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307 comments on DrumBeat: November 2, 2006

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JoulesBurn on November 2, 2006 - 3:33pm Permalink | Subthread | Parent | Comments top
All markets are finite? Maybe in the short term. Arable land is finite. There is a limit to crop yield, especially without fossil fuel-derived additives to the soil. People can only eat so much, but then the population keeps on breeding.

Biofuels changes the game. Demand for gas for the car could swallow everything farmers could grow. Of course, with the ensuing mass starvation, demand might be lessened. Perhaps you're right after all.

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Engineer-Poet on November 2, 2006 - 6:23pm Permalink | Subthread | Parent | Comments top
You just brushed past the kernel of what I'm writing about.  More later.
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Todd on November 2, 2006 - 8:29pm Permalink | Subthread | Parent | Comments top
JB,

It's unclear what your point is; even corn for ethanol is finite.  I get the impression that you don't understand production ag.  What will happen, just like llamas and wine grapes, is that farmers will switch out of a corn and beans rotation to corn on corn and create a glut of corn.  This will drive the price of corn down and beans up so...

At the same time, by switching to corn on corn, their cost of production will go up since they won't have the residual nitrogen from the beans, possibly have to irrigate more, be paying for GM seed and their profits will likely go down short of an explosive increase in their corn price.  This is why so many farm wives work off the farm (and do the farm's books in their spare time) - to balance the variability of income and, maybe, get some benefits like medical.  You got to ask yourself, if farming is so great a profit center why does the farmer's wife work as the elementary school secretary?

But, I was addressing profitable farming in my initial response.  Growing commodity crops is like being a slave to the bank because it is often impossible to plow down and plant crops without a loan each year.

Is overseas demand going to make a difference to farm profitibility?  How are these countries with starving people going to pay for it?  Via our tax dollars to subsidize it all?  Are US consumers going to watch the price of food go up because the .gov mandates ethanol?  How about the reality that new engines aren't tricked into better emissions because of the oxygenates added to gasoline?

In my county, I know of quality wine grape growers who didn't pick last year because they couldn't find a home for their grapes that turned a profit.  The same thing will happen to corn growers.

I don't know the answer.

Todd;  a Realist

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JoulesBurn on November 2, 2006 - 10:04pm Permalink | Subthread | Parent | Comments top
They don't have to stop crop rotations. Corn, then beans, then corn, etc.

My point is this:

Corn and soybeans are currently commodities because there has been an overproduction relative to world demand. Subsidies paid to farmers for these make things worse for everybody except ADM and Cargill. Farmers get hosed because they take all the risk and are usually in debt for equipment, land, etc. I'm not an ag expert, but my dad grew up on one and I have plenty of close relatives in Illinois that farm including a cousin that does pretty well. But most do work other jobs. That is the present, though. I'm talking about the next few years, and farmers are excited about a huge new market for their produc. Who can blame them?

There is currently under construction in western Washington a biodiesel plant capable of churning out 100 M gallons of product per year. Similar things are unfolding in Iowa and elsewhere. I added a few of them up and came to 1.2 billion gallon capacity in the next couple of years. Assuming they all use soybeans, that would use a third of the current US crop. But even that much biodiesel doesn't make much of a dent in the amount of diesel fuel consumed in the US. Same for ethanol, assuming that the EROEI really is 1.2 or so. Energy consumption is like a black hole--it will swallow everything and not so much burp.

I'm not saying things will turn out good for farmers, as it rarely does.

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Todd on November 2, 2006 - 10:28pm Permalink | Subthread | Parent | Comments top
JB,

I guess we are coming from the same place in most ways - at least we aren't arguing about basics.

I believe that farmers are going to take it by over producing.  You may be right that they have a few good years ahead. I just believe that farm profits, in the long run, won't come from producing commodtity crops regardless of their demand.

My rationale for this is that consumers are going to whoop and howler about farm "subsidies" just like oil profits if it hits them in the pocketbook.  We'll see.

Todd; a Realist

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sf on November 3, 2006 - 12:25am Permalink | Subthread | Parent | Comments top
I wonder whether the real value of biodiesel will be as an additive to replace the lubricity lost in low sulphur diesel.  We will probably be close to peak ethanol when there is enough for 90/10 gasohol.  
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Engineer-Poet on November 3, 2006 - 12:37am Permalink | Subthread | Parent | Comments top
We'd be better off using ethanol as a co-injected octane booster than blending it with gasoline; savings of 30% aren't enough to save us, but are nothing to sneeze at either.  If we're going to use ethanol with petroleum, that's how it should be used.
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Jack on November 3, 2006 - 3:36am Permalink | Subthread | Parent | Comments top
I expect that you are right that 90/10 ethanol on a global aggregate basis is probably peak ethanol. In fact, it may be even lower since it does not appear that temperate countries can produce ethanol at efficiencies adequate to justify their use.

However, offsetting 10% of gasoline use with a sustainable, climate friendly fuel such as sugar cane derived ethanol is exactly the type of step we need to take to completely solve peak oil and global warming. 3-4 more silver bul;ets of the same magnitude and peak oil would be a lot less of a worry.

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