Posts Tagged ‘biofuels’

Nigel Hunt of Reuters reports that

Corn prices rose to record highs on Monday and looked set to climb further as torrential rains threatened to reduce further U.S. crop prospects in a market already facing tight supplies and surging demand.

Strong demand for corn from U.S. biofuel producers has contributed to supply tightness in the corn market. The U.S. Department of Agriculture has forecast about a third of this year’s crop will be consumed by the biofuel sector.

“I am still very bullish. I think $7, $8, $9 corn is well within reach,” said Commerzbank analyst Edward Hands.

Unfortunately, the combination of a foolish corn ethanol program with rising gas prices and rising transportation costs are all conspiring to drive up the price of food. With the additional effects of the recent heavy storms and rain in the Midwest, including flooding in some areas and frequent tornadoes, corn prices are skyrocketing. One simple action that should be taken immediately is to halt all corn ethanol subsidies and programs, so that food and fuel are no longer in competition with each other.

Original text copyrighted © 2008 James K. Bashkin

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Addendum. Devastated US corn crop sends ethanol producer shares into freefall.” The Associated Press reported the following financial news:

The values of ethanol producers hemorrhaged Thursday as the price of their key feedstock, corn, climbed to record levels because U.S. floods have devasted this year’s crop.

“In the last 10 days the world has changed in the corn market with massive flooding causing irreparable damage to this year’s crop and pushing corn prices up $1 over this time frame,” Citi Investment Research analyst David C. Driscoll wrote in a client note.

“As a result of this unprecedented weather event which has happened only twice in the last 25 years, ethanol margins have plummeted over the same ten day time span with small and mid size ethanol producers now running at substantial losses against cash costs.”

He expects such small and mid-sized producers to halt operations.

Unfortunately, these financial and farming problems will increase food prices in the near term, but they may help lower food prices in future growing seasons, as long as the corn ethanol producers stay shut down. Repeal of the tax credits for corn ethanol would help keep corn ethanol from once again driving food prices up.

Original text copyrighted © 2008 James K. Bashkin

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“Biofuels are fast becoming a new flash point in global diplomacy, putting pressure on Western politicians to reconsider their policies.”

Note that free registration at the NYT may be necessary to see this article at the “read more” link. Nevertheless, this New York Times article needs to be read! This is true even though the article sounds more like it was written by a politician than I would have expected, giving ample space what I would call the self-serving justifications offered by Congressmen and Federal officials. The tone of the NYT article contrasts with the stronger conclusions reached in the Chicago Tribune about the growing price of eggs, where the blame is laid squarely on high corn prices (you may have to register for a free account to see this article, also). I have been writing about the topic of the unfortunate conflict between food and fuel since approximately September (not that the idea was original to me, there was plenty of documentation available!).

I don’t condemn all biofuels, and I support biodiesel made from waste vegetable oil, fish oil or other waste products as a reasonable approach, if one must have a liquid, carbon-based fuel. It is certainly clear that liquid fuels will not be disappearing overnight. However, I do not support placing food crops in competition with energy needs. In my opinion, the time of electric cars should be and is approaching, as hybrids become more popular, plug-in hybrids are near to reaching mainstream showrooms, and battery technology continues to improve, making already-available, purely electric cars even more affordable. We should be making investments in these technologies and related clean energy programs (solar, wind, geothermal), not pouring tax dollars down the drain with ethanol subsidies that have no effect whatsoever on oil and gas prices (this much is obvious, regardless of your opinion how corn ethanol and other biofuels affect food prices). The Economist was also firm in its criticism of corn ethanol programs, as reported here earlier.

Please see my recent post about the discoveries of improved Lithium ion batteries from Argonne National Labs and my post about electric cars, hybrids and plug-in hybrids. Many other related articles are published here as well.

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© James K. Bashkin, 2008

As reported in the New York Times on Feb 8, 2008 and discussed by Douglas Schiller at, two studies have reached the conclusion given in the title. US demand for biofuels from food sources is driving up food prices throughout the world.

A key distinction here is “from food”. We may still have the option of using waste cooking vegetable oil and other waste products to produce biofuels (for example, to make biodiesel) without harming food prices or the environment. Solutions to the problems that do not require liquid fuels, including electric cars, are looking like the best answer over the long term, however.

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For another (better) overview of the reports that were released yesterday from a number of Universities and The Nature Conservancy, see here.

© James K. Bashkin, 2008

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These comments are my analysis and discussion of an article on various sides of the “corn ethanol story” published by Joel Achenbach in the Washington Post, with farmers telling us they can’t survive without the subsidies. I guess they’ll inherit the earth when the rest of us have no water to drink. The fact that the dust bowl is likely to be re-created doesn’t seem to bother them, so get ready, California, for a big influx of foreigners from the Midwest. Click the “read more” link below to see the article.

The comments on the story, found on the Washington Post website, are most telling, with some decrying “environmentalists who are never happy.” Well, I don’t see a lot to be happy about when tax dollars are being spent to subsidize a senseless and wasteful corn-ethanol program that pollutes and wastes our fresh water while having no impact on our foreign oil dependence. I have documented much about the problems of corn ethanol on this site. I don’t blame the farmers for taking the subsidies: heck, this is America, where socialism is a crime unless it bails out good farmin’ folk (or big business). Using public funds to save lives through health care, or to save the environment through any number of approaches (mass transit, anyone?), is clearly viewed as evil by many. It is, however, our “energy policies” that are flawed- they certainly have nothing to do with energy.

Corn is food, and will never compete successfully as an ethanol producer unless its non-food parts are added to cellulosic ethanol feedstocks in future biomass-to-ethanol plants. Wasting money on corn-ethanol just delays research on sensible biofuels and pollutes the fresh water that is so short in many parts of the US and the world.

Why is it that everyone is up in arms about chemical companies, oil companies, power companies or mining companies that pollute the environment, but polluting is no problem at all if done by those great family farmers whom we all love so much (and their large corporate cousins)?

Of course, as pointed out in one of the comments to the Washington Post story, ethanol contains about half the available energy that gasoline contains, so you have to burn twice as much ethanol as gas to go the same distance at the same speed.

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© James K. Bashkin, 2007

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As reported by Timothy Gardner of Reuters, ethanol prices are so low that producers are not making any profit.

U.S. weekly ethanol margins still in the dumps

by Timothy Gardner

NEW YORK, Nov 2 (Reuters) – U.S. ethanol margins ticked a few cents higher this week as producers fetched slightly higher prices for the renewable fuel, but the average producer was still making next to no profit, analysts said Friday.

So, production of ethanol is

  • ruining the food economy
  • polluting the rivers (and streams and Gulf of Mexico and everything else) with agricultural runoff
  • eliminating grasslands
  • using up water in water-poor regions

and the bad news is … nobody is even getting rich off this behavior! Oh, and it is having zero impact on our need for foreign oil. The robber barons of old must be turning over in their graves.

More from Mr. Gardner:

“When gasoline prices are much higher than ethanol prices, some blenders add more ethanol to gasoline than required by law, which eventually boosts prices for the renewable fuel.

But the slighter better ethanol margins were not enough to line the pockets of renewable fuel producers

“When you consider overhead costs, you’re probably below break even,” Ron Oster, an ethanol analyst at Broadpoint Capital, Inc, in Missouri, said in an interview.”

Why such trouble? Because the corn-ethanol business faces problems like

“rising prices for natural gas, used to power most bio-refineries, [that] cut profit margins down to about break even”

Read the whole article for bleak projections of profit, more explanation of high production costs and revelations about the poor efficiency of many ethanol plants.

Why are we subsidizing this industry, and why are we pretending that it is good for the environment?

© James K. Bashkin, 2007

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With thanks to George L. in St. Louis for the heads up, here is what The Economist has to say (in regard to US corn-ethanol efforts):

“Everyone seems to think that ethanol is a good way to make cars greener. Everyone is wrong”

The article does not dismiss all bioenergy, and it reports on new research and development that may provide economically-viable bioenergy supplies. The discussion of these potential new approaches is supportive and hopeful.

However, the article dismantles myths about corn-ethanol as a fuel. These include the matter, well-known by technologists but seemingly unknown to politicians or the public, that ethanol is a lousy fuel for many reasons. Not the least is the “hygroscopic” nature of ethanol- its property of absorbing water from the atmosphere. Automobile fuel with significant water content is bad for combustion efficiency.

It is time we realized that “natural” is not synonymous with “environmentally friendly”, or even “harmless”. It is time we stopped allowing senseless government subsidies of environmentally-wasteful corn ethanol programs that are driving up the cost of nearly all food, everywhere, in the US and around the world… without doing a single thing to solve any energy problem.

If you want to read more about the harmful effects on “normal people” of increased food prices, just see”Biofuelled: Grain prices go the way of the oil prices,” from The Economist print edition, or online at the link. The fact that demand for grain is exceeding supplies is explained in this article:

“The culprit is the growing use of grains to make biofuels, such as ethanol. … Ethanol distilleries (in the USA) now consume 1/5 of the Nation’s corn.”

But how can this be? Bioethanol is all natural. Isn’t that good? In a word, NO, and the stresses that corn-ethanol places on the environment, the food economy, and the cost of living are serious. Farm production may not be able to keep up with demand, and, the article reports, even if production is increased, it may not matter:

“… even if new land is planted, argues Jeffrey Currie of Goldman Sachs, it will not necessarily reduce the cost of grains. Since high oil prices and generous government subsidies ensure that biofuels are profitable, any extra grain will be used to make more (ethanol). That will not dent the oil price (…). Instead, the price of biofuels has risen to that of petrol (gasoline), and the price of corn and crude oil, the main feedstocks for the two, have converged.”

How can it happen that food prices are being driven up with NO environmental benefit? Among other things, we should consider the following points:

  • the convergence of pressure from large national and multinational farming companies and from small farmers
  • the readiness of politicians to use public funds to “give back” to their constituents and campaign contributors through huge subsidies
  • the undoubted joy in some circles that this behavior can be successfully linked, however falsely, to “improving the environment”
  • the willingness of the public to believe that anything “natural” has to be better than alternatives

For additional relevant articles in The Economist and many other news and scientific sources, see the World Headlines link under my blogroll heading. Comments and feedback are welcome, as always.

© James K. Bashkin, 2007

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Go to the Science Friday home page and look for the Oct 4, 2007 (Hour 1) show on Biofuels to listen to the Podcast.

Also, check out my blogroll (under Science) for a link to the Science Friday Kids’ Connection, an educational resource for grades 6-8.

Let me know what you think! Thanks, as always, for your feedback.

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There are good and bad sides to biofuels, as Jane Goodall points out. I will explore this in detail in a series of articles that express my opinion and cite scientific reports or discussions. First, a bullet-point summary of key points is given below.

Much of the good/bad duality of biofuels has to do with the following questions:

  • where do the biofuels come from?
  • what are we destroying in order to generate biofuels?
  • what are we consuming in order to generate biofuels?
  • what are we failing to produce in order to generate biofuels?
  • Many (most) of the crops being planted for biofuels are destined to generate biodiesel, not bioethanol.
  • Some plants grown for fuel are intended to produce a type of diesel called straight vegetable oil (SVO).
    • SVOs contain a number of impurities, at least as far as fuel oil is concerned. Even water is an impurity here.
    • Just as an example, you only have to press the oil out of the olives to remove it.
    • Peanut oil and practical coconut oil can be also be collected mechanically, like pressing olives.
  • Biodiesel is more pure than SVO or WVO (if made properly). It is made by chemically splitting animal fat or vegetable oil into two parts, followed by purification.
  • The standard chemical reaction to make biodiesel uses alcohol (methanol or ethanol) and a catalyst.
  • This reaction, called transesterification, generates fatty acid esters and the byproduct known as glycerol.
  • One example that seems to me to have little or no downside is the generation of biodiesel from fish oil:
    • Fish oil is already generated by the fishing industry.
    • Fish oil is potential waste that already exists and may not be used as efficiently as possible.
    • Fish oil conversion to biodiesel still needs to be pushed forward by invention and commercial development.
  • Another example of a method that exhibits great potential is the conversion of all of a plant’s dried matter (known as biomass) into biodiesel:
    • Plant oils are only about 10% of total plant biomass in most cases
    • Using all the biomass to generate biodiesel captures much more of the value of a plant, and the energy that went into growing it, than using only plant oil does
    • Cellulose and lignins are components of typical biomass and are hard to convert into liquid fuel, compared to oils

© James K. Bashkin, 2007

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