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The Future for the Ethanol Industry?

K

Kato

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Manitoba - At the end of the road
MMM... a sign of things to come for the ethanol industry?? Found this article when I was scoping out the Farm Bill Progress.

US farm bill cuts ethanol tax credit

James Politi / Washington April 28, 2008

http://www.business-standard.com/ft/storypage_ft.php?&autono=321335

Note this paragraph...

Under the terms of the deal reached by House and Senate negotiators, a key ethanol tax credit is expected to be reduced from 51 cents per gallon to 45 and the tariff on ethanol imports from outside the US is also expected to be scaled back.

It's interesting how once governments get their fingers in things they go all to pieces. Someone gets a bright idea that foreign oil dependence needs to be reduced. That leads to promotion of one industry, ethanol. This leads to higher grain prices, yes. But also leads to every supplier in the chain jumping on the opportunity to jack up prices on every input from fertilizer to machinery. This leads to inflation. Higher grain prices lead to huge losses in the livestock industry, which works it's way through the system to result in less livestock being raised. This leads to higher food prices in general. Which brings us back to government adding billions of dollars in food aid for both domestic and foreign people who can no longer afford to feed their families.

We all know how fast input prices come down after they start to snowball like this. A long time, if ever. In a few years, when the bloom is off the ethanol escapade, and lots of people who invested in that have lost their share of money, what will we be left with? How about the grain farmers who bought new combines that now need to be paid for with lower grain prices? Or the cattle ranchers and hog farmers who are working in town? Richer rich. Poorer poor. And still a reliance on foreign oil, except now at a higher price.

Was it worth it? Time will tell.

IMHO if the amount of money and effort that has been put into converting food to fuel had been spent instead on conservation and alternate energy, we'd all be a lot better off. It's not that hard to do. Something simple like dropping the speed limit could save millions of barrels of oil alone.

It's a lot cheaper to subsidize grain growers for their low prices than it is to subsidize a couple of hundred million hungry people.

I don't know how much the American press is covering this, but there are food riots taking place in Haiti, and countries are starting to put export embargos on foodstocks in order to make sure they have enough for their own citizens to eat.

And all the new ethanol plants are not even finished construction yet.......... :roll: :roll: :roll: :roll:
 
This is what happens when you can't see the big picture. IF ehtanol production was focused on using cellulose as a feed stock instead of grain it would be effiecenty and effective way to produce a biofeul. But using grain requires more than a liter of oil to make a liter of ethanol. That nakes no sense. Oh well maybe someone else will have to show how this is done ie) south american using sugar cane or wood waste from lumber productiuon in the boreal forest.
 
Ethanol hasn't been the only item effecting the food problems. Many countries have had problems with producing the crops due to weather. Also many countries have increased their consumption of more protein diets and want more. China and India have become the number one buyers of oil. The corn being used for ethanol isn't just being used for ethanol and then discarded, cattle feeders are using all the by products. The cost of food items because of corn or bean prices has only raised the prices a few cents. The freight to haul the food to the consumer is the problem. There was a study done at Iowa State University on the effects of ethanol on the fuel price. It was funded by the petroleum companies. The study found that ethanol lowered the prices of fuel by $.39 a gallon in the midwest and $.17 in other parts of the country. So we will see how the oil companies deal with this study. They might try to break the e-plants so they can get all the market. So much of the crap you hear on TV or radio has been so deceptive and based on so little knowledge it is comical. I do know the cost of corn for feeding cattle has been tough but I also know what selling corn at $1.25/bu is like. Sorry for the rant but I'm tired of ethanol taking all the heat when there are so many factors to consider.
 
QUESTION said:
This is what happens when you can't see the big picture. IF ehtanol production was focused on using cellulose as a feed stock instead of grain it would be effiecenty and effective way to produce a biofeul. But using grain requires more than a liter of oil to make a liter of ethanol. That nakes no sense. Oh well maybe someone else will have to show how this is done ie) south american using sugar cane or wood waste from lumber productiuon in the boreal forest.
Click to expand...

Much of the cellulose based feedstock for ethanol will come from acres currently used to raise food, causing the same problem we have now. We need expand use of nuclear and increase oil extraxtion until an alternative can be developed that doesn't take food producing acres out of production.
 
Where do you get that from? Using waste from the forrestry industry won't take grainland out of production. And as for using cropland to produce cellullose - research is going on right now using canola, mustard , flax ,corn stalks and other discarded cereal straw as sorces of cellulose for ethanol production too see which yeilds the most efficiently. So in conclusion You can seed crops like switch grass for cellulose for ethanol production and take land out of production of food but it is NOT required. You can use other sorces of celluose such as crop residues. People really need a course in thinking out side the box.
 
If switchgrass is like other grasses in this area large amounts of fertilizer is required. Again more energy to produce more energy and at more cost than producing Alfafa. However there is still lots of waste from forestry that could be used.
 
All being said and done, the most efficient way to produce ethanol is with sugar cane. As the story says, the tariff on ethanol imports from outside the US is also expected to be scaled back.

These tariffs that were supposed to be long term are already beginning to be chipped away at. This is another thing we have all learned in Canada, the hard way. Business plans made based on what governments say they will honour in the future are not to be relied on. Policies seem to be invented on the fly, and discarded just as easily, whenever politics come into play. Regardless of the impact on those of those who have invested in those businesses.

As for ethanol not having a large impact, I would disagree. It's had a huge impact here. We just recently had a plant upgrade to the tune of ten times it's size, only a few miles from us. This plant was going to be the be all and end all for the wheat growers of Manitoba. It would take the majority of Manitoba's wheat crop to keep it running, and the benefits would be enormous. NOT :shock: :shock: :shock: :shock: Within a couple of months the plant has announced it's switching to American corn, with no plans to go back to wheat. I would bet any money that those trains dropping off the corn will be hauling DDG back to the States as a backhaul too. This plant will not sell byproduct to anyone who wants less than a carload, which basically cuts out most of the people in this province. Maybe when the U.S. lowers it's import tariffs the ethanol will go south too.

The track runs right behind our house, and believe me, the train traffic is heavy. As we sit and listen to the train rumble by, we can't help but wonder exactly where is the benefit in all this? :? :? It sure isn't in the Manitoba cattle producers' pockets. We end up with high priced feed, no local market for grain, and no access to the byproducts we could use to cut our cost of gain.

:roll: :roll: :roll: :roll: :roll:
 
That's also the outlook of the Automobile Association of America. "As long as the price of crude oil stays above $100 a barrel, drivers will be forced to pay more and more at the gas pump," a AAA spokesman, Troy Green, said.

Oil recently hit an all-time high of nearly $120 a barrel, more than double its early 2007 price of about $50 a barrel. It closed Friday at $118.52.

The forecasts calling for a jump to between $7 and $10 a gallon are based on the view that the price of crude is on its way to $200 in two to three years.

Translating this price into dollars and cents at the gas pump, one of our forecasters, the chairman of Houston-based Dune Energy, Alan Gaines, sees gas rising to $7–$8 a gallon. The other, a commodities tracker at Weiss Research in Jupiter, Fla., Sean Brodrick, projects a range of $8 to $10 a gallon.

While $7–$10 a gallon would be ground-breaking in America, these prices would not be trendsetting internationally. For example, European drivers are already shelling out $9 a gallon (which includes a $2-a-gallon tax).

Canadians are also being hit with rising gas prices. They are paying the American-dollar equivalent of $4.92 a gallon, and they're being told to brace themselves for prices above $5.65 a gallon this summer.

Early last year, with a barrel of oil trading in the low $50s and gasoline nationally selling in a range of $2.30 to $2.50 a gallon, Mr. Gaines — in an impressive display of crystal ball gazing — accurately predicted oil was $100-bound and that gasoline would follow suit by reaching $4 a gallon.
 
In my area we need all of the crop residue we raise to either put back on the soil to build that up or use as feed\bedding for livestock. We are hundreds of miles from a forest so those waste products don't enter in the picture for all of the ethanol plants going up around here. The ethenol promoters are all talking about switching to switch grass which will take food producing acres out of production.

I like thinking outside the box as much as anyone, but there is a reason the box is there. The ethanol mandate is way ahead of the technology for using cellulose waste, thus food will continue to be burned as fuel.
 
Rambo i do not know where you are from but there are some crop resides that are not commonly used as feed or bedding for example canola straw, mustard straw, flax straw bascially because the product is so indigestible and because of the properties of the product make poor bedding. So these oilseed crop residues are usally just incorperated back into the feild. As that is the easiest way to dispose of them and get some benefit from them.
As for the ethanol mandate anyone who does the math figures out pretty quickly that using grain for the production ethanol is not sustainable long term let alone profitable if the government funding dries up.
 
i know biodiesel isn't ethanol but in germany as they've gradually removed the tax incentives for biodiesel the plants have been dismantled and shipped somewhere else for another country to have their kick at the biofuel can. this is a money game and doesn't have a lot to do with the environment or energy supply. the guys behind this 'industry' are just trying to siphon off taxpayer dollars while they waste a lot of oil and natural gas.
 

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