Drought = Less Ethanol?

[na1g]

Our local newspaper just ran an Associated Press article about the 2012 drought and ethanol production. A few highlights:

- "...of the nation's 211 ethanol plants, 20 have ceased production over the past year, inluding 5 in January."

- "Still, there is growing concern about what happens if the drought lingers through another corn-growing season."

- "About 95 percent of US ethanol is made from corn."

- "...39 percent of the US corn crop is used in ethanol production."

- "Even though more acres were planted in 2012 compared to 2011, about 13 percent less corn was harvested."

- "...not much of an issue for consumers, at least for now, because there are plenty of stockpiles of ethanol."

- "...the nation has more than 20 million barrels of ethanol in stock."

In case you thought this was good news and surely the EPA would re-think increasing ethanol content to 15% in gasoline, the last two quotes will set you straight. I feel sorry for the corn farmers but wish they would make corn flakes instead of ethanol.

pete

[Bobmws]

So now our food prices soar and we still get screwed with lousy mileage and performance, and the cost of that will increase too............

[mika]

Manufacturing agricultural based products, cornflakes/ethanol/enter product name here, are far less likely to be continuous operations in the same way that widget manufacturing is described in conversation. In the case of ethanol the balance among supply/seasonal gas demand changes/storage capacity/production changes due to seasonal blends results in the slow down or shut down of production and refining operations. If the article is referring to business failures the industry has a history of that going back to the dawn of time. Lack of demand, distance to market, costs greater than revenue will lead to any business closing.

Your selected quotes observes increased acreage was dedicated to corn yet it yielded less. Acres planted and rainfall amounts are only two of many elements in predicting yield. Which acres are planted? Increases in planted acreage often come from marginal lands which farmers expect lower yields and only plant when market prices will support the risk. Bushels per acre planted is an important metric but I would argue it must be considered in the context of total production v demand. Improved drought resistant seed stains have been developed to protect yield. When water comes is as important as if. Timing and form will greatly impact crop yield.

Without reading the article I am not certain I would use it to draw an overall conclusion about the EPA. My experience as a reader of such articles the 'consumers don't need to worry' parts refer to short term seasonal supply and demand concerns and do little to inform the long term view of the issue.

Based on the quotes without reading the article and including past reading I suggest the discussion has to be expanded to include water management. Water is a limited resource here in Fly Over Land. What should it be used for. Does it make sense to drain aquifers and reservoirs to grow any row crops? If so how much and for what purpose? I am not opposed to shale oil but have great concerns about its impact on water reserves. As I understand it these resources are finite but the demand for food and potable water will continue long after.

Dang I swore I wouldn't get involved in another ethanol thread but I am procrastinating and this was the only thing at hand.

[greenwald]

So now our food prices soar and we still get screwed with lousy mileage and performance, and the cost of that will increase too............

Amen to that!

[mika]

So now our food prices soar and we still get screwed with lousy mileage and performance, and the cost of that will increase too............

Amen to that!

The two issues are definitely but it is simplistic to see it as just cause and effect. If we are going to dance on the edge of the forum rules at lets at least do it with more than sound bites. No energy policy, bad farm policy and protective tariffs are the visible tip of a big iceberg. It is not a left-right, dem-rep, city-farmer issue it is how we are choosing to run complex long term systems with very short term ad hoc solutions.

Sorry Mods.

[beckgr]

This is not a rational issue as its a federal program, not private and also not voted on by congress. While water is a valid concern, the mandate does not allow for that consideration and I surmise until water is an emergency situation, it will not be a factor. (It should be, but it won be.) Energy policy and the EPA are in the drivers seat and the federal mandates are on production of biofuels. The mandates won't change without congressional or presidential intervention. I always believed that the in the food vs fuel debate, food would win. But the market, due to our mandates, has moved food production (exports) to South America, the Black Sea regions as well as other, new, non-traditional exporting countries. So ethanol is here to stay. We are producing enough ethanol that we can't consume it all at only a 10% inclusion rate, but mandates require more production. That's why the govt has to allow 15% blend.

What's even more interesting is why aren't we switching to natural gas more quickly than we are today? On a btu basis it has a 5-1 advantage cost wise over crude oil.

[mika]

I will argue that because 'it' is a Federal problem it is incredibly rational; however, the difficulty in that is it is a problem which does not reside in one branch (silo) but bridges all three branches and administrative law. The logic with a single silo is predictable and while not fallacy proof it does generally work. Where rationality of the system comes into doubt is that the designers of the silos set them up as silos and ones that function in tension with each other. The administrative law side is linked in tension filled ways to all the silos in ways that reinforce the tension.

I will also argue that it is not just a Federal problem but also a state problem which adds another layer of silos in tension with each other and the Federal system.

Left to business it may not be any different. Business might not intentionally set them selves up in this manner but it is more often the case than many would think. While it is not a purely business management issue business is one of the component constituencies involved in all of the branches involved adding to the complexity of the problem.

The difference between how we approach the Federal problem and a similar problem is we are willing to expend the energy to analyze the business problem, hire consultants and more. The same people that display the intellect to go about dealing with the issues throw up their hands grab a beer and say its the government(any silo) and accept the status.

The shift to natural gas or any other energy source than a dominate one is largely limited by infrastructure and connivance.

[kantuckid]

One of my sons was in your "throw up their hands" mode as he often butted heads with feds that were from the EPA and that often lacked the credentials/knowledge/background,whatever to back up what they were pushing. He met them head to head on the job & as a presenter at the conferences where the atmospheric types chew the fat. He came away from these contacts not impressed(that's the throw up the hands direct contact, the other being the directives that came out) by what the govt. was putting out. He often told us that they(EPA) didn't know what the hell they were doing. I kind of doubt they were drinking beer together. This not a political but scientific premise were talking. His posture was/is\ not the right/left thing but as an atmospheric scientist that was extremely frustrated to do the right things as his company proceeded to spend enormous sums of cash to clean things up. He was the guy that implemented the smokestack , what I'll call "cleaners", for certain emissions in coal fired plants operated by a mega power conglomerate in the SE USA.
As a side note, I'm a life long NG reader & his company was actually running "Bambi in the forest ads" in the mag at the time he was trying to get more money for his projects. Later the cash flow started but the PR preceded the $$$,FWIW.
As gas is the thing for now, he is reassigned(2 yrs-sort of temp. thing) to director of engineering in a very large power plant that currently runs on gas. The "scrubber" projects were mostly put aside during this gas era. As another side note, my nephews are layed off from their KY coal jobs.
On the grow corn notion: Here in KY a the state dept of AG is making a push to legalize hemp(as in Canada now) as a cash crop. One of the arguments against it is economic & that corn will bring you $1k per acre & thus no money to be made on hemp in the 1st place. State AG guy says only by growing & development will we ever know plus in Canada they grow it to a profit now. As I understand it, the reason we don't grow bio crops like Brazil is intertwined with the sugar subsidies our govt. gives to cane producers. It is fact that in USA we have the highest sugar prices in the world because of this subsidy. So much for the idea that we eat cheap,huh? There really are a lot of things for the govt. to "clean up" before bio becomes what it might have potential for.

[beckgr]

It's true our sugar subsidies make sugar for ethanol too expensive. I'm not sure why the sugar groups were able to get that subsidy passed, but just as with our energy and environmental policies once you have a federal program, mandate, etc, it is extremely, I'd say impossible, to change or redirect without years and years of debate. Case in point is our current farm bill. Farm producers well need a safety net, but once prices are profitable it's still very hard to chanage a bill and get all of the associated groups (as Mika mentions) on board to effect change. Private business can run into the same issues, but they can change on a dime or shareholders will demand the change. Well, maybe not on a dime, but they can move at light speed relative to anything that needs votes to pass.

Definitely agree on EPA officials not understanding all they need. i get involved with EPA, FDA and OSHa and while they mean well, they move to the direction of the adminstration (not party specific, both parties are equally terrible here.) They don't need a vote, they can implement rules and it becomes policy. Thus the lack of an effective means to change direction with ethanol very quickly at all.

Nat Gas, indeed with have infrastructure issues, conveyance, etc. But man, on a BTU basis I'm just personally surprised we don't we a lot more chatter, or effort of money being spent there. I'd like to try and convert an old pickup to NG and see what happens.

[WalterK75]

Somehow this quote seemed appropriate.

Politics is the art of looking for trouble, finding it everywhere, diagnosing it incorrectly and applying the wrong remedies.

Groucho Marx

[36654]

The shift to natural gas or any other energy source than a dominate one is largely limited by infrastructure and connivance.

With electricity at 5.5-cents per kwh, it is simply too cheap to provide any return on investments for new plants. Replacement parts for antiquated equipment from the lowest price supplier is what this market supports.

Getting NG service to or thru an existing neighborhood is pretty much a joke. In my case, I need to pay $7500 to run the line past my neighbors 60-ft wide lot.............if I want NG. Then I start paying for new furnace and heat pump.....mo money, mo money.....

As such, the oil burner is still in basement.........

[bikerfish1100]

for those concerned about the shift to E15, the AMA has an action page to support a proposal to limit ethanol %.

My US Senators received letters from me on it.

http://capwiz.com/amacycle/issues/al...18221&queueid=[capwiz:queue_id]

[36654]

Nat Gas, indeed with have infrastructure issues, conveyance, etc. But man, on a BTU basis I'm just personally surprised we don't we a lot more chatter, or effort of money being spent there. I'd like to try and convert an old pickup to NG and see what happens.

If I'm not mistaken you need 5.7 gallons of CNG to equal one gal of gasoline. Of course you need to pay the cost of compressing that CNG to 2400 psi.

[kantuckid]

Somehow this quote seemed appropriate.

Politics is the art of looking for trouble, finding it everywhere, diagnosing it incorrectly and applying the wrong remedies.

Groucho Marx

Our senate in KY just passed the "Hemp bill"-the head of the legislature says he thinks it "needs more study"-this inspite of Canada having some years of growing it,field inspections to ensure no cannabis mixed in,etc.. Needs more study meaning lets see where the money talks?

[RoadRdr]

for those concerned about the shift to E15, the AMA has an action page to support a proposal to limit ethanol %.

My US Senators received letters from me on it.

http://capwiz.com/amacycle/issues/al...18221&queueid=[capwiz:queue_id]

That couldn't have been easier. Since I'm an AMA member my data including the Senators addresses showed up right on the form when I clicked the link.

I know firsthand from prior work experience that the EPA micro-bureaus can run wild with good intentions but poor science. I was heavily involved in auto emissions testing programs when they were pushing the dynamometer auto emission testing.It was a bad program based on very minimal research. And it proved to be ineffective.