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Ethanol: What do you know, the marketplace works!

5.8K views 54 replies 36 participants last post by  CaptainDan  
#1 ·
Washington, DC –The U.S. Department of Agriculture (USDA) today confirmed what many in the ethanol and agricultural industries have long known – American corn farmers would respond to the price signals from the marketplace to produce more corn. The USDA’s annual report detailing farmers’ crop planting intentions estimates that corn acres will increase to more than 90.5 million, a jump of 15% over last year. Assuming corn yields stay on their historic upward trend, America’s farmers will produce a corn crop in excess of 13 billion bushels. Such a harvest would produce ample corn supplies to economically meet the needs of all the sectors that rely on it.
http://www.ethanolrfa.org/media/press/rfa/view.php?id=985

The price of corn goes up. Farmers plant more corn. Whoda thunk?

So much for Mexican tortilla futures.
 
#2 ·
Good news, but still, corn is not the only source for Ethanol (as you've pointed out with other articles Hoosier Ron). And the naysayers need to know what other sources are out there or they will continue to use Corn as the straw-man of choice for their anti-Ethanol pro-status quo arguments.
 
#5 ·
4wdaaron said:
Just because we plant it all doesn't mean we harvest it at 180 or 200 bu/ac. (or at all) Sure seems like we're due for a bad growing year sometime soon, it's been awhile
According to Al Gore REAL soon, I mean drought all the corn will be poping like Orvile Redebacher, but on the bright side all the water from the melting ice caps will put out the fire. I couldn't resist.
 
#8 ·
4wdaaron said:
Just because we plant it all doesn't mean we harvest it at 180 or 200 bu/ac. (or at all) Sure seems like we're due for a bad growing year sometime soon, it's been awhile
That was 2 years ago, Illinois had a very bad drought, about half of normal rainfall. But corn is grown over a large area, so other areas tend to pick up the slack.
 
#10 ·
Eastern Washington has a large number of hybrid poplar groves. These trees are genetically engineered to grow incredibly fast. and are so tightly packed you cannot see between them, each one 40-60 feet tall. A viable commercial harvest with 6-10 inch diameter trees can be made every five years. And the trees grow quite well, even on fairly marginal land.

All this from memory, so I might be a bit off on the details, but based on that, I would be very surprised if corn stays at the forefront of the ethanol race.
 
#11 · (Edited)
plane said:
Eastern Washington has a large number of hybrid poplar groves. These trees are genetically engineered to grow incredibly fast. and are so tightly packed you cannot see between them, each one 40-60 feet tall. A viable commercial harvest with 6-10 inch diameter trees can be made every five years. And the trees grow quite well, even on fairly marginal land.

All this from memory, so I might be a bit off on the details, but based on that, I would be very surprised if corn stays at the forefront of the ethanol race.
Purdue University did a study on Ethanol from Poplar Trees and the University of Tennessee did one with White Pine, both came to the similar conclusion that a significant amount of ethanol could be produced from this renewable source and most of it from what is now NOT farmland. In fact it makes land that is currently not being used into a very desirable real estate.

What I thought was interesting in the article HoosierRon quotes is that this is the first time since 1943 that American Farmers have planted this much corn. Correct me if I am wrong but don't you think that with what had to be a 100% increase in U.S. population with the Baby Boom and over 60 years of growth that American Farmers would have planted more many times since then? Either they are getting much better yields from the planted crop or this whole "everyone will starve" thing is just BS.

Also read where there is over 30 million acres available for crops, but is the "paid not to grow on" acres we have all heard about for years. If this available land and the land that is not classified as "Farmland" were used for Corn production leads me to believe we will have a major surplus of Corn before a shortage. Just hope the Farmers mortgaging their futures on Corn do not get burned, its time these guys got a break.
 
#13 ·
Sure, of course there is enough corn to meet the ecomonic demands as they exist today. Additionally, I'm sure there is plenty of corn production capacity left to meet normal yearly increases in demand. It's important to remember though that today's ethanol production is still just a drop in the bucket compared to the amount of gasoline consumed every year. There isn't enough corn available to realistically replace a majority portion of that gasoline with ethanol, which gets back to Ming's point.
 
#14 ·
SierraGS said:
Also read where there is over 30 million acres available for crops, but is the "paid not to grow on" acres we have all heard about for years. If this available land and the land that is not classified as "Farmland" were used for Corn production leads me to believe we will have a major surplus of Corn before a shortage. Just hope the Farmers mortgaging their futures on Corn do not get burned, its time these guys got a break.
The reason it is "paid not to grow on" land is to prevent the abuse of the soil. If you plant crops in the same fields every season, year after year, you will eventually rob the soil of nutrients, leading to fields that are totally unusable. This was a major problem during the "dust bowl" in the 1930's, and was the reason the government started offering to pay farmers to leave fields fallow for a season or two between crops. This same land is planted the next season.

Corn isn't the future of ethanol, but it's definitely going to be a big part of it for awhile.
 
#16 ·
Slowrider5 said:
Sure, of course there is enough corn to meet the ecomonic demands as they exist today. Additionally, I'm sure there is plenty of corn production capacity left to meet normal yearly increases in demand. It's important to remember though that today's ethanol production is still just a drop in the bucket compared to the amount of gasoline consumed every year. There isn't enough corn available to realistically replace a majority portion of that gasoline with ethanol, which gets back to Ming's point.
awalbert88 said:
Corn isn't the future of ethanol, but it's definitely going to be a big part of it for awhile.
Corn-based ethnanol alone will never account for a meaningful portion of America's fuel needs. Automakers just marketed E85 in a quick attempt to maintain a greener image. Simple modifications were performed, a few E85 stations sprouted up, and now a handful of us are highway vegetarians. A more feasible alternative is probably cellulosic ethanol, which can be made from just about anything. Brazil, for instance, uses sugarcane. Still, with the demise of petroleum in sight, no one energy source will be the answer. Electric and hydrogen power are out there as well.
 
#17 ·
SierraGS said:
Purdue University did a study on Ethanol from Poplar Trees and the University of Tennessee did one with White Pine, both came to the similar conclusion that a significant amount of ethanol could be produced from this renewable source and most of it from what is now NOT farmland. In fact it makes land that is currently not being used into a very desirable real estate.
You would think that of all states, Michigan would be investigating the possibility of this sort of "crop".

From what I understand, this may be the most economic and productive biomass to use as a basis for fuel.
 
#19 ·
The primary driver with corn-based ethanol to this point has been enormous subsidies to the likes of ADM and the feel-good politics shared by farmers, politicians and others hoping to profit from this very questionable path. It seems that everyone agrees corn is not the best input, but it's where the quick and easy money is so that's where we're stuck. As long as the subsidies are there, I don't see what will move us away from this. If switchgrass, or whatever, is the optimum input, and IF we're interested in efficiency, let's put the subsidies on those inputs. On the other hand if we're interested in enriching certain influential interests, we'll leave the subsidies where those interests continue to benefit.
 
#20 · (Edited)
Havasavana said:
If switchgrass, or whatever, is the optimum input, and IF we're interested in efficiency, let's put the subsidies on those inputs. On the other hand if we're interested in enriching certain influential interests, we'll leave the subsidies where those interests continue to benefit.
You mean like this:

28 February 2007

The US Department of Energy will invest up to $385 million for six biorefinery projects over the next four years. When fully operational, the biorefineries are expected to produce more than 130 million gallons of cellulosic ethanol per year.

The solicitation, announced a year ago, was initially for three biorefineries and $160 million. However, in an effort to expedite the goals of the Advanced Energy Initiative and help achieve the goals of President Bush’s Twenty in Ten Initiative, within authority of the Energy Policy Act of 2005 (EPAct 2005), Section 932, Secretary Bodman raised the funding ceiling.

Combined with the industry cost share, more than $1.2 billion will be invested in these six biorefineries. Negotiations between the selected companies and DOE will begin immediately to determine final project plans and funding levels. Funding will begin this fiscal year and run through FY 2010.
And this:

27 March 2007

The US Department of Energy (DOE) has awarded more than $23 million in federal funding for five projects focused on developing highly efficient fermentative organisms to convert biomass material to ethanol.

The award for these five cellulosic ethanol projects follows the award of $385 million in federal funds to six cellulosic biorefinery projects announced earlier this year. (Earlier post.) Commercialized fermentative organisms will be crucial to achieving commercial scale in cellulosic ethanol refining.
 
#21 ·
$385 + $23 million over 4 years isn't very impressive compared to over $51 Billion in corn subsidies from 1995-2005. Certainly most of this is not ethanol-related, but if ethanol is such a wonderful solution, why don't we remove the tariffs on importing it? The answer is obvious. From what I read, a major sticking point on free-trade negotiations with Europe, Canada, and others is repeatedly farm subsidies. Although touted to be in the interest of the 'family farmers', the reality is the parties that benefit most are the agri-business conglomerates such as ADM and Cargill.

The relatively tiny subsidies you cited might be of value, but only if and when the enormous corn-oriented subsidies are canceled.

http://www.econbrowser.com/archives/2007/02/ethanol_subsidi.html

http://www.ewg.org:16080/farm/progdetail.php?fips=00000&progcode=corn

http://www.taxpayer.net/energy/ethanolprimer.pdf

http://www.globalsubsidies.org/IMG/pdf/biofuels_subsidies_us.pdf

An interesting bit from the above link is that if all of the US's 6 million FFVs ran on E85 the annual cost to the taxpayer in Federal tax credits would be $3-4 billion with an extra billion or so for state incentives.

Plenty more info by googling on 'ethanol subsidy'.
 
#22 · (Edited)
masrapido said:
Corn-based ethanol alone will never account for a meaningful portion of America's fuel needs. Automakers just marketed E85 in a quick attempt to maintain a greener image. Simple modifications were performed, a few E85 stations sprouted up, and now a handful of us are highway vegetarians. A more feasible alternative is probably cellulosic ethanol, which can be made from just about anything. Brazil, for instance, uses sugarcane. Still, with the demise of petroleum in sight, no one energy source will be the answer. Electric and hydrogen power are out there as well.
I agree that Corn based ethanol or even ethanol itself WILL NOT be the primary "Alternative Fuel" of the future. As Ming pointed out Corn-based ethanol is the whipping boy of the media and critics who use any negative twist on it to make all Alternative Energy/Fuel options look bad.

Using a fuel other than gasoline is a paradigm shift that U.S. consumers are going to have to make, as consumers did in Brazil and they doing in Sweden where the SAAB BioPower is popular.

Hopefully this will happen soon and you will see Ethanol and BioDiesel more readily available, and the millions of E-85 vehicles can take full advantage of the supply. After this happens other alternative fuels such as Butanol may get more attention since it can be used in all vehicles, and the process for making Ethanol and Butanol are similar so there would not be a problem of making Ethanol refineries obsolete. Cellulosic Ethanol production will greatly improve the yield from Corn since it will enable the use of the entire plant AND allow Ethanol/Butanol/BioDiesel to be produced from many other plants.

In addition to the Hydropower you mention, more electric power will be produced from Solar and Wind sources and technology exists where sewage and wastewater can generate electricity. This will create a large source of renewable clean electric power with no need for oil. It would allow land sparse urban areas to combine electric generation with a sewage treatment plant, add some solar panels to the roof in sunbelt areas and you would have a very efficient "power production per square foot" facility.

There is a company (Silverado Green Fuels) turning Brown Coal into a cheap ($15 a barrel) clean burning source of liquid fuel for industrial boilers.

And there is Algae that can be used in many ways to turn Biomass and even smokestack emissions into Alternative Fuel or energy.

Many industrial waste products can also be turned into Alternative Fuels.

My guess is that in 10 years each area of the country will produce an Alternative Fuel from the Biomass source that best suits that areas geography and ability to produce it in large volume.

This whole Alternative Energy/Fuel issue is very interesting and will create many economic opportunities with positive environmental results.
 
#23 ·
The more farmland being used for what it's intended to be used for the better. Corn may be what starts ethanol in the US, but I agree that other products will end up being used more to make it, especially if they are less expensive to use. Makes sense for any business to try to find a less expensive way to produce it, and if they can use trees for it, start logging.
 
#25 ·
Slack said:
But this doesn't prove anything. This is just one season. As demand goes up for fuel, people will starve! You guys just don't get it!
I'm taking my ball and going home!!!
People will starve no matter what. Thats the way of the world. It has always been that way, and always will. Its not a reason not to have corn ethanol. how about we dont have high fructose corn syrup while we r at it? sombody could be eating that in malaysia instead of me w/ my can of Coke....
 
#26 ·
Many improvements in the overall efficiency of Ethanol production are probably yet to be realised. Bottom line, it is renewable, it keeps many farmers busy and profitable and the profits stay here. I see no negatives at all - and yes, I would be willing to pay slightly more for corn produced here.