Everyone Hates Ethanol

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MARCH 16, 2009 WSJ
"These days, it's routine for businesses to fail, get rescued by the government, and then continue to fail. But ethanol, which survives only because of its iron lung of subsidies and mandates, is a special case. Naturally, the industry is demanding even more government life support.
Corn ethanol producers -- led by Wesley Clark, the retired general turned chairman of a new biofuels lobbying outfit called Growth Energy -- want the Obama Administration to make their guaranteed market even larger. Recall that the 2007 energy bill requires refiners to mix 36 billion gallons into the gasoline supply by 2022. The quotas, which ratchet up each year, are arbitrary, but evidently no one in Congress wondered what might happen if the economy didn't cooperate.
Now the recession is hammering demand for gas. The Energy Information Administration notes that U.S. consumption fell nearly 7% in 2008 and expects another 2.2% drop this year. That comes as great news for President Obama, who is achieving his carbon-reduction goals even without a new carbon tax, but the irony is that the ethanol industry is part of the wider collateral damage.
Americans are unlikely to use enough gas next year to absorb the 13 billion gallons of ethanol that Congress mandated, because current regulations limit the ethanol content in each gallon of gas at 10%. The industry is asking that this cap be lifted to 15% or even 20%. That way, more ethanol can be mixed with less gas, and producers won't end up with a glut that the government does not require anyone to buy.
The ethanol boosters aren't troubled that only a fraction of the 240 million cars and trucks on the road today can run with ethanol blends higher than 10%. It can damage engines and corrode automotive pipes, as well as impair some safety features, especially in older vehicles. It can also overwhelm pollution control systems like catalytic converters. The malfunctions multiply in other products that use gas, such as boats, snowmobiles, lawnmowers, chainsaws, etc.
That possible policy train wreck is uniting almost every other Washington lobby -- and talk about strange bedfellows. The Alliance of Automobile Manufacturers, the Motorcycle Industry Council and the Outdoor Power Equipment Institute, among others, are opposed, since raising the blend limit will ruin their products. The left-leaning American Lung Association and the Union of Concerned Scientists are opposed too, since it will increase auto emissions. The Natural Resources Defense Council and the Sierra Club agree, on top of growing scientific evidence that corn ethanol provides little or no net reduction in CO2 over the gasoline it displaces.
The biggest losers in this scheme are U.S. oil refiners. Liability for any problems arising from ethanol blending rests with them, because Congress refused to grant legal immunity for selling a product that complies with the mandates that it ordered. The refiners are also set to pay stiff fines for not fulfilling Congress's mandates for second-generation cellulosic ethanol. But the cellulosic ethanol makers themselves already concede that they won't be able to churn out enough of the stuff -- 100 million gallons next year, 250 million gallons in 2011 -- to meet the targets that Congress wrote two years ago.
So successful but politically unpopular businesses will be punished for not buying a product that does not exist -- from companies that haven't yet found a way to succeed despite generous political and taxpayer advantages. The next step is to use cap and trade to make green alternatives look artificially good by comparison. Even then they'll probably still be bottomless money pits.
To recap: Congress and the ethanol lobby argue that if some outcome would be politically nice, it should be mandated (details to follow). Then a new round of market interventions is necessary to fix the economic harm resulting from the previous requirements, while creating more damage in the process. Ethanol is one of the most shameless energy rackets going, in a field with no shortage of competitors."
from the WSJ
dec
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soybean; prove that
"I get civil like a savage when the government
speaks with the forked tongue of fake civility"
verbatime
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quote:
Originally posted by verbatime
[br]soybean; prove that


http://farmingweek.com/DiscussionBoard/topic.asp?TOPIC_ID=5872
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Ok, tw, I agree with the government and defense.
However, when the government entered into a situation
of food, cheap food, and to do that was to regulate the
acres, produced from PRIVATE enterprise--farmers, were paid
to plant, or set aside acres in accordance to what was
thought to be necessaery for a controlled cheap food policy--
anytime WE, the farmer, can get away from the policy, and food
as a weapon, most farmers would be happy with a free market
system--with paper traders making their profits, too. There
are still government bins in this county that were moved from
the central government storage plot, to the private sector--
the bins housed the excess grain, which was bought by thegovernment, and then turned loose by the government when
times were lean, quantitiy wise--or prices got to high and the consumer started
complaining.
Don't blame the farmer, it was his livelehood, every few years
the farm program gets changed---sometimes we think maybe this
will be the last one--but something comes up and by golly,
the government is in control.
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Dennis i know where there are about 30 or so of those bins still standing together-i remember helping dad move 2 when i was a little guy-4000 bu each= before i knew what a sweep auger was-good times huh?
nite-johnboy
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Yes, crawl in doors, when it got down to the shovel time,
we were using a 6 inch auger, 8 horse briggs and stratton,
that I had to jump from the auger frame hanging onto the
starter rope to start--I was a runt then--man, the sweep
auger tied to the end of the auger seemed like heaven--as
long as there were at least two around to do the work, one
on the job got a little tricky with the sweep auger and
crawling in or out with it running---safety was a concern--
make sure you stayed out of the auger! (and it was noisy, too.)
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On second thought forget it Jam, don't really care what you think.
The problem with socialism is you eventually run out of other people's money-Margaret Thatcher
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JAM: I never threatened you. I was going to post who
you represent to document that you have a conflict of
interest in that you want low corn prices. On the advice
of legal counsel, I am not going to do it. It's that
simple. You appear to be mentally disturbed. I suggest
that you seek professional help. Good luck.
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Never threatened? Your quote that you just posted a few days ago "I told you that if you...that I was going to file a formal complaint with the Indiana Bar Assn., the American Bar Assn, and the Mormon Church."
So that is not a threat? This was after I showed how the stuff you were posting was garbage and I disproved it with university studies. You retort was that all of the universities were communist. Nothing to refute what the studies said, just name calling. Then you claimed I was name calling. Now you seem to be claiming that you are professional psychologists and trying to disparage my name by questioning my sanity. Again, nothing but slander from you. No facts, nothing but disparagement. That is all you seem capable of doing. Then you claim to be a "nice guy" after attack after attack. Now you are doing the same thing to Soybean and you have done to Dec and I.
Now the claim that your attorney told you to not post who I was. What crap! Either you are lying to your attorney or you are lying to us. There is nothing legally that can be done by you telling us who you were going to file a formal complaint with any of the organizations above. You made the treat. I have done nothing but call you on it. And you run. 3020 (or c3po, whichever) says you show restraint, which is stupid in that it is not restraint when you have NOTHING to use in the first place.
You are one of the one on here that post after post wants accountability but when you are called to be accountable you run and claim that your attorney (whose profession you have disparaged on here numerous times as well) wont let you. Which is an obvious lie in that there is NO legal theory whatsoever that would prevent you from answering the question of who you were going to notify in those agencies above or what you were going to complain about, or better yet, what any of them would do.
Your true colors shine through loud and clear here. And it is bright yellow.
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Ethanol Bailout? Time To Shuck Corn
By INVESTOR'S BUSINESS DAILY
Ethanol Scam (=) Cornholio
Energy Policy: The heavily subsidized ethanol industry is the latest to seek a federal bailout. If there is any industry that deserves to go bankrupt, it's this one. Time has come to stop putting food in our gas tanks.
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Read More: Energy
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The bailout-seeking domestic auto industry has been criticized as being unproductive and inefficient. It hasn't been helped by mandated fuel economy standards that have done little to reduce our dependence on foreign energy or help the environment. Now the fuel we have been mandated to put in our cars, equally unproductive and inefficient, is also seeking a bailout.
Ethanol never made much sense economically or environmentally. It never would have made it to market without congressional mandates and huge subsidies. Having the first presidential contest in the corm state of Iowa didn't hurt either. With oil prices plummeting, it is even less competitive ? if it ever was.
The product has benefited from a tax credit paid to gasoline producers to blend gasoline with ethanol; a federal fuel economy standard that sets a minimum amount of ethanol to be blended; and a 54-cents-a-gallon tariff on cheaper imported ethanol made in places like Brazil. Brazilian ethanol is made from sugar, not corn. But corn is grown in Iowa, and Brazilians can't vote.
Recent legislation mandated increased ethanol use as well as a 51-cent-a-gallon tax credit and more corn subsidies. Over the last two decades the ethanol industry has been kept alive with more than $25 billion in federal handouts. Yet it still can't compete.
Five of Iowa's 32 ethanol plants are in bankruptcy. They are operated by Sioux Falls, S.D.-based ethanol giant VeraSun Energy, which itself filed for Chapter 11 on Oct. 31. Eleven plants in other states have also fallen into bankruptcy. Nationally the ethanol plant failure rate is at 8.8% and could reach 22% in short order.
The Renewable Fuels Association, the industry's lobbying arm, has talked with Team Obama about further handouts such as $1 billion in short-term credit to keep failing plants in operation and $50 billion in loan guarantees to build more. The association wants to increase the 10% ethanol limit in gasoline for conventional cars and trucks and require that any carmaker getting federal funds produce only vehicles that can run on any blend up to 85% ethanol.
Even the environmentalists are getting wise to this game. The Environmental Working Group and five other groups came out against such a bailout last week, saying subsidies "for corn-based ethanol have produced unintended, yet potentially catastrophic, environmental consequences, with little or no return to taxpayers in energy security (or) protection from global warming."
According to a report from the Hoover Institute's Henry Miller and professor Colin Carter of the University of California, Davis, "ethanol yields about 30% less energy per gallon of gasoline, so miles per gallon in internal combustion engines drop significantly." So the per-mile cost is actually higher at the pump. Meanwhile, it raises the food prices at the supermarket you drive to.
Corn ethanol is less energy efficient and costs more. It generates less than two units of energy for every unit of energy used to produce it. It takes 1,700 gallons of water to produce one gallon of ethanol. Each acre of corn requires 130 pounds of nitrogen and 55 pounds of phosphorous.
Increased acreage means increased agricultural runoff, which is creating aquatic "dead zones" in our rivers, bays and coastal areas.
Industries such as poultry and livestock, as well as their customers and workers, suffered when government policies and subsidies drove corn prices to record highs last summer. Demand for corn and the diversion from other crops have sent food prices soaring worldwide.
If we are seriously talking about an economic recovery, we need to remove this albatross from around the neck of businesses, consumers and taxpayers.
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Dec....logging in as Cornholio is pretty damned funny! lmao You're too much,
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JAM: I know that you probably won't believe this, but
despite your insults, name calling, and character
assassination, I like and admire you. I am a little
concerned that you have lost it and gone off the deep
edge. I sincerely hope that you will find peace.
God Bless.
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JAM,
sounds like 48 wants to make love to you.
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Cornhole: Did you change your alias from "soybean" to
Cornhole, when I called your bluff as to what SB brand,
number, maturity, and population you planted??? lol.
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Yeah, 48 has been caught in his lies and blustering but is not enough of a man to admit it. Rather he continues to try to claim that he is a good guy but that I am insane. This guy really does have personal problems doesn't he.
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48- I think you posted the wrong picture of dec's aircraft, I found a tape of him and his plane being pulled to the airport. Enjoy.
http://www.youtube.com/watch?v=Oh215s9ubMk&feature=related
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lmao...I'm sure the "tow vehicle" taking him out to the taxiway is running on ethanol blend.
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I find it amazing that nobody comments on the content of the opening post of the wsj editorial...
dec
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reply

quote:
Originally posted by OBG
[br]

quote:
Originally posted by dec
[br]
MARCH 16, 2009 WSJ
Now the recession is hammering demand for gas. The Energy Information Administration notes that U.S. consumption fell nearly 7% in 2008 and expects another 2.2% drop this year.


That information is not true. Here's what the article says;
"Now the recession is hammering demand for gas. The Energy Information Administration notes that U.S. consumption fell nearly 7% in 2008 and expects another 2.2% drop this year."
The author is confused with demand for crude oil which is lower due to distillate demand loss. Demand for gasoline is not down.
Here's the actual latest RBOB data from the Energy Information Agency;
The 4 week demand for gasoline one year ago ending 03/07/08 was 9.093
The 4 week demand for gasoline this year ending 03/06/09 was 9.024
Just a week ago demand for gasoline was up 2.2% year-over-year.
http://tonto.eia.doe.gov/oog/info/twip/twip_gasoline.html#demand
IMAGE(http://tonto.eia.doe.gov/oog/info/twip/gtpsusm.gif)
The sad truth is that no global economic growth is EVER possible EVER AGAIN without creating a runaway bull market in oil.
To prevent a bull market in oil, a perpetual loss in the Dow must be maintained.
Geology is a *****.


22030500
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Saying that 'everyone hates ethanol" is like saying every one "loves " "dec" Sorry Dec, not every body loves 'dec'
The articles has so many false hood. IT is not worth replying to. The author is blowing methane gas.
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tw: I realize that you are a troll or a paid hack and that
you are mentally challenged, but can you understand the
difference between "I don't have to pay one red cent" as
a capital investment not to mention the insurance and
licensing vs paying for plane trips.
I realize you are too mentally challenged to understand
capital investments, so let's dumb this down and go real
slow. I don't have to pay one red cent to buy a plane.
But, I damn sure pay for my plane trips.
This is a production ag chat room. It is obvious that you
are not involved in production ag. So why don't you go
collect your troll/paid hack/moveon.org payments some where
else???
Otherwise, I think we can make this a memorable experience
for you. lol.
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Faust: LMAO.
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dec: With all your trillions, why aren't you buying up
ethanol plants for pennies on the dollar? I mean after all
YOU said the ethanol plant gets the Blender's Tax Credit.
Granted it's been reduced from 51 to 46 cents. I mean you
could buy a 110 mil gal plant and pay for it in the first
year with the Blender's Tax Credit. The ethanol and distillers
and depreciation would be gravy. UNLESS you were FOS about
who gets the Blender's Tax Credit. lol.
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quote:
Originally posted by 48
[br]dec: With all your trillions, why aren't you buying up
ethanol plants for pennies on the dollar? I mean after all
YOU said the ethanol plant gets the Blender's Tax Credit.
Granted it's been reduced from 51 to 46 cents. I mean you
could buy a 110 mil gal plant and pay for it in the first
year with the Blender's Tax Credit. The ethanol and distillers
and depreciation would be gravy. UNLESS you were FOS about
who gets the Blender's Tax Credit. lol.


You are too predictable...you couldn't comment intelligently about the thread opener, so instead you bring up an entirely irrelevant point about my flying privately...who in the hell cares, you must think its gives you some moral high ground. I have been at the forefront in my criticism of ethanol for being a scam and it has been proven more than correct. You are so blind by your boosterism and nonsense that it is too laughable....lost in space. You can deny the blood that has been extracted from investors in ethanol if you want, but to deny that its main purpose has always been to take advantage of the taxpayer and force something upon the consumer by fiat...what a crying shame that a folks like you have to conjure up "theories" and b.s. to rationalize your pet project. I know from my inquiries that you are regarded as a major blow hard who speaks without thinking...you prove it repeatedly on this board.
dec
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Here is a list of stories from the past week from some non-farmers who like bio-fuels.
The story below is disturbing, because it supports my view that alternatives won't replace oil in a manner that allows life as we knew it to continue. During the multi-year runnup from from $10 oil in 1998 to $150 in 2008, nothing other than biofuels presented itself, and nothing every will.
Meanwhile oil production in almost every producing country is in irreversible decline.
Get used to ever-increasing biofuel production. Sorry Urban poor in Calcutta, trend line yields are basicly headed forever down, and noone, not even our new "messiah" himself can stop any of it.
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Shell dumps wind, solar and hydro power in favour of biofuels
Tuesday 17 March 2009
Shell will no longer invest in renewable technologies such as wind, solar and hydro power because they are not economic, the Anglo-Dutch oil company said today. It plans to invest more in biofuels which environmental groups blame for driving up food prices and deforestation.
Executives at its annual strategy presentation said Shell, already the world's largest buyer and blender of crop-based biofuels, would also invest an unspecified amount in developing a new generat*ion of biofuels which do not use food-based crops and are less harmful to the environment.
The company said that many alternative technologies did not offer attractive investment opportunities. Linda Cook, Shell's executive director of gas and power, said: "If there aren't investment opportunities which compete with other projects we won't put money into it. We are businessmen and women. If there were renewables [which made money] we would put money into it."
Shell said biofuels fitted its core business of providing fuels, logistics, trading and branding. Cook added: "It's now looking like bio*fuels is one which is closest to what we do in Shell. Wind and solar are interesting [but] we may continue to struggle with other investment opportunities in the portfolio even with big subsidies in many markets. We do not expect material investment [in wind and solar] going forward."
The company also confirmed that it would increase its dividend payments this year by about 5% to $10bn.
Until recently, Shell's investment in wind power featured prominently in its corporate advertisements. FoE said the company's move heralded a slightly more honest approach. "Shell is at least being a bit more honest about the fact they are a fossil fuel company. It has seen the limitations of the greenwash it was putting out a few years ago."
Outgoing chief executive Jeroen van der Veer admitted that the company had suffered some "technology baths" in the past when it backed unprofitable technologies. "We don't do it [renewables] all."
Cook pointed out that at one stage the company only invested 1% of its budget on liquefied natural gas, which is now a big part of its business. "You have to start somewhere," she said.Van der Veer also admitted that Shell's overall R&D budget would "fall a bit" as the company focused on the most promising technologies and in the wake of the oil price slump.
The company said it would raise debt levels to maintain dividend payments and its spending programme. Van der Veer insisted that energy demand in the long term was strong and oil prices would recover. "The problem is you don't know when the long term starts."
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Agriculture secretary wants more ethanol in gas
EPA says it will review request, engine manufacturers concerned
Mon., March. 9, 2009
WASHINGTON - Agriculture Secretary Tom Vilsack says the government should move quickly to increase the amount of ethanol allowed in gasoline.
http://www.msnbc.msn.com/id/29600732/
-------------------------------------------------------------------
Mon Mar 9, 2009 5:35pm EDT
WASHINGTON (Reuters) - House Speaker Nancy Pelosi said on Monday that she supported a higher ethanol-to-gasoline blend rate as a way to reduce reliance on petroleum imports.
"It seems to me we should be able to do that," Pelosi told reporters.
http://www.reuters.com/article/environmentNews/idUSTRE5286RW20090309
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r3020: Thanx for the factual response to soybean's BS.
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Beaner: Thanx for the intelligent response to soybean as
I know ethanol is not your favorite. lol.
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quote:
Originally posted by 48
[br]Beaner: Thanx for the intelligent response to soybean as
I know ethanol is not your favorite. lol.


48, your are right; ethanol is not my favorite program. Nevertheless, I prefer to argue with the facts as i see them and not with crap like soybean attempted. What I hate on this board are the drive by shooters who pop in take a wild shot with no need and then run.
I say we should dump all political incumbents in the next election and promise all winners we will do the same in next election to them if they forget who they are representing. And we should make damn sure we choose very wisely on their replacements.
Beaner.
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soybean: You are FOS. Try doing a little research before
you post. r3020 gave you an excellent reply. The Blender's
Tax Credit goes to the...Blender...not the farmer. This is
usually Big Oil. Valero is the biggest oil refiner in the
US, and they recently bought some of VeraSun's plants out
of bankruptcy. It is pretty clear who will receive the Blender's
Tax Credit=Valero...not corn farmers.
The Blender's Tax Credit to Big Oil is in recognition of the
fact that they are losing gasoline sales to ethanol. It was
an inducement for them to blend ethanol beyond what was
required to replace MTBE. The Achilles heel in the ethanol
business from day 1 has been the fact that the ethanol
industry has no control over the final marketing and
distribution of it's product. This is a very poor business
model.
The 54 cent import tariff on cheap Brazilian sugarcane ethanol
was intended to protect the fledgling little US corn based
ethanol industry until it got off the ground. In fact, the
tariff protects Big Oil's gasoline far more than ethanol.
Without going into all the subsidies that Big Oil gets like
the Oil Depletion Allowance, what do you think the subsidy is
to Big Oil to maintain two US Navy carrier groups in the
Persian Gulf to keep the Straits of Hormuz open for Big Oil's
supertankers??? The costs dwarf the Blenders Tax Credit which
goes to Big Oil anyway.
There is no question that many ethanol plants were ill
conceived and poorly thought out from a logistical stand
point of unit trains to haul the ethanol out, to haul coal
in, close proximity to cattle feed lots so wet distillers
could be fed without incurring the energy to dry distillers,
and close proximity to the corn itself. And...some plants
which were well thought out, did not have astute purchasing
agents to manage the risk when the Big Specs ran crude oil
to $147/bbl and corn to $8/bu. Can you say...VeraSun.
Finally, every major oil reservoir in the world is in
irreversible decline. It would be wise for us to be coming
up with a battle plan to address this. Ethanol is not my
favorite. My favorite is to drill every thing we have,
generate all electricity with nuclear power, and convert
our coal to gasoline and diesel.
Diesel has 30% more energy than gasoline. If we mandated
that all vehicles had to be diesel, we could improve our
energy supply situation by almost 30% immediately. Granted,
mgp does not equate 1:1 with energy content. The Volkswagon
Jetta diesel got 52 mpg ten years ago. The current flex
fuel Chevy Impala gets 31 mpg. We could restore US energy
indepence over night if we mandated that all vehicles had
to be diesel and that passenger cars had to get 50+mpg.
All that I have suggested is easily doable. It is not pie
in the sky. It is imperative that we re-establish US energy
independence ASAP.
The food vs fuel argument is a joke. Most of the corn grown
is not food grade corn. It is livestock feed. And, we have
increased acres for the corn being used to make ethanol.
If ethanol was banned over night, those acres would simply
not be planted to corn.
Another promising idea is ocean water to algal diesel.
Beaner has posted studies that indicate that we could replace
all our petroleum requirements with algal diesel.
Cheap, abundant domestic energy is mandatory if this nation
is going to survive and prosper and not go back to horses
and candles. And, since you're so worried about food, if we
went back to horses, It would require 1/3 of our cropland to
grow feed for the horses--not humans.
So...the question is...are you an intelligent individual
interested in intelligent solutions to our energy crisis?
Or, are you a troll and paid hack for Big Oil/OPEC???
BTW, I love Big Oil. I just don't agree with their ruthless
suppression of all competition--like Canadian Tar Sands--
even if it means bringing the whole country down. Best.
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48...Nothing anyone has said has changed anything.
I cannot wait to hear all your excuses when prices go way up again (with or without big specs) because of the ethanol scam. Blame everyone but yourselves.
Good luck with the excuses and brainwashing. Let me know how things turn out in another year.
Every $1.00 in extra household income created by ethanol support cost someone else in the economy about $2.00.
Let's take away the subsidies and mandates that are your lifeline in this ethanol scam? If ethanol is such a good thing then the average american should not have to support you and your Livelihood.
The full cost of each gallon of gasoline replaced by ethanol (when the Omaha Rack price of gasoline is $2.37), including costs born by other users of corn, soybeans and other feed ingredients, is at least 79-86% higher than gasoline. The 2007/2008 $4.40 per gallon total wholesale cost is a minimum. If other federal and local support costs and the policy-induced price increases for other feed ingredients are included the true cost of ethanol is even higher than $4.40 per gallon of gasoline replaced. Adding margins, taxes, other policy support costs and added costs other than higher corn and soybean prices brings the true retail cost of ethanol to over $5.00 per gallon, gasoline equivalent basis (when the Omaha Rack price of gasoline is $2.37).
Proponents of biofuels also claim that by increasing U.S. production of biofuels we can become more independent of imported oil. It is true that biofuels may have some minor impact on oil imports. In 2007 ethanol production had the energy equivalent of about 3% of U.S. oil imports. However, the amounts of biofuels needed to make a significant difference in our strategic position on oil imports cannot be produced with todays, or prospective, feedstocks and technology.
Of course, we can use only a small fraction of our food supply for fuel production. Biofuels made from food simply cannot replace enough petroleum fuel to make a significant difference in our vulnerability to oil import interruptions, oil supplies, or oil prices.
In summary, fixed tax credits and RFS requirements increase both costs and potential price instability for both food and fuel. It is difficult to see how this policy results in increased security or any meaningful reductions in vulnerability to interruptions in U.S. oil imports. Even if we convert large amounts of land to cellulose biofuel production the yields are not high enough to have a significant effect on total energy supplies or prices.
Subsidies do not create wealth or value, they only redistribute it. If biofuels did not depend on significant public support (lavish subsidies and tax credits) this statement would have some merit. However, the over-expansion of biofuel production due to public financial support means that we are producing biofuels at total costs that are much higher than the market value of the petroleum fuels that are produced. In the process we destroy, not create, value in the rest of the economy.
According to a study from LEGC --28--, and cited on the Renewable Fuels Association Web site --29--, in 2006 ethanol created $6.7 billion in household income. The study was sponsored and paid for by the RFA.
In this study?s model used to estimate biofuel support costs increased costs from biofuels support policies for the rest of the economy during 2006 were about $13 billion. In other words, every $1.00 in extra household income created by ethanol support cost someone else in the economy about $2.00.
In other words, every $1.00 in extra household income created by ethanol support cost someone else in the economy about $2.00.
--28--http://www.ethanolrfa.org/objects/documents/2006_ethanol_economic_contribution.pdf
--29-- http://www.ethanolrfa.org/resource/facts/economy/ (Study was funded by RFA)
The cost that biofuels policy is imposing on other sectors is a drag on the overall economy and result in lost economic growth and jobs in other sectors as well. We simply cannot subsidize our way into long term economic growth and job creation.
Does Biofuels Policy Reduce Energy Costs?
As has been pointed out in this study the total cost of ethanol is nearly double that of gasoline. Even excluding costs born by others, ethanol and biodiesel are both priced above the fuels they replace. Biofuels policy has in fact increased, not decreased, U.S. energy costs.
In summary, one of America?s largest ethanol producers is struggling to pay the increased costs corn that biofuels policy helped cause. As the ethanol industry continues to increase capacity in the face of limited corn availability in the 2008/2009 crop year VeraSun?s fortunes will further decline. So will those of food producers who are also victims of this same policy. And wow they are now bankrupt!
Is Federal Biofuels Policy Efficient and Equitable?
Biofuels alone, produced in a market-driven environment, would arguably result in a net gain to the U.S. economy. However, federal biofuels policy fails on two major criteria of any public policy; efficiency and equity.
Biofuel policy fails on efficiency grounds because the policy, by raising the prices of biofuel feedstocks (and other feed and food ingredients) to artificially high levels, increases costs to other users of those feedstocks. In effect, biofuels support policy takes biofuel feedstocks away from uses that the market places a relatively high value (food) and channels them into relatively lower value uses (liquid fuels). Costs are raised for all users of feedstocks, including even the biofuel users themselves.
By raising costs in the food and fuel sector biofuels policy forces consumers to spend less on non-food/fuel purchases if they are to maintain their real level of food and fuel consumption. There is a redistribution of purchasing power, income and jobs, but no net real gain after higher prices are taken into account.
On equity grounds biofuel support policy also fails. Costs of food and fuel production are increased, disproportionately affecting those least able to afford higher food and fuel costs. In effect, biofuels support policy acts as a regressive tax on the poor and grants a windfall gain to a relatively few large farmers.
Not only does this regressive tax affect the U.S., our biofuels policies have helped increase global food costs. The poorest of the poor around the world are the most heavily affected, and have no influence on the policies that are making them worse off. In perspective, according to a World Bank study the 500 pounds of grain required to fill the 25 gallon tank of a sports utility vehicle with ethanol could feed one person for a year.
In effect, with this policy the U.S. is telling the world that we will hoard our food supply to fuel our automobiles.
Increased ethanol production has come at a heavy cost to the U.S. economy. Driven in part by large biofuel tax credits, costs of feedstocks used to produce biofuels have increased to levels well beyond free market-based values. Increases costs are falling heavily on U.S. food producers, and biofuel producers themselves. Perhaps the greatest irony of our biofuels support policies is that biofuel producers have seen their once-generous profit margins erased by rising costs of corn and soybean oil. It was those very same biofuels producers who, with the help of crop producer associations, sponsored the current biofuels support policy.
Increased costs of biofuel feedstocks are slowly winding their way through the U.S. food production and marketing system. It is difficult to point to any one item and say that the retail price has been affected by a given amount. It is, however, an inescapable fact that we are paying for biofuels support policy at the gas pump, in the grocery store, and at restaurants. The invisible cost increases for food, while not significant for any one purchase, about doubles the total costs of corn and soybean based biofuels.
Biofuels themselves are also significantly more expensive because of federal policy. Ethanol costs, including costs born by other feedstock users, are nearly double that of gasoline.
Biofuels policy acts as a regressive tax on the poor. By increasing the costs of food and fuel and increasing incomes of a relatively few farmers the program makes a massive income and wealth transfer from the poor to the relatively rich.
[/b]

Soybean wow I'm convinced. roll my eyes
You're the little feller in the front taking it then... Better write your congressman. lmao

[/b]

quote:
Originally posted by soybean
[br]
In effect, with this policy the U.S. is
telling the world that we will hoard our
food supply to fuel our automobiles.


Soybean writes;
"In effect, with this policy the U.S. is
telling the world that we will hoard our
food supply to fuel our automobiles."
That's pretty funny. Not that I disagree.
The part I think is funny here is that
somebody is evidently foolish enough to
assume that global grain exports have anywhere
to go except down, regardless of public
policy.
While I commend most of the points that
Mr. Soybean made, he makes an assumption
that without biofuels, grain would be cheap.
Cheap grains were a result of cheap fuel.
Those days are behind us as daily production
rates irreversibly decline.
I really don't care if ethanol exists or not;
the result is IDENTICAL. Irreversible declining
oil production leads to declining grain production
anyway you slice it.
The result of that geological reality is that
Urban poor in countries net-importing food
will die. All of them.
[/b]

soybean: You said: "Every $1.00 in extra household income
created by ethanol support cost someone else in the economy
about $2.00."
That is just a wild allegation out of thin air. You can not
back up that assertion with sound economic analysis. If you
can...do it.
[/b]

soybean: You said: "If ethanol is such a good thing then the
average american should not have to support you and your
Livelihood."
I am semi-retired and grow wheat and raise stocker cattle.
I don't grow corn. I don't own stock in an ethanol plant.
Ethanol does not contribute one penny to my income. I am
just a patriotic American that knows that it is mandatory
for the US to re-establish energy independence. Ethanol
can supply 10% of our fuel requirements, and 10% is not
insignificant.
[/b]

soybean:
RBJ9 [10]
Symbol: RBJ9
Descriptsion: DAY RBOB GASOLINE
Month: Apr-09
Last: 1.5026
Change: 0.0145
Open: 1.4850
High: 1.4850
Low: 1.4850
Close: ---
Previous: 1.4881
Volume: 19740
Delay: 10
Exchange: NYMEX
Trade Time: 03/24/09 14:47
1.5026 0.0145 1.4850 1.4850
@ACJ9 @ACJ9 [10]
Symbol: @ACJ9
Descriptsion: ELECTRONIC DENATURED FUEL ETHANOL
Month: Apr-09
Last: 1.604
Change: -0.004
Open: 1.609
High: 1.610
Low: 1.600
Close: ---
Previous: 1.608
Volume: 27
Delay: 10
Exchange: CBOT
Trade Time: 03/24/09 13:40
1.604 -0.004 1.610 1.600
Source: DTN
[/b]

I BEG everyone to at least read the following post. Hopefully take the time to follow the link to the most respected source in the oil/gas business.
This article details the collossal drop in drilling in the last 6 months vs the 1981 oil bear market. IT BEARS ZERO RESEMBLANCE!!!
This is MUCH MUCH worse loss in investment, and the reason, (while the industry REFUSES to admit it) is falling EROEI. It just takes TOO MUCH energy to get what is left in the ground.
Here's the statement from the article below that says it all;
"The speed of this cycle's decent, [drilling rig activity] assuming that was the bottom, is astounding. It suggests that other factors are at work in the oil and gas business than merely commodity prices and the recessionary impact on oil and gas demand."
Nobody seems to understand (this weird invisible force) maybe they should read agweb and they'd figure it out! []
------------------------------------------------------------------
We have taken the pattern of this extended 1980s rig downturn and applied it to the current rig decline to see where we might wind up if that earlier cycle were to be followed. It suggests that while we have already surpassed the bottom of the first phase of the 1980s' cycle downturn, from the 1,126 working rigs at March 13th we could see the industry needing to shut down another 211 rigs. Added to the current 905 rig decline, the domestic rig count would fall by 1,116 rigs or a 55% decline from the September peak of 2,031 working rigs.
IMAGE(http://www.rigzone.com/images/news/wti/graph-4_031709.gif)
The complete 1980s rig cycle spanned 246 weeks from peak to trough. At the average rate the rig count is dropping, we would reach the comparable 1980s correction low in another eight weeks, or by May 1st. If achieved, the low would have been reached in 40% of the time of the 1997-1999 cycle, five weeks short of the entire 2001-2002 cycle and in 13% of the time of the 1980s cycle. The speed of this cycle's decent, assuming that was the bottom, is astounding. It suggests that other factors are at work in the oil and gas business than merely commodity prices and the recessionary impact on oil and gas demand.
http://www.rigzone.com/news/article.asp?a_id=74065
[/b]

There is only one boondoggle in this country and that is the paper trader bailout. AIG insured bad assets, said if this assets go bad we will pay you x amount of money. In return AIG received premium payments. The paper traders were insuring their assets. The trouble is they never paid NEARLY enough in premiums. Typical paper trader, trying to get some thing for nothing. Now the asset have gone bad and AIG doesn't have the money to cover the losses. Instead of letting the paper traders "crash and burn", pun intended, the government bails them out with OUR tax dollars.
Dec, you can stick your paper trading boondoggle up your a$$. Everyone hates paper traders. Ethanol is one of the few bright spots in this country. If ALL subsides were ended no one could compete with ethanol because no one can compete with the American farmer on a level playing field.
The problem with socialism is you eventually run out of other people's money-Margaret Thatcher
[/b]

I find it humerous how many people on this board jump to attack Dec for his views on ethanol. He has been consistent on this topic from day one and has been proven more right than wrong based on what has happened in the ethanol sector.
I also find it interesting how many people on the board decry paper traders. However, I did not hear many people griping last summer when speculators helped drive corn to over 47/bushel and beats to over $16/bushel. I also never hear much against speculators from farmers when they ares eeking to hedge their grain and need a long on the other side to get it done.
When a man knows he is to be hanged in a fortnight, it concentrates his mind wonderfully.
--Samuel Johnson
[/b]

It amazes me that anyone would be so upset that dec or anyone else is succsesful.I thought that was what capitalism is all about-so dec if you can afford a private jet more power to ya.
BUT i have been told on here that i dont know about such things
so maybe i will be shown the error of my ways.
[/b]

Paper traders were not the whole reason corn went to 8.00. If you look at the hard numbers you will find out that funds/specs were actually long more contracts in 2007 for corn than they were ever net long in 2008. Look it up... Ethanol is like any other bussiness, there will be winners and losers... look at banks right now... there are major losers and yet there will be major winners at the same time becuase the fundamentals are sooo good that a bank with a good balance sheet can make more money that they ever could. I hate government involvement in every thing as much as anyone else. But there is little way around it. I think in a few years we will all see why the government is/has been standing behind biofuels. I think they know about the supply of oil more than most people do... I think its great to have more competition on the energy front. Everyone hates a monopoly, and there are already plenty of them that are currently getting away with it. I am just wondering why dec since he knew who would benefit from ethanol in the first place... corn farmer and land owners that he didn't buy a bunch of land with his money and grow corn... and profit from it...or did he? I can assure you everything the government is doing now is going to bite the taxpayer in the arse again, heck even giving away money for first time homebuyers and forcing fannie and freddie to make jsut as stupid of loans as they were before... haha, its a never ending corruption/doom cycle..
[/b]

quote:
Originally posted by 48
[br]tw: I realize that you are a troll or a paid hack and that
you are mentally challenged, but can you understand the
difference between "I don't have to pay one red cent" as
a capital investment not to mention the insurance and
licensing vs paying for plane trips.
I realize you are too mentally challenged to understand
capital investments, so let's dumb this down and go real
slow. I don't have to pay one red cent to buy a plane.
But, I damn sure pay for my plane trips.
This is a production ag chat room. It is obvious that you
are not involved in production ag. So why don't you go
collect your troll/paid hack/moveon.org payments some where
else???
Otherwise, I think we can make this a memorable experience
for you. lol.


This remindes me of a post i made that wasnt perfectly worded and two
charming fellowes from kansas jumped on with both feet and then followed me to another thread so i know how you fell.
In the last sentance who is 'WE' please explain.
[/b]

I'll type this REAL slow:
Look at crude oil price--then followed by---everything.
The ***** heads have us by the balls, if you want to
continue down the same road, sit an A$$ and give up.
[/b]

Beaner, the 175 BILLION down the black hole of AIG didn't go to ethanol producers, It went to paper traders on both sides of the credit default swaps. The money wasn't there, there were alot of Madoff types that were going to lose everything. Congress bailed them out. Maybe I paint with a broad brush when I inclued all paper traders, but it is not ethanol that has brought this country to it's knees, it is paper traders. Ethanol is like every other business that has ever been started, it is going through growing pains. The weak will be weeeded out and the strong will survive. Dec paints with a broad brush also when he blames the world's ills on ethanol.
The problem with socialism is you eventually run out of other people's money-Margaret Thatcher
[/b]

r3020: All the hoopla about AIG bonuses is just a smoke
screen to obscure who is getting bailed out. GoldmanSachs
is the biggest recipient and Citi is close behind. You
are exactly right about the paper traders. When the Big
Banks sliced and diced the sub-prime toxic waste, they
leveraged it at 30-40/1. AIG was the counterparty. The
reason AIG is being bailed out is that the money goes
to Goldman Sachs and Citi. All the Congressional hearings
over the bonuses is just a smokescreen so that the taxpayer
won't see where the big money is going. The bonuses are
1% of what Goldman Sachs and Citi are getting. Keep up
the good work.
[/b]

Ali Naimi hates ethanol;
"The world risked disaster by placing too much hope on untested alternative energy sources, Naimi told an Opec conference of energy leaders."
------------------------------------------------------------------
'Spend now - or face catastrophe'
News wires
Action is needed now to prevent a possible "catastrophic" energy supply crunch , Saudi Arabian Oil Minister Ali Naimi warned today.
"In years to come, if traditional energy supplies should prove inadequate because capital expenditure was curtailed due to unsustainable low prices, unreliable indication of future demand or hopes for a substitute that oil cannot deliver, such a supply crunch would be catastrophic," Reuters quoted Naimi as saying.
"The painful result would be felt sooner rather than later. It would effectively take the wheels off an already derailed economy."
The world risked disaster by placing too much hope on untested alternative energy sources, Naimi told an Opec conference of energy leaders.
"We frankly court disaster if these supplemental resources on which such high hopes for energy security and sustainability are pinned do not fulfil their high expectations," he said.
-------------------------------------------------------------------------------------------------------------------------------------
See?? There you have it! From Mr. Energy himself no less. We waste our time on alternatives like ethanol. Bad Bad Bad. The massive loss in upstream oil investment is ruining flow rates, and is guaranteeing a calamity of dry pumps.
Stop pinning hopes on ethanol now before it is too late!! Even Naimi says it!
Stop wasting government money on alternative energy!!
All we need is OPEC. I love OPEC, and so should you.
[/b]

soybean: You said: "The full cost of each gallon of gasoline replaced by ethanol (when the Omaha Rack price of gasoline is $2.37), including costs born by other users of corn, soybeans and other feed ingredients, is at least 79-86% higher than gasoline. The 2007/2008 $4.40 per gallon total wholesale cost is a minimum. If other federal and local support costs and the policy-induced price increases for other feed ingredients are included the true cost of ethanol is even higher than $4.40 per gallon of gasoline replaced. Adding margins, taxes, other policy support costs and added costs other than higher corn and soybean prices brings the true retail cost of ethanol to over $5.00 per gallon, gasoline equivalent basis (when the Omaha Rack price of gasoline is $2.37)."
This is just absolute BS. Above I posted the closing spot
futures for gasoline=1.50 and ethanol=1.60. Ethanol is
1.60/1.50=1.0667= 6.67% more expensive than gasoline--NOT
79-86% higher.
[/b]

soybean: You said: "The poorest of the poor around the world are the most heavily affected, and have no influence on the policies that are making them worse off."
This is just absolute BS. The US is the most generous country
in the world assisting the poor of the world. Disagree???
Well...tell me what country gives away more food than the US?
Do you know where that food comes from??? American farmers!
It damn sure does not come from the oil companies and OPEC.
[/b]

soybean: You invoke the poor and the food vs fuel argument.
The latest USDA Corn S&D report shows Exports=1.7bil bu.
Why aren't you screaming about the exports that could be
used for food for the poor? Ending Stocks=1.74bil bu.
Did you catch that??? Ending Stocks=1.74bil bu. This is
while we have record ethanol production. Ethanol is not
causing a shortage. We are swimming in corn. And...until
12 days ago, the price of corn was BELOW the Cost of
Production.
The point is that ethanol is not causing a supply shortage.
When the price of corn went to $8, grocery stores raised
their prices. Well...corn has crashed, but grocery stores
have not lowered their prices.
The Federal Reserve System is hyperinflating our currency
which causes the price of all commodities from crude oil
to gold to steel to copper to corn to go up. Why aren't
you directing your ire at our central bank???
[/b]

soybean: You said: "As has been pointed out in this study the total cost of ethanol is nearly double that of gasoline. Even excluding costs born by others, ethanol and biodiesel are both priced above the fuels they replace. Biofuels policy has in fact increased, not decreased, U.S. energy costs."
When crude oil was $147/bbl, ethanol was cheaper than
gasoline. Markets are transitory and dynamic. Nevertheless,
it takes more energy to produce a gallon of gasoline than
a gallon of ethanol. So...over receding and advancing
horizons, ethanol will always be cheaper than gasoline
over the long haul even without subsidies--which go to
Big Oil anyway.
[/b]

soybean: You said: "The poorest of the poor around the world
are the most heavily affected, and have no influence on the
policies that are making them worse off."
For your information, the farmers in these countries with
the poorest of the poor have filed trade complaints with
the World Trade Organization because our food donations
have depressed the incomes of the poor farmers.
These poor farmers don't even take care of the poor in
their own countries, but they file complaints with the
WTO when we take care of their poor.
Your invoking the poor in scapegoating ethanol rings
pretty hollow.
[/b]

Very good discourse 48, The response to each of his full of crap allogtion is spot on.
Soybean you need to quit your *****ing and get your *** to work on something positive. Food for fuel is good for the enviroment. It keeps people alive and at the same time uses up green house gas. Cattle fart less.
"I get civil like a savage when the government
speaks with the forked tongue of fake civility"
verbatime
[/b]

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