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For Katrina

Econ101

Well-known member
… ultimately plan to blend chicken fat from the nearby Tyson Foods poultry plant with the soybean oil to cut costs…



Plant sells first gallons



By Tim Krakowiak ~ Southeast Missourian

Wednesday, April 11, 2007



DEXTER, Mo. -- The first batch of B100 biodiesel made by Global Fuels was scheduled to be pumped into a truck Tuesday. But when the truck from Bootheel Petroleum Co. arrived, some rewiring remained to be done in the plant's fuel line.



Engineers put in a full day of equipment testing at the plant on County Road 731 just east of Dexter Tuesday to make the final adjustments necessary for Global Fuels' 200,000-gallon storage tanks to begin pumping out biodiesel fuel made from soybeans.



Global Fuels plant manager Tim Hutchcraft said the entire operation should be up and running today.



The plant, which has the capacity to produce 8,700 gallons a day, presently has 30,000 to 35,000 gallons available, Hutchcraft said. It will operate 24 hours a day, 7 days a week.



Jay Barbour, vice president of Bootheel Petroleum Co. in Dexter, volunteered to buy the first 300 gallons. Although he drove away empty-handed Tuesday, he said he was glad to help identify the problem.



"Even though we're in the oil business, this is good for us, too," Barbour said.



After all the electrical glitches are fixed, Barbour will start getting pure B100 fuel from the plant, which he can blend with regular diesel fuel at different percentages to let customers choose the grade they want.



Switching to biodiesel streamlines the process of producing fuel, Barbour said. "With soybean oil, you don't have to go drilling under the ocean. It's a lot easier to find."



Last week Global Fuels produced its first batch of pure B100 fuel using processed soybeans from local farms. Co-owners Jerry Bagby and Harold Williams ultimately plan to blend chicken fat from the nearby Tyson Foods poultry plant with the soybean oil to cut costs. Soybean oil is 33 cents a pound, while chicken fat is just 19 cents a pound. Bagby said the plant will eventually produce 3 million gallons of biodiesel fuel a year.



Bagby said the fuel makes ecological sense. "The air is essentially left as it was with feedstock. It's going to be a big benefit to the environment."



The market for biodiesel and ethanol started to flourish after passage of the federal Energy Policy Act in August 2005. Now oil refineries use less sulfur in regular diesel fuel because of the acid it produces in the atmosphere. Sulfur helped with engine upkeep, serving as a lubricant.



Biodiesel fuel replaces the lubricant and helps keep fuel lines and filters clean. According to Bagby, the quality of the fuel is measured by the amount of glycerin that's removed. "To an engine, glycerin is sort of like what cholesterol is to your blood stream," he said. "Basically we remove glycerin from soybean oil in our plant."



Justin Danforth, project engineer of Agri Process Innovations, has been working with Global Fuels since the groundbreaking in May.



Greenline Industries of San Rafael, Calif., and Agri Process Innovations of Suttcart, Ark., have partnered to form Greenline Fabrications to increase biodiesel production nationally.



Danforth said API has been testing devices to see if a market exists for the excess glycerin that comes from the biodiesel fuel. He said no huge market for the glycerin exists right now because of the high methanol content. If some of the methanol is removed, the byproduct could be sold to pharmaceutical and makeup companies, he said. Right now the only market for the glycerin is asphalt companies who burn it in incinerators.



Bagby did not give a price for the B100 to be sold at Global Fuels, but said it will cost about the same as regular diesel.



semissourian.com
 

IL Rancher

Well-known member
There is one I have heard about that they are going to build in conjunction with a hog processing plant and try to use the excess hog fat. I would imagine that they will look at beef tallow as well from all those yield grade 4 and 5 CAB animals :lol: Could be good in the long run, add some value to the cost of finished animals, which is of course why Tyson is intersted in it on the Chicken fat arena...
 

katrina

Well-known member
Thanks econ...... :D
I was a little worried there for a minute... :lol: :shock:
We are in the process of getting out syntrafuge rewired with an electric motor....

That is exciting news... Even half blends will help our oil dependancy. But we have along ways to go....
 

Econ101

Well-known member
There is also a turkey offal processing plant I heard of in TN that turns the waste into biofuel. At low prices and no govt. subsidy, it just didn't pay enough to do these type of things.
 

Econ101

Well-known member
katrina said:
econ,
How is it that ethenol is priced the same as gas??? I've forgotten...( I need more sleep.)

It only has about 70% of the energy of gas so you would need more ethanol to get the equivalent energy from it.

Pure and simple, it is subsidized.

Most mixes only have a small part of ethanol in them.

Corn alcohol is worth more when it comes out of a whiskey bottle.
 

aplusmnt

Well-known member
There are a couple people around this area that go around and get the used grease at the donut shops and restaurants to make their own diesel in their garage.

Lots of potential for bio diesel, more so than ethanol gas if you ask me.

If I remember right when the Diesel motor was invented in Germany it was designed to run on Vegetable oil. Due to Germany's lack of oil, during war time. It was not till later that the oil companies tweaked it to get it from Crude oil and motors were also tweaked to use this new version of Diesel fuel.
 

IL Rancher

Well-known member
Well, If I remember correct it was developed prior to wartime but yes, it was developed for vegtable oil originally and than disel fuel was invented later...
 

Steve

Well-known member
Econ101
Pure and simple, it is subsidized.

If it "pure and simple",...maybe you can "explain" how ethanol is subsidized..

is the feds giving "every one a check"?

is it in the form of "loan guarantees"?

or is through "tax incentives" or "tax credits"?

How are ethanol getting subsidized?

Many who oppose ethanol say it is subsidized and then use some number to back up their claim and say how much it is costing the taxpayers.....yet never explain how the so-called subsidy works.....
 

Econ101

Well-known member
Steve said:
Econ101
Pure and simple, it is subsidized.

If it "pure and simple",...maybe you can "explain" how ethanol is subsidized..

is the feds giving "every one a check"?

is it in the form of "loan guarantees"?

or is through "tax incentives" or "tax credits"?

How are ethanol getting subsidized?

Many who oppose ethanol say it is subsidized and then use some number to back up their claim and say how much it is costing the taxpayers.....yet never explain how the so-called subsidy works.....

Good Question, Texan. Here is a little dated article on how the subsidy works. There may be a difference in the amount of the subsidy, but I think it works the same way today.

How the Ethanol Subsidy works
The "blender" buys gasoline and ethanol at their "rack" (wholesale) prices and blends them. The blender then gets the 51¢ credit for each gallon of ethanol purchased. Hence, if the wholesale price of ethanol is $3.51 and the bender gets a $0.51 subsidy, the blender figures the ethanol really costs only $3.00. So we save $0.51 because the blender passes on a lower price of ethanol, but we have to pay the $0.51 subsidy in our taxes, so it's just the same as if the ethanol really did cost $3.51 and there were no subsisdy.

The subsidy for ethanol production is $0.51/gallon, plus a small-producers credit of $0.10/gallon for producers of up to 60 million gallons per year (up from 30 with new energy bill). This is reported in the CRS Issue Brief for Congress, IB10041, Energy Tax Policy, June 17, 2005, page 14. The total subsidy per year is estimated at $1.49 billion for FY2005 and rising.

To be conservative, I have ignored the small-producer credit. That does add to the cost.

What is the Excise-Tax Bias Against Ethanol?
Ethanol is charged the same tax per gallon as gas.
It should be the same tax per energy, 1/3 less.

For example, if ethanol had half the energy per gallon of gasoline but was more than twice as cheap per gallon, you would have to pay twice as much tax to drive the same distance with ethanol as with gas. That's unfair.

Some states, like Hawaii, give ethanol the appropriate tax break, and some, like South Dakota, overdo it. The federal government and most states give no tax break.

To be cautious, I assume no states give ethanol any tax break. The federal tax is 18.4¢ and the states average 21¢/gallon.

The appropriate tax on ethanol, given this rate on gasoline, is:
Fair ethanol tax = 39.4/1.48432 = 26.5¢/gallon,
because gas has 1.48 times more energy.
The bias against ethanol is 12.9¢/gallon,
ignoring all state tax breaks for ethanol.

How Big Is the Corn Subsidy?
Total corn subsidies for 1995--2003 were $37,360,151,705.

Total US corn production 1995--2003 = 83,696,000,000 bushels.
1995--97 in Feed Outlook, 10.14.98
1998--2003 in Corn Supply and Use

Average subsidy = $0.4464 / per bushel.

The USDA tells us the conversion rate of corn to ethanol is 2.5 gallon per bushel. So, the

Average subsidy = $0.1786 / gallon of ethanol produced.

Source:
http://zfacts.com/p/63.html

I think the 51 cents a gallon goes to year 2010. There are other subsidies out there that play a role that are hard to calculate because they depend on the price of corn, which, as you know, is over that thresh hold now. The Cato Institute quotes the historical calculation to be between $1.03 and $ 1.38 per gallon.

On a 55 gallon barrel and 51 cents/gallon that is $28.00 per barrel more than gas and it has a lower energy content than gas.

Here is the Cato article:

January 29, 2007


January 29, 2007

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Ethanol Makes Gasoline Costlier, Dirtier

by Jerry Taylor and Peter Van Doren

Jerry Taylor and Peter Van Doren are senior fellows. Peter Van Doren is also editor of Regulation magazine.

In his State of the Union address, President Bush spoke a lot about energy independence and alternative energy sources such as ethanol. According to the president, ethanol is the magical elixir that will solve virtually every economic, environmental, and foreign policy problem on the horizon. In reality, it's enormously expensive and wasteful.

Untruths and misconceptions about ethanol include:

Ethanol will lead to energy independence. If all the corn produced in America last year were dedicated to ethanol production (14.3 percent of it was), U.S. gasoline consumption would drop by 12 percent. For corn ethanol to completely displace gasoline consumption in this country, we would need to appropriate all U.S. cropland, turn it completely over to corn-ethanol production, and then find 20 percent more land for cultivation on top of that.

The U.S. Energy Information Administration believes that the practical limit for domestic ethanol production is about 700,000 barrels per day, a figure they don't think is realistic until 2030. That translates to about 6 percent of the U.S. transportation fuels market in 2030.

Ethanol is economically competitive now. According to a 2005 report issued by the Agriculture Department, corn ethanol costs an average of $2.53 to produce, or several times what it costs to produce a gallon of gasoline. Without the subsidies, costs would be higher still. A study last fall from the International Institute for Sustainable Development found that ethanol subsidies amount to $1.05-$1.38 per gallon, or 42 percent to 55 percent of ethanol's wholesale market price.

Ethanol reduces gasoline prices. If you lived in California and other areas that used reformulated gasoline last summer – that's the environmentally "clean" gasoline required for areas with air pollution problems, and that's where most of that ethanol went – you might have paid up to 60 cents a gallon more for gasoline than you would have otherwise. That's because the federal government required oil refineries to use 4 billion gallons of ethanol in 2006 regardless of price, and gasoline pump prices last summer reflected the fact that ethanol was twice as expensive as wholesale conventional gasoline.

Ethanol is a renewable fuel. According to a group of academics from UC Berkeley who published in Science magazine last year, 5 percent to 26 percent of the energy content of ethanol is "renewable." The balance of ethanol's energy actually comes from the staggering amount of coal, natural gas and nuclear power necessary to produce corn and process it into ethanol.

Ethanol reduces air pollution. A review of the literature by Australian academic Robert Niven found that, when evaporative emissions are taken into account, E10 (fuel that's 10 percent ethanol and 90 percent gasoline, the standard mix) increases emissions of total hydrocarbons, nonmethane organic compounds, and air toxics compared to conventional gasoline. The result is greater concentrations of photochemical smog and toxic compounds.

Ethanol reduces greenhouse gas emissions. At best, E10 reduces greenhouse gas emissions by from zero to 5 percent; pure ethanol by 12 percent. The International Energy Agency, however, estimates that it costs about $250 to reduce a ton of greenhouse gases this way, or more than 10 times what Yale economist William Nordhaus thinks is economically sensible given the economics of climate change. Ethanol as an anti-warming policy is what academics refer to as "crazy talk."

Ethanol subsidies are necessary to "level the playing field." Petroleum subsidies are something less than $1 billion a year – six to eight times less than ethanol subsidies – and work out to about 0.3 cents per gallon.

Switchgrass (aka, "cellulosic ethanol") will set us free. Guy Caruso, the head of the EIA, noted in a speech last December that the capital costs associated with cellulosic ethanol production were five times greater than those associated with conventional corn ethanol production. Estimates like that are a bit soft, however, because there is no cellulosic ethanol industry in existence at present, so data is hard to come by. Betting the farm on an industry that doesn't yet exist to produce a product that is known to be staggeringly expensive isn't the best use of tax dollars.

If ethanol has commercial merit, it doesn't need the subsidy. If it doesn't, no amount of subsidy will bestow it. And that's the truth.

This article appeared in the Chicago Sun-Times on January 27, 2007.

Unless there are some efficiencies that can be squeezed out of ethanol production (which seems hard given we have been making it for centuries), it is pretty much just a corn subsidy for the short run.

Now in Brazil, where sugar cane is used, there is a different story, largely because of the climate and cheap land used to grow sugar, but it comes at the cost of destroying the rain forest. Cane sugar is easier to convert to ethanol. Cane is hard on the land--it needs inputs. It was a cash crop for my grandfather in Louisiana but it wore out the land fast and you had to crop rotate. I don't know about the production model in Brazil.
 

Steve

Well-known member
Econ101
There are other subsidies out there that play a role that are hard to calculate because they depend on the price of corn, which, as you know, is over that thresh hold now.

I have read the above articles in posing my question.....

Most use the term subsidized or subsidy...which is intentionally misleading..

when in fact they are mostly in the form of "tax credits", "tax incentives" and "loan guarantees",..and in fact the rise in corn demand has eliminated many forms of cash payments.....

is it wrong to give "tax incentives" or "tax credits" and loan guaranties" to new industries?
 

Steve

Well-known member
Econ101
Unless there are some efficiencies that can be squeezed out of ethanol production

With out trying we will never know....

I am for giving any new industry a chance...and a tax break..

will it solve our problems maybe not,... but not trying will not solve it either....

If you take out your "subsidy argument"...and replace it with the correct terms tax incentive, tax credit, and loan guaranties....then it's really not costing US a dime to try..we are just giving the companies a tax break if they try....
 

Steve

Well-known member
Ethanol reduces gasoline prices. If you lived in California and other areas that used reformulated gasoline last summer – that's the environmentally "clean" gasoline required for areas with air pollution problems, and that's where most of that ethanol went – you might have paid up to 60 cents a gallon more for gasoline than you would have otherwise.

see this is well, an out right lie....*

New Jersey has "reformulated gas"...in the past they used MTBE until they found it contaminated all the states wells ,..so as of last year we started using ethanol..since we are mandated by the Fed EPA to use reformulated gas..we have to use ethanol.....and our prices are substantially lower then any of the neighborings states prices.

I travel often and always make sure I plan my fill-ups in state, because we are consistently ten to twenty cents lower..and with the added benefit of "no" self serve stations in the state...

so the statement above is false,..we not only have cheaper ethanol gas....but we have "full service" stations that pump it for US..

*Note: I am not calling Econ101 a lier,...I am saying that the article is incorrect and making a statement that amounts to a lie, to promote their biased agenda
 

Econ101

Well-known member
Steve, you are right that I did not write the article and all those statements are not mine. Always note the source of the article. In this case, it was the Cato Institute, a conservative think tank in D.C.

I did want to address some of your points, not to defend the opposition view, but to just discuss them.

Quote:
Ethanol reduces gasoline prices. If you lived in California and other areas that used reformulated gasoline last summer – that's the environmentally "clean" gasoline required for areas with air pollution problems, and that's where most of that ethanol went – you might have paid up to 60 cents a gallon more for gasoline than you would have otherwise.


see this is well, an out right lie....*

New Jersey has "reformulated gas"...in the past they used MTBE until they found it contaminated all the states wells ,..so as of last year we started using ethanol..since we are mandated by the Fed EPA to use reformulated gas..we have to use ethanol.....and our prices are substantially lower then any of the neighborings states prices.

I think they were comparing pure gasoline (not MTBE) to gas that has ethanol in it. MTBE regulations were a total failure and caused a lot of environmental damage. It was one of those backward steps the enviro policy did.

I think you also have to note that this position by the Cato writer is real close to the arguments the oil companies make.

I agree with your argument that sometimes it is in the best interest of government to encourage industry through subsidies, tax incentives, and direct funding for a national goal. I have argued for this on this forum. It is an embarrassment that Brazil is so far ahead of us in ethanol technology and production. It is an embarrassment that we don't already have the enzymes or whatever for switchgrass and lower energy consumption crops conversion to ethanol. Our universities should have been working on these things a long time ago. We just haven't had a real energy policy in recent years except "use it up while it is cheap".

I would have to disagree with you that tax breaks, tax credits, and loans are not subsidies. They all are. You are right that subsidies that have no up front costs are better than ones that are given even if there is no performance (actual production)

Even with all these considerations, I don't think that ethanol will be a real long term solution to our energy problems. They are just a band aid.
 

Econ101

Well-known member
Steve, if you want to see what it costs to produce corn, here is a link to a breakdown of corn costs. If you will go look in the budget, you will see that soil fertility (fertilizer) costs are the highest non land costs in the budget. The next is repairs, fuel and hire. There are so many variables that it is hard to make this analysis except for a snapshot in time. The fuel related items (fertilizer, diesel, etc.) will go up costs as the price of energy increases.

What this means is that ethanol may never be energy positive given the theoretical amount of energy in ethanol compared to the costs of producing it.

Subsidies may artificially make it comparative to gasoline, but the net energy gain is small given the amount of energy it takes to make it. It just isn't really energy positive enough to be a viable energy source.

http://www.farmdoc.uiuc.edu/manage/newsletters/fefo07_05/fefo07_05.html
 

Steve

Well-known member
Econ101
Even with all these considerations, I don't think that ethanol will be a real long term solution to our energy problems. They are just a band aid.

even if they ultimaty fail or are replaced by another source the technology gains will advance our energy independance...so while I do not blindly support ethanol,...I will not discount it's gains,..

Econ101
I think they were comparing pure gasoline (not MTBE) to gas that has ethanol in it.

I was comparing our cost with ethanol to that with MTBE,..and our cost is still lower then near by states that serve pure Gas...

Yes we see a seasonal rise in the spring of about ten cents, but it is still less then thier cost of Pure gas,....and we have only full service stations.....(try to figure that out),..
 

aplusmnt

Well-known member
I hope someone is keeping track of the amount of barrels we import from the middle east and can compare that to the amount we import in say 5 years.

I would be more likely to bet that we are using the same or more fuel in 5 years than we are now. This is my fear with ethanol, that it will not decrease our dependency. Between the energy that it takes to make it and its lack of efficiency. Dependency will not change.

I think Ethanol is like Global Warming, everyone will be spinning their wheels trying to make some difference and in the end nothing will change, nothing will matter. All that will happen is the tax payer will pay, the average Joe will pay and some fat cats somewhere be it in Washington or the Corporate world get rich.

Only thing good I can see come of it is the Crop farmer makes a little short lived money, but on the flip side, the Cattle, Chicken and Pork producers will be the looser.
 

Steve

Well-known member
I would be more likely to bet that we are using the same or more fuel in 5 years than we are now.

I saw a study recently that projected the direction our "energy" needs would go in the next ten to twenty years....

Most of US forget that cars and gasoline are only part of the picture..

it projected that domestic ethanol could only only be at most 3% of our energy needs..more so because diesel and bio-diesel would capture upwards of twenty to thirty percent of the auto market..

and hybrids would start improving..taking a larger bite from power-plant produced electricity..

but it fell back to a big concern that we and other countries were switching back to reliance on coal..

I am not blindly for ethanol,... but feel it is part of the solution..one that advances technology and efficiencies..while "replacing" part of our imported oil requirements.

Many of US hate mandated requirement or subsidies in the form of tax incentives....but even the most Rabid environmentalists such as Al Gore won't actually go green how can they expect the rest of US to change to something that is not as usable as gasoline?

[/quote]
 

Steve

Well-known member
Econ101
It is an embarrassment that Brazil is so far ahead of us in ethanol technology and production. It is an embarrassment that we don't already have the enzymes or whatever for switchgrass and lower energy consumption crops conversion to ethanol. Our universities should have been working on these things a long time ago.

are we that far away?...is 2015 to late?

"Corn ethanol is helping to establish the alternative fuel infrastructure. It is paving the way for research in alternative sources of ethanol, including sugar beets, sugarcane, swicthgrass and plant cellulose."

While chemically identical to ethanol produced from corn or soybeans, cellulose ethanol exhibits a net energy content three times higher than corn ethanol and emits a low net level of greenhouse gases. Recent technological developments are not only improving yields but also driving down production cost, bringing us nearer to the day when cellulosic ethanol could replace expensive, imported "black gold" with a sustainable, domestically produced biofuel.,...

In October of 2004, Genencor announced a 30-fold reduction in the cost of enzymes to a range of $.10-$.20 per gallon of ethanol. To achieve the savings, Genencor developed a mixture of genetically modified enzymes that act synergistically to convert cellulose into glucose.,...

Battelle's recent report entitled, "Near Term U.S. Biomass Potential", looked at a scenario for producing 50 billion gallons of ethanol per year from cellulosic biomass. "The primary biomass supply would consist of waste biomass streams plus the production of energy crops." The waste stream was estimated to contribute 40-50% of the supply. The report concluded that the expansion of biomass supplies needed to achieve this level of production "would not result in large impacts on the agricultural system." Beyond this level of production, "dedicated energy crops would be required with implications for the cost of cropland and competition with food crops.",...

Assuming no increase in vehicle efficiency and a continued growth in driving, the U.S. is on a path to consume 290 billion gallons of gasoline in our cars and trucks by 2050.,...

The idea has two features, the amount of money available goes down over time, so by 2015 the industry is ready to stand on its own two feet

So we could "replace or produce"...50 of the 290 billion gallons of fuel "with out impacting existing food production acreages??

and that is with out "improving technology" of cars....



a long but good article:
http://www.harvestcleanenergy.org/enews/enews_0505/enews_0505_Cellulosic_Ethanol.htm
 
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