DrumBeat: March 12, 2008
Posted by Leanan on March 12, 2008 - 9:12am
Topic: Miscellaneous
Oil crosses record $110, despite supply rise
NEW YORK (CNNMoney.com) -- Oil prices rebounded to another record high Wednesday afternoon after initially plummeting when a government report said supplies of crude and gasoline had risen much more than expected.In afternoon trading, U.S. light crude for April delivery surged to a high of $110.20 before closing at $109.92. Oil had traded as low as at $107.09 following the report's release on Wednesday morning.
ConocoPhillips lowers long-term production guidance
HOUSTON — Oil major ConocoPhillips on Wednesday lowered its long-term production growth rate to 2 percent from a previous forecast of 3 percent, saying the company's goal was value not volume.
Survey: Talent not surfacing in oil, gas industry
The talent pool is drying up for some oil and gas companies, according to a survey released Wednesday.Ernst & Young LLP and Rice University surveyed human resources executives at 22 international oil and gas companies, and found that nearly 90 percent say the talent shortage has become one of the Top 5 business issues facing their companies.
Landmines Block Egypt's Access to Oil and Gas
Some 22 million landmines and unexploded ordnance have lain hidden in the northwest of Egypt since World War II, Fathy El-Shazly, national project director for mine clearance and development at the Ministry of International Cooperation, told United Nations news service Irin.Many of the mines are near the battlefield of El-Alamein, where the British Eighth Army forced the Africa Corps of "Desert Fox" Erwin Rommel to retreat all the way back to Tunisia.
... The former battleground is a treasure trove of raw materials such as oil, natural gas and ore. Egypt used to be seen as a minor oil player but experts now estimate that 4.8 billion barrels of oil lie under the sands of the north west -- enough for the country to draw level with OPEC member Angola in terms of oil production.
Gunmen hijack vessel in Nigeria, take hostages, demand ransom
LAGOS, Nigeria: Gunmen hijacked a vessel carrying six Nigerians on Wednesday in the restive southern oil region, security officials said.A private security official said assailants attacked the vessel on a creek near the oil hub of Port Harcourt and were demanding ransom for the hostages. The official spoke on condition of anonymity due to company restrictions on dealing with the media.
States await word on new air pollution rules
WASHINGTON - States and local officials across the country awaited word Wednesday on whether they will have to further cut air pollution to protect millions of people, especially the very young and the elderly, from respiratory illnesses.The Environmental Protection Agency is planning to announce whether it will tighten the federal health standard for ozone, commonly known as smog, and leave several hundred additional counties falling short of what the federal government considers healthy air.
Al Gore's fund to close after attracting $5 billion
GENEVA: The sustainable investment firm run by Al Gore, the former U.S. vice-president, is about to be closed to new investors, having raised close to its $5 billion target.
The new geopolitics of crude oil
In essence, if Chinese austerity and US demand weaken or if the Group of Seven central banks intervene in the foreign exchange markets to buy dollars against the Euro and the Japanese Yen, then crude oil prices could easily plunge to $80. However, the Wall Street credit meltdown has scared the Bernanke Fed and the Chairman’s helicopters are dropping billions of new liquidity in the money markets, meaning US interest rates have plunged 200 basis points since September. The last thing Saudi Arabia, the UAE and Kuwait need is $125 crude oil in November, with their largest customer and security underwriter in deep financial distress. Saudi Arabia has been hypersensitive to its image in the US, since the kingdom was demonised in the media, Congress and the court of public opinion after 9/11. If oil prices do not fall, Opec and Saudi Arabia could well become the focal point of the presidential election in the US. The bitterness of the Bush White House’s reaction to the last Opec conclave in Vienna is a premonition of autumn follies.
IEA to convene meeting on surging oil prices
LONDON (Thomson Financial) - The International Energy Agency will convene a meeting of oil industry experts in Paris on Monday on the current surge in crude prices, which have leapt from record to record in the last 10 days, an IEA spokesman said Wednesday.'There will be a meeting on prices with experts, both from the financial and (oil) trading sectors, as well as with representatives of the production and refining sectors,' an IEA spokeswoman told Agence France Presse.
Iran has stated that it believes an Opec-style cartel for natural gas producers could help cut production and costs and benefit customers."Iran supports setting up a body that would guarantee the rights of both consumers and producers," vice minister at the Oil Ministry Ali Kordan, told the Iranian daily Ettelaat, according to Reuters.
"Trading in gas has grown so much internationally that a policy-setting body is needed. Setting up such a body would cut production costs and this would help protect the rights of consumers," added Kordan.
Venezuela's Orinoco Output Exceeds 600,000 bbl/d, Topping Estimates
State oil company Petroleos de Venezuela Tuesday said its four oil upgrading ventures in the Orinoco basin produce more than 600,000 barrels of crude a day, more than the company's own estimates.
Uganda: Government has no petrol reserves
THE Government does not have petrol in the national oil reserve in Jinja, Julius Bitature, the depot manager, has disclosed. According to Bitature, the 550,000 litres of petrol in the reserve belong to private fuel companies.
Nigerians pull half of claims in Chevron suit
Nigerian villagers who are suing Chevron Corp. in a San Francisco federal court have quietly moved to withdraw half of their claims that the oil company was responsible for military attacks on protesters in the late 1990s.
Scotland wants to become a global force in marine energy - a market that could be worth billions.
Why Food Shortages Are Our Problem Too
British farmers should be cheering about the prospect of markets booming. Instead, the dairy sector is only just moving into recovery, while pigs and poultry are still in intensive care, vegetables and horticulture are in decline and beef and sheep are ailing. Why? Partly due to higher feed prices, or the better profitability of growing cereals or biofuels, but also because the marketplace has been dominated by the multiple retailers and their refusal to pay fair prices that cover the real cost of producing chickens, pigs and so on, and allow enough profit for farmers to invest for the future.
Crude Bull Run May Be A Long Ride With Capital Constraints
WASHINGTON (Dow Jones)--As oil prices threaten to spike above $110 a barrel Tuesday - daily setting new inflation-adjusted records - some industry experts say the bull run is in for a long ride and crude could surge even higher.While in the short term, traders are concerned about inventory levels heading into the summer, Jeffrey Currie, chief strategist and managing director of global investment for Goldman Sachs (GS), says bottlenecks in global capital investment flows into new oil production will likely continue to put upward pressure on oil prices in the mid to long term.
Australia: What kind of future will our kids inherit?
This is what Minister McNamara had to say on the subject of growth and sustainability.“Population distribution, standard of living and sustainability are linked inextricably,’’ he told the Brisbane Institute.
“A long-term study pointing out the appropriate population distribution for Australia, including modelling of the impacts both of climate change and peak oil, must now become a priority.
“In the 21st century, the human race must finally confront the reality that in the closed system that is planet Earth, there are limits to growth.
“No matter how clever we are, there is no escaping the physical limits of the world’s resources. The laws of physics trump the laws of economics every time.”
Mexico energy debate plays out in soap opera, show
MEXICO CITY (Reuters) - A fierce debate in Mexico over oil has found its way into a soap opera and an entertainment show as the country grapples with whether to allow foreign companies a place in the energy sector.
Myanmar's nutty scheme to solve energy crisis
PYAW GAN, Myanmar, March 12 (Reuters) - They may look leafless and lifeless, but Kyaw Sinnt is certain his nut-trees are the key to Myanmar's chronic energy shortage.Others are less sure, saying the junta's plan to turn the country into a giant plantation of biofuel-producing "physic nuts" is yet another example of the ill-conceived central planning that has crippled a once-promising economy.
India: Only degraded land for bio-fuel crop
New Delhi (IANS) Jatropha, a bio-fuel crop hailed by some as the answer to India’s oil shortage and reviled by others as the bane of its food crops and forests, will be grown only on degraded forest land, parliament was informed Wednesday. Two MPs had asked if the government had assessed the impact on the environment of large-scale cultivation of bio-fuel crops that are seen by many to be the solution to high oil prices and also to emission of greenhouse gases (GHG) that is leading to climate change.
Nuclear power: Getting attention?
With crude oil settling at $100-plus per barrel, gasoline reportedly heading to $4 per gallon, fuel prices spiking across the energy spectrum and worry about greenhouse gas emissions and pollution, interest is renewing in using nuclear power to generate electricity - at least to a degree.That's a bet nuclear power advocates are apparently making, at any rate. Some 34 applications for new reactor plants in a dozen or so states, most of them in the southern U.S., have been announced.
Nathan Craig, an anthropology professor, said he refuses to own a car.He said riding bikes and walking can save money and help solve the nation's obesity epidemic.
"It's a part of my war on terror," he said. "I'm interested in reducing my country's dependency on foreign fuel."
The Cruelest Tax Increase of All
So, what exactly does H.R. 5351 mean for America? And, what does it mean for working families, seniors and entrepreneurs struggling to make ends meet during this time of economic hardship?In short, it means higher energy prices across the board and greater dependence on foreign oil.
Michael Klare: The Bad News at the Pump
Oil prices are high today not due to a temporary disruption in the global flow of petroleum but for systemic reasons that are becoming more pronounced. This means news headlines with the phrase ‘record oil price’ are likely to be commonplace for a long time to come....So here's the bad news at the pump: The inability of the global energy industry to keep pace with rising demand is only likely to become more pronounced as, in the years ahead, the world reaches maximum sustainable daily petroleum output and commences what just about all energy experts now agree will be an irreversible decline. No one can be sure when exactly this will occur, but a growing chorus of specialists believes that we are moving ever closer to that moment of "peak" oil output -- with some specialists placing it as soon as 2010-12.
Analysts: U.S. economy won’t stem oil demand
NEW YORK - Strong global demand for oil will keep prices high despite a downturn in demand in the U.S., two prominent forecasters warned.The U.S. Energy Department and the International Energy Agency said Tuesday there is unlikely to be much relief from high oil prices because of brisk demand in China and other emerging markets.
$4-a-gallon gas forecast in some areas
WASHINGTON — Gasoline prices in the coming months are likely to top $4 a gallon in some parts of the country, and perhaps nationally, the government said Tuesday.
Iraqi government defends budget handling
BAGHDAD - Iraqi government officials on Wednesday expressed "regret" about what U.S. officials said was mismanagement of oil revenues.U.S. auditors told Congress on Tuesday that Iraq is not spending much of its own money, despite soaring oil revenues that are pushing the country toward a massive budget surplus.
UK: Ecotricity urges Chancellor to turn windfalls into wind turbines
While companies like Shell and Centrica hope they are still holding onto their record profits after the Chancellor’s first budget later today, Ecotricity is one energy company sharing the sentiments of green groups, in hoping that Alistair Darling will tax these windfalls.Dale Vince, MD of Ecotricity, said: ‘Taxing the windfall profits of energy companies is plain common sense.’
Taking On Congress' Favorite Biofuel
For a young company, Virent Energy Systems seems to lead a charmed life. The Madison, Wis., biofuels outfit has pulled in more than $30 million from venture capitalists while striking strategic relationships with the likes of Cargill, Honda Motor and Royal Dutch Shell.Watch Virent Chief Executive Eric Apfelbach's crisp PowerPoint presentation on the company's business, and you'd probably want to get a piece of this action too. Virent has a low-temperature, low-pressure, catalytic process for turning carbohydrates (sugars) into gasoline, diesel and other fuels. Its 70 employees now make a gallon or so daily. Targeting gasoline as its first fuel, Virent hopes within five years to raise that production to 10 million to 15 million gallons annually.
Nippon Oil seeks first fuel export term deals
TOKYO, March 12 (Reuters) - Top Japanese refiner Nippon Oil Corp (5001.T: Quote, Profile, Research) is close to clinching its first long-term fuel export deals with oil majors and traders as shrinking domestic demand forces it to step up overseas sales, industry sources familiar with the talks said on Wednesday.
Chevron can't offset reserve fall
NEW YORK–Chevron Corp., the second-largest oil company in the United States, expects oil and gas reserves to increase about 5 per cent over the next three years, but says the growth won't offset a 7 per cent decline in 2007.
Nigerian oil delta under threat of new violence
LAGOS (Reuters) - The risk of renewed violence in Nigeria's oil producing Niger Delta is increasing because militants are frustrated by a lack of concrete results from peace talks, a key negotiator said on Wednesday.
Experts To Discuss 'Peak Oil And The Future Of Energy' March 20 At CU-Boulder
A cross-disciplinary panel of noted scientists and experts will discuss "Peak Oil and the Future of Energy" at the University of Colorado at Boulder on Thursday, March 20.Panelists include CU chemistry Professor and CU Environmental Initiative Director Carl Koval, Association for the Study of Peak Oil-USA President Steve Andrews, Colorado Governor's Energy Office representative Morey Wolfson and National Renewable Energy Laboratory Biofuels Group Manager Jim McMillan.
Energy Efficiency: A Passing Fad?
With gas prices skyrocketing, conservation is back in style. Here's a look at how the trend is playing out and whether it's here to stay.
India: High oil prices to hit common man hard
MUMBAI: As stocks surged and salaries grew, urban India almost breezed through the dramatic rise in world oil price, from $50 a barrel to $100 in just two years. But chances are that it may now begin to hurt. Crude prices touched a new high of $109 a barrel on Tuesday and Wall Street’s biggest bond house Goldman Sachs (which got its earlier forecast right) on Tuesday talked of a ‘Super Spike’, that could take prices up to $200.Choppy markets and a high oil bill could be double whammy for the economy as well as Indian consumers. Even if politics postpone any big hikes in petrol and diesel prices, air travel could turn out to be more expensive and power bill could make you sweat.
World `Squandered' Decade in Climate Debate, Top Scientist Says
(Bloomberg) -- World leaders wasted a decade debating whether global warming is happening, and now need to act quickly to limit its effects, a former chairman of the United Nations Intergovernmental Panel on Climate Change said.The pace of greenhouse-gas emissions risks locking in thousands of years of higher sea levels, as well as damaging marine ecosystems such as coral reefs, melting sea-ice and acidifying the oceans, said Robert Watson, now chief scientific adviser at the U.K. environment ministry.
Oil Group to Press Canada to Postpone Emissions Rules
(Bloomberg) -- Oil-sands producers will ask the Canadian government to delay new greenhouse-gas rules to give scientists time to figure out how to halt their emissions.``We'll be talking to the government about their timeline for this,'' Pierre Alvarez, president of the Canadian Association of Petroleum Producers, said yesterday in a telephone interview. ``This is going to take a bunch of work.''
Climate alarmists pose real threat to freedom (by Vaclav Klaus, President of the Czech Republic)
I am afraid there are people who want to stop the economic growth, the rise in the standard of living (though not their own) and the ability of man to use the expanding wealth, science and technology for solving the actual pressing problems of mankind, especially of the developing countries. This ambition goes very much against past human experience which has always been connected with a strong motivation to better human conditions. There is no reason to make the change just now, especially with arguments based on such incomplete and faulty science. Human wants are unlimited and should stay so. Asceticism is a respectable individual attitude but should not be forcefully imposed upon the rest of us.
Global warming to affect transport
WASHINGTON - Flooded roads and subways, deformed railroad tracks and weakened bridges may be the wave of the future with continuing global warming, a new study says.Climate change will affect every type of transportation through rising sea levels, increased rainfall and surges from more intense storms, the National Research Council said in a report released Tuesday.
Complicating matters, people continue to move into coastal areas, creating the need for more roads and services in the most vulnerable regions, the report noted.
http://online.wsj.com/article/SB120527083101428305.html?mod=todays_us_pa...
WSJ: Qatar Rethinks Dollar Peg Amid Gulf-Wide Inflation
By TAHANI KARRAR
March 12, 2008; Page A17
On the other end, EADS will pay contractors in dollars:
http://www.ft.com/cms/s/0/14507ae6-ef44-11dc-8a17-0000779fd2ac.html
This ties a lot of European companies to the dollar. Wonder if that was thought about in awarding the contract? Nah.
Sending dollars out of the country weakens the dollar. And the scale is so small as to be meaningless. The top end figure that I have heard over the life of the contract is $100bn, much of which would stay in the US. Finally, this doesn't tie European companies to the dollar in any way. They are certain to hedge and can just convert to what every currency they want when they receive the fund (and can lock in the rate now, the $-Euro market is very deep).
I don't think there is any currency implication in this at all other than that companies that get paid in any given currency will seek to take in debt or expenses in that currency. However, you could make an argument that EADS pursuing dollar denominated contracts shows confidence in the dollar.
westexas, with the price of the crude oil ‘net exports’ obviously accelerating, especially in rapidly depreciating US$ which no sane exporter would want to hold for very long, I think there are some extra wrinkles to add to ELM.
I saw your comments on demand destruction starting with the poorest, and as the very poor drop out of consuming those people still consuming will have much more purchasing power so the price has to rise even more steeply to destroy some of their demand - I agree with your point of view. This will stress the price at the same time as the 'import land' countries such as the UK start to suddenly massively increase demand for 'net exports' as their own production declines sharply post their own peaks.
From a supply point of view, clearly ELM is already coming into play as exporting nations look after their own people first - putting a severe strain on available supply even before peak (ie:peak lite) - however now prices are rising steeply I expect the supply situation to become much worse due to hoarding , not just by exporters but by all producers, countries and consumers.
Why hoarding by producers? ... This is my scenario ... once we are past peak oil and supply is always constrained by very steep depletion rates and lack of adequate alternatives the price will probably always increase despite recessions. If this is the case it would be wise for any producer to make the resource last as long as possible to maximise profit and income – the exact opposite of normal economic theory.
For the case of countries like KSA they must make the oil last as long as possible by hoarding it, since without it they are literally dead.
For the case of individual oil companies such as Shell (or indeed a ‘good ol’ boy’ with a couple of ‘nodding donkeys‘) they are also economically dead once their reserves run out - so I would not expect them to pump at the maximum possible rate as economists seem to predict.
Since it is normal human behaviour, I expect producers to hoard as much of the oil underground at minimum cost for as long as they can get away with if the oil will be more profitable to produce in the future rather than producing it now.
Shareholders are trying to maximise profit. Hoarding pushes up the price today and tomorrow more than the costs, makes the reserves last longer, keeps the share price higher and avoids risky, hugely expensive, deep-water exploration until it is really needed.
As a ‘by catch’ not producing at maximum rate could be justified morally to the world at large by reducing the impact on climate change, saving some oil for our children and also by not making exceesive profits (subject to windfall taxes) this year but spreading the profits more thinly over a number of years.
IMO, you are correct about the wisdom of oil producers electing to defer production (much more common onshore than offshore of course), partly because it is hard to find quality production.
Oil reserves are valued on a Net Present Value (NPV) basis. You estimate the annual production, throw in the operating costs and a price projection and then discount the stream of income to present value using some kind of discount rate (most commonly 10%, but it depends on whether you are buying or selling).
With low current interest rates and the expectation for rising oil prices, IMO it makes sense to develop a field and fast as possible and then to produce at less than the Maximum Efficient Rate. In many reservoirs, this will also result in somewhat higher recovery factors.
At Matt Simmons' predicted price of $200, in constant 2005 dollars, each incremental 10 bpd of production would generate a gross cash flow, before operating costs, to the working interest owners and royalty owners of about $15 million over a 20 year period. The big factor is operating costs.
The Lower 48 fields I'm talking about will produce several hundred thousand to several million barrels, and take years to decades to fully deplete--and meet world crude demand for a time period measured in minutes and hours.
But what about competition? Surely, there will be some between exporters.
My working guesstimate is that total world net oil exports will have dropped by at least 75% from 2005 to 2031. It's really more of a competition between importers for declining oil exports. As noted above, IMO, the bidding will get more aggressive as forced energy conservation moves up the food chain.
The important thing is to maximise profit - there will be competition, but that does not mean that they will produce more oil in the short term (or, more especially, enough oil to permit BAU economic growth) - profit means minimising cost/risk and maximising income. Profit is overridingly important to a producer, not the customer's/world's actual total needs.
The more efficiently a producer extracts oil the greater the depletion rate, the less time to make a profit - oil will be more expensive/difficult to extract in the future which is what causes global peak oil, since as prices rise (in order to make a profit) demand falls - as opposed to an individual oil well which peaks due to geological reasons.
Post peak we are in a new paradigm since, sadly, there appears to be no adequate alternative to oil for the forseeable future - on average expect constant declines in volume but constant increases in price - the lower the world total volume the higher the profit if you have an existing well. If the supernormal profits attract 'windfall' taxes there is a definite disincentive to produce.
Peak oil is bonanza time for producers but disaster time for consumers - the poorest consumers suffer the most - are people with the largest debts the richest or the poorest?
The economic theory, politics and energy sources used to run our 'exponential growth' world will have to be rethought I suspect.
xeroid said: "The important thing is to maximise profit - there will be competition, but that does not mean that they will produce more oil in the short term (or, more especially, enough oil to permit BAU economic growth) - profit means minimising cost/risk and maximising income. Profit is overridingly important to a producer, not the customer's/world's actual total needs."
This is oligopolistic behavior.
Yes -it is
It is how the world in general works, but especially the world of oil - a very large percent of exported oil comes from OPEC (a known price setting cartel) or from nationalised oil companies working to a domestic political agenda.
Most people try and get the maximum pay for the minimum amount of effort, if it costs more to go to work than you get in pay there is no profit so you don't do it - it is normal human behavior.
Shareholders of any large company pay the company directors to maximise and grow profits - things like paying interest on savings and pensions depend on this.
Hi xeriod,
Interesting discussion.
re: "...the price will probably always increase despite recessions. If this is the case it would be wise for any producer to make the resource last as long as possible to maximise profit and income – the exact opposite of normal economic theory."
Wouldn't this depend on all producers being "in sync" with one another?
Also, how does this relate to WT's point below about 1) Difference between onshore and off-shore and 2) the declining number of exporters in total (I think this is what he's saying)
Also, it seems like - (not to me to use words like "elastic" or "inelastic", but) - the needs that are hard to replace will remain so or increase (agriculture?). And, at the same time, there is also (as of today) continuous growth in the war machine (arms exports and imports).
Since the demand/consumption generated by this machine can grow quite rapidly - in a kind of discontinuity with previous use, we might say - then there are additional consumption pressures that may work in ways that may offset (what we might come to see as) the relatively benign market picture. (Just a hypothesis.)
re: "...not producing at maximum rate could be justified morally"
Definitely, and it would be nice if there were to be some kind of "natural" way - (even in the more or less artificial world of human economic interaction) - this might come about.
Yes, that is what OPEC is all about! Post peak, OPEC is able to control the price of the marginal 'net export' barrel of traded oil.
Cartels, oligopolies and monopolies can be controlled by law in individual countries such as the USA, but there is no enforcable world law able to control such behavior - when it comes to international trade we have to live with it!
Once the price of a large proportion of the traded oil is controlled (ever upwards at a % rate more than you can earn by saving in a bank) it makes sense to leave as much oil in the ground as you can since having somebody pay you to burn it tomorrow is more profitable than allowing them to burn it today.
Deepwater oil is very costly and risky to produce relative to onshore but, once you have started, the oil has to be extracted as quickly as possible because the offshore saltwater environment is so hostile (if you want to hoard the production it will have to be in onshore tanks like the SPR) - we can see this in action in places like Mexico and the North Sea with post peak decline rates ~20% and rapid economic depletion.
Oil Group to Press Canada to Postpone Emissions Rules
I suspect the scientists will discover how to limit the emissions much faster if they are prohibited than if we do it the other way around. Perhaps because huge sums of money would become available for the research were oil company profits to depend upon its outcome.
Just a reminder to those who can get The National Geographic Channel, a show about oil is coming on tonight.
It comes on at 8 Eastern and 7 Central time. Don't know about the rest of the country. But it sounds interesting, especially that part about "how far we'll go to find every last barrel and at what cost."
Ron Patterson
Thanks Ron.
Quite by accident I happened to flip to The History Channel's "Oil Apocalypse" last Monday night 11:00PM EDT.
Look Here
Quite ironic that this is part of their Mega Disasters series. It does not seem to replay in the next two weeks. It first aired 22 Feb 2008.
I am realtively newly awakened to this building disaster and having lurked here for just a couple of weeks found the show dealt at a very high level with many topics discussed in depth here.
The last five minutes dealt with possible social and inter-nation breakdown including a - perhaps over the top - mushroom cloud over some unspecified oil field. But then humankind is capable of so much "bad - and good".
Too bad THC and HGC are cable-only channels. The masses need to be exposed to more of this "straight talk".
Pete
I associate THC with something totally different than cable TV :)
Yes, of course, it stands for thermohaline circulation.
It's good to be able to hash out the facts and weed out joint misunderstandings.
I'd tell you about the 60s but I can't remember them save for some vague recollection of premium gas around 50 cents a gallon.
As long as there is not a Peak THC crisis we might just make it through - or not suffer as much trying.
Pete
Northern Indiana, 1972, about 10 miles south of the big Standard Oil Facility....$.299...regular leaded....
60's were a little soon to have it at $.50 a gallon
BZ
Venture stations, northeast Kansas, early '70s $.19 a gallon.
Obviously I can't remeber the 70s either and it could be the 80s are at risk too.
So, exacly when was (premium) close to 50 cents a gallon?
Pete
i think that was about the mid 70's, i would place it at about 1975. 74 -75 was a time of major inflation in commodities. i remember asking the ceo of texaco if we would see $ 1 gasoline in the near future, that was '75. i forget what he said, but it was $1 a few yrs later.
On the northeast corner of Nineteenth Avenue and Ortega in San Francisco is a Standard (Chevron) gas-station. I worked at that gas-station from January, 1972 to October, 1976; I was at San Francisco State at this time, so I worked weekends during the school year and full-time for most of the summer.
When I first started working there, gasoline fluctuated between 25.9 and 35.9 cents per gallon, (for Premium, or Ethyl, as it was then often known, Regular was a three or four cents a gallon cheaper) as, if I recall correctly, they had for the past decade or more. The price fluctuation was due to the ongoing “gas wars” conducted by local gas-stations. I could come to work one weekend and gas prices would be at the bottom of the range, and we would be quite busy, the next weekend the prices would have gone up a few cents, and the weekend after that we would be at or near the top or the scale, and business was quite slow. Then, the next week, prices would have plunged down to the bottom of the scale again, and the whole cycle would continue.
But, although none of working at the gas station were aware of Peak Oil, or the fact that the US had hit its peak back in 1970, this last fact undoubtedly was behind the unexplained minor shortages that started appearing in mid to late 1972, the first of the long lines at the station, and the price (temporarily, as I recall) rising to an unprecedented 40 cents a gallon. But the optimism of that era was deeply entrenched, I recall at the time gas hit the 40 cent mark sitting around with four or five co-workers at the gas-station on a slow day, and asking how long it would take gas to reach a buck a gallon. Everyone looked around, thought, then the unanimous verdict was: “Naah, never happen.”
Anyway, I don’t know if we made arrangements with the Saudis or others for increased imports, because, as I recall, this 1972 mini-crisis seemed to melt away after a few months. But this didn’t last long, as the Arab Oil Embargo came down in mid-October of 1973, and its effects begin to be felt at the pumps only several weeks later. At first this consisted of price rises, to what were for the times, unprecedented levels. I recall going out to service a car, and the old guy in it looked at the price on the pump, a mind-boggling 50 cents a gallon. He looked at me and said “F**k you, I’m not paying you rip-offs” He started to drive off, but before he left, I snarled back at him, “Well, Asshole, you’ll run out of gas before you find anything cheaper, the price is the same everywhere.” And the price WAS the same everywhere, from now on it would only move upward or at best hang steady, the era of the “gas-wars” between service-stations was over, forever.
And the gas-wars were not the only long-standing business practice to end, forever. Before the Arab Oil Embargo, gas-stations, grocery stores of all sizes, and other retail outlets gave away trading stamps. People born this side of the late ‘60’s probably have never seen these, but they were a regular feature at retail outlets throughout my childhood and teenage years. On the West Coast, the trading stamps were Blue Chip Stamps and S&H Green Stamps, with Blue Chip being by far the more widely offered. Each stamp had printed on it “Cash Value One Mill.” (A mill is one tenth of one cent.) These were actual stamps, about two-thirds the size of an ordinary postage stamp, and gummed on the back, and you pasted them into booklets which, when a sufficient quantity was amassed, could be redeemed for stuff like toasters, vacuum cleaners, etc., mostly household appliances and stuff, as I recall. Anyway, these vanished from the entire retail scene, not just the gas stations shortly after the Arab Oil Embargo really started kicking in. Gas-stations in general, as far back as I remember, also offered free state and local highway maps that they gave away to their customers. Maps didn’t disappear, but they were no longer free as a price-tag of from 50 cent to a buck was now charged. And, of course, the Embargo was the beginning of the end for the true “service-station”, before, “self-service” was rare, but from this point in time on, it expanded, while the full service stations continued to diminish in numbers over the years.
When the Oil Embargo was first announced, the first effect were the price rises. Most people must have (incredibly, naively, from to-day’s vantage point) thought all this would be quite temporary, as for the first week or two of the Embargo, business was slow, as, I suppose people, like the guy who buzzed me off over 50-cent gas must have thought that prices would soon come down. It takes about six weeks for a tanker to sail from Saudi Arabia to the U.S., so six weeks after the Embargo was announced, the effect became quite noticeable, and the real gas lines became an everyday feature. This was when the government installed the odd-even (based on your car’s license number) sort of “Rationing Lite” system. And the oil companies practiced their own rationing, as each service station received a specific monthly allotment of gasoline. Scotty (Scotty Petrie, the operator of the 19th and Ortega station at this time) calculated that if he sold every car all the gas they wanted, that he would exhaust the monthly allotment that Standard Oil granted him in slightly more than two weeks. So Scotty instituted a limit of 8 gallons to every car coming into the pumps. Business hours were also cut back, and this created problems with the long lines of waiting autos, which backed out of the station and went up the street, frequently curling around the block and extend up most of that block. So, a couple of hours before closing time, we would take a large cardboard sign that said “Last Car”, go out to the last car an the line and inform the driver he was lucky, as he would be the last getting gas here to-day, then hang the sign on the back of his car. One day, I went out with the sign, and as it turned out, the last car sort of stood out, an almost overwhelmingly bright yellow VW Bug. I put the sign on the car, and returned to the gas-station and continued pumping gas. A couple hours later the yellow VW comes up and I sell it its gas, and went on to service the next car after the VW departed. It wasn’t until three or four cars had bought their eight gallons that I flashed on the fact that the VW was supposed to be the last car for the day. There were several cars still in line with the sign now on the last of them. It turned out that after I left the sign on the VW, the next car came up, and offered the driver of the VW $5 to take the sign and put it on his own car; he then sold the sign to the next car coming behind him, and so on. Ever after that, an employee of the gas-station had to simply stand by the last car, and slowly walk with it as it inched towards the station, and waving off all would-be customers.
After five months, King Faisal of Saudi Arabia felt he had wrested as much as he could out of the US and the West insofar as seriously addressing the (at the time) 25 year old Arab-Israel conflict. So the Embargo was lifted, and the oil flow resumed. But before the Embargo, the Saudis were getting something like $2.80 per barrel, afterward, as part of the price for restoring production, Faisal insisted on, and got a price of $11.65 per barrel. And the era of 25-35 cent gasoline, along with free maps and trading stamps, was over….Forever.
Anyway, thanks for the trip down Memory Lane. A lot of it just seems unbelievable now, free maps and trading stamps and getting cussed out behind 50 cent gas. Definitely, it was another era.
Antoinetta III Posted on Oil Drum 3-12-08
Nice recap of a bygone era.
My father had a service station from the time just prior to the embargo to the mid 1980s.
Early on, 25.9 cents to 32.9 cents per gallon for regular depending on the state of the gas war from all out war to armistice. Dad had a mind like the proverbial steel trap and told me that locally, that had pretty much been the pricing structure going back to well before WWII.
During the gas war era, many small retailers did not own the gas in their tanks. The refiners would operate on a "tank wagon" basis and adjust the wholesale price of the amount pumped / billed to the retailer based on a participation factor that allowed, [but did not compel the small retailer] to lower prices in response to a "gas war." IIRC , at 32.9 there was about 4 cents in margin and at 25.9 there was about 2.5 cents of margin.
My dad's service station was in Utah, which had no real connection in the supply chain to imported oil, but after the embargo was subject to all the rules on allotments to retailers. In general there were no lines locally, but allotments seemed to based on political pull or at least some formula known only to some bureaucrat with a weird sense of humor. Most stations never ran out. My father's place was capped price wise below the prevailing price, "alloted" much more premium than he really wanted when compared to regular [but sold out of the premium as well], and sold out of all grades for as long as two weeks at the end of every month. The overall effect reinforced my already reasonably well developed belief that Government even if attempting to do the right thing, will screw the pooch most of the time.
Also from today's WSJ, a pretty good article about diesel:
Diesel Demand Remains Strong
The article goes on to say that diesel is taking market share away from gasoline in many parts of the world, including the U.S.:
So when we start looking at demand destruction for gasoline, we need to take a look at how much of this demand has simply shifted to diesel rather than been eliminated entirely.
While I am not arguing the merits of biofuels, a critical point to keep in mind is that, as I understand it, virtually all diesel engines can easily handle 100% biodiesel. And biodiesel does not have the distribution problems that ethanol has. My point is that for maximum fuel flexibility, a diesel engine makes more sense than gasoline. It all goes back to the reason that Rudolph Diesel designed the engine in the first place--so that farmers could run mechanized equipment on vegetable oils.
Untreated bio-oils & fats (straight cottonseed, rapeseed, waste grease etc.) can work as fuel at higher temperatures (hot enough not to thicken) IF the diesel fuel injection pump is strong and robust enough (many diesel fuel pumps use fuel as the lubricant).
For extended use, there have been reports that bio-fuels tend to create excessive carbon deposits in the combustion chamber.
Treated fuel can involve a couple of processes involving lye or methanol. More at http://www.greasecar.com
My 1982 M-B 240D has what is reported to be the strongest fuel pump, "strong enough to push pureed bananas for fuel" and lubricated by engine oil. And with the smaller engine and manual transmission it can get 30 to 31 mpg in the city. Highway mileage is heavily dependent upon speed (35 to 43 mpg in my limited experience).
Most bio-fuels have slightly lower mpg reported.
Best Hopes for Old Mercedes Diesels,
Alan
Best hopes for finding spare fuel pumps for a 1982 car when you have switched to bananas.
Put this reply near the top of this thread.
I was at the National biodiesel conference last month and listened to pipeline operators explain why biodiesel is not put in pipelines in the U.S.. While technically you can put biodiesel in the pipeline in reality it doesn't happen.
The pipeline operators/owners (oil companies sometimes) claim that biodiesel mixes more with various petroleum products more than petroleum products. So you can run Jet A:Ultra low #2diesel:#2 diesel and not worry about contamination of the JetA with odd things. But apparently you can't run Jet A:#2diesel:B100 and not have concerns. Also the interface cuts are bigger so people lose money.
My and other proponents of biodiesel stated that you know when you contaminated JetA with biodiesel because there is something different to test for. But mixing various grades of petroleum has no effect as long as you meet the spec of the petroleum product, Jet A for instance. So there can be lots of cross contamination between #2 diesel and Jet A but as long as the Jet A meets spec it is okay to sell. As long as there is 10 ppm methyl esters the Jet A is considered out of spec (0 ppm allowed) even if that level of methyl ester is not an issue in performance of Jet A at 30,000 feet.
One more reason biofuels are at a disadvantage in transportation.
Chip Fat Landys:
http://www.landyzone.co.uk/lz/f16/cooking-oil-power-21328.html
Wont save the world, but good for fun.
To make it work well, you must first strike up a relationship with the daughter of a Fish and Chip Shop proprietor....
There's just one small problem with vegetable oils for diesel: there is not enough of it and the sources such as soybeans are roughly 2.5 times the price of corn. As for historical justification, Henry Ford intended that his Model T would run on ethanol so that farmers could ferment there own fuel to drive to town. Virtually all gasoline engines can handle E85 with factory add ons costing about $100.00. My experience and reading indicates any modern gas vehicle which has been well maintained can handle E20 and others have tried higher levels with some success.
Locally here in North Iowa we have 2 biodiesel plants, one at Mason City and one at Algona. There are are at least 6 ethanol plants nearby close to the towns of Lakota, Albert Lea, Mn., Hanlontown, Mason City, Charles City, and Fort Dodge. The ethanol out put is so much greater than bio diesel as to make bio diesel look puny.
Regarding ethanol subsidies, you might want to check out the comments by the Pilgrims Pride CEO at the bottom of the thread.
WT:
We've talked about biodiesel a lot over the past few months. A while back, Robert Rapier did a post which IMHO set forth the definitive arguement for why biodiesel cannot and will not be the long-term silver bullet. Stuart's article on the huge implications of the large-scale diversion of crop land to biofuels put the final nails in the coffin.
Nevertheless, it is true that the EROI of biodiesel is, or can be, generally more favorable than for ethanol. This is certainly the case for ethanol from corn (maize), though in the case of tropical sugar cane ethanol the EROIs are more closely comparable. The choice of oilseed feedstock does matter. Crops that are higher yielding and that require fewer energy inputs will obviously have better EROIs. Thus, while I would agree with Robert that this is a dead-end that we don't want to travel down to any great length, if we are going to travel any distance at all on any biofuel dead end, the biodiesel route would be the preferable one.
I have also been arguing, though, that while we don't want to be thinking in terms of biodiesel as a general transportation energy supply, there are a few specific and very limited niches where it still might make some sense and could be done without too disasterous of an impact on global food supplies or global ecosystems. First and foremost among these would be to supply fuel to agricultural equipment. It is quite feasible for farms to grow enough oilseeds to supply all of the biodiesel that they need to fuel their equipment, and according to my calculations, it appears that they should be able to do so without having to dedicate more than 5-10% of their total cropland at most. One can even envision ways in which this could be done on a small-scale, appropriate technology basis right on the farm. We repeatedly see people here worrying about the whole world starving because all the farm tractors are going to grind to a halt when the oil gives out. Nonsense! It is quite feasible for all farm equipment to be fueled by biodiesel that is grown right on the farms, and there is no reason to think that any farmer in their right mind wouldn't do exactly that if that is what it takes to stay in operation. It clearly would be better to sacrifice that 5-10% of cropland for biodiesel production for the farm equipment than to risk losing 100% of it. Thus, while we have many things to worry about, fueling the tractors need not be one of them.
Without in any way trying to pretend to knowledge of farming that I do not possess, I would like to remark that those who were informed said in discussions in this forum that using animals instead to do the heavy lifting on a farm takes up around 30% of produce, so the bio alternative seems to be way ahead.
You may find this story interesting on a biomass cooperative for farmers fuel in Austria:
Austria opens first cooperative biomass service station
http://www.exchangemagazine.com/morningpost/2008/week11/Monday/0310015.h...
That's a long-winded way of describing a big pile of wood chips. I spend a fair amount of time in Carinthia. I'd say almost everyone heats with heating oil,although I know a few people who have installed geothermal systems. One friend has one of those high-efficiency wood chip furnaces that heats his own house and a house next door. It's a beautiful system with a big hopper that feeds the chips into the furnace. He gets the wood from his own land although he lives less than an hour from the wood chip pile described in the aerticle.
I think that comparing bio-fuel driven farm work to animal-driven farm work is an important comparison, but we need to make sure that we're looking at the full spectrum of input costs.
While it may only take 5-10% of cropland to fuel the farm equipment, what percentage of the crop land is required to fund the purchase of that equipment (combines and tractors aren't cheap). How much will that percentage of cropland increase as the costs of fossil fuel and metals inputs to tractor and combine manufacture increase dramatically?
Farm animals, by comparison, have the remarkable ability to reproduce themselves. Of course, breeding animals for farm use may require more input than simply maintaining a healthy adult animal, and there's vet costs, etc. There is also evidence that animal-powered farms do less damage to soil structure through compaction than do tractors. And while animals eat feed, they also produce manure, something tractors don't do.
I don't know the end result of a fully-inclusive balancing test--industrial farm machinery may still be by far the better choice--but we need to account for all the inputs and externalities before making that determination.
All true, but remember that horses or other beasts of burden pull equipment, too, so you are going to have some of that "overhead" in any case. Cyrus McCormick was mass producing farm machinery long before the first tractors appeared on the farm.
Excellent points, Jeff. I also think that some support is needed for the 25% and 30% numbers that are being used. I recall reading material claiming that 25% of farmland in the US was dedicated to 'horsepower' (including no doubt mules, etc) sometime around the beginning of the last century. But horses then were widely used off-farm.
Is anyone able to reference studies attempting to estimate current farmland requirements for animal power dedicated to food production?
Also, look at Stuarts graph on yield increases. When horses were used it was before the major use of fertilizer, dwarf breeds, herbicides, and other such things cited in the article. With yields 2.5 to 6 times more than when horses were used, the 25% value is probably outdated. With horses eating Wheats (and soy) which yield 3 times more 25%/3 = 8.333% - not too bad.
Also in terms of reliability Veterinary medicine has improved in orders of magnitude as well (dunno about tractors improvements - as a kid (only 15 years ago) the farmer next door had a tractor (Oliver?) from the 40's. Certainly a durable good.
So alot needs to be updated to fit the _current_ perspective, imho.
Horses would'nt survive on wheat and soy. They eat grasses, and when working intensively, oats. I am not aware that pasture and hay yields have grown as exponentially as grains and soy over the past 100 years. The oat crop also probably hasn't received the intensive treatment yet.
The Land Institute did some work on the horses vs. tractor debate a few years ago in their Sunshine Farm project. My recollection of the verdict was that it was a six of one, half dozen of the other type.
Here's another issue with horses. Even an 8-horse hitch, which I think was relatively rare, cannot do the same amount of plowing in the same amount of time as a decent-sized tractor, and I'm not talking the monsters out there now. Also, fewer people have the ability (even if taught intensively) to handle a multiple-horse hitch than can operate a tractor. Horses just aren't for everyone.
Another problem with horses is that they require attention 24/7/365. The tractor requires maintenance and repair, but will spend the winter in its shed without the need to be filled with diesel a couple of times a day.
No wonder farmers switched to tractors just as fast as their pocketbooks would let them.
I expect that tractors will be some of the last machinery produced. If we will be pushed eventually to move back to tractors, I suggest that the gov subsidize heavily the conversion, because it won't happen in time otherwise due to the difficulty in working with animals, the fewer acres the horse may work per day, and the need to increase the number of animals drastically. The conversion would be a huge, long-term project.
I think these are all points well taken - and add in the value of the manure (can't spread any tractor outputs on fields), the value of reduced soil compaction, etc... I'd be fascinated to see someone do a real land analysis of tractors vs, animals - like Jeff, I don't know how it would come out, but it would be interesting, and likely closer than the figures tossed around probably indicate.
Sharon
I wouldn't bet on soil compaction being one of the benefits of horse-powered agriculture.
A 1000 horsepower engine weighs as much as 1 horse.
If farmers judge compaction to be a problem, redesign of the tractors and cropping patterns is the easiest step, as well - more wheels, tank treads, longer and more decentralized vehicles can largely solve the problem.
I think most modern farmers would find switching to no-till agriculture much easier than switching to horsepowered agriculture.
EROI of sugar cane alcohol is considerably enhanced when you consider that the energy input (besides sunlight) is near slave labor of sugar cane workers. If Iowa corn has to compete, it will need petroleum to do so. How about a combined cycle? Grow enough oilseeds to power the agricultural machinery to grow corn for ethanol?
The Iowa corn crop most certainly does not need petroleum with the right investments. Wind driven ammonia is moving forward nicely:
http://strandedwind.org/node/129
And if they fractionate the inputs every hundred gallons of ethanol producing corn also contains six gallons of corn oil. We can use the corn oil as the diesel starter, it turns out you can inject ammonia right behind the turbocharger, lean the diesel input out, and agricultural engines get along just fine without any other mods. So its literally one feed line and some controller work to convert each machine in our current fleet to a renewable fuel.
Good times here in the heartland ... if only James Inhofe (R-Exxon) doesn't screw me, my kids, and everyone else in the country ... counting the days until our new President takes office.
What's the EROEI of ammonia?
Good point! And I'm sure the farmers would rather set aside 10% for biodiesel production vs: 25% to feed the horses. The thing about a tractor is that, unlike a horse, you don't have to feed it when you're not using it! And that's most of the time. I wouldn't be surprised to find that the acreage for producing the fuel for a tractor comes in at even less than 10%.
Jatropha can be planted on otherwise fallow land and requires modest irrigation, as I understand. While requiring hand harvest, the equipment required to extract the oil is downright primitive. The oil can be filtered and run directly in old, low-tech diesels.
I think the tractor will be around for a long while. When stocking up on gold, consider buying some old diesel farm equipment if you have the space to store it. Lots of the old diesel tractors have service lives of fifty years or more. I suspect that they'll appreciate in price dramatically. By buying them we are preserving equipment that otherwise might be sent to the junk yard. In addition, they're just lovely things. Unlike gasolline engines, an old diesel can sit around unused for years. Change out the fuel every couple of years and start it up for a few minutes. I bought a 1985 Dayton diesel generator recently and asked the seller when he last changed out the fuel. He said he never had since it was new - only used it ten or twenty minutes a year for his welder. The fuel stunk to high heaven and the exhaust was smokey but it ran fine with twenty year old petrodiesel fuel - if I'm to believe his story.
LJR said:
Jatropha can be planted on otherwise fallow land and requires modest irrigation, as I understand.
True, but it should be noted that jatropha is a tropical plant. That's fine for certain countries such as India and much of Africa and Latin America, but it's not going to help the USA, Canada or Europe. Even in the tropics, I do have some concern about how much jatropha planting will affect soil fertility, erosion and water resources. Still, every little bit helps.
Jatropha Curcas aka the physic nut, (and its competitor Pongammia Pinnata, aka honge/karanja) is a nitrogen fixer, so planting it should enrich the soil.
And it makes headlines not for being a rainforest plant (Oil palms do, and are viable in that circumstance), but for being a desert tolerant plant - and the US has plenty of unused desert. We also have plenty of friendly 3rd-world countries with unused desert that would love a major export. We'd need to pick relatively stable ones with constitutional rights ideally.
Jatropha is a Euphorbiaceae and is NOT a nitrogen fixer. No Euphorbiaceae is. The green manure of the plant is, however, relatively high in nitrogen and can be used as a soil improver.
Nor is the plant "desert tolerant", where deserts are defined as areas with less than 10" average rainfall per year. The biophysical limit has been found to be 300-1000 mm (12-39") per year. In lowest rainfall areas, the plant will go drought deciduous and will not bear or bear only sparsely. This would not be compatible with the pressure to maximize yields if you were to commercialize the nut.
It is also a pest and noxious invasive in some areas such as Western Australia, where its growing is banned.
I'll take your word for it. Is this your area of expertise?
Persistent rumor I guess. Any idea why it's got that reputation? I've read it many times, and it fits with the reputed tendency to thrive in poor soils.
I've also read varying reports of the drought-tolerance - "thriving in 10 inches of rainfall a year" is a common claim. Nevertheless, my point was that we as a country, and as a world have plenty of land that is of marginal utility to agriculture due to its low rainfall, whether or not it is technically desert.
I do specialize in growing Euphorbiaceae among many other things I'm into :)
Jatropha does grow in poor soil, and prefers sandy, well-draining, low-nutrient soils. But water is a limiting factor to its performance. "Growing" vs thriving is very different, and water availability has dramatic effects on the yield of the nut, if that is what you are out to maximize. It's a tropical plant, so won't grow in the US or any temperate climate areas. I think the "rumors" about jatropha stem from non-horticulture type folks translating "grows in arid conditions and poor soil" to "it can be grown as a high-yield commercial biofuel crop" under those conditions.
It can be useful to people in small-scale settings. It often grows in disturbed lands in some areas of Africa and India, and in Mali, for example, villages have been introduced to harvesting the nuts and using the oil to run a small generator, providing light at night when there was none before. That seems perfectly reasonable to me--that it could make a dent in the commercial diesel supply seems more like a fairy tale.
"Land of marginal utility" to agriculture provides important environmental services to us and to other living creatures. It would be a shame to destroy that for the sake of our liquid fuel addiction.
This thread regarding the use of Biodiesel is probaly the most relevant article i have read here in a while. Biodiesel for use localy has a great future and will mean farmers will have a fuel supply at a slight inconvenience With out resorting to manual labour/draft animals. A lot of pople here are getting hung up on the need for new equipment and EROI. Most of the eqipment is already bought and paid for, And as pointed out An oil press is very basic equipment.As for the Tractor capable of using this fuel : They all can The only modifcation realy needed is for cooler cliamates is an in line fuel heater to keep the oil thin and and start/stop the engine on regular fuel,and proper filration.(Trans esterfication using Methanol gets a better more customer friendly fuel but on the whole is not required)
As for the machinery breaking down. We only recently got rid of my fathers Ferguson 20 Grey. His since new 1954.( kept for sentimental resons) Never had a major mechanical break down in those years. and would still start by starting handle when the battery was flat if you were up to it.
what is used most for biodiesel and is switch grass even a biodiesel? switchgrass can yield 3-4 times as much ethanol per acre as corn can. can we convert farms to run on switch grass?
In the US, the main feedstock is soybean. In the EU, it is rapeseed. For imports, it's mainly palm oil.
Switchgrass is a native prairie grass. To convert it to ethanol, we'd first have to invent a commercial cellulosic ethanol industry, which isn't quite there yet :)
It's doing fairly well though:
http://ianrnews.unl.edu/static/0801070.shtml
Unlike ethanol from corn, I like this technology a lot.
Well, not exactly. What this study (you can get the original from the PNAS website) details is the yield of switchgrass from 12 plots in NE and SD grown over 5 years. There are no plants to process the switchgrass into ethanol, so the study authors used the UC Berkeley EBAMM model to plug their yield numbers in to get an estimated output of ethanol. Then, if you go dissect the EBAMM model, you'll notice that the model adds up all the inputs in the field, adds the inputs for the cellulosic processing (which doesn't exist on a commercial scale, so the numbers are estimates), then credits the entire energy content of the switchgrass back to the ethanol. By magic, you get 540% yield! If you delete the "credit" in the EBAMM model, however, you end up with an EROI of 0.97. Just about where corn ethanol is. (And this is logical, since the alcohol concentration of the initial mash for fermentation is less than half of what it is when corn is the feedstock, yet the inputs to switchgrass growing are lower).
The local paper sold near my lifeboat had quite a lively debate concerning the merits and drawbacks of switchgrass farming.
Some highlights:
Switchgrass could be pelletized and burned in devices that were hopper fed.
Produces a lot of ash.
It takes years to establish a productive field and then they were vulnerable to fire.
Is invasive.
Large plantings could affect the local ecology and attract and harbor pests detrimental to adjacent holdings of other crops.
Thanks for the info - there are so many things to keep track of, and I have never met a field with so many miss-statements and exaggerations as renewable energy, so a heads-up like yours is more than useful.
Many thanks.
Soybeans are a lousy biodiesel feedstock. The only reason they are using it is because they are already growing so much of the things. Rapeseed yields much better, sunflowers slightly less (but these could even be harvested by hand if necessary).
A tiny patch of switchgrass works better than a tiny patch of corn at the benchtop scale. You try to run that stuff in the volumes we run corn and we have the same pesticide/herbicide problems we get with corn.
There is no magic bullet. If cellulostic ethanol ever takes off it'll come from a simultaneous multiculture crop or from waste from a monoculture crop being harvested for its seed.
And this is a dead issue, anyway, as peak oil is going to kill car culture before we can possibly adapt such things. Electric rail, delivery vehicles, and We, The People experience a life change like the one that comes upon a single human when he/she experiences a stroke; reduced mobility and changed expectations.
What percent does that grow to if you include the energy needed to:
- mine the ore and produce the steel and other materials used to make the tractors
- power the factories used to make the tractors
- transport the tractors and their spare parts to the farms
- power the industrial civilization that needs to exist in order to permit any of the above activities to take place in an organized fashion
'power the industrial civilization that needs to exist in order to permit any of the above activities to take place in an organized fashion'
This is how I've been thinking for some time! Solutions that imply the continuing existence of the problem they are supposed to solve don't work. Relates to the Einstein quote - problems cannot be solved by the same level of thinking that created them. Also relates to Jeff Vail's idea of bootstrap EROEI.
It's, actually, better than that. By fractionating the corn, something more, and more, ethanol refineries are moving towards, you get a little over a gallon of corn oil/bu.
Since you get, at present, a bit over a hundred and fifty bushels/acre -about 25 gallons of corn oil - and, it only takes 8 gallons of biodiesel to grow/harvest an acre of corn, and since the distillers grains are a better product with the oil removed (more digestible, easier flow) It's a big Win/Win all around.
Distillers grains (waste left after ethanol fermentation) are worse than raw corn in quantity.
Above a certain % they cause scours (diarrhea) in cattle and there are limits for pigs, chickens and turkeys as well (unsure about catfish). And these limits are being reached today.
Alan
Its not F#$%$%@K 10% its 90% if it was only 10% you could close the farm gate and export energy out THIS IS NOT THE CASE. If you remove ethanol subsidies production would crash and burn even with oil at $110 a barrel go figure...
But don't let facts get in the way of a fell good story.
We cannot go back to horses there is no way we can go to bio fuels...