Thursday, February 17, 2011

Ethanol Catch 22

Blink:
Have you noticed how your meat and dairy prices at your local supermarket have skyrocketed lately? That is because our cars now burn up a third of the nation’s corn crop that normally was utilized as feed for the livestock industry.

Read On:
Federally mandated ethanol standards first came into play in 2005, thanks to high gasoline prices and America’s dependence on imported fossil fuels. Then the bar was raised when
Congress created subsidies paying gasoline blenders for every gallon they blend with ethanol. As a result, over the last five years the percentage of corn used for ethanol rose from 9.5 percent to now approximately one-third of the crop’s total yield. Corn Economics 101 – the increased demand for corn for the production of ethanol drives up the prices for other buyers like livestock producers.

Now let us examine the Catch-22 of ethanol produced from corn. Ethanol now comprises approximately 8 percent of the fuel we consume. We are just beginning to feel it at our dinner table, but long-term how will ethanol as a renewable fuel impact America? For starters there is corn ethanol’s thirst for water. Researchers now estimate ethanol consumes three times more water than originally estimated back in 2005 – water needed to irrigate corn production as it extends to new areas of the country and water needed in the production of ethanol. Second, extensive studies indicate that energy balance between the use of fossil energy in the production of ethanol is just about equal to the energy contained in the ethanol produced. Let us not forget how fossil fuel is used in the logistics of moving the grain to the refinery and then from the refinery to the pump. Third, the fertilizers needed to grow corn are not exactly eco-friendly. Some farmers are trying to capitalize on robust corn prices by not rotating their crops properly which ultimately leads to soil erosion. Last, Americans who want to use ethanol might bear the cost of making their cars e85 compatible.

In closing, I am by no means an energy expert. However, ethanol production has thrown Corn Economics 101 out of sync. I have read about other alternatives out there when it comes to the production of renewable fuels, like cellulosic ethanol made from trash and other useless matter. This much I do know, you will not be witnessing the leaders of the meat industry fraternizing with advocates of corn ethanol in the near future.

7 comments:

  1. Jim:
    Seems like we are being hit from alll sides. The price of cotton is going up because of the increasing demands from overseas and the decreasing supply. So less clothes and food, what next?
    Cheers
    Dick

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  2. Seems like this is a tremendous opportunity. Build desalination plants along the coast to provide water and increase farm production so that we don't have to pay farmers subsidies not to grow.

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  3. Never underestimate the impact of the Law of Unintended Consequences which consistently raises its ugly head every time Congress creates a new law!

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  4. Jim,

    If you ask me, the real problem is not finding alternative fuel sources as it is making a tectonic shift in our behaviour, specifically that it's time we move from mass consumption to a more balanced state. If you haven't seen it, I'd recommend you check out the documentary "The Story of Stuff" (http://www.storyofstuff.com/). Very thought-provoking stuff.

    Thanks again, Jim, for drawing attention to this issue.

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  5. "Stuck in the middle..." The concept of ethanol was well placed, but other factors have now created exactly the opposite outcome as was originally designed. The corn states will NEVER vote against it, and the farm lobby will scare the livin' shit out of anyone who even thinks of voting for a restructuring or repeal. Such as it is in many things with our nations lawmakers. Its a topsy-turvy world where black is white, up is down, and shit is the coin of the realm.

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  6. Thank you everyone for your comments. More of a discussion thread than I envisioned when I posted. Based on some offline comments, combined with the above, it looks as if lobbyists impact the Ethanol Catch-22 big time! You have to love the politics of the Beltway. Show me the money!

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  7. Jim
    Thanks for reminding me to go backwards as a way to move forward. I re-read Dr. Seuss' Oh The Places You'll Go, a book we read in 19??, and forgot all about ethanol, gas prices, beef, Ghadafi, Rush Bimbo, Afghanistan, and all the other Stans. The book flushed my mind of all the negatives, and I focused on the good things that have happened, are happening, and will happen in my life. I've got places to go. Wish I could be in Houston next Saturday for the final four. Now that's a place to go or Newark after the Four!

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