Ethanol plants go down the tubes

 
John C. Eberhardt

John C. Eberhardt

 

The housing bubble pops, investors stumble over each other trying to find another place to make money and end up buying commodities such as corn and oil. The result is that the prices skyrocket. And when oil prices went up so did gas prices. Then there were cries for domestic alternative fuels such as ethanol and then came the mandates and the subsidies. The mandates and subsidies came along inside the Energy Policy Act of 2005. That energy bill back in 2005 mandated that 4 billion gallons of renewable fuel (you guessed it, mostly corn-based ethanol) must be added to the United States’ gasoline supply in 2006. Then it mandated 4.7 billion gallons in 2007 and 7.5 billion in 2012. This is a huge increase in ethanol use but is still only a teaspoon full when compared to the 140 billion gallons of gas the U.S. burns every year.
 

 

Then came the “chicken and the egg” problem. Now we’ll go back to the investors again. Ethanol was supposed to be an alternative fuel that could be produced by many sources including and mostly domestic corn. Investors again stumbled over each other investing in these ethanol plants. Almost overnight ethanol plants started popping up all over the United States and every one of them were designed to use corn. And everything seemed to be going great until the demand for corn went way up as it started to deplete the suppl

 
Just working for a living

y of corn used for our food and for feedstock. This caused the price of corn to rise even more. Once the price of corn went up, this drove the cost to produce ethanol to skyrocket. Then to make things worse, speculators again made a quick buck buying (even more) corn futures which then drove up the price of corn even more. Now the high corn prices, the credit crunch, falling oil prices and decrease consumer demand is causing the opposite to occur.
Just when you thought things were bad enough, another nail in their coffin came as now there were too many plants making too much ethanol. The oversupply of ethanol caused ethanol prices to fall sharply. Ethanol plants that were just finished being built and others that were just starting to be built went bankrupt. It seems like more of them go down every day. John McCain just announced in last night’s debates that he is planning to eliminate the import tariff of 54¢ per gallon on Brazil’s sugar and ethanol imports. And I quote from last night’s debate “”I would eliminate the tariff on imported sugar cane-based ethanol from Brazil.” I don’t know all the answers but I myself can’t really see how this can I help our domestic ethanol industry in any way at all. I think they should be some common ground here somewhere that we could get to. I can’t help but feel sorry for our alternative energy programs. What is going to happen next is anyone’s guess.

Source: http://genomicsgtl.energy.gov/biofuels/transportation.shtm
Source: http://en.wikipedia.org/wiki/Energy_Policy_Act_of_2005
Source: http://www.doi.gov/iepa/EnergyPolicyActof2005.pdf
Source: http://www.eia.doe.gov/oiaf/aeo/
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4 Responses to “Ethanol plants go down the tubes”

  1. andyde Says:

    Interesting article, thanks !

    Beyond Tanks.

  2. stopethanol Says:

    Unfortunately Mr. Eberhardt is one federal RFS mandate behind. The new law is EISA 2007 and it mandates 9 billion gallons of ethanol production this year and 15.2 billion gallons by 2012, which will be enough to take all of our auto gasoline production E10. If you want to see the latest information look at stopethanol.wordpress.com

  3. johnceberhardt Says:

    Thanks for your comment. I am aware of the additional amounts of ethanol that were mandated. Ethanol is a supplemental and transitional fuel source. It cannot possibly supplant our need for oil and corn is one of the poorest choices for ethanol production.

    In 2008 the United States we will consume about 20,800,000 barrels per day (7,592,000,000 per year) while producing only 8,322,000 barrels per day (I know I’m being a little silly by saying “only” here). Currently, out of each barrel of oil, 19% is gasoline, 9% is diesel, 4% is jet fuel and heating oil accounts for about 2%. Today, according to the Energy Information Administration, auto gas consumption is currently about 547 million gallons per month, Distillate Fuel Oil (diesel and heating) is currently about 104 million gallons per month, and jet fuel usage is currently about 48 million gallons per month as of July 2008.

    If all the U.S. corn crop were used to make ethanol it can only replace about 12% of our current gasoline usage. This would cause worldwide famine and drive the price of corn through the roof.

    But the corn lobby of the Midwestern states is very powerful and has a “devil may care” attitude. They have everything to gain and nothing to lose. It sounds like a politicians dream. The powerful (and voting) Midwest farmers will get rich, the air will be cleaner, we will put a dent in global-warming, and, best of all, we can eliminate those pesky wars over foreign oil. We can tell those greedy OPEC members to blow. As one of the kings of the ethanol lobby, Sen. Chuck Grassley of Iowa, put it like this, “Everything about ethanol is good, good, good.”

    But there are a lot better things to make ethanol out of.

    “Nor is all ethanol created equal. In Brazil, ethanol made from sugar cane has an energy balance of 8-to-1 — that is, when you add up the fossil fuels used to irrigate, fertilize, grow, transport and refine sugar cane into ethanol, the energy output is eight times higher than the energy inputs. That’s a better deal than gasoline, which has an energy balance of 5-to-1. In contrast, the energy balance of corn ethanol is only 1.3-to-1 – making it practically worthless as an energy source. Corn ethanol is essentially a way of recycling natural gas,” says Robert Rapier, an oil-industry engineer who runs the R-Squared Energy Blog.

    Also I have noticed one error in your blog from personal experience. Aircraft engines can use ethanol as a fuel. As a private pilot and member of the EAA, I know that many airplanes use ethanol as the primary source of fuel. My Cessna 172 and has an auto gas supplemental type certificate (I received my STC in 1987) that allows my plane to run automobile fuel. My aircraft can run anything from 80 octane to 100 low lead and all types of auto fuel. See: http://www.k0lee.com/blog/2007/08/can-ethanol-be-aviation-fuel.html and http://www.ethanolproducer.com/article.jsp?article_id=4274.

    Some aircraft require modifications to burn ethanol. My aircraft requires all parts that are vulnerable to the corrosive nature of ethanol to be replaced, such as rubber hoses, etc.

    Other aircraft require changes to the engine to maintain the correct stoichiometric ratio. The term stoichiometric ratio describes the chemically correct air-fuel ratio necessary to achieve complete combustion of the fuel. Gasoline’s average stoichiometric ratio is approximately 1.78:1 This can also be described as the mass Air to Fuel Ratio (AFR) which is between 14.6 and 14:7:1.

    On most newer aircraft this modification involves resizing the jets on the fuel injectors to increase the range of the fuel to air mixture. Ethanol requires about 30% higher stoichiometric ratio than gasoline. You can still use gasoline as long as you remember to lean the engine (I run full rich on takeoff).

    As I’ve said before, the future of our nation’s energy will come from a variety of sources. Ethanol’s role in this future is yet to be determined. But we do need some sources of energy that will bridge the gap from the old to the new and buy us time until we are able to fully develop these new sources of energy. Sources of energy will increasingly come from renewable energy and therefore decrease our reliance on fossil fuels such as Petroleum Products.

    Conservation and technological improvements will reduce our total energy demand. Reduction in reliance on the automobile combined with improved gas mileage (80 mpg and greater) can reduce fuel use by a factor of four. Currently advances in wind, solar, geothermal and energy conservation show great promise. It has also been suggested by many politicians that the United States should build many more nuclear power plants. It is also hoped that fusion power, which is technically feasible although approximately 25 years in the future, will be another source of clean power.

  4. stopethanol Says:

    You stated: “Also I have noticed one error in your blog from personal experience. Aircraft engines can use ethanol as a fuel.”

    There is no error in my blog. I did not state that aircraft engines could not use ethanol as a fuel, I said that aircraft engines should not use ethanol as a fuel. And, in fact, the engine in your Cessna 172 is prohibited from using ethanol blended fuel if you have either the EAA or Petersen STC. The links that you provided about airplanes using ethanol blended fuel are homebuilt aircraft, they are not commercial Type Certificated aircraft. Homebuilt aircraft do not have a Type Certificate. The owner can specify the type of fuel to be used at the time of building since he is the manufacturer. If he specifies that his airplane can burn ethanol blended fuel, he is free to do so, but he must accept the consequences.

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