DrumBeat: June 1, 2008
Posted by Leanan on June 1, 2008 - 8:00am
Topic: Miscellaneous
Ending dollar peg won't solve Gulf inflation - Paulson
ABU DHABI, June 1 (Reuters) - U.S. Treasury Secretary Henry Paulson said on Sunday leaders of Gulf oil producing states had told him that abandoning their currency pegs to the dollar will not solve their inflation problems.Paulson, two-thirds of the way through a four-day trip to Saudi Arabia, Qatar and the United Arab Emirates, said leaders in the region have "quite an awareness that the peg does not influence inflation to a significant degree.
"They recognize that inflation is the overriding issue ... Ending the peg is not the solution to the inflation problem."
Indonesia says cannot rule out more fuel price hikes
JAKARTA (Reuters) - The Indonesian government cannot guarantee that there will be no further fuel price hikes before the 2009 presidential election, Energy Minister Purnomo Yusgiantoro said on Sunday.Indonesia raised fuel prices by almost 30 percent last month, sparking protests in a country where millions are already suffering from rising energy and food costs.
Iraq oil exports hit post-war highs - minister
BAGHDAD (Reuters) - Iraq has raised oil output and exports to their highest levels since the 2003 U.S. invasion, its oil minister said on Sunday."The export figures for May were more than 2 million barrels per day and we have exceeded our previous export and production figures," Hussein al-Shahristani told Reuters in an interview.
China Orders Sinopec, Cnooc to Ensure Oil Supply to Quake Areas
(Bloomberg) -- China has ordered China National Petroleum Corp., China Petroleum & Chemical Corp. and China National Offshore Oil Corp. to ensure oil supply after the nation's most powerful earthquake since 1950, the cabinet said.
The speculation on oil prices is beating up supply-demand issues
Oil price boom is getting dangerous. Now the economies and consumers are seriously at risk. It is not only developing countries, but major economies are hit by this monstrous trend.
Climate Enters Debate Over Nuclear Power
BRATTLEBORO, Vt. — After part of a cooling tower collapsed last August at Vermont’s only nuclear power plant, the company that runs it blamed rotting wooden timbers that it had failed to inspect properly. The uproar that followed rekindled environmental groups’ hopes of shutting down the aging plant.The proposed closing, albeit a long shot, has gained some support this year among Vermont politicians. The discussion is bringing into sharp relief a conflict between two objectives long held by environmental advocates: combating nuclear power and stopping global warming.
No more cheap shots for gun users
EDMONTON - The price of ammo is shooting up faster than a speeding bullet.Metal supplies are diminishing due to industrialization in China. On top of that, ammunition supplies have been depleted by wars in Iraq and Afghanistan and by consumers who hoard what they can for fear of higher prices.
Prices are also skyrocketing because fuel prices have meant a doubling of shipping costs in three years.
Tropical Storm Arthur Moves Across Mexico's Yucatan
(Bloomberg) -- Arthur, the first tropical storm of the Atlantic hurricane season, is expected to dump as much as 10 inches (25 centimeters) of rain on Mexico, Belize and Guatemala as it spins slowly west across Mexico's Yucatan Peninsula....State-owned Petroleos Mexicanos pumps 1.07 million barrels a day from the Cantarell field in the Bay of Campeche. The company had no immediate comment yesterday on whether operations would be affected, spokesman Carlos Ramirez said in a telephone interview.
Rising fuel costs are the single issue to blame and worse yet, it doesn’t look likely to dissipate anytime soon.“It’s creating an incredible impact on customers’ transportation budgets,” says John Hickerson, Senior Vice President & Chief Marketing Office, FFE Transportation Services and President, American Eagle Lines and FFE Logistics (www.ffex.net). “There’s no denying it’s real. Our customers stop at the fuel pump on their way home and they experience it.”
Food and fuel crisis must be solved: MP
Food crops must be kept separate from crops used for biofuels in order to put a stop to global food shortages, a Rudd government minister has warned.Agriculture Minister Tony Burke says the challenge for countries around the world, as they face an increasing shortages in food, is to balance the harnessing of biofuel with global food demands.
Mexico has tripled its imports of grain since 1994 and now depends on them for 40 percent of its food needs. "Today Mexico has to rely on imports for basic foodstuffs, whatever the market price," said Armando Nartra, director of the Institute for Rural Development Studies.An unexpected consequence of the invasion of Mexico by basic and processed U.S. foods is a dramatic increase in obesity. Almost 33 percent of adults are obese; another 40 percent are overweight. The side effects absorb 21 percent of the public health budget.
A free oil market would lower prices
Gasoline appears headed for $1.50 per litre and oil $150 a barrel. Airlines are the first of many industries to force rising fuel costs onto consumers. High oil prices are driving up food costs worldwide, causing enormous suffering. Flat petroleum supply and relentless increases in demand ensure all but the wealthiest will soon run out of something. Much misery lies ahead.
Asphalt Jungle: The Temple Of Doom - It's the end of the car as we know it. And I feel fine
I don't know whether the future means hybrids, advanced diesels, fuel cells, electrics, a combination of all four, or some other system we haven't even thought of yet-but I don't need to know. All I need to know is this: Cars will continue, and they'll continue to wow us. How can I be so sure? Because mankind has always risen to the challenge. Always. The charts don't lie: The progress wrought by human ingenuity knows no bounds.
Gates Warns China Not to Bully Region on Energy
SINGAPORE — Defense Secretary Robert M. Gates issued a set of thinly veiled warnings to China on Saturday, cautioning that it could risk its share of further gains in Asia’s economic prosperity if it bullied its neighbors over natural resources in contested areas like the South China Sea.
After 25 years of leading development teams in cooling mainframes, servers and processors, Schmidt says the rapid expansion of information technology has created an unprecedented energy crisis for major corporations. He says IBM is "keen on green data centers," and his mission is to help solve that crisis."Big Fortune 500 companies are out of power," he said. "If I told you the names of these companies, you would recognize them."
Saudi to double refining despite rising costs
Saudi Arabia is pushing ahead with plans to nearly double its refining capacity despite a sharp increase in investment requirements for such projects due to a surge in construction costs and a shortage in manpower.After a long delay, the Gulf Kingdom, the world's dominant oil exporter, approved two mega refining ventures with foreign partners this month despite an increase by at least 60 per cent in their costs, according to analysts.
Kazakh Energy Suppliers Warn of Upcoming Power Deficit
Kazakhstan faces an energy crisis. Energy consumption is increasing in the country every year, while the existing power stations are able to satisfy the demand for energy only up to 2009, the country's energy suppliers said at a special meeting in Almaty today.According to experts' forecasts, if the measures are not taken immediately, Kazakhstan's north and south will be the first to suffer energy shortages, while the west will become more dependent on foreign supplies. Besides, almost all power stations are worn out and the equipment's exploitation period exceeds all acceptable norms.
Energy Crisis in Europe Becomes Worse
The energy crisis in Europe is becoming increasingly worse. More and more people are protesting the high fuel prices; businesses that depend a lot of fuel have had enough. All throughout Europe, fishermen and truck drivers are protesting.Although it’s reasonably calm in the Netherlands for now, the same cannot be said for the rest of Europe, especially not for Germany (as reported yesterday) and Spain.
Many good and qualified geologists came before and have come after him, but Carter’s assessment of Robert D. “Bob” Gunn in 1979 continues to plague an entire industry. The denial to allow one of the country’s brightest geological minds to serve as a voice of reason on behalf of the nation was because, as Carter put it: Mr. Gunn represented “dirty oil.”
Michigan may raise residents' electric bills to help businesses
LANSING, Mich. - State lawmakers plan to raise residential electric bills by as much as 15 percent so businesses and schools can pay less.Prices historically have been "skewed" by state regulators so residents pay less than the actual cost of electricity, while businesses pay more.
The investigation by the Commodity Futures and Trading Commission of possible manipulation of the oil market is welcomed news. But it would be a mistake to blame improper trading behavior alone for the record high oil prices.
New Hampshire: New state DOT commissioner faces fiscal, infrastructure challenges
"It's a challenging time because of the energy crisis, and there's a lack of a strong national transportation policy," Campbell said. "First and foremost, we need a strong approach that includes other modes (of transit.)"Campbell said freight rail and air transportation are areas in need of more focus, citing rail as a tool for strengthening the economy of the northern portion of New Hampshire, and the recent Skybus closure at Pease.
TVA, once one of the most conservation-oriented utilities in the country, abandoned its innovative ways in the 1980s and is only now returning to a major focus on energy efficiency.As a result of the decades-long lag, Tennesseans use more residential electricity per person than any other state except Alabama. In contrast, utilities in several other parts of the country have embraced efforts to reduce electricity use by customers, leapfrogging TVA and offering a wide array of programs designed to save energy.
Everybody's taking record oil prices hard, but few are hit harder than the nation's 3.4 million truckers. Unlike most people, truckers can't cut back on their driving to make a living – driving is their living. And the high cost of diesel fuel – which recently broke the $5-per-gallon mark on the West Coast – is driving small trucking companies and independent drivers to the brink of ruin.
Sue, don't drill: It's the American way
If we lived in a country where "capitalism" flourished, the solution to the energy crisis our country is currently facing would look something like this: Investor owned companies would drill more wells to produce more crude to meet demand, federally controlled lands and waters would be open for exploration of its natural resources, consumers would conserve, and researchers and IOCs would diligently work to develop alternative fuels for the future.
U.S. must tap its own oil resources or face even greater energy crisis
My analysis indicated that the company would deplete its reserve production capacity by the early 1970s. Interestingly, the late Dr. M. King Hubbert, perhaps the most knowledgeable production forecaster of his age, developed a model in 1956 that predicted that all U.S. domestic production would peak in the early 1970s. In other words, the nation would begin to become dependent on imported oil in the 1970s. Only oil people and government bureaucrats knew of this disturbing fact at that time.
Bangladesh: Use 2.5b tonne coal for energy security
A UNDP-Bangladesh report recommends increasing the use of coal resources to avert a deep energy crisis that would affect economic growth in near future."The estimated resources of 2.5 billion tonnes of coal in Bangladesh are equivalent to 65 trillion cubic feet of gas which could assure energy security in the medium and long-term," says the report titled "Sustainable Energy Development in Bangladesh -- Coal as an alternative energy resource."
How to harvest solar power? Beam it down from space!
By 2030, India's Planning Commission estimates that the country will have to generate at least 700,000 megawatts of additional power to meet the demands of its expanding economy and growing population.Much of that electricity will come from coal-fired power plants, like the $4 billion so-called ultra mega complex scheduled to be built south of Tunda Wand, a tiny village near the Gulf of Kutch, an inlet of the Arabian Sea on India's west coast. Dozens of other such projects are already or soon will be under way.
Yet Mehta has another solution for India's chronic electricity shortage, one that does not involve power plants on the ground but instead massive sun-gathering satellites in geosynchronous orbits 22,000 miles in the sky.
A rural pain: Gas prices impact West Virginians' long commutes
The state ranks 13th in the percentage of workers who work outside their county of residence, according to the 2006 American Community Survey by the U.S. Census Bureau. With an average travel time of 25.6 minutes, the state ranks 11th in work commute time.And as a largely rural state, mass transit isn't available to most people. Only 1 percent of workers used public transportation to get to work in 2006, compared to a national average of 4.8 percent.
Cutting back on miles traveled isn't enough
The bad news is that the Highway Trust Fund, which was created in 1956 to finance the national road system, is losing a lot of money because it depends on the federal gasoline tax. Fewer miles driven mean fewer dollars going to the fund.
Energy policy doesn't attack root of problem
Virtually every individual, family, business and institution in the United States is grappling with the destructive consequences of our national failure to devise a responsible energy policy.The price of oil has risen 85 percent in the past two years. Because of our extreme dependence on fossil fuel, that price increase is causing a shock to our economic system that is apparent in higher gas and food prices, rising costs for manufactured goods, damaged corporate profits and painfully stretched household budgets.
With gas at $4, a few strive for 55
Jon Zehnder, 54, knows he’s a curiosity because, as his bumper sticker says, “I drive 55.”“I like to drive fast, but I’m old enough to remember the energy crisis in the 1970s,” said the Lindsborg, Kan., social worker. “And,” he added with a laugh, “I’m saving a butt load on gas.”
But even in a time of $4-a-gallon gas, the slow lane is lonely these days.
What happens when oil runs out?
GRAND RAPIDS -- The collapse of cities, a return to rail transportation, famine and a worldwide depression are but a few outcomes predicted by energy industry insiders and believers in the peak oil theory who gathered this weekend at Calvin College."We will have a different civilization, to be sure," said David Goodstein, a vice provost and professor of physics at the California Institute of Technology (Caltech).
Algeria riots pose risk of wider unrest
ALGIERS, June 1 (Reuters) - Sporadic riots in OPEC member Algeria this year risk triggering wider protests against a political elite slow to turn unprecedented oil wealth into jobs and homes.Street clashes are a prickly issue in Algeria, a major gas exporter to Europe with a record of rebellion and where youth riots in 1988 forced the authorities to abandon one-party rule.
Fuel subsidies hurting Indonesia: Pertamina executive
SINGAPORE (AFP) -- Fuel subsidies in Indonesia are hurting the economy, sucking away precious funds which could have been better used in other areas such as health and economic development, an Indonesian oil executive said Sunday.The country cannot go on indefinitely subsidising fuel and bold decisions are needed from the government to address the situation, said Widhyawan Prawiraatmadja, a senior vice president with state-owned Pertamina.
Several ominous transportation issues recently converged that foreshadow a major problem. It began with truckers grinding large sections of our national highways to a halt in protest of rising fuel prices. These same fuel increases forced several airlines to close or cut operations. Meanwhile, car manufacturers were reporting some of their worst numbers in a generation-again, with much of the blame focused on rising gas costs.
Saudi Jizan oil refinery hits new delay - report
RIYADH, June 1 (Reuters) - Saudi Arabia has for a third time delayed a tender for bids for a 200,000 barrels-per-day oil refinery in the southern province of Jizan, al-Watan newspaper reported on Sunday....Spiralling costs have cast doubt over the viability of new oil refineries worldwide and industry observers have been sceptical over the Jizan plan as it is a long distance from crude production facilities.
U.S. lawmakers scramble to close energy 'loopholes'
With gasoline prices in the United States perhaps bubbling up toward a once-unthinkable $5 a gallon, lawmakers in Washington are running frantically to do something - anything - to halt the parabolic rise in the price of oil.
Russia raises oil export duty to record $398.1 per ton from June
MOSCOW (RIA Novosti) - Russia's oil export duty will rise to a record $398.1 per metric ton from June 1, 2008, in line with global market trends."The average [crude] price was $102.8 per barrel for the March-April monitoring period, which puts the maximum duty rate at $398.1 per metric ton. Therefore we will reach a record export duty on Russian oil that will be fixed at $398.1 per metric ton from June 1," Alexander Sakovich, deputy head of the customs payment department at Russia's Finance Ministry earlier said.
US envoy talks of 'apocalypse' in Sudan town
Burned and looted huts stretch as far as the eye can see in Sudan's oil-rich town of Abyei, now empty of civilians, the United States special envoy to Sudan, Richard Williamson, said on Saturday.Williamson, who toured Abyei on Friday, said he saw "scorched earth" devastation in the town where heavy fighting last month between northern and southern Sudanese troops sent tens of thousands of civilians fleeing.
Vladimir Putin weighs into TNK-BP Russia row
Vladimir Putin has waded into the shareholder row at BP's Russian joint venture, TNK-BP, saying that he warned the British company years ago about the risks of setting up the partnership with a group of Russian billionaires."Several years ago they [BP] created a joint venture splitting the firm 50-50. When they did it, and I was present at the signing ceremony, I told them: 'Don't do it. Agree to one of you having a controlling stake'", the Russian Prime Minister told French newspaper Le Monde on Saturday.
Russia to increase oil output after tax cuts
PARIS - Russia, the world's second-largest oil exporter, will raise its oil output in the next few years as new tax cuts will allow oil firms to invest more in exploration and production, Prime Minister Vladimir Putin said.Russia imposed heavy taxes on the oil industry, stashing away the proceeds in two oil wealth funds. Oil companies have complained about the excessive tax burden, which they say has led to underinvestment and stagnation.
Ex-official: Enron probably a focus of oil inquiry
(CNN) -- Federal regulators investigating possible price manipulation of crude oil are probably looking at what role collapsed energy giant Enron may have played, a former government official said Friday.
Forecasting inflation is now harder: Bank of Canada
OTTAWA (Reuters) - Rising gas prices are making it increasingly hard for the Bank of Canada to forecast inflation, central bank Governor Mark Carney said in an interview published on Saturday.
Power struggle: demand for oil is rising far quicker than production
Rising prices at the petrol pumps are a direct result of a lack of oil supply. When there's not enough to go around, the sellers can name their price. The result is that oil prices have almost doubled, rising from less than $70 a barrel this time last year to around $130 a barrel today.
Separating the myths from the facts about North Sea oil
Gordon Brown’s announcement in Banchory last week that he plans to increase North Sea oil production by up to 70,000 barrels a day was confirmation, if any were needed, that the country is in the grip of a fuel crisis.
French threat to North Sea oil reserves
A consortium of foreign oil companies led by French giant Total is threatening to block government plans to fully develop the North Sea's last frontier, which contains over a fifth of Britain's flagging oil and gas reserves.
David Strahan: Sorry Gordon, but geology has us over a barrel
Even by the low standards of his Government, Gordon Brown's recent pronouncements on oil have been surprising. Writing in a national newspaper on Wednesday, he argued that the price of a barrel had soared to $135 because of barriers to production that are "technical, financial and political".There are problems here, sure enough, but the word he left out was "geological", and the omission is crucial. It means he really doesn't understand the profundity of the current crisis, and explains why panicky initiatives are bound to fail.
America's suburbs: An age of transformation
Valencia was designed by Victor Gruen, an architect who did as much to shape American suburbia in the 1960s as William Levitt had done in the 1950s. Gruen was an idealist: his most enduring invention, the two-storey enclosed shopping mall, was supposed to evoke a European city centre. For Valencia he devised a dense urban core and a series of neighbourhoods connected to each other and downtown via walkways known as paseos. The settlement was supposed to be orderly and self-contained, unlike the chaotic San Fernando valley just to the south. As one of the town's early planners explained, it would be “an island of reason in the path of metropolitan sprawl”.It didn't quite work out that way. Valencia contains no building taller than six storeys and few taller than three storeys. These days the paseos are used mostly for walking dogs, and by children. Everybody else drives. Nor did Valencia prove to be economically self-contained. Each morning about half of its residents leave for jobs in Los Angeles. Roughly the same number make the reverse trip over the Santa Monica mountains to toil in Valencia's offices, sound stages and warehouses.
Australia: Govt 'backing down on renewable energy'
The Rudd government has been accused of neglecting to set aside money for renewable energy.Treasurer Wayne Swan has been criticised for a budget decision to means test the $8,000 rebate for installing solar energy panels.
But that's just one of several blows to the renewable energy sector, University of New South Wales (UNSW) senior lecturer Mark Diesendorf says.
Oil drilling plan outrages green groups
An Australian joint venture is planning to drill off the NSW coast in search of oil and gas in a move that has outraged green groups.The venture says the skyrocketing world oil price has made it feasible to establish a drilling rig 22km offshore between the Central Coast and Newcastle, The Sunday Telegraph newspaper reports.
Michael T. Klare: How Scarce Energy Resources Can Quickly Lead to Deadly Wars
Shows of force by nations competing to control dwindling energy supplies could trigger conflict in hot spots across the globe.
US Regulators Crude Probe Sparks Jitters Across Atlantic
"No doubt speculation is boosting the oil price, and perhaps oil markets are also being manipulated," said David Strahan, a trustee for the Oil Depletion Analysis Centre, a U.K.-based charity. "But the reason the oil price continues to soar, and why investors apparently see crude as a one-way bet, is a growing physical shortage of supply.""Even if the CFTC investigation does uncover market manipulation it is unlikely to moderate the oil price, since the fundamental cause is geological constraint and the approaching global oil production peak," Strahan said.
If the soaring crude price has shown anything, it is that a paradigm shift is under way in the global oil industry: the Western world can no longer take for granted the abundant supply of affordable energy that has sustained its economy and living standards in the past.
Oil shock brings cheer at last to EU's carbon market
PARIS (AFP) - After slumping to prices that had made it a near-laughing stock, the European Union's carbon market, the Emissions Trading System (ETS), has been given a useful boost by, of all things, oil.
Economic cost drives Senate climate debate
WASHINGTON - The possible economic cost of confronting global warming — from higher electricity bills to more expensive gasoline — is driving the debate as climate change takes center stage in Congress.The Senate will begin considering legislation Monday that would mandate a reduction in carbon dioxide and other greenhouse gases from power plants, refineries, factories and transportation, cutting heat-trapping pollution by two-thirds by mid-century.
Pethokoukis (USNews): Do We Need an Energy "Manhattan Project"?
Can Big Government really solve the energy crisis? It would be nice to believe that. While America has a much-deserved reputation as the land of free-market-loving entrepreneurs, that doesn't mean Uncle Sam can't occasionally take the lead and achieve some pretty impressive results. Two that quickly come to mind are the Manhattan Project ($20 billion in today's dollars), which developed the atomic bomb, and the Apollo space program ($100 billion in today's dollars), which eventually put 12 men on the surface of the moon. And it's those two examples of successful collective action that many people think should serve as the models for how we deal with our current power problems, whether it's slowing climate change or achieving energy security.
Efforts underway to cap corn to ethanol production:
http://www.seacoastonline.com/apps/pbcs.dll/article?AID=/20080601/OPINIO...
All city "think tankers" should be watching the morning farm reports that are broadcast weekly (usually on Saturday mornings). The excitement is almst palpable as the agriculture industry tries to figure out what to do with all of it's new found wealth and power.
The reporting is that the corn crop will not yield nearly as much corn as is needed to supply the ethanol industry, the animal feed industry and the food industry all at the same time. This means that the prospect of "cheap corn" in the near future is unlikely. Combine that with the staggering cost of natural gas, the fuel that really powers the ethanol industry (ethanol is essentially a gas to liquids industry, using solar power stored in food as the tool of conversion) and the raw materials cost to produce ethanol continues to skyrocket. The U.S. government has essentially subsidized this cost and mandated a market for ethanol, but if the corn cannot be delivered, the mandates become purely theoretical.
Sorghum to ethanol
The "ag industry" is now abuzz with the idea of substitution. Put the words "Sorghum to ethanol" into the google search bar and you will see what they mean. Sorghum or milo is now seen as the next potential source for raw material to produce ethanol. Agriculture departments at almost every major university are toying with programs to use sorghum as a source for bio-fuel. And as you would expect, projections of price increases for sorghum are pouring in. The problem is that sorghum is a major source of feed for animals, and thus we can assume that meat prices will be forced higher. And sorghum does not get us out of the continuing thirst by the ethanol industry for natural gas.
The U.S. Department of Agriculture and the Congress seem to see what is happening, and are now freeing up huge chunks of land held in "conservation trusts" (what used to be called "set aside") and allowing it to be used as pasture. The land that will go to sorghum and corn production is already displacing land recently used for pasture, wheat, soybean, barley, and hops (look out beer prices!)and with sorghmum soon to go into cars, it will reduce the amount that can go into cows.
Note that all of this is happening at the very front end of the ethanol mandates. If we stay to the fully implemented mandates, it will require a 5 fold increase in ethanol production by 2020!
this would still produce only a tiny fraction of the liquid fuel the U.S. consumes. It is almost impossible to project the potential dislocation to food markets, grain markets, and natural gas prices such a program portends.
To all the mathamatical whiz kids at TOD who have written on the subject of EROEI, take heart in your vindication (most of all the dean of the school of ethanol debunkers, Robert Rapier), the marketplace is bearing your theories out.
The farmers, however are having a "field" day (agricultural pun intended) as the wave of increasing farm produce prices from the ethanal plan expand outward in all directions.
At the grocery store and in the food poor nations of the world, however, it is not such a pretty picture.
Soon, the ethanol program will collapse in it's own misguided math (my guess is that ethanol will "peak" long before crude oil does) as more and more people realize there are easier ways to get energy from the sun than using our food and natural gas supply to do it.
RC
Isn't the ethanol subsidy a fixed amount per gallon?
Seems like as the price of natural gas (for fertilizer) and diesel (for tractors and transportation) go up, the relative advantage of a fixed subsidy goes down. And politically, it's going to be hard to increase that subsidy in the face of rising food costs.
Sorry for re-posting this from yesterday's DrumBeat, but it seems appropriate:
The US produces a load of ethanol now -- 550,000 barrels per day (EIA figures)which is up 160,000 barrels per day from a year ago. A five fold increase would result in 2.75 million barrels per day -- in volume terms equal to more than 50% of current domestic US supply, in energy terms worth about 40%. So,if possible, this would be a substantial fraction not the minuscule fraction you posit. Add this volume of ethanol to an ANWAR, an equal volume of biofuels, a traditional US production of around 3 million barrels per day, and massive efficiency increases due to more fuel efficient cars, hybrids and V2G construction and it's possible we could be in a lot better shape dependence-wise come 2020.
Now there are serious problems with ethanol production. But they are not so dark or dire as you paint them. First, not all ethanol production uses natural gas to provide heat for fermentation. So your statement about ethanol essentially being a liquification program is a little off. Sure, you convert some energy into more of another, but the imputs are direct solar, diesel, fertilizer, electric from natural gas, coal, nuclear, wind, etc.
The impacts on food are definitely negative and so the industry is now scrambling to diversify even as it tries to grow the ethanol base. We'll probably see less corn and more other things to include sorghum but also a growing base of cellulosic. A number of cellulosic refining operations are springing up this year as well -- enough to total more than 50,000 barrels per day in new production.
So the ethanol picture is more complex and we are likely to continue to see growth -- albeit struggling. I don't know if we'll reach the fivefold increase in ethanol by 2020 or if we can produce that total. Nor do I know if other biofuels will reach parity volumes. But we will likely see increases even as we make a step shift away from corn to diverse sources.
Ethanol was never a panacea. But it will continue to provide mitigation and, perhaps, power the farm equipment when we need it most. In the end, I think V2G with renewable/nuclear power is the preferred option. So let's hope that begins to pick up steam pretty rapidly as well.
If I understand it correctly you are saying:
Ethanol 2.75mbd (allowing for 5 fold increase)
Biofuels 2.75mbd (err! from somewhere)
ANWR 0.75mbd (if it ever happens/if they can achieve that flowrate)
Existing US production 3mbd (assuming no production declines)
Total 9.25mbd by 2020
Don't you think you're being just a little over optimistic?
Actually, 3 mbd is counting in the decline rate. We produce 5.5 mbpd now.
And yes, those figures were overly optimistic. But I'm quoting figures from optimistic sources. The original statement was an 'if even.' So I was covering that statement.
In my opinion, we're more likely to get this by 2020:
Ethanol: 1 mbpd (constrained by land, food and water issues)
Other Biofuels: .5 mbpd (see above statement)
ANWR: .5 mbpd (if opened)
New off shore: .25 mbpd (if opened)
US production after decline rate + enhanced recovery: 3 mbpd (actually, this figure is a bit pessimistic, but we have some really old wells and lots of off-shore sources that don't have a very long lifetime)
Total: 5.25 mbpd by 2020
Net loss -.25 million barrels per day plus loss in efficiency in ethanol.
I received a letter from a govt. official that the United States is expected to produce 7.5 bilion gallons of grain ethanol in 2008. The 2015 grain ethanol cap is for 15 billion gallons/yr. The total requirement for grain & cellulosic ethanol is 36 billion gallons by 2022. Since there is no large scale cellulosic ethanol due for some time, it is likely that the 15 billion gallon limit to corn ethanol production might be mandatory under strictest penalty of the law unless the law is amended.
This year the farmers planted 6% fewer acres of corn as they needed to try to fill a growing demand for soybeans and other crops. The early proponents of grain ethanol had argued that higher prices for corn could only bring more corn acreage planted. This myth is already debunked. The amount of new acreage being cleared is negligible compared to mandatory requirements for biofuels around the world.
An article published in the Boston Herald website today indicates that the ethanol margins after subsidies are currently so poor it is not economical to build new ethanol refineries. If the government had not meddled in the energy markets by requiring mandatory fuel blending the market could correct itself. With mandatory blending the situation might cause a huge blow to motorists who might be required to pay higher costs at the pump for inefficient ethanol and higher food prices at the same time. The United States as the world's largest corn exporter is in serious danger of becoming a corn importer at a time when grain stockpiles are low.
http://www.bostonherald.com/business/general/view/2008_06_01_Ethanol_at_...
Legal remedy is needed and there are people in government working to try to end the ethanol trap.
It's a tough spot. If you kill corn ethanol you lose 550,000+ barrels per day in domestic production so you get a knock-on effect to liquids supply. Then there's the food issue.
I expect this to be a bitter fight for all sides and lose-lose all around. That said, there is significant, though not extraordinary, new supply of cellulosic ethanol coming online.
But those .55Mbpd are somewhat illusory. First you have to subtract the fuel used to grow the additional crops, and transport and process it. Given the poor energy return on energy invested that correction is likely to be substantial. Then if you consider the largest damage to the US is due to the effect on our balance of payments, ethanol has left us with less food for export. If you properly account for all the effects, I don't think you will conclude that the ethanol program has been a net win.
Of course the quality of our political/policy debate within the US is so poor, that we can hardly expect that any honest attempt to access the true impact of a program will be made, or listened to.
Oh brother, here we go again...
1. Though some diesel inputs are used it is not more than a small fraction of the volume of ethanol produced.
2. Though natural gas is used in some inputs as well, it is not all of the net energy involved.
3. You can't run cars on natural gas at the moment so this energy input does not directly compete with transportation fuel.
4. So you still have a net volume and energy gain to transport.
5. Ethanol detractors overstate EROEI loss.
6. Ethanol proponents overstate EROEI gains.
7. Likely EROEI is slightly positive.
8. Increased ethanol production is reducing US oil imports.
Simply put, you can't remove the ethanol and not expect it to have a negative effect to transportation supply. What's most annoying to me is each side of the issue claims to have all the answers. It's either a panacea or it's the end of the world. The debate, in my opinion, has become silly.
You know, there are actual scientists, including Dr. Ted Patzek, doing actual science, making actual measurements and their findings indicate that ethanol is a net energy loser. This is simple to determine actually and Patzek and et al have done so. Please look up their research and quit foisting this science-illiterate nonsense on the gullible here.
For those of you who wish to invest in the ethanol future, I have a perpetual motion machine out in the garage.
Yes, the same 'actual scientist' who found that gasoline was also a net energy loser.
"Calls for the removal of ethanol from the marketplace would do precious little to reduce the price of food, but would send prices at the pump even higher by more than $1 per gallon. Ultimately, this deliberate smear campaign is aimed at destroying the base upon which the next generation of biofuels will be built. If this country were to jettison the starch-based ethanol industry, the development of cellulosic ethanol technologies and other biofuel advancements would be set back by decades, something those in OPEC and the oil industry would clearly welcome."
http://renewablefuelsassociation.cmail2.com/e/418171/ews4dy/
...the development of cellulosic ethanol technologies and other biofuel advancements would be set back by decades...
Oh, please. Really?
From everything I've ever seen on TOD, the cellulosic process, if it is ever made to work in practice on a large scale (and hopefully without releasing a bug that multiplies until it has liquefied all the world's plant life...), is very, very different in numerous respects from the far simpler starch process. Which is, after all, why we only have the starch process so far.
So what is the point of mucking up the world's food supply something fierce, by way of the many adverse primary and higher-order side effects of shifting too much land and too many resources into corn to support the starch process? That process is essentially unrelated to a cellulosic process that doesn't even exist yet. Just because the starch hypesters at your link, with their infinite thirst for taxpayer dollars, assert that it saves a buck on gasoline, that makes it a good idea? Give me a break!
I realize it's a lovely boondoggle for those on the receiving end of quasi-infinite wads of taxpayer cash. I realize as well that farmers deeply love to swim in taxpayer cash - though they have dwindled in numbers, we seem somehow to still have such a vast surplus (because the lifestyle attraction of be-your-own-boss-out-in-the-"country" trumps not only economics but just plain good sense?) that swimming in subsidy cash often seems far and away what many of them do best, and who wouldn't love it? On the other hand, I find government boondoggles to be very tiresome; on a bad day, I can almost get to thinking the whole government to be nothing more than a bunch of corrupt thieving crooks. If we really want to do coal-to-liquids, or we think we have so much natural gas that ought to do gas-to-liquids, there are reasonable and straightforward chemical processes for those operations, leaving absolutely no need to muck up the food supply.
100 million gallon cellulosic plant
http://earth2tech.com/2007/11/06/range-fuels-starts-construction-on-cell...
1.4 million gallon cellulosic plant
http://www.greencarcongress.com/2008/05/verenium-commis.html
Three other cellulosic biorefineries
http://www.greencarcongress.com/2008/04/doe-to-fund-3-m.html#more
This in addition to a number of other second-gen biofuels projects.
As for starch hypesters, as you call them (what is that, some kind of term the oil industry dreamed up?), I posted their links to match the starch hate burning a big red hole through this forum. If they're going to cite one extreme, it does well enough to hear the other side of the argument. Often, you'll find truth lies somewhere between the two.
If you need 21 billion gallons of cellulosic ethanol by 2022 and you have little more than 101 million gallons planed you fall short of your requirements more than 200 times. The loblolly pine plantations of Georgia were planted as these trees were preferred for pulp and construction timber. Thus you compete for valuable resources. The EROIE for cellulosic ethanol was stated as below 1.
If you have an EROIE of 1, then for every btu of energy you spend you get one back.
If you have an EROIE of 1.3 for grain ethanol, and you spend one gallon of ethanol to grow, harvest, transport, mill, ferment, and put ethanol back in the rack, then you only get 1/3 of a gallon in energy produced from the corn. If you use a bushel of corn to make ethanol you only get a third of the energy out of it as you had to use the other parts of it to get the corn and process it.
You decry hatred, but were sly in dishing it out. Contempt of a theory without investigation is dangerous. Your theories lead to a tripling of the price of grain and millions starving. Your continued dishonesty is irreprehensible. To slander someone by saying the person claimed there was a negative EROIE of gasoline is hype of the worse type. Some oil fields yield EROIE's in excess of ten. You cannot duplicate that in your overpriced cellulosic frauds.
Will try to clarify the situation:
CORN EXPORTS = 2-2.25 BILLION BUSHELS DEPENDING ON HARVEST SIZE
CORN HARVEST ABOUT 12 - 13 BILLION BUSHELS DEPENDING ON HARVEST SIZE
Ethanol yield of corn = 2.7 gallons per bushel
Grain ethanol cap limit (2015 USA) = 15 billion gallons
15 billion gallons of ethanol/2.7 gallons/bu= 5.6 billion bushels of corn required for ethanol production.
That might put you in the red (losses) and wanting over 3 billion bushels of corn for import. The energy policy acts passed in 2005 and 2007 were produced without contingencies to mitigate these problems.
Canada is requiring 10 percent ethanol blending by 2010.
There is biofuels production in Europe and Asia that may require corn and vegetable oil. Some of it is mandatory, thus the markets might not function efficiently, and the impact on grain stocks will be devastating.
WINTER WHEAT HARVEST (2008) FORECAST: 1.78 BILLION BUSHELS.
SPRING WHEAT HARVEST (2008) FORECAST: 2.4 BILLION BUSHELS.
Previously I used out of date harvest data and did not differentiate between winter and spring wheat to arrive at my assumptions.
The EROIE of ethanol is alleged to be in the negative territory. I can neither confirm nor deny those claims, but those who compared ethanol to gasoline did not always realize that ethanol gives you fewer miles per gasoline.
"a 2003 Ford Ranger FFV 2WD was tested running straight gasoline as opposed to running E-85 (85% ethanol/15% gasoline). On pure gasoline it got 19 mpg, and on E-85 it got 14 mpg" That is 26% fewer mpg. There are figures to the left and to the right of this all over the internet. Most of them show you lower mpg's with ethanol and/or ethanol blended gasoline.
VonHeltzen: http://www.vonheltzen.com/Information.html
I know about lower efficiencies of pure ethanol/E85. If had you read my post you would have noticed that I mentioned lower pure ethanol net energy.
As for total volumes, it's not quite so simple. Much of the ethanol used also produces distillers grains which are used to feed livestock. So if you use 10% of the corn crop for ethanol, you still get a certain volume back in distillers grains.
As for EROEI, I've seen reliable figures ranging from 1.2 to 2.0. It's certainly not that great on EROEI, but it's not negative.
Cellulosic ethanol is moving apace, so any attempts to kill off ethanol based on corn alone will have to succeed in the next couple of years. Circa 2010, we have a valid diversification.
The dredges of the corn mash were devoid of sugar calories. Most of the corn energy content was from the sugars. If you get 30% of the corn mass leftover after distilling how many cows can you feed compared to whole corn? Cows were fattened quickly on corn sugar that is why it was used as a feed instead of using switch grass that grew very quickly. I read of a debate in Canada that the bioengineered corn for ethanol is not approved for human consumption and they were not certain it was fit for animal consumption either.
David Pimental of Cornell published a study that there is negative EROIE with corn ethanol. He was interviewed and pointed out flaws in the theory that corn ethanol has a modestly positive EROIE.
http://www.grist.org/news/maindish/2006/12/08/philpott/
The United States 2007 gasoline consumption was 142 billion gallons or about 9.25 million barrels per day.
According to the Clean Air Trust ethanol only gets "34% less gas mileage" when compared to gasoline and diesel. http://www.cleanairtrust.org/E85-Gas-Mileage-Consumption.html This is much worse than earlier reports stating ethanol provided 80% of gasoline delivered energy content.
Thus your 15 billion gallons of corn ethanol that may be required by 2022, capped in 2015, times 34% equals 9.9 billion gallons of gasoline equivalent. Then you might wipe out almost 40% of your corn crop, all your corn exports, and need to line up more than 3 billion bushels of corn in a world full of grain shortages. Then you get less than 7% of your gasoline needs with a process that has a negative EROIE and then you end up with less energy than you started. If you did have as high as a 1.3 EROIE then you might take 30% of the energy from 9.9 million gallons of gasoline and you get 3% of your gasoline energy needs after subtracting energy inputs, Washington running up record deficits, trade imbalances, and a falling dollar. If in fact you have a negative EROIE for the process as an engineer has reported, then you made a worse deal for the United States than the Indians who sold Manhattan for some glass beads, grain alcohol, and smallpox infected blankets. Forty percent of the corn for 3% of our gasoline that could have easily been won by mandating a three perccent improvement in fuel mileage economy per vehicle is bad business.
I should with gladness like to cancel mandatory cellulosic ethanol production as well. It EROIE was reportedly lower that is why other nations did not beat you to it.
And Dr. Pimental includes calories burned by people doing farmwork in his EROEI equations...
"Looking more in-depth into Dr. Pimentel’s response, he is very detailed, maybe even too detailed. He includes in his results the “calories burned by the people doing the farm work. He not only calculates the energy needed to heat the water to ferment the grain, but also the energy needed to build the plant and all its parts – steel girders, concrete, and stainless steel.” Pimentel, when applying this equation to other energy sources, surprisingly considers gasoline to be a net energy loser “If you include the pumping and processing and so forth, it runs a little over 10 percent.” Skeptics of his results say he is not to include the energy cost of making the machinery, neither include the energy cost for feeding the people that work the machinery."
http://gog2g.com/2006/07/27/looking-into-the-eroei-of-ethanol.aspx
It's very clear some people are happy to scream and scream about ethanol. The truth is not nearly so bad as the picture you paint. Given, it is not ideal and I hope we don't have to use it for very long. But here we are with ethanol as one of the viable alternatives available to us.
Hopefully, we'll fast track V2G so that we can have more options as well.
I did not use a paint brush, but the text was a bit off at one point. The EROIE of 1.3 at the high end with 15 billion gallons of corn ethanol production would have provided closer to 2% of our gasoline energy needs while taking about 5.5 billion bushels of corn from a 12-13 billion bushel capacity. That is about 44% of our corn harvcest at 12.5 billion bushels/yr. One researcher was using an EROIE of .8 for corn ethanol and that would definately make for total wasted effort of building those stainless steel distillery drums to make too much alcohol. A scenario of no energy returned and 44% of the corn gone, with not so much as a food coupon in return.
Maybe the ethanol people may not talk so loud. Pride goes before a fall.
good points rainsong ! ethanol is a scam !
This one is for you Robert
... how low would you approve EROEI for ethanol to go, before you Robert would disapprove the very idea ?
Well, currently, we supply 550,000 barrels per day of ethanol by volume. That volume represents almost 5% current gasoline consumption and we do it with around 20-25% of the corn crop. Since the energy for ethanol doesn't come from gasoline your EROEI comparison doesn't make sense.
Now the US isn't going to allocate the entire corn crop to ethanol. It's switching to other feedstocks including those for cellulosic which, according to numerous sources have an EROEI of 2-36 depending on feedstock and method.
You keep quoting Pimentel's figures. Pimentel also found a negative EROEI for gasoline. So, according to your argument, cited researchers, and figures, there's no energy gain in gasoline, either.
Finally, distiller's grains have been used as cattle feed for some time with success. So, since ethanol production doesn't consume the entire product the total volume isn't consumed as fuel.
Oh, and in my experience, idiots spouting propaganda often scream the loudest. Farewell, and good luck with the screaming.
Jezz where do you get them numbers from, you are getting better by the minute :
Is this cellulosic ethanol or cellulosic magic fluids? EROEI of 36 ! It is better than all ready-made-crude-oil in the world today
I have heard enough let's wistle off this energy crisis today !
Just bye-bye Robert
No Paal, there are no magic 'fluids.'
The figures come from a number of places. Wiki references most:
http://en.wikipedia.org/wiki/Ethanol_fuel
It's cellulosic magic fluids. Dammit, the process doesn't even exist yet. It's still a science project. (For the uninitiated, in these contexts, I use "science project" as in government-project bureaucratese. There, it denotes a cash cow that might work someday, but doesn't work now, and is almost certain to require lots and lots and lots of research grants before it ever works, preferably enough grants over enough time to carry the research team through to retirement, should it ever work at all. Unfortunately, the primary goal of too many research teams - ITER being a fine example - is to collect research grants and produce not just mountains, but entire mountain ranges, of bumf; getting a result may be a goal too, but a rather secondary one at best.)