to try and argue for some more complexity in this debate.
And to really make my point, let’s not rest our hopes on Cellulose based Ethanol, and assume for simplicity that it is never going to happen. Let’s just debate on the sugar to alcohol process we currently have.
We are just in the early phases of including ethanol into our economy … a wonderful opportunity made possible during this most recent spike in energy costs.
The process of adaptation takes time, and there are bumps in the road. As engineers in Detroit work out the “duh” problems of supporting flex fuel systems (usually by identifying a simple problem, like the liner material in fuel line or filters, etc) … these kinks are trivial to overcome. Sadly, Detroit (or North American Engine Manufacturers) are slow adapters and have a knack for being rigid, stupid, and believe themselves entitled to market share which seems to constantly erode.
Note Brazil and their non-problems with ethanol use in their 9-5 commute to work. Also note their non-deprecating currency. Also note that they are not using corn.
Ethanol is not causing the price of corn to spike. The market place, full of regrettable distortions (subsidies for both ethanol and oil) also happens to be full of rational actors who are risk averse.
Because farmers are risk averse and rational actors, they grow a FAMILIAR crop, and are hedged because they are able to sell it for food or fuel use. Corn is not an ideal ethanol feedstock. There are zillion other crops which can be grown which yield more.
Note the gallons per acre yield for other crops:
http://www.swivel.com/graphs/show/5090130
Also, engine manufacturers, like Evinrude and Briggs and Strat are also (lazy) rational actors. Why deal with the complexity (warranty and customer support) when they can just sit on their asses like they always have and say “don’t use that demon fuel E85”. By doing so, they are ONCE AGAIN leaving room for Honda to come in, innovate with a few tweaks, and erode their market share. Take a trip down memory lane on who capitalized and blazed the trail on 4 stroke outboards (which do not kick out 15% of their fuel into the ocean like 2 stroke engines do?) You will see a familiar cast of characters.
Corn for Fuel = Starving People is a gross oversimplification of the system dynamics. It is also a highly convenient argument for the energy companies.
E85 may not be a panacea, but it certainly is part of energy diversification and energy independence.
Watching the free market work will be an enjoyable process on this one. When oil drops back down and the mania subsides for a while, some of these ethanol plants will be able to be purchased from bankrupt producers and pennies on the dollar. I wonder who will be buying low here? Because oil is going to continue to trend up this will be a great opportunity.
As farmers figure out that corn is an energy intensive crop to grow (fertilizer, and poor sugar or starch yield per acre) and grow more appropriate crops, this issue will fade because it is not based in reality. The food is not disappearing from bellies around the world. Quite the opposite.
As Greg0658 points out … with corn (or any other crop) the sugar/starch is utilized during the ethanol production process. The byproduct mash is the remaining protein (!!!) and other goodies which are dried and used as feed for livestock. A pretty cool process if you think about it.
So we get vegetarian fed cattle, energy diversification, and we still get to eat steak! That is a pretty sweet deal.
The glass way more than half full with this whole “ethanol thing”.
Sorry about the double post above. Typepad needs java script which was disabled. It issued an error and I then resubmitted after re-enabling java script. My bad.
Ethanol can only survive with massive pork barrel government subsides. If it was such a great energy source wall street would have ridden the gravy train long long ago….
Oh, me bad, guess free market capitalism is only a convenience to some…
BP Source
Ethanol Is a Fuel That Doesn’t Work
What if ethanol plants could break down the corn kernel into different parts and make ethanol from the starch portion and food from the protein portion of the corn kernel? Good Idea? Well it’s already happening! There are several plants that will be implementing this new technology with the next year.
If ethanol plants can make food AND fuel, then what will some of you give the industry a little more respect?
We have to rememeber that this is a progressing industry and will be improving every year and becoming more efficient.
An ethanol advocacy group showed that some cars get better mileage on E20 and E30 blends that pure gasoline. Those studies need to be replicated.
The big problem with ethanol and engines is its corrosive effect on gasoline lines, so it would not surprise me to see problems with older and smaller engines.
However, the really dumb part with ethanol is not that its not economic in the U.S. with corn; it is that it is no contest when compared to sugar cane.
Maple Inc., a company based in Dallas, is growing cane in the Peruvian desert. They bought land no one wanted and are getting cane yields double of what Brazil gets, and Brazil is producing ethanol at 80 cents a gallon. In contrast, U.S. ethanol even with corn at half the price of what it is now cost $1 a gallon to produce. And now the cost is a minimum of $2. With double the yield of Brazil, Peru could theoretically start producing ethanol at 40 cents a gallon, but it gets better.
Brazilian researchers have found a way to extract ethanol from the cane stalk resulting in 50% higher ethanol yields. Also, in Japan, researchers have developed a breed of sugar cane dubbed monster cane that yields 3X more sugar than conventional cane. If these technologies get employed, ethanol production costs could easily be cut in half. Who gives a rat’s ass about peak oil when you could produce a fuel that costs 20 to 40 cents a gallon? This, not offshore drilling, is the answer to our energy problems.
I wish Cargill and ADM et. al would have spent less time on ethanol politics and more on developing and getting us cheap cane ethanol. The highest yielding producers of sugar cane per acre in the world are not in Brazil. They are in Colombia, Guatemala, and Peru.
In summary, corn ethanol is not a bad product as much as an economically illogical one. I can justify corn ethanol compared to gasoline, but there is no economic justification for it over cane ethanol. Corn ethanol is a purely political product.
So we get vegetarian fed cattle, energy diversification, and we still get to eat steak! That is a pretty sweet deal.
The glass way more than half full with this whole “ethanol thing”.
Posted by: rebound | Jul 18, 2008 6:26:04 PM
rebound, that’s great if one discounts the fact that Corn-based feeds kill Cattle.
those Ruminants were meant to ferment grasses, not the sugar-rich kernels. the acid build-up, in the stomach, from the Corn-feed actually blows them out..to say nothing of the other ‘Feed’ additives widely used, and the, overall, quality of the resultant Beef.
You can add on your map the new plant in Aberdeen WA that was built to make biodiesel from soy and vegetable oils that is in limbo because of the high cost of raw material.
We could be importing sugar cane ethanol from Brazil except for the fifty cent/gal duty that has no other purpose other than to buy votes from corn farmers, and make others rich from building these new factories that may eventually go bankrupt and cost the overnment even more?
Wouldn’t these subsidies have been better spent on new solar thermal plants in the southwest deserts?
Bob A – I gotta mention that high voltage electrical lines disipate energy to the sky
the longer the run before using up the current, the more waste … transformed higher voltage helps but doesn’t elimiate the waste
this: “not the sugar-rich kernels”
it’s, literally, the Protein loading, via Corn, that is blowing out these Ruminants.
http://arbl.cvmbs.colostate.edu/hbooks/pathphys/digestion/herbivores/rumen_anat.html
as well, Corn was Feed b/c it was dirt cheap, First, not b/c it was the best Feed.
http://grainandfeedmarkets.com/
And, if Corn is winning any Feed Contests, note the Sponsors..